Bally’s said Wednesday it has the financing to deliver a $1.7 billion casino and entertainment complex in River West, but slowed construction of “non-gaming elements” of the project to protest video gambling terminals with potential to “cannibalize” casino revenue.
An executive team representing the gambling giant told the City Council’s License Committee that it would be “irresponsible to go forward” with all of the promised bells and whistles without knowing how much gambling competition Bally’s would ultimately face.
The decision to lay off 136 employees and halt construction of roughly 12% of the project was portrayed as a re-set — and not a violation of Bally’s host agreement with the city.
Bally’s made its $4 million annual lump-sum payment to the city on Tuesday as a sign of its commitment to honor the agreement.
The Illinois Gaming Board has approved 65 applications for Chicago video gambling terminals. But Bally’s President and Interim Chief Financial Officer George Papanier said company officials have “no idea where that number would end up.”
“That could, in effect, be adding several casinos within the marketplace where we thought we had a form of exclusivity in,” Papanier said. “As a result of that, we’re re-evaluating everything outside of the HCA agreement to determine whether it’s fiscally responsible for us as a company to continue to invest at that level without the type of return that we would expect.”
The $1.7 billion casino project has encountered financial and logistical challenges since Bally’s was selected to build Chicago’s casino in 2022, including an $800 million “funding gap,” changes to its hotel plans and delays that pushed the permanent casino’s expected opening into 2027.
But the revised deadline will be honored, Papanier said.
“We are going to deliver the event center, 100 rooms of the hotel and the required food and beverage components,” Papanier said.
“The components that are being reset and re-contemplated are being considered all in conjunction with the proliferation of VGTs… There’s anywhere from a 30 to a 50% impact on top line revenue… It would be irresponsible for us to trudge forward with components that are not required until we understand what the landscape looks like.”
Downtown Ald. Brendan Reilly (42nd) has long opposed the selection of Bally’s and the decision to build the casino complex in River West. He condemned what he called now-former Mayor Lori Lightfoot’s eleventh-hour “switcheroo” that designated Medinah Temple as the site for Bally’s temporary casino.
Like a prosecutor, Reilly asked Papanier whether Bally’s was slowing construction because it “lacks confidence in the Chicago market or because it lacks confidence in its ability to finance the entire project.”
“The answer to that is neither,” Papanier said. “Our concern around the cannibalization of VGTs and what they can do… what they’ve proven to do across the state, is the true concern here and why we’re actually discussing a reset as opposed to delivering or over-delivering every component and then some that was required” by the host agreement.
Reilly didn’t buy it. Reading from a recent earnings call, Reilly quoted Bally’s own lender as saying that potential competition from video gambling terminals in Chicago was already factored into the gambling giant’s earning assumptions.
“We all know that you were struggling to cobble together money. You have an incredible debt load and you’re trying to blame all of this on…VGTs — where not a single machine is lawfully operating today yet there are thousands of [illegal] sweepstakes machines doing that,” Reilly said.
Reilly unleashed most of his anger at Mayor Brandon Johnson’s top aides: senior mayoral adviser Jason Lee and chief of staff Cristina Pacione-Zayas.
They were invited to Wednesday’s hearing, but chose not to appear. Instead, they sent Johnson’s chief financial officer, who’s been on the job for a few weeks.
“Hooray for public transparency. If I’m a taxpayer in the city of Chicago, I’m disgusted,” Reilly said. “The mayor is not doing his job enforcing the [host agreement]. They’re allowing folks to play games with union jobs, people’s livelihoods and honestly, our police and fire pensions — which require this casino to be incredibly successful.”
Ald. Marty Quinn (13th) sounded exasperated. “This is a circus. Congratulations Bally’s for being part of a circus,” Quinn said.
License Committee Chair Debra Silverstein (50th) closed the three and a half hour hearing with a promise to meet again — this time with Lee and Pacione-Zayas on the political hot seat.
“It’s very disappointing, very embarrassing, very insulting — any adjective you can think of — that we don’t have representation from the mayor’s office here today to answer our questions,” Silverstein said.