Bally's "resetting the pace of construction" for Chicago casino amid City Hall dispute

Bally's is slowing construction on parts of its permanent Chicago casino development in the River West neighborhood, citing a growing dispute with the city over video gambling terminals.

The move raises concerns about what it could mean for the future of the casino and the thousands of workers connected to its construction.

Bally's said the permanent casino is still expected to open early next year, but the company is now "resetting the pace of some construction."

While construction on the casino appeared to be continuing as normal on Monday, Bally's is halting work on most of the non-gaming parts of the $1.7 billion complex — including the hotel, restaurants and events center — as it fights the city over video gambling terminals.

In a statement, Bally's said in part: "The potential for an uncontrolled proliferation of video gambling terminals is in breach of the City's commitment not to expand gaming in the Host Community Agreement."

Over Mayor Brandon Johnson's objections, the City Council last year lifted the city's ban on video gambling, banking on $6.8 million in new revenue.

The legalization and expansion of video gambling terminals in Chicago is part of the $16.6 billion budget written by City Council opponents of Mayor Brandon Johnson, which passed the city council and which the mayor allowed to go into effect without his signature last year. The revenue from video gambling – along with an increase in the city's plastic bag tax, overhauling the tax of off-premise liquor sales and finding new advertising opportunities – were the councilmen's alternative to Johnson's proposed corporate head tax.

Bally's argues that the legalization of video gambling in Chicago violates its 2022 agreement with the city.

"The potential for an uncontrolled proliferation of video gambling terminals (VGTs) is in breach of the City's commitment not to expand gaming in the Host Community Agreement (HCA) and creates uncertainty that could be harmful for Bally's Chicago prospects," Bally's said in its statement Sunday.

However, Ald. Bill Conway (34th), whose ward is adjacent to the project, argued Bally's is violating that agreement by slowing construction on the casino.

"The host community agreement that Bally's has signed does not say that they can, you know, simply abandon the project if there's another gambling motive here," Conway said. "It does give some of them some ability to perhaps renegotiate it, but it doesn't involve stopping instruction or abandoning the project at all."

Bally's wants rollout of video gambling in Chicago stopped, fearing that allowing legalized video gambling at bars, restaurants, and other businesses will cut into casino profits.

Conway said dispute over video gambling might not tell the whole story.

In its latest annual report with the U.S. Securities and Exchange Commission, the company reported nearly $5 billion in debt as of the end of last year. In that report, Bally's warned that its debt could limit its "financial flexibility."

"I don't think Bally's is close to bankruptcy or anything like that, but it's clear they're facing significant financial pressures, and that may really be what's at play here when we're looking at the video gambling dispute in light of the financial pressures that Bally's is facing across its company," Conway said.

Bally's isn't the only one with a lot at stake. The city is counting on the permanent casino complex to generate approximately $200 million in annual tax revenue to help shore up the city's employee pension funds.

Conway said the financial impact of this project goes well beyond the casino itself.

"The casino itself can be a real boom to Chicago's underfunded pensions if it does, assuming it does come to fruition, but you know, certainly they place it in jeopardy by seemingly trying to delay or abandon the project," he said. "I think it's in everybody's interest for the casino to be successful, based on the fiscal pressures that we face."

Bally's said it hopes for more productive talks with the mayor's office and City Council. The company has not said when it now expects the hotel, restaurants, event center, and other non-gambling portions of the casino project to open.

"We do not take this lightly because of the potential impact on many of the 1,500 union tradespeople who have been working hard to build Bally's Chicago," Bally's said.

The mayor's office and Ald. Walter Redmond Burnett (27th), whose ward includes the permanent casino, did not immediately respond to requests for comment.