As Bally's troubles mount, City Hall has to make sure casino is a winning bet

With each passing month, the planned Bally’s Chicago casino seems less like the promised sure thing that will generate enough revenue to help solve the city’s pension crisis, and more like a potential bust.

Last week, Bally’s bosses said the gaming company is searching for $800 million to fund construction of the casino, planned for the Chicago Tribune’s Freedom Center site at Chicago Avenue and Halsted Street.

Bally’s officials said they are hopeful they can find a lender for the cash by summer. But they better get cracking: Demolition has yet to begin on the 30-acre Tribune property, and by state law, the $1.3 billion permanent casino has to be built and open by September 2026.

Chicago has so much riding on this casino’s success. We encourage City Hall and Mayor Brandon Johnson’s administration to hold Bally’s fully accountable and remind them of their responsibilities to the city and its taxpayers.

Falling stock prices, heavy debt

Bally’s cash problems are serious enough for the company to form a special committee last week to evaluate a $15-a-share buyout offer from New York hedge fund Standard General.

But two years ago, Bally’s stock was being offered at $33 a share, and a buyout bid at that price was rejected by the gamer — which should raise alarms about the direction in which the company is heading and its ability to build the Chicago casino as promised.

Standard General already owns about a quarter of Bally’s. The buyout would take the publicly-traded company private.

And while Bally’s stock price shrivels, its debt hasn’t. The company ended last year with $163 million in cash, but a whopping $3.6 billion in debt, according to executives in a recent quarterly earnings call.

The Bally’s cash shortage is only the latest in a bad run of luck that has plagued the casino project from the start, including last January’s revelation that a 400-room, 35-story hotel tower approved for the site has to be relocated to avoid damaging underground city water pipes.

Three months later, Bally’s and city officials are still figuring out where to place the tower.

This editorial board has argued that moving the hotel is a major change in the land use scheme that has already been approved by the Chicago Plan Commission and City Council, and that once a new spot is found, the whole package really ought to be sent to those two parties for re-approval.

Meanwhile, the temporary casino that opened last year at the old Medinah Temple, 600 N. Wabash Ave., is still in operation — but it’s an underperformer, generating $1.5 million in tax revenue, a far cry from the $3 million to $4 million monthly haul Bally’s initially promised.

There’s also this question: Can Bally’s, once built, stand up to the competition? The Wind Creek Chicago Casino and Hotel is set to open this summer in East Hazel Crest/Homewood, adding to the 11 casinos already operating in the Chicago/Northwest Indiana region. Bally’s, of course, would have the lure of being in the city. But gaming revenue is no sure thing, as the Civic Federation has pointed out: “While a casino may generate some budgetary relief, gaming revenues can be unreliable, particularly over the long run, and should be budgeted with caution,” Civic Federation researchers wrote.

Mayor’s office ‘has no concerns’

We’ve never been a fan of this Bally’s project, nor of the selection process under Mayor Lori Lightfoot that picked the company as the winner. We were surprised the Lightfoot administration just accepted Bally’s financial projections and site choice without any independent confirmation.

And as the Sun-Times reported last June, Nomura Securities — a city consultant selected to evaluate casino proposals under Lightfoot — had financial ties to Bally’s.

The Nomura/Bally’s relationship should have been thoroughly investigated by the Johnson administration, with the public being told the results. As yet, that hasn’t happened.

Even regarding Bally’s finances, the public has been greeted by virtual silence from City Hall’s Fifth Floor. Johnson’s office did tell Crain’s Chicago Business that “advisers have indicated to us that Bally’s is going through the normal financing process. Therefore, we have no concerns at this time.”

But City Hall should be concerned, and if so, not just privately. Especially when a billion-dollar project that is supposed to bring relief to taxpayers seems so fraught with trouble.

At this point, to simply trust that the Bally’s project will turn out right has the makings of a sucker’s bet.

Send letters to letters@suntimes.com.