Bally’s Credit Downgrades Won’t Keep Company From Pursuing Petersburg Casino
Posted on: April 2, 2024, 05:38h.
Last updated on: April 3, 2024, 10:00h.
Rhode Island-based Bally’s Corporation suffered its third credit rating downgrade this week when Fitch Ratings on Monday lowered its outlook on the casino company from “B+” to “B.”
The noninvestment grade implies Bally’s has a “negative” outlook because of its murky financial situation. The company is scrambling to raise $800 million to fund the construction of its $1.1 billion casino resort scheme in downtown Chicago at the Freedom Center.
Along with Chicago, Bally’s wants to build a smaller casino in Pennsylvania near the Penn State University campus. Bally’s officials have also expressed interest in building a casino in Virginia should an opportunity arise by way of Petersburg.
Bally’s bid on the Richmond casino opportunity in 2021, but wasn’t chosen by local officials in the Virginia capital. Richmond’s casino plan was ultimately rejected by city voters.
Legislative efforts have since relocated the Richmond casino license about 25 miles south to Petersburg.
The Virginia General Assembly passed legislation last month to allow the Petersburg City Council to field proposals for a casino resort, but the bill hasn’t yet been signed by Gov. Glenn Younkin (R). The governor has until April 8 at 11:59 pm EST to act on the measure.
Bally’s Remains Interested in Petersburg?
Fitch joined its “Big Three” credit rating counterparts, Moody’s and S&P, in lowering its grade for Bally’s. Despite the demotions, Bally’s brass told The Progress-Index that the rating adjustments won’t impact the company’s ability to participate in a competitive bidding process should one occur in Petersburg.
We remain confident in our proposal to construct a world-class casino resort in Petersburg,” a Bally’s spokesperson wrote in an email to the Petersburg news outlet.
“The success of this proposal, however, is contingent upon our selection by the city and the city’s voters’ approval via referendum in November,” the Bally’s release continued. “We are optimistic and look forward to the next steps in the process.”
Though Bally’s might still bid on the Petersburg casino license should the city become authorized to conduct a bidding period, the city council might be smart to go with a competitor due to the company’s situation.
It’s unknown at this juncture how many companies might bid on a Petersburg casino, but Maryland-based Cordish Companies has expressed interest. Cordish floated a $1.4 billion mixed-use development in Petersburg in late 2022 that would include a casino resort. The project would be built over many years through several construction phases. ??
Youngkin Mum on Casino Bill
Youngkin is reviewing hundreds of bills the Virginia General Assembly passed during its 2023 legislative session, with one being Senate Bill 628. The legislation seeks to qualify Petersburg as a host city for a commercial casino.
Virginia has four other cities where casinos are allowed, including Norfolk, Portsmouth, Bristol, and Danville.
There were recent rumblings in Richmond that the governor might use the Petersburg casino bill to rally support for his Potomac Yard Entertainment District. But after billionaire Ted Leonsis last week agreed to keep his professional sports teams in Washington, DC, effectively ending the Potomac Yard project, that bargaining chip is off the table. ?
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Bally's is hoping for better luck in Petersburg than they had three years ago when Bally's was eliminated from consideration for their planned $650 million Bally's casino resort in Richmond, Virginia. Bally's was not pleased with that decision as reflected in this statement quoted from a casino-industry news article on April 21, 2021. "Despite the lack of public support, Bally’s still wasn’t expecting the result. Its President and CEO, George Papanier, said that the company was “disappointed and surprised” by the decision. He added that the company is “deeply committed” to the project and that it was willing to provide “the largest financial package” to the city. It won’t be able to dispute the decision, but Papanier added that Bally’s isn’t going to hold a grudge." Who would approve their future financing plan to build a "world-class" Bally's casino in Petersburg, VA? How about the same question regarding their financing plan for the permanent Bally's Chicago flagship casino resort hotel in the Windy City? Will Bally's be disappointed and surprised again? Let's watch closely -- but don't be surprised at the decision!
The gambling industry is consolidating and Bally's was late to the game. Bally's leadership knows that the weaker players like themselves will eventually be forced out of the market, so they are desparate to expand at all costs. Their reckless efforts to expand into third-tier markets like State College and Petersburg when they are already overextended in Chicago, New York, and Las Vegas will only further dissipate the company's already over-extended resources. This company is circling the drain... if I was an investor in Bally's, I would start looking for ways to cut my losses....
Unbelievable that a casino is proposed to be built within 4 miles of this major university campus -- and this despite overwhelming public outcry against the proposal. Bally's credit rating is slipping -- maybe the casino-based gambling industry is not as profitable as it used to be. Hopefully the profitability will continue to decline and Bally's can stop trying to ruin neighborhoods, small town communities, and university campuses by putting up casinos. If the casino is indeed built in the dying, leaky-roofed Nittany Mall--a 4-mile straight shot from the University Park campus, it will likely and hopefully not succeed. Not a great bet by a corporation that makes its fortune on gambling.
Bally's website mentions just two future Bally's brick-and-mortar casinos. Nothing is mentioned about Petersburg. They proudly mention Bally's Chicago and the first land-based Bally's casino in Pennsylvania planned for inside the nearly vacant Nittany Mall in State College, PA. The estimated cost of that planned Pennsylvania casino is $120 million. The State College casino is rarely mentioned when Bally's future financial commitments are described in any news article, so thank you Devin for including it today! The construction of the Bally's Pennsylvania casino might be a bit easier since the casino location is INSIDE a former Macy's department store. But wait! Legal wranglings over this Bally's project began in July 2021. The decision to approve or deny the actual ISSUANCE of that Bally's Pennsylvania casino license awaits a decision by the Pennsylvania Supreme Court at a date yet undetermined. The legal battle involves a lawsuit filed against the winning bidder by the non-winning bidder. At this point, some analysts remain doubtful if Bally's can find financing for that $120 million casino in a mall just four miles from the main campus of Penn State. Seems like a lot to spend just to put a small Bally's casino into an old Macy's store. Bally's should recalibrate that decision and remember that today's college students mostly enjoy betting on sports via their smartphones. They don't look for slot machines and hope to hit elusive jackpots to brag about to their classmates. Their peer group pals would literally roll their eyes about that unlikely dream if it was mentioned out loud. Those same students' meager discretionary spending dollars would not last for 10 minutes with current casino table game minimums. Then it's time to call Mom or Dad again. Does this planned $120M casino in State College look like a wise business decision by the small inner circle of Bally's decision-makers? Not even close!