Bally’s is on a winning streak that seems to defy explanation

Sometimes in sports, an underdog team will defy the odds over and over again, such that the experts are finally forced to acknowledge: “I’m not picking them, but I’m done picking against them.”

Numerous examples come to mind, some of which ended in victory while others fell just short. Think of the Indiana Pacers’ memorable run to a Game 7 of this year’s NBA Finals, or Leicester City’s 2015-16 Premier League title, or the Boston Red Sox’ historic comeback from down 3-0 against the Yankees in the 2004 ALCS.

In gaming, the notion of wins and losses is far less binary. Nobody is hoisting a casino championship trophy or parading down the Las Vegas Strip. But if there were ever an example of an improbable team that continues to outkick its coverage, it would be Bally’s Corp.

The Rhode Island-based company is a corporate entity cobbled together in such a way that Doctor Frankenstein himself might have second thoughts. It is financially stretched tighter than a snare drum and has not hosted an earnings call with analysts for multiple quarters. Its interests are flung far and wide from Las Vegas to Chicago to New York to Australia, with holes that can be picked apart in every example. And yet, things have had a way of working themselves out.

A substantial funding agreement with Gaming and Leisure Properties effectively saved its Chicago and Las Vegas interests. A reverse-merger with Intralot provided critical funds and disposed of its international digital business. And, most recently, its New York City bid was saved by Mayor Eric Adams while its Australian subsidiary stumbled into re-acquiring substantial assets.

Bally’s ability to find answers, however convoluted they may be, is undeniable. The question now is just how long the company can continue this uphill tightrope sprint.

Boogie down Bronx

Perhaps nothing highlights this Bally’s phenomenon better than its New York casino bid. Bally’s is proposing a $4 billion integrated resort on a golf course it owns at Ferry Point in the Bronx. The project, for various reasons, has always been considered a long shot.

One reason is the cost – the company is struggling to stay on track with its Chicago casino, which costs less than half (about $1.8 billion) what it says it would spend in New York. In Q1, Bally’s reported $209 million in cash versus net debt of $3.4 billion, although that was multiple transactions ago by now. In addition to the massive development costs, the New York licence fee is also $500 million, up front.

For Bally’s in particular, winning a spot in New York would be costly for another reason. The company purchased the golf course from the Trump Organization for $60 million in 2023. If the project is awarded a licence, Bally’s is obligated to pay an additional $115 million kicker, meaning its pre-construction costs would actually be at least $615 million. This connection to US President Donald Trump has been among the biggest criticisms of the project, but it hasn’t been enough to stop it.

Before the 27 June deadline to submit its casino application to the state, Bally’s needed key zoning approvals from the city council and state legislature. In late May, the council tabled a vote on the matter, setting up a last-minute dash throughout June. Bally’s Chairman Soo Kim told the New York Post the council’s action showed that its members were insinuating that “‘If Bally’s wins, Trump benefits’. That’s crazy.”

From the top rope, twice

At the time, it seemed as though the obstacles in New York were mounting too quickly for Bally’s to overcome them. The company needed a “home rule” vote on its zoning bill, meaning that the council needed to approve it before the legislature could. That required a two-thirds majority vote from the council, until Adams intervened.

Prior to the vote, Adams submitted a letter of support for the bill, lowering the threshold to a simple majority. The final vote came in at 32-12, with seven abstentions. Adams has maintained that his actions are not an endorsement of the project. Rather, he says he wants to keep the pool of applicants for the three available casino licences as wide as possible.

“It does not matter which proposal is selected by the state so long as it’s in New York City,” his office said at the time. “We would be supportive of more than one selection in New York City, but that requires more than one competitive proposal.”

After Bally’s officially lodged its bid, it had to go back before the council for another, specific municipal zoning item. That 15 July vote was a resounding defeat, with 29 against versus just nine in favour. Again it seemed that the project was all but dead.

No appetite for a fight

But there again Adams saved the day, as he vetoed that vote on 30 July and sent it back to the council, where it now sits. This has prompted fresh criticism over the connections between Adams, Bally’s and Trump.

According to Spectrum News NY1, Vito Pitta, Adams’ election attorney and head of his legal defence fund, is a lobbyist for the Bally’s proposal. His campaign chairman, Frank Carone, is a consultant for the company, although both connections have been downplayed.

And perhaps most notably, Trump’s Justice Department permanently dismissed significant federal corruption charges against Adams earlier this year, which many feel has made the mayor subservient to the president’s wishes.

In any case, the council could technically override the veto with a two-thirds majority vote by 11 August, but that now appears unlikely. City and State NY reported on Tuesday, citing unnamed sources, that council members “didn’t have the appetite to take up a veto override fight”. Their hope is that the project is simply left out of the ultimate licensing decision by the state.

A local community advisory committee meeting for the Bally’s project is now slated for Friday afternoon. It is unclear whether the company will make a presentation then or await further clarity.

Thunder down under

While the New York saga has become increasingly complicated for Bally’s, the same is true some 10,000 miles away. For multiple years running, beleaguered Australian operator Star Entertainment has been battling with bankruptcy, such that the company became increasingly desperate from January onwards.

As a significant employer and tax contributor, Star fought to the end to stay independent, but its financial troubles coupled with a litany of regulatory violations were too much to bear. That’s when Bally’s stepped in.

Bally’s swooped up majority control of Star in April in an AU$300 million takeover bid. The company again struck what seemed to be a miraculous deal and it was also able to reduce the investment by AU$100 million by offloading that stake to existing Star shareholder Bruce Mathieson. At the time the deal was struck, Star had just two properties in its portfolio, Star Sydney and Star Gold Coast.

Days before Bally’s submitted an initial offer in March, Star had announced its intention to exit its Queen’s Wharf Brisbane joint venture and sell its stake back to the project’s other two partners. The multibillion-dollar mixed-use development was poised to become Star’s biggest asset, but was too expensive. The deal was struck primarily to get out of equity and debt contributions.

Not so fast

Bally’s made clear that it did not support the Queen’s Wharf exit and it sought to keep all assets together. For months it appeared that the withdrawal was in fact final, until it wasn’t.

Star announced on 30 June that certain requirements had still not been met, which prompted the partners to retract the deal. An extension was subsequently granted through July but that too was unsuccessful. The agreement was officially dissolved on 1 August.

To be clear, the dissolution of the agreement is not necessarily a full positive. Star now faces additional financial penalties for not finalising the terms and is again saddled with big financial commitments at a time when every dollar counts. It is also under a federal money laundering investigation that could result in hundreds of millions in further fines.

In spite of all of that, Bally’s got what it wanted and, in a way, it could make its purchase more prudent. The company essentially bought when the value was lowest and gained a massive asset through no work of its own.

Bally’s declined multiple requests for comment for this story.

One man’s vision

In all, the breakneck flurry of activity for Bally’s has accelerated since its buyout last July from Standard General. SG is a New York-based hedge fund also run by Kim. Kim had tried twice before to buy out the company, significantly lowering his bid each time. Ultimately, the final price was $18.25 per share, down from the initial 2022 offer of $38 per share.

As part of the deal, Bally’s was merged with Queen Casino and Entertainment, a regional operator also owned by SG. This brought the total Bally’s US portfolio to 19 casinos across 11 states, although Bally’s itself is the former Twin River Holdings with the Bally’s name purchased from Caesars. This highlights the company’s ability to grow like something of a corporate snowball, largely inorganic yet effective nonetheless.

While the company is mostly silent to the media and financial analysts, Kim has become the face of the brand, regularly giving direct interviews and quotes about the company’s doings.

Some comments haven’t been received as well as others – like when he told the Chicago Tribune that his company was “going to be eating a lot of people’s lunches” in the market – but that too has not prevented Kim from securing a litany of deals across the world.

On Wednesday, Bally’s announced that it will report second-quarter earnings after the market closed on 11 August. Its stock was up 2% to $9.48 at closing, but is down more than 50% year-to-date.