Chicago Mayor Expresses Uncertainty Over Bally’s Permanent Casino Project

Brandon Johnson

Bally’s Corporation (NYSE: BALY) recently reported impressive revenue from its temporary casino in Chicago and plans to begin construction on its permanent venue at the Freedom Center in the River West area next month. However, Mayor Brandon Johnson (D) cautions that the completion of this project is not guaranteed.

In a recent interview with the Chicago Sun-Times editorial board, Mayor Johnson highlighted that Bally’s faces several challenges, including addressing an $800 million funding shortfall in the city. This significant financial hurdle is a primary reason the mayor cannot assure the casino hotel’s completion.

Bally’s has secured a $500 million credit facility, utilizing $250 million of it for land at the Freedom Center, formerly the site of the Chicago Tribune.

Potential Complications from Bally’s Takeover Bid

Bally’s was awarded Chicago’s sole casino permit in May 2022 by former Mayor Lori Lightfoot. The decision was controversial, with allegations of corruption and concerns over a compromised bidding process.

Compounding Bally’s challenges in Chicago, earlier this year, Standard General, a hedge fund led by Bally’s director Soo Kim, offered $15 per share to acquire the casino operator. While this bid is still under review, at least one investor warned that an accepted offer could jeopardize the Chicago project. Although Kim disputes this, recent credit rating downgrades for Bally’s by major agencies suggest that financing may come with higher interest rates. These increased rates could impose substantial interest expenses, making it crucial for the Chicago resort to meet high-profit and revenue expectations.

Additional Challenges Facing Bally’s in Chicago

Bally’s faces another significant issue in Chicago: the unresolved location for the hotel within the Freedom Center property. Earlier this year, it was revealed that the original proposed site was unsuitable due to the risk of damaging underground water pipes during construction.

The hotel is a vital component of Bally’s Chicago casino, potentially accounting for a large portion of the $1.34 billion the operator is required to invest in the city. According to the Sun-Times, $1.1 billion of this investment is still pending.

The combination of financial challenges, unresolved logistics, and the ongoing takeover bid creates a complex environment for Bally’s ambitious Chicago project.

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