Bally’s Corp. Chairman Soo Kim says building and running a proposed $1.7 billion casino complex in Chicago is crucial to the successful relaunch of a storied name in the gambling industry.
(Bloomberg) — Bally’s Corp. Chairman Soo Kim says building and running a proposed $1.7 billion casino complex in Chicago is crucial to the successful relaunch of a storied name in the gambling industry.
The venue “will be our most important, period,” in terms of the company’s overall strategy, Kim said in an online video interview. “It’s really an opportunity to re-announce and reintroduce the Bally’s brand name nationally and what better place than Chicago.”
Kim’s hedge fund Standard General owns a 22% stake in the gaming concern, formerly known as Twin River Worldwide Holdings Inc. In 2020, the Providence, Rhode Island-based firm purchased the Bally’s name from Caesars Entertainment and plans to use the brand that dates back to 1947 to further its expansion from a single venue in its home state to more than a dozen properties in 10 states.
The plan is a bet by Kim that US casino gambling is poised to broaden from the Las Vegas strip, Atlantic City boardwalk, riverboats and tribal gaming houses. The project, subject to approval from state regulators, would be one of the biggest new gambling developments in the US and the first casino in Chicago.
“The next great frontier are large cities,” Kim said.
Chicago Skeptics
Bally’s is facing skepticism in Chicago and elsewhere. While it’s grown dramatically through acquisitions recently, the company has never built a project of this scale — a one-million-square-foot casino to be flanked by a hotel, restaurants, entertainment center and exhibit space along the Chicago River.
Some aldermen in the third-largest US city have questioned the company’s financial resources and experience to manage such a development. Many of the biggest names in the casino business, including MGM Resorts International and Las Vegas Sands Corp., didn’t bid on the Chicago project out of concern about a high tax rate and market potential.
Bally’s shares are down almost 47% this year, underperforming the roughly 20% decline in the S&P 500 Casinos & Gaming Index.
Even with a recent rise in gaming revenues in the Chicago area, which includes Illinois and Indiana, “oversaturation has to be a concern,” according to a September report by the Illinois Commission on Government Forecasting and Accountability, a bipartisan organization that provides research to state legislators.
The city’s casino will compete with five Illinois sites as well as four in nearby Indiana, two new suburban casinos, two potential so-called racinos, or racetracks with slot machines, and more than 17,000 video gambling terminals in the region, the commission said.
Illinois casino revenue totals remain below pre-pandemic levels and underscore an overall downward trend over the past decade, according to the commission. The growing popularity of online, sports and video gambling is keeping some bettors away.
Video gambling revenue has risen to 40.4% of the total the state gets from gambling taxes, while casinos have fallen to 7.4% in the year ended June 30, from over 50% a decade ago, according to the commission. The largest share of revenue comes from the Illinois lottery.
“Once more gambling opportunities arrive in the form of new casinos, the competition for the gaming dollar in this area will be larger than ever and ‘winners’ and ‘losers’ should be anticipated,” said the report from the commission.
Bally’s ‘Confident’
Kim says the Chicago casino will require Bally’s to use the experience it’s gained from other properties.
“It would absolutely be our most complex challenge,” Kim said. “We feel more than confident.”
Chicago has largely been excluded from casino gambling and the surge in video betting machines in Illinois and the region, Kim said. And the city, home to 2.7 million residents, hosted more than 30 million tourists in 2021.
“It’s another excuse to go downtown,” he said. “It’s about keeping Illinois state revenues in the state. It’s about keeping city revenues in the city.” Chicago forecasts the casino eventually may provide $200 million in annual revenue for two of its underfunded pensions.
While Kim wouldn’t comment on revenue and gross receipt expectations, he said he expects the casino complex will draw gamblers from other venues in the region, including those who have opted for video machines.
Bally’s submitted two separate bids last year to develop a casino, and the city chose the plan for the site of the old Chicago Tribune Publishing Center. A temporary site may open in 2023 and the permanent one could start in 2026, contingent on approval from the Illinois Gaming Board.
The city’s efforts to attract bids were hobbled initially by an unappealing tax rate that topped 70%. The Illinois General Assembly later lowered that to around 40% at the request of Mayor Lori Lightfoot to boost the project’s appeal.
“A brand that works in Chicago, works in America,” Kim said. “It’s a good place to win.”
–With assistance from Christopher Palmeri.
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