Shares in Bally’s Corp plummeted more than 25% in trading Monday, as investors appeared to respond negatively to debt disclosures included in the operator’s second-quarter 10-Q filing submitted to the Securities and Exchange Commission on 14 August.
Bally’s said in the filing that based on its current forecasts, the company “does not project that it would satisfy the liquidity maintenance requirement” or the “consolidated net leverage ratio covenant” in its revolving credit facility over the next year.
“As described below, while the company is actively engaged in discussions on several financing alternatives, the conditions and events raise substantial doubt about the company’s ability to continue as a going concern,” the filing said.
These financing alternatives include “asset monetisation, an equity sale and debt financings”, Bally’s said. The operator said it entered into a non-binding term sheet in July for a loan to advance its $4 billion Bally’s Bronx project, but cautioned that “there can be no assurance that the plans will be successfully implemented”.
Bally’s ended the quarter with cash and equivalents of $390.1 million against long-term net debt of $4.46 billion. Shares closed Monday at $10.31, down 26% on the day, bringing its year-to-date performance to -38%.
Las Vegas on the sale block?
There are three substantial US projects in Bally’s queue – its $1.7 billion permanent Chicago casino, its $1.19 Las Vegas Strip project and Bally’s Bronx, which received one of three coveted New York City licences last December.
Of the three developments, Las Vegas might be the easiest exit, given that Chicago is currently being built and New York is a bigger opportunity. Ever since the former Tropicana was demolished in October 2024, Bally’s has made little progress on the Strip. The company has released just one official rendering of the mixed-use project and has signalled since the start of the year that it is primarily interested in building a retail-entertainment district rather than a casino-resort.
This has ruffled some feathers in Las Vegas, as the MLB’s Athletics franchise is reportedly drawing up contingency plans to build up to $100 million of its own infrastructure on the site as Bally’s lags. According to a report from The Athletic, the Las Vegas Convention and Visitors Authority pressed Bally’s “pretty pointedly” to present a financing plan by August, but neither the LVCVA nor the company commented on the ultimatum to iGB last week.
In a note to investors Monday, Citizens analyst Jordan Bender said he does not believe Bally’s “has the ability to finish all of its projects without selling or bringing in a development partner” at its current debt levels. Las Vegas, he wrote, ” would be the most likely asset to be sold or have a partner brought in” based on the broad language the company is using.
Indeed, Bally’s CEO Robeson Reeves did not refer to a Las Vegas casino in Bally’s Q2 release. He instead said that the company is in “advanced negotiations with potential partners for exciting retail and
entertainment offerings”.
Trouble in Chicago
With Las Vegas potentially in jeopardy, Chicago and New York have their own issues as well.
Earlier this month, Bally’s halted construction on the non-gaming elements of its Chicago casino in response to the city’s legalisation of video gaming terminals. The city-wide proliferation of VGTs could cost Bally’s some $70 million per year in revenue and slash hundreds of jobs, the operator has warned, and the latest construction halt is now the third stoppage the project has faced.
Bally’s was able to secure an extension to its temporary Chicago licence earlier this year through language included in Illinois’ omnibus revenue bill. If the extension hadn’t been obtained, Bally’s would have had to close its temporary casino on 9 September. Given that the permanent casino won’t be completed until early 2027 at the earliest, that would’ve meant several months with no income in the market.
Still, there is no telling how this temporary halt to non-gaming constuction will affect the overall timeline. Bally’s Q2 release granted just one sentence to the project: “Construction of Bally’s Chicago continues as we target opening of the permanent casino in early 2027.”
Big bucks in the Bronx
Even before construction on Bally’s Bronx has begun, the company has allocated $615 million toward it this year. Of that, $500 million was spent on the New York licence fee and $115 million went to the Trump Organization. When Bally’s purchased the Bronx site from Trump in 2023, the deal terms included the $115 million kicker if Bally’s was eventually granted a casino licence.
At $4 billion, Bally’s Bronx is more than double the cost of Chicago, which has been a struggle in itself. The current plan calls for a single-phase build-out to be completed by 2030. While most of its application materials were redacted, one publicly available timeline said construction would be begin “approximately eight to nine months” post-licensure. That licence was granted in December, meaning work would have to start this month or next in order to keep that 2030 goal alive.
Time is of the essence in New York, as competitor Resorts World New York City is already operating. The third licensee, Hard Rock Metropolitan Park, is also shooting for a 2030 opening. That project is bigger and more expensive than Bally’s Bronx but is more stable given its connection to New York Mets owner Steve Cohen, one of the richest men in the world with a net worth of about $23 billion. As of now, it seems Bally’s is more concerned with raising money for Bally’s Bronx than building it out.
“We are actively raising additional capital for the further development and construction of the project and have substantial interest from potential partners for both project debt and equity financings,” Reeves said. “In July, we signed a nonbinding term sheet for a pre-construction loan for Bally’s Bronx, and in August we entered into a letter of intent with a potential equity investor.”
Solid Q2 results
All of this intrigue overshadowed Bally’s actual Q2 results, which were released late for the second consecutive quarter. Group revenue, bolstered mainly by acquisitions, grew 20% year-over-year to $792.2 million.
Bally’s casino revenue rose 2% YoY to $401 million, while segment adjusted EBITDAR ticked up about 3.5% to $109.6 million, driven primarily by landside moves in Baton Rouge and Marquette. On the digital side, B2C revenue from Bally’s Intralot rose 22% YoY to $243.5 million, while digital revenue in North America was up 17% to $66.1 million. Bally’s announced a $326 million takeover of British sports betting and igaming operator evoke during the quarter.
“In summary, our strategic initiatives are creating a highly scaled, growing, global omni-channel provider of retail and online experiences and we are aggressively pursuing and executing on the many growth opportunities before us.”
Jess Marquez
Jess has covered the global gaming industry since 2022. A native of Reno, Nevada, he’d like to note that it’s Ne-va-da, not Ne-VAH-da.
Original article: https://igamingbusiness.com/finance/ballys-q2-stock-slide/
