Bally’s Seeking Financing, Could Sell Las Vegas Casino Site to Raise It

Bally’s could engage in asset or equity sales to raise financing needed to regain compliance with its agreements with various creditors.

In a Form 10-Q filing with the Securities and Exchange Commission (SEC), the regional casino operator told investors there’s “substantial doubt” it will be able to continue as a going concern if it doesn’t seek capital-raising alternatives, potentially including debt financing. In part, that regulatory language stems from financing needs for the operator’s planned $4 billion casino hotel in the Bronx, NY.

That project is slated to be Bally’s most expensive in company history, more than doubling the cost of its Chicago integrated resort. To date, the operator has committed $800 million to Bronx venture, on which construction hasn’t commenced, but it’s believed the gaming company needs to raise another $500 million to advance the project.

Situation Not Dire, But Bally’s Las Vegas Site Could on the Block

Bally’s has a long-standing knack for raising capital even when its back appears to be against the wall, but where financing will be procured for the Bronx casino remains to be seen. Gaming and Leisure Properties (NASDAQ: GLPI), Bally’s primary landlord, said earlier this year it’s unlikely it will provide full financing for the Bronx gaming venue.

In a note to clients today, Citizens Equity Research analyst Jordan Bender said Bally’s situation “is not dire,” but there’s a “but” and it could include the operator selling its operating rights on the Las Vegas Strip site previously occupied by the Tropicana.

Bally’s acquired the non-real estate assets of the Tropicana from Penn Entertainment (NASDAQ: PENN) for $150 million. Over the past several years, analysts have frequently speculated that the gaming company could sell that interest, potentially at hefty profit. With the operator pressed for capital and the fate of the Las Vegas venue up in the air, it might be sensible for Bally’s to sell the operating rights, particularly because there is no functioning casino hotel currently at the site. Gaming and Leisure owns the real estate.

On the other hand, Bally’s is said to be cobbling together tenants for retail development at the Strip site, indicating that may be a source of financing in lieu of an outright sale.

NYC Financing Preferred Option

Bally’s has long been more buyer than seller, gobbling up regional casinos and digital gaming assets to morph from a sleepy regional casino operator to an international outfit with a sprawling portfolio. That may imply the company could be reluctant to sell an asset in order to raise cash.

Bally’s is currently in the process of digesting its acquisition of William Hill owner Evoke Plc (LSE: EVOK), which the target says is “going to plan.”