Bally's tries again with another IPO attempt for Chicago casino

Bally’s Corporation has announced an updated strategy to engage Chicago and Illinois residents in its ambitious $1.7 billion casino project after an earlier attempt to offer ownership shares exclusively to women and minorities stalled. On April 23, Bally’s unveiled a new plan, highlighted by an initial public offering (IPO) for its Bally’s Chicago subsidiary, which aims to open its doors in September 2026.

Following a previous IPO initiative that faced regulatory hurdles, Bally’s has now broadened its approach to attract potential investors. In the newly submitted prospectus to the U.S. Securities and Exchange Commission (SEC), the company underscores its commitment to local engagement through preferential allocations for Chicago and Illinois residents. This strategic pivot is designed to align with the company’s community-focused mandate, which requires a minimum of 25% of the project’s equity to be allocated to minority individuals and minority-owned businesses.

The prior attempt at an IPO was declared void when the SEC did not proceed with it, while Bally’s faced legal challenges from two Texas residents who claimed the exclusive offering was discriminatory. With the revised offering, Bally’s aims to create a more inclusive investment environment while adhering to its minority ownership commitments.

“We currently intend to provide preferential allocations to City of Chicago residents and Illinois residents during this offering,” the prospectus states, extending investment opportunities to residents in Florida, New York, and Texas as well.

While it remains to be seen how the SEC will react to this second submission, Bally’s has assured stakeholders that the new offering maintains compliance with the city’s minority ownership directives. Loop Capital Markets has been reappointed as the lead placement agent for this offering.

In its prospectus, Bally’s Chicago outlines a structured investment model featuring four distinct classes of shares—Classes A1 to A4—each catering to different levels of investment. The following share offerings are detailed:

500 Class A1 shares at $250 each
1,000 Class A2 shares at $2,500 each
1,000 Class A3 shares at $5,000 each
7,500 Class A4 shares at $25,000 each

Each share purchase comes with subordinated loans aggregating to $25,000, with varying loan amounts per class: Class A1 shares include loans, while Class A4 shares do not.

The prospectus elaborates on the financial structure: “In connection with this offering and the concurrent private placements, we intend to enter into an amended and restated subordinated loan agreement with Bally’s Chicago HoldCo, whereby various tranches of loans will be made available based on sold Class A interests.” It is important to note that investors will not possess any rights concerning the subordinated loan agreements. Additionally, a set of Class B interests exists but remains exclusive to Bally’s Chicago Holding Company LLC and is not part of the public offering.

Pre-IPO Activity: March Private Placements

Prior to the IPO announcement, Bally’s successfully executed private placements on March 10, selling a total of 1,185 Class A shares across all classes and generating $13.2 million in revenue. Investors in this private placement included those deemed ‘Accredited Investors’ under Regulation D of the Securities Act.

Furthermore, Bally’s sold an additional 2,800 Class A4 shares to Bally’s Chicago HoldCo LLC, raising questions about the total number of shares available in the forthcoming IPO.

Understanding the Investment: Key Considerations

Investing in shares offered through this IPO presents unique challenges. Unlike conventional stock options, these shares will not be listed on public exchanges, limiting liquidity and transferability. Potential investors should be particularly cautious given the stringent regulations governing these shares.

The prospectus clearly states: “You cannot freely sell your Class A interests. Each Class A interest is subject to strict controls that limit transferability.” Furthermore, the shares attached to subordinated loans cannot be sold until the loans are fully repaid, which requires a detailed understanding of the financial intricacies involved.

Ultimately, this investment is characterized by high risk, echoing concerns from its initial offering. While it aims to enhance access to investment opportunities for underrepresented groups, the speculative nature of such shares cannot be overlooked. The filing notes, “As there is no established trading market for our Class A interests, liquidity is limited, and holders may face challenges monetizing their investments.”

This refreshed IPO strategy from Bally’s Corporation exemplifies the dynamic transition within the gambling sector as it adapts to both regulatory landscapes and community needs, illustrating an evolving commitment to inclusivity in investment.