Bally’s Hit With Credit Downgrade on Chicago Casino Risk

Posted on: March 31, 2025, 07:38h. 

Last updated on: April 1, 2025, 09:12h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Bally’s credit rating approaching dubious “CCC” territory
  • Risks in Chicago among reasons for downgrade

Due in part to risk tied to the operator’s Chicago casino hotel plans, Bally’s (NYSE: BALY.T) saw its credit rating downgraded to “B-“ from “B” by Fitch Ratings, putting it one notch above the group of ratings at which issuers carry “substantial risk.”

Bally's Chicago gross gaming revenue
Bally’s temporary Chicago casino at Medinah Temple. The operator’s credit rating was downgraded by Fitch, which cited risks in the city. (Image: Axios Chicago)

In applying a “negative” outlook to the regional casino company’s credit profile, Fitch cited risks stemming from Bally’s upcoming $1.7 billion Chicago integrated resort — its most expensive project to date. When that venue opens in late 2026, it will be the only one of its kind in Chicago proper, but that doesn’t insulate it from potential competitive risk from gaming venues outside the city.

There is execution risk in the development of the Chicago projects, as well as other potential development opportunities,” notes the ratings agency. “Challenges include a saturated Chicago gaming market, the higher-than-average gaming tax rate, and the typical ramp-up of a new casino development.”

While being the lone gaming venue in the third-largest US city could prove advantageous for Bally’s, that doesn’t change the fact that Illinois is one of the largest casino markets in the country outside of Las Vegas. The state is currently home to 16 brick-and-mortar casinos, a fair amount of which are relatively short drives from the Windy City.

Bally’s Chicago Casino Should Have Sufficient Funding

In 2022, then-Mayor Lori Lightfoot’s administration selected Bally’s as the winner of Chicago’s lone casino permit, touching off a firestorm of criticism and controversy.

Those concerns proved warranted as speculation regarding the operator’s ability to procure the necessary financing to complete the project — fears partially rooted in its low credit grade — lingered into last year. In a sweeping series of transactions, Gaming and Leisure Properties (NASDAQ: GLPI), one of the largest owners of gaming real estate, provided $2.07 billion in capital to Bally’s, including $800 million to close a shortfall in Chicago.

Those deals allayed concerns about Bally’s capital position, but also created long-term liabilities because the operator will be paying rent to GLPI on the Chicago gaming venue, among other properties. Many gaming companies have lease payments, but as Fitch notes, Bally’s faces some potential risks in that regard in Chicago because the ramp-up period for the casino hotel could take a while, implying a multiyear return on investment period.

“Fitch estimates that lease expense will approach $100 million annually when fully funded,” adds the research firm. “The property’s scale, city location, and strong demographics should result in win-per-unit metrics that are in line with or stronger than comparable Chicago properties.”

Some Silver Linings for Bally’s

As has been noted during its recent pursuit of Australia’s Star Entertainment Group, Bally’s had $171 million in cash on hand at the end of 2024 and access to another $620 million on an undrawn revolving credit facility. It also doesn’t face any debt maturities until 2028.

Fitch said the gaming company could tap the revolver for financing needs and the operator could exercise an option to sell the real estate of the Twin River Casino in Rhode Island to GLPI — a move that could ease some of the operator’s Chicago bills.

“The agreed sales price is $735 million, and GLPI will receive an annual rent payment of approximately $58.8 million with escalators. While the sale proceeds could ease Bally’s Chicago contribution burden, the covenant resolution remains uncertain,” concludes Fitch.