Chicago Committee Not Buying Bally’s Casino Delays Due to VGTs

Bally's told a Chicago committee on Wednesday that it had slowed the development of non-gaming elements of a casino project in opposition to video gambling terminals (VGTs).

The gaming giant, which is in the middle of building a $1.7 billion facility, previously threatened to pause construction if local lawmakers approved VGTs citywide. Executive members of the company told the Chicago Council License Committee that it would be “irresponsible” to continue development as originally planned with these machines now in circulation and stealing potential revenue from the facility.

Despite their stance, Committee members aren’t convinced that Bally’s is being transparent about the real issue.

Bally’s Chicago casino stalls

Bally’s well has started to run dry.

The company said in a Form 10-Q filing with the Securities and Exchange Commission in August that there was “substantial doubt” about its ability to continue operating in its current arrangement. 

Last Friday, Bally’s and its executive vice president and chief financial officer, Mira Mircheva, also split ways. An announcement said the decision was due to “personal reasons” and did not reflect the company’s financial troubles.

Now, Committee members believe that Bally’s could be scapegoating VGTs as a reason to slow construction in light of the company’s financial situation.

Bally’s paid its $4 million annual charge to Chicago on Tuesday as an indication of its intent to follow through with the casino. But President and Interim Chief Financial Officer George Papanier still took issue with the now 65 VGTs that have been approved citywide. 

“Officials have no idea where that number could end up,” Papanier said. “That could, in effect, be adding several casinos within the marketplace where we thought we had a form of exclusivity in. As a result of that, we’re re-evaluating everything outside of the HCA agreement to determine whether it’s fiscally responsible for us as a company to continue to invest at that level without the type of return that we would expect.”

What’s causing the tension?

Papanier only just took over as CFO after Mircheva announced she would be leaving the company. Downtown Ald. Brendan Reilly (42nd) keyed in on that and Bally’s decision to slow progress and asked if the decision was reached because the company lacked the confidence in its ability to find the cash to support construction.

“Our concern is around the cannibalization of VGTs and what they can do,” Papanier said, while promising that the facility would still be completed in 2027 as agreed. “What they’ve proven to do across the state, is the true concern here and why we’re actually discussing a reset as opposed to delivering or over-delivering every component and then some that was required [by the host agreement].”

Reilly wasn’t moved. He noted that Bally’s was “struggling to cobble together money” and face its “incredible debt load.” 

He also highlighted a recent earnings call, where Bally’s lender said that competition from Chicago VGTs had been factored into the giant’s earnings calculations.

Ald. Marty Quinn (13th) summarized frustration with the meeting by congratulating Bally’s on  becoming part of the circus. 

Top members of Mayor Brendan Johnson’s staff were invited but did not attend the meeting. License Committee Chair Debra Silverstein (50th) also took issue with that, calling it “very disappointing, very embarrassing, [and] very insulting.” She also declared there would be another meeting with two of Johnson’s top aides in attendance.