Bally’s (NYSE: BALY.T) had its credit rating lowered from “B” to “B-” by Fitch Ratings, citing risks associated with its Chicago casino hotel project. This downgrade places the company just one step above the category where issuers face “substantial risk.”
Fitch assigned a “negative” outlook to Bally’s credit profile, partly due to risks tied to its upcoming $1.7 billion Chicago integrated resort—its largest project to date. Set to open in late 2026 as Chicago’s only casino, the venue still faces potential competition from gaming establishments outside the city.
"There is execution risk in the development of the Chicago projects, as well as other potential development opportunities,” notes the ratings agency. “Challenges include a saturated Chicago gaming market, the higher-than-average gaming tax rate, and the typical ramp-up of a new casino development.”
Being the only casino in the third-largest U.S. city could benefit Bally’s, but Illinois remains one of the biggest casino markets outside Las Vegas. The state has 16 land-based casinos, many within a short drive of Chicago.
Bally’s Chicago Casino Expected to Be Fully Funded
In 2022, former Mayor Lori Lightfoot’s administration awarded Bally’s the city’s sole casino license, sparking significant criticism and controversy.
Those concerns proved warranted as speculation regarding the operator’s ability to procure the necessary financing to complete the project — fears partially rooted in its low credit grade — lingered into last year. In a sweeping series of transactions, Gaming and Leisure Properties (NASDAQ: GLPI) — one of the largest owners of gaming real estate — provided $2.07 billion in capital to Bally’s, including $800 million to close a shortfall in Chicago.
While recent agreements have eased concerns about Bally’s financial stability, they also introduce long-term obligations, as the company will pay rent to GLPI for its Chicago casino and other properties. Leasing is common in the gaming industry, but Fitch warns that Bally’s could face risks in Chicago due to a potentially extended ramp-up period for the casino hotel, leading to a multi-year return on investment.
“Fitch estimates lease expenses will reach approximately $100 million annually once fully funded,” the firm noted. “However, the casino’s scale, prime city location, and strong demographics should drive win-per-unit metrics comparable to or exceeding similar Chicago properties.”
Bally’s Financial Cushion
Despite concerns, Bally’s has some financial flexibility. As of late 2024, the company held $171 million in cash and had access to an additional $620 million from an undrawn revolving credit facility. Additionally, it faces no major debt maturities until 2028.
Fitch highlighted that Bally’s could use its revolving credit for funding needs and may choose to sell the real estate of Twin River Casino in Rhode Island to GLPI. This move could help offset some of Bally’s financial commitments in Chicago.
“The agreed sale price is $735 million, with GLPI set to receive an annual rent payment of about $58.8 million, including escalators. While the sale could alleviate Bally’s financial burden for its Chicago project, the resolution of related covenants remains uncertain,” Fitch concluded.
