By now, it’s safe to that Bally’s Corp. has a lot on its plate—the Rhode Island-based operator launched iGaming in its home state earlier this month; it has plans to launch mobile sports betting in Massachusetts; it is weeks away from demolishing the Tropicana Las Vegas; it is continuing to work towards the construction of its $1.7 billion permanent casino in Chicago; and, perhaps most significantly, it recently received another takeover bid from its largest shareholder, hedge fund Standard General (SG).
The SG bid, which first broke March 11 in a filing to the U.S. Securities and Exchange Commission, is an offer to buy out the remaining shares in Bally’s at a valuation of $15 per share—a 41 percent premium to its March 8 closing price—for an overall valuation of $684 million. SG’s current stake is approximately 23 percent.
Per the filing, SG notified Bally’s board of directors about the proposal and expected the board to form a special committee to consider the offer and make any potential recommendations.
Soo Kim, who serves as chairman for Bally’s, is a founding partner of SG and also serves as its managing partner and chief investment officer.
According to the Chicago Sun-Times, Kim said in a letter to the board that the buyout is a way for shareholders to “immediately realize a premium price, in cash, for their investment and provides stockholders certainty of value for their shares, especially when viewed against the operational risks inherent in the Company’s business and the market risks inherent in remaining a publicly-listed company.”
In response to the news, Bally’s stock soared more than 35 percent, still well below its all-time high of $73, reached in March 2021.
The recent offer was the second that SG has extended to Bally’s, and was significantly discounted from the first. The original January 2022 bid was for $38 per share, with a total valuation of just over $2 billion.
The sharp decrease in valuation is reflective of some of the operator’s recent financial and operational struggles, including the sluggish performance of its Bally Bet sportsbook product, which was ultimately outsourced to Kambi last year. In addition, Diamond Sports Group, the former operator of the company’s branded sports TV networks, filed for bankruptcy.
The company is also significantly leveraged, having finished 2023 with $3.6 billion in debt and $163.2 million in cash. Current CEO Robeson Reeves is also relatively new in the role, having replaced former CEO Lee Fenton last February in efforts to spark change.
That said, Bally’s certainly has a lot of other developments to tend to at the moment, the most recent being its March 5 launch of iGaming in Rhode Island. Bally’s is the only land-based operator in the state and has a monopoly on the market as its sole licensee.
As of now, Bally’s site offers live-dealer blackjack and roulette as well as 170 slot games. The company constructed a 4,000-square-foot studio to broadcast the games at its Twin River Lincoln casino, and it expects to add approximately 50 to 75 new positions as the rollout continues.
“We are pleased to launch this new gaming product,” Bally’s Rhode Island President Craig Eaton said in a statement after the launch, “which is borne out of our partnership with the General Assembly, Governor McKee and our regulators, the Rhode Island Department of Revenue, Division of Lottery, Department of Business Regulation and RI State Police to enhance state revenue and better position the state’s casinos in the competitive New England gaming market.”
Now that Rhode Island is live, Bally’s will now work to launch mobile sports betting in Massachusetts, having told the Massachusetts Gaming Commission (MGC) that it plans to bring Bally Bet to the Bay State by the end of the second quarter, pending regulatory approvals.
Per iGaming Business, Bruce Band, the MGC’s director of sports betting, got the confirmation when he called the operator following the Rhode Island launch. Before that, Band had unsuccessfully attempted to make contact with Bally’s multiple times after a December 2023 meeting. The operator was first licensed in the state last year but did not launch—the license was renewed in January.
On the land-based side, the company is in the final stages of shutting down the Tropicana Las Vegas, which is set to close April 2 for demolition. This will clear the path for the construction of the Oakland A’s new $1.5 billion, 33,000-seat ballpark.
More than 700 Tropicana employees are set to be laid off due to the closure, and the company has worked to arrange job fairs and other resources to help affected staff find new positions.
Bally’s finalized the deal to purchase the operating rights of the casino in September 2022 in a $148 million cash deal with Gaming and Leisure Properties (GLPI) and Penn Entertainment. It ultimately agreed to relinquish the casino altogether in exchange for the right to construct its own casino hotel on the remaining 20-plus acres left on the plot.
The A’s released new renderings for the stadium project earlier this month, with a layered roof structure akin to the Sydney Opera House and a massive reinforced glass window offering views of the Strip.
While many expect the development to be yet another boost to the city’s booming economy, it is not expected to be complete until 2028 at the earliest. Bally’s is still several years away from reaping some of its potential gains, especially given that it would have to construct and finance its own resort on the site.
Finally, speaking of financing construction, the company is also in deep water with regards to its proposed $1.7 billion permanent casino complex in Chicago at the site of the Freedom Center, for which it was granted the only available license by former mayor Lori Lightfoot last year.
The temporary casino, set up in the famed Medinah Temple building downtown, has done well to bring in at least some revenue to stem the bleeding—the casino turned a profit of just under $10 million in February, and is already the third-highest grossing casino in the state.
Per the license agreement, Bally’s must open the permanent casino no later September 2026, but construction has yet to begin. It must also spend at least $1.34 billion between both sites, another tall task in light of its increasing financial strain.
Earlier this month, Bally’s CFO Marcus Glover made a surprise revelation to the Nevada Gaming Control Board (NGCB) that the company has a funding gap of approximately $800 million for the project, out of a total of $1.1 billion still left to spend.
According to Crain’s Chicago Business, the company is in advanced talks to secure the financing with an undisclosed partner, and will “hopefully” have a deal in place by summer.
If that wasn’t enough, the planning of the complex itself has also been thrown into uncertainty, after it was announced earlier this year that the company would have to find a new location on which to build a 400-room hotel tower when it was discovered that the original location would potentially damage city infrastructure.
Bally’s then scrambled to produce a new design whereby the smaller, 100-room tower was moved on top of the casino, and that design was approved by the city in early February. The location of the larger tower has yet to be determined.
Given the whirlwind of developments, it should come as no surprise that the company is coming under increasing scrutiny—the editorial board of the Chicago Tribune, which will have to be relocated by July 1 to make way for the permanent casino, published a scathing op-ed about the bungled process on March 11, expressing extreme skepticism about the viability of the company’s ambitious future plans.
“In light of increasing concerns about just what kind of facility Chicago ultimately will get, something needs now to be said loud and clear: A casino that’s merely a shed for slots, a casino that is nothing more than a repository for gambling, as distinct from an attraction with all manner of lovely things, is worse than no casino at all,” the board wrote.
While the publication noted that there were several factors involved in the decision-making process for Bally’s license approval, not all of which were in the company’s control, its message was clear that patience is already running out.
“This is a pivotal moment for this project,” the Tribune editorial board wrote. “A stripped-down casino is in no one’s interest in this town. We’re trusting you to deliver what was promised, Mr. Kim. Still, given the flashing warning lights we’re seeing right now, the mayor would be wise to have a contingency plan.”
