Online sports betting and prediction markets reshape gambling competition
Bally’s has spent the past several years expanding its casino footprint on the premise that physical gaming floors would remain central to gambling even as customers moved to phones and computers. An August quarterly filing from the company — which warned that its ability to continue operating may depend on financing and transactions still being negotiated — has now put that premise under sharper scrutiny.
The filing warned that Bally’s might violate liquidity and leverage requirements under its revolving credit facility within a year unless it secured new financing or completed planned transactions. The disclosure, which the company said was driven by accounting rules rather than management’s view of its prospects, marked a shift in how Bally’s has communicated with investors about its financial position.
Investors reacted sharply. Shares plunged 26% on the first trading day after the August filing and have recovered only modestly since, closing at $9.43 on Friday, about 33% below their prewarning level. The selloff came roughly two months after Fitch Ratings placed a negative outlook on Bally’s already junk-rated credit, citing heavy borrowing, cash-flow deficits and uncertainty about financing the company’s three big development projects.
“Leverage is not sustainable at current levels,” Fitch said in a June report.
In a follow-up statement, Bally’s pointed out that accounting rules prevented it from counting loans and asset sales still being negotiated until definitive agreements were signed. Company officials also told investors and analysts that pending steps would enable Bally’s to satisfy the disputed liquidity and leverage requirements.
“Bally’s fully expects that it will meet future funding needs,” the company said.
The current Bally’s grew out of Twin River Worldwide Holdings, a Rhode Island casino operator that bought the rights to the Bally’s brand from Caesars Entertainment in 2020 and adopted it as its own. Today the company owns 20 casinos in 11 states, plus online-gambling, lottery and casino interests overseas.
Behind the expansion is Soo Kim, a 51-year-old executive chairman who was born in Seoul, raised in Queens and built his career as a hedge-fund investor finding value others overlooked. Kim accelerated Bally’s expansion during the pandemic after seeing business surge when Mississippi casinos reopened in May 2020; concluding that government-imposed shutdowns would not suppress demand for long, he went on a buying spree while much of the industry retrenched.
“Mostly everything he’s done has worked out,” said Jeffrey Stantial, a gaming analyst at Stifel.
Kim’s three signature projects are testing that track record. The largest is a $4 billion resort overlooking the East River in the Bronx, scheduled to open in 2030 on a 3-million-square-foot site that previously operated as the Trump Golf Links at Ferry Point. Bally’s won one of three New York City casino licenses the New York State Gaming Commission awarded in December — licenses prized because the city of 8.6 million residents had no full-service casino until this year.
The company is also spending $1.7 billion on a permanent Chicago resort containing what will be the city’s largest casino, and $1.2 billion on a Las Vegas Strip hotel-casino complex on the same site as the 33,000-seat ballpark under construction for the Athletics, the former Oakland, Calif., Major League Baseball team scheduled to begin playing there in 2028.
Kim, in an interview with The Wall Street Journal before the going concern disclosure, argued that all three projects occupy niches competitors cannot easily fill. In Las Vegas, he envisions baseball fans walking through Bally’s restaurants, bars and entertainment spaces on their way to A’s games.
“It’s not like we’re dragging them into a casino,” he said. “We’re pulling them into an entertainment district.”
The Bronx, he said, could be Bally’s biggest prize because the New York region has an unusually small supply of casino gambling relative to its enormous population. Even after all three newly licensed casinos open, he argued, the market will still have far fewer gaming positions per resident than Illinois.
“The Bronx could be insane,” Kim said. “And that’s insane good.”
The Chicago project has already hit bumps. The City Council lifted Chicago’s ban on video-gambling terminals — slot and poker machines commonly installed in bars and restaurants — which Bally’s says is barred by its 2022 agreement with the city. Chicago officials say such a move is legal. Bally’s has threatened legal action and warned it will slow work on the planned hotel and other amenities if Chicago moves forward with its video gambling plan.
The financial pressure on Bally’s comes as new competitors reshape the gambling business from outside its casino walls. Americans are betting more than ever, but most of the growth is happening online rather than at traditional casinos. State-regulated sports betting revenue jumped 23% to nearly $17 billion last year, while online casino revenue climbed 28% to $10.7 billion, according to the American Gaming Association. Combined global monthly trading volume on Kalshi and Polymarket surged from less than $5 billion last September to nearly $24 billion in April, according to Pew Research Center. Traditional casino revenue rose 2.3%, to $50.9 billion.
“There’s no reason to think it’s a growth industry long term,” Stantial said.
Some analysts said Wall Street overreacted to the August disclosure. Barry Jonas, a gaming analyst at Truist Securities, said the company still has numerous ways to relieve the financial pressure — completing financing for the Bronx project, or raising money by selling investments or other assets.
“Soo has proven time and time again his ability to navigate the credit markets,” Jonas said.
Even Fitch identified some financial breathing room. Although the ratings firm flagged pressure on Bally’s revolving-credit facility, it noted that the company’s next bond maturity — a $750 million issue — is not due until 2029.
Still, the company’s leverage leaves it especially vulnerable if the economy falters. “You hit these levels of leverage and you start worrying: If we hit a recession, there are going to be challenges,” Jonas said.