Bally’s Financial Issues Put NY Casino Project in Jeopardy

The future of gaming giant Bally’s is in serious doubt according to the company itself.

In a Form 10-Q filing with the Securities and Exchange Commission, Bally’s said there was “substantial doubt” about its ability to continue operating in its current format if it doesn’t raise significant capital. This coincided with a 30.9% decline in stock price over the last five days, and an even larger drop since Monday morning.

Bally’s recently paused construction on a mega-facility in Chicago following disputes over the legalization of video gaming terminals throughout the city.

Bally’s worried about finances

On Friday, Bally’s issued a “going concern warning” to federal regulators, indicating that it didn’t have enough cash to pay its lenders. This warning often precedes a filing of bankruptcy. 

Despite the snafu, Bally’s still expects to open its Chicago casino in early 2027.

"There has been no change to the status of Bally's Chicago's construction based off the company's most recent 10-Q filing,” the company said in a statement. “Bally's Chicago remains well situated to continue delivering on its obligations. The going concern disclosure is based on a forward-looking technical accounting analysis which considers only funding that has been unconditionally secured as of the date of the assessment.”

A major portion of the company’s financial doubt is tied to a planned $4 billion casino hotel in the Bronx, New York. The company was given the right to build a downstate location after a total of three licenses were awarded by Gov. Kathy Hochul and the Gaming Facility Location Board following a highly competitive bidding process.

The New York location is expected to be Bally’s most expensive in its history and more than twice as much as the $1.7 billion Chicago property. Bally’s has already supplied $800 million to the project, but according to analysts, it needs another $500 million to advance to the next stage.

Bronx casino could be in trouble

Bally’s has a history of finding ways to raise capital funding when it is in hard times. However, finding enough to cover its lucrative New York project will be a challenge.

 Gaming and Leisure Properties, Bally’s primary real estate partner, said earlier this year it was unlikely to provide full financing for the Bronx project. Citizens Equity Research analyst Jordan Bender said in a note to clients on Monday that Bally’s was facing a “not dire” situation, but that different measures could be needed to solve its financial woes.

“We do not believe the company has the ability to finish all of its projects without selling or bringing in a development partner at its current leverage levels,” he said. “We believe Las Vegas would be the most likely asset to be sold or have a partner brought in, given the language in the release only mentions non-gaming amenities and no longer refers to a casino at the site.”

Despite faith in Bally’s ability to overcome the situation, investors are ready to pull the plug. The $8.91 stock price at the time of writing is down 30.9% over the last five days and 35.3% since Monday morning. 

There is special concern for Bally’s in Rhode Island, where the company operates the state’s two casinos, online casino, and was selected to become its second sports betting operator.

“It now appears clear that our concerns were warranted,” said House Minority Leader Michael Chippendale. “Look, Bally’s warning is real, and it is significant. In the SEC filing they doubt that they will be able to meet liquidity or leverage requirements within a year without some sort of additional financing. Their management also concluded that their current plans do not eliminate that doubt. That’s troubling.”