Question of the Day - 30 March 2025

Long-time business writer, LVA blogger, and CDC Gaming reporter, David McKee, replies.

Thank you for asking. It’s difficult to transcribe gales of hysterical laughter, so I’ll attempt a sober response. To employ the Socratic method: Has Bally’s Chairman Soo Kim lost his mind?

But seriously, folks, It’s hard to know where to begin, so many things are wrong with this idea. For starters, Bally’s Corp. doesn’t have a pot in which to piss. It has liquidated its U.S. casinos to Gaming & Leisure Properties Inc., in an attempt to prop up its $1.7 billion Chicago megaresort project. And even that's largely being financed by GLPI, which Kim also expects will pay for the (as-yet-unfunded) replacement for the Tropicana Las Vegas. GLPI executives have other ideas.

So to keep score, Kim has two projects — only one of which is presently in progress — that his company can’t afford. He’s also pitching New York City on a multi-billion-dollar megaresort to arise on the former Trump Links in the Bronx (across the street from lower-income housing, the Throggs Neck Houses, by the way). Leaving aside Bally’s penury, it has multiple better-financed competitors for that Big Apple casino concession. Also, it was overwhelmingly voted down by the local community board after a raucous meeting in which Kim was heckled and drowned out. Several additional appeals are possible, but Bally’s is a long-shot candidate in Gotham.

Perhaps it’s just as well. The company is groaning under $3.3 billion in debt, has roughly $175 million cash on hand, and has lost the confidence of Wall Street. It has no exit strategy, except for Kim to repeatedly invoke the magic word “Chicago,” as though the September 2026 opening of Bally’s Chicago will miraculously solve all of Bally’s problems. 

It almost surely won’t, judging by the underperformance of Bally’s Casino, a temporary facility in downtown Windy City's Medinah Temple. This Second City effort has achieved only moderate gambling revenue, location notwithstanding, and has failed to make a dent in any of the suburban casinos. Even so, Kim recently proclaimed that the permanent casino would eat everybody’s else’s lunch, a boast rooted in nothing.

Throughout his ownership of Bally’s, Kim has shown a lamentable inability to focus and follow through. For instance, when entry to the Japanese casino market was both formidably difficult and unimaginably expensive (MGM Resorts International is spending an unprecedented $12 billion on its Osaka casino), Kim was making noises about attempting a run at Japan.

As with so many Kim misadventures, one has to ask our mom’s favorite and withering question: Using what for money? Which brings us to Star Entertainment.

True, Kim offered only $157 million for Star, which means Bally’s could pay for the deal out of cash on hand. (Its borrowing power is zilch.) Shareholder Bruce Mathieson has offered to kick in another $31 million to help swing a sale. However, even a combined $188 million seems insultingly low for Star’s portfolio of assets. Star sold its Sheraton Mirage in 2023 for $192 million, just for context. 

Star owns three megaresorts in Australia, including seven hotels. Kim proposes to buy them for pennies on the dollar. To put Kim’s offer in perspective, Salter Bros. is in talks as I write this to extend Star $750 million in credit. Match that, Soo. (Spoiler alert: He can’t.)

I have nothing but respect for Bally’s CEO Robeson Reaves, CFO Marcus Glover, and President George Papanier. They’re talented executives saddled with an unreasonable boss who’s always either in retail therapy or haring off after the next shiny object. However, unless we’re very much mistaken, none of those gentlemen has worked in the Australian leisure industry, nor does Bally’s have any boots on the ground Down Under.

That’s a big problem, because of a severe corporate-culture problem at Star, which got caught laundering money for various unsavory characters it coveted as high rollers. Bally’s would be at the mercy of such talent as Star has, all of whom must be looked askance in the wake of Star’s deep regulatory problems, which extended to the highest echelons of the company.

By the way, “high rollers” and “Bally’s” intersect to form a null set. So that's another challenge for Kim’s team. They’d have to recalibrate their skill set to encompass high-end/high-risk casinos, rather than the bargain-friendly joints for which they're known.

To make matters even worse, Star has been losing money for three years and was recently delisted for insolvency. Kim proposes to hitch his leaking rowboat to a sinking battleship. Bally’s would be lucky not to get sucked into the Star undertow. The brightest hope is the dim prospect that, since the Australian government views Star as too big to fail (it's part of a casino duopoly Down Under), it won’t let a total collapse take place. When a government bailout is your fallback position, you’ve got a major problem.

Lastly, Star is due to be fined (probably well in excess of $100 million) for its misdeeds and all its casino licenses are currently suspended. That’s hardly a scenario anybody wants to walk into, which may explain why Bally’s is the only fish at the table. 

It would be miraculous if Bally’s survives its Chicago crisis and Australia is a bridge way way too far. But reasoning with Soo Kim seems to be about as fruitful as King Canute’s command that the ocean’s waves cease crashing to shore.