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Bally’s Takes On Partner In Development Of Permanent Chicago Casino

Bally’s has partnered with Gaming and Leisure Properties to secure funding for the development of its permanent casino in Chicago.

Bally's Chicago
Photo by Bally's Corp./HKS
Derek Helling Avatar
3 mins read
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The blurry future of Bally’s grand plans for a brick-and-mortar casino in Chicago is clearer, but that clarity is not because of improvements in Bally’s status. Rather, the more optimistic appraisal of Bally’s in Chicago is because of the involvement of another party.

For that reason, it’s uncertain how much a better outlook in Chicago improves the state of the company overall. The company’s leadership and shareholders still have much to assess moving forward.

Bally’s Chicago was touch and go

When Bally’s won the bidding to develop the first physical casino in Chicago, it committed to spending no less than $1.34 billion on the project. However, company officials revealed in March that Bally’s still had $1.1 billion of that commitment yet to execute and was about $800 million short of having the money necessary to do so.

That admission created doubt around the future of gambling in Chicago and the company’s overall health. While Bally’s leadership expressed confidence in its ability to secure the lacking funding, Chicago officials like Mayor Brandon Johnson expressed skepticism.

Bally’s seems to have backed up its word to secure the funding by summer 2024 with a new partnership and transaction with Gaming and Leisure Properties, Inc. (GLPI). The deal between the companies involves but is not limited to Chicago.

Bally’s, GLPI lay out new terms of the relationship

According to a July 12, 2024, press release from GLPI1, GLPI is essentially trading money for real estate and an interest in Bally’s Chicago. The real estate assets that GLPI will acquire include Bally’s Kansas City and Bally’s Shreveport Casino & Hotel.

Bally’s and GLPI had previously done business concerning the Bally’s casinos in Rhode Island. GLPI acquired those real assets in June 20222 and has been leasing the properties back to Bally’s since.

As part of this deal, the two parties have adjusted those terms. Similar arrangements will now be in place in Kansas City and Shreveport.

In Chicago, GLPI says it “will own all funded improvements, which will be leased to Bally’s with rent commencing at a rate of 8.5% as advances are made.” Furthermore, “GLPI also intends to acquire the Chicago land” prior to the beginning of construction on the former Tribune Freedom site.

In a separate press release3 on the same day, Bally’s confirmed many of the details. Bally’s stated that it expects to receive a total of $2.07 billion from GLPI as a result of all the expansions of that relationship.

Therefore, you can add the permanent Bally’s Chicago to the list of casinos across the world that GLPI plays the role of landlord for when it opens. Bally’s reiterated that it still intends to open that facility in September 2026.

That firmer footing for Bally’s in Chicago should help boost shareholder morale. It might not be sufficient to make all investors look at everything through a rosy lens, though.

Chicago progress might not settle the future for Bally’s

In April, an investment firm for which Bally’s chairman Soo Kim also acts as the managing partner made its second overture to acquire the balance of shares of Bally’s it does not control. At that time, Standard General controlled about 23% of Bally’s stock.

The board of directors for Bally’s stated that it had appointed a special committee to review the offer from Standard General shortly thereafter. To date, there has been no public comment about that review.

That committee could still be meeting and if so, this expanded partnership with GLPI likely changes the conversation. The question is to what degree.

Other investors, like K&F Growth Capital, have expressed concerns beyond Chicago. Those include Bally’s attempts to secure a casino license in New York and operations in Las Vegas.

Additionally, K&F communicated that it would like to see Bally’s curtail its investment in online gambling to focus on what it sees as more profitable operations in brick-and-mortar casinos in smaller markets. How much support there is for K&F’s proposals in Bally’s broader investment base is unclear.

Shareholders might see the progress in Chicago as a step in the right direction but it’s too early to tell whether the developments in Chicago are a miracle cure for dissent. Additionally, the new partnership with GLPI does not automatically mean that the Standard General offer is no longer under consideration.

Sources

  1. Gaming and Leisure Properties Enters into Sale Leaseback and Development Funding Transactions with Bally’s Corporation Totaling $1.585 Billion at Blended 8.3% Initial Cash Yield ↩︎
  2. Gaming and Leisure Properties to Acquire Real Property Assets of Bally’s Two Rhode Island Assets for $1.0 Billion ↩︎
  3. Bally’s Announces Refreshed Site Plan that Restores 500-room Hotel Tower Plan into Single-Phase Project ↩︎
Derek Helling Avatar
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Derek Helling is a staff writer for PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

View all posts by Derek Helling

Derek Helling is a staff writer for PlayUSA. Helling focuses on breaking news, including finance, regulation, and technology in the gaming industry. Helling completed his journalism degree at the University of Iowa and resides in Chicago

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