Chicago Mayor Johnson Supports Bally’s Amid Brewing Controversies

Chicago Mayor Johnson backs Bally's amid ongoing controversy

Chicago Mayor Brandon Johnson (D) is backing Bally's Casinos (NYSE: BALY ) even as the regional casino operator faces headwinds on its $1.1 billion integrated resort project in the third-largest U.S. region that could Endanger the city.

In a statement to Crain's Chicago Business, Johnson's office said it expects Bally's to make good on its commitment to build a permanent casino-hotel at the former Tribune printing plant near River West. The bookmaker currently operates a temporary casino at the Temple of the Medina in River North.

Last month, Bally executives told the Nevada Gaming Control Board (NGCB) they were seeking to close an $800 million funding gap to complete the Chicago project. That effort may become more difficult with the recent series of credit rating downgrades for Bally's.

"Bally's has said the casino is expected to begin construction this year and open in 2026," a statement from the mayor's office said.

Lori Lightfoot (D) was mayor of Chicago when Bally's was selected to receive the city's only casino license.

Takeover bid could impact Bally’s Chicago plans

Some Chicago residents, including policymakers, are betting that a permanent Bally's Casino will create jobs and revenue for the city, but they worry that Standard General's recent takeover bid could jeopardize the project if accepted.

A hedge fund controlled by Bally's director Soo Kim has pledged to complete construction of a Chicago casino hotel if it takes over Bally's. However, some investors and residents worry about the project's fate if the area's casinos are privatized.

In a letter to Bally's board of directors on Tuesday, California-based asset manager K&F Growth Capital, which owns 1% of the gaming company, said the gaming company had already eaten too much with its "moonshot bet." Major casino projects including Chicago.

K&F encouraged Bally's to seek a partner in Chicago to limit its risk, while also urging the board to sell the operation to Tropicana Las Vegas to raise capital and trying to get New York City to give up on obtaining a casino license. Johnson's office said it would not intervene in the dispute between K&F and Standard General.

“Under no circumstances will the city intervene in disagreements between investors, but looks forward to progress on the project and will continue to monitor its progress,” the statement to Crain’s said.

CHICAGO HAS CHOICES

Bally's has not said it is looking for a partner in Chicago, but the move could help minimize financial risk at a time when investors are worried about the operator's credibility.

Analysts are now widely speculating that Bally's will reject Standard General's takeover bid and move forward with Plan Chicago, the gaming company's most expensive plan to date.

If that didn't happen, Chicago had other options, as Hard Rock International and native Rush Street also sought a permit, which Bally ultimately won. However, a more effective and probably more desirable option for the city would be for Bally’s to deliver on its promise.