Struggling Finance and Intense Competition Affect Bally's Casino in Chicago, Leading to a Lower Credit Rating
Cutting the Deck: Bally's Corp's Financial Storm Over $1.7B Chicago Casino Project
Bally's Corp, the Rhode Island-based gaming titan, is reeling under financial pressure with the downgrading of its credit rating from "B" to "B-" by Fitch Ratings. This move comes as the company grapples with its most extensive development project yet - the much-anticipated Chicago casino.
The downgrade, triggered by concerns over the company's rising EBITDAR leverage and the risk of increased debt, serves as a grim reminder of the growing financial strife. According to Fitch, Bally's EBITDAR leverage could peak at 7.0x in 2024, with potential escalations to 8.0x-9.0x due to fresh debt issuance and lease commitments. The company's efforts to secure $940 million in private capital fall short by $250 million, which they aim to acquire through an initial public offering (IPO) targeting women and minority investors, yet pending SEC approval. In the interim, they're offloading $195 million in private shares.
Despite a revolving credit facility of $620 million and no major debt maturities until 2028, Fitch sounds the alarm over tightening liquidity due to ongoing financial obligations.
Chicago's Cutthroat Casino Market
Slated for a September 2026 opening at 777 W. Chicago Ave, Bally's permanent casino faces an uphill battle in a market already saturated with competition. High gaming tax rates, the challenge of building customer loyalty, and the poor performance of the temporary Medinah Temple casino add to the risks.
The Medinah Temple location reported a paltry $8.8 million in revenue in February, marking its lowest monthly total in over a year. Bally's CEO, Robeson Reeves, acknowledged the struggles, stating, "The temporary Chicago casino returns remain below our expectations, though we're hearing from customers that they're getting increasingly excited about what's happening a few blocks northwest at the permanent site."
Bally's Asks for Relief, Faces Lawsuits
Bally's is requesting a $300 million property tax relief over a ten-year period, but the idea is still under consideration by the Rules Committee of the Chicago City Council. However, the company's minority investment initiative faces challenges in two lawsuits instigated by conservative organizations, claiming discrimination against white male investors, despite being mandated by the company's contract with the city.
If Bally's manages to secure complete funding for the Chicago project and lower its debt ratios, it could potentially raise its credit rating. The company is also considering a sale-leaseback agreement for Twin River Casino, which could net $735 million.
(Enrichment Insights: Illinois gaming regulators halted construction due to concerns over financing and market viability. The project relies on sale-leaseback financing mechanisms, which Fitch Ratings warns could strain liquidity given Chicago's high 40% tax rate and market saturation risks from existing casinos. The interim location has generated $160.7 million since 2023 but recorded a $294.4 million net loss when accounting for expenses. Tax revenue stands at $3 million versus the city’s $16.5 million 2025 projection.)
- In the face of financial challenges, Bally's Corp, the Rhode Island-based gaming titan, aims to secure complete funding for its Chicago casino project, hoping to raise its credit rating.
- The permanent Bally's casino, set to open in September 2026, will contend in a competitive market, particularly with high gaming tax rates and the challenge of building customer loyalty.
- Bally's Corp is currently seeking $300 million in property tax relief over a ten-year period, but the proposal is still under consideration by the Rules Committee of the Chicago City Council.
- Despite the ongoing financial obligations and concerns over liquidity, Bally's has been offloading $195 million in private shares and is considering a sale-leaseback agreement for Twin River Casino, which could generate $735 million.
