Bally’s Chicago Casino: A Clearer but Complex Future 

The murky prospects for Bally’s ambitious plans to establish a brick-and-mortar casino in Chicago have recently come into sharper focus. However, this newfound clarity is not due to improvements in Bally’s financial health or stability. Instead, the optimistic outlook stems from the involvement of another significant player in the gambling industry.

This development raises questions about how much this positive turn in Chicago will bolster the overall state of Bally’s, leaving its leadership and shareholders with much to contemplate moving forward.

• Financial Partnership with GLPI: Bally's has entered a significant partnership with Gaming and Leisure Properties, Inc. (GLPI), which includes a financial infusion of $2.07 billion. GLPI will own funded improvements for the Chicago casino and other properties, leasing them back to Bally's.
• Uncertain Financial Outlook: Despite the partnership, Bally's faces ongoing financial uncertainties, having previously fallen short on its $1.34 billion commitment for the Chicago project. The partnership with GLPI aims to address these funding challenges but doesn't fully resolve broader financial concerns.
• Strategic and Investor Concerns: The future of Bally's remains complex with additional factors like a bid from Standard General to acquire the remaining shares and concerns from investors about Bally's strategic direction, including its online gambling investments and operations in various markets.

Bally’s Chicago Casino: A Rocky Start

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Bally’s initial triumph in securing the bid to develop Chicago’s first physical casino came with a hefty price tag: a commitment to invest no less than $1.34 billion into the project. Yet, as of March, Bally’s had only fulfilled a fraction of that commitment, still needing to execute $1.1 billion and being about $800 million short of the necessary funding.

This shortfall cast a shadow of doubt over the future of Chicago’s gambling scene and raised concerns about Bally’s overall financial health. While company officials maintained confidence in their ability to secure the remaining funds, skepticism lingered among Chicago officials, including Mayor Brandon Johnson.

Bally’s recently took a significant step toward fulfilling its funding promises by entering into a new partnership with Gaming and Leisure Properties, Inc. (GLPI). According to a July 12, 2024, press release from GLPI, the partnership involves GLPI providing financial backing in exchange for real estate and an interest in Bally’s Chicago. The deal extends beyond Chicago, with GLPI acquiring real estate assets from Bally’s in Kansas City and Shreveport, as well. This arrangement mirrors a previous deal between the two companies concerning Bally’s casinos in Rhode Island, where GLPI acquired the properties and leased them back to Bally’s.

In Chicago, GLPI will own all funded improvements and lease them to Bally’s at a starting rent rate of 8.5% as advances are made. Additionally, GLPI plans to acquire the Chicago land before construction begins on the former Tribune Freedom site. Bally’s confirmed in a separate press release that it expects to receive a total of $2.07 billion from GLPI as a result of this expanded relationship. This influx of capital should bolster Bally’s position, allowing it to proceed with the Chicago casino, slated to open in September 2026.

While this development is likely to improve shareholder morale, it may not be sufficient to alleviate all investor concerns. The progress in Chicago is a positive step, but it might not address broader uncertainties surrounding Bally’s future.

GLPI will own the improvements for Bally’s Chicago and lease them back, starting with rent at 8.5%.

Broader Implications for Bally’s Future is underway

The future for Bally’s remains uncertain despite the progress in Chicago. In April, Standard General, an investment firm led by Bally’s chairman Soo Kim, made a second bid to acquire the remaining shares of Bally’s it does not already control. Standard General currently holds about 23% of Bally’s stock.

Bally’s board of directors formed a special committee to review the offer from Standard General. However, there has been no public update on the review's outcome, leaving stakeholders in suspense.

The expanded partnership with GLPI may influence the committee's considerations, but to what extent remains to be seen. Other investors, such as K&F Growth Capital, have voiced concerns over Bally’s broader strategy, including its pursuit of a casino license in New York and its operations in Las Vegas.

K&F Growth Capital has also suggested that Bally’s should reduce its investment in online gambling and focus more on profitable brick-and-mortar casino operations in smaller markets. The level of support for K&F’s proposals among Bally’s broader investor base is still unclear.

The developments in Chicago represent a step in the right direction for Bally’s, potentially providing a much-needed boost to shareholder confidence. However, the new partnership with GLPI does not automatically resolve all of Bally’s challenges, nor does it negate the potential acquisition by Standard General. Bally’s future, while clearer in some respects, remains complex and uncertain, with much depending on how these various factors play out.