Bally’s Defends Chicago Casino Financing as Aldermen Challenge Construction Delays

CHICAGO – Bally’s faced more than three hours of City Council questioning Wednesday over construction delays at its $1.7 billion permanent casino.

Company executives maintained that Bally’s has sufficient funding to deliver its contractual obligations while blaming the slowdown on Chicago’s decision to legalize video gambling terminals.

The Sept. 9 License and Consumer Protection Committee hearing followed an August decision to slow work on the project’s 34-story hotel, entertainment venue, restaurants and other non-gaming amenities. Construction on the core permanent casino is continuing, with Bally’s maintaining its planned opening schedule.

Bally’s Points to Video Gambling Expansion

Bally’s President and interim CFO George Papanier told aldermen that the City Council’s approval of video gambling terminals changed the economic assumptions underlying the development. The company argues that allowing VGTs in bars and restaurants could keep gambling spending in Chicago neighborhoods rather than directing customers to the new casino.

“As a result of that, we’re re-evaluating everything outside of the [initial agreement with the city] to determine whether it’s fiscally responsible for us as a public company to continue to invest at that level without the type of return that we would expect,” Papanier said.

The dispute follows Bally’s August slowdown of non-gaming construction, when the company argued that wider VGT availability conflicted with commitments contained in its agreement with Chicago.

Bally’s Executive Vice President and Chief Legal Officer Kim Barker told the committee that the Host Community Agreement permits phased development. She said the company remains capable of meeting its obligations and that the construction changes comply with the agreement.

Aldermen Question Bally’s Financial Position

Several aldermen challenged Bally’s explanation and pointed instead to its recent financial pressures. Those include a going-concern warning, disputes involving contractors at the River West construction site and the recent resignation of CFO Mira Mircheva.

Bally’s rejected suggestions that financial instability was behind the slowdown. Its latest quarterly filing states that the company is required to spend at least $1.34 billion on the temporary and permanent Chicago casino project, with approximately $400 million of that contractual commitment remaining as of June 30.

Ald. Brendan Reilly accused the company and city officials of failing to provide sufficient answers during the hearing. Other council members also questioned why senior mayoral adviser Jason Lee did not appear before the committee despite requests for additional information about the administration’s handling of the dispute.

Casino and City Remain at Odds over Project

Not every council member placed responsibility on Bally’s. Ald. Walter Burnett, whose ward includes the permanent casino site, said the council’s decision to approve VGTs had altered the environment established when Chicago selected Bally’s for its casino license.

The company also confirmed it made a $4 million annual payment to the city this week under its Host Community Agreement. The agreement provides for two annual $2 million impact payments following commencement of temporary casino operations.

The Sept. 9 hearing ended without a vote or resolution to the dispute. Bally’s continues to reassess the paused non-gaming portions of the development, while council members are pressing the company and the city administration for more information about financing, construction and the effect of neighborhood VGTs.

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