Bally’s Chicago IPO Faces Legal Challenges

Bally’s Corporation has published an update on its Chicago Casino plans, warning that the planned initial public offering faces certain legal headwinds, which could incur “significant costs.”

Many Are Unhappy with the Offering’s Restrictions

For context, the development of Bally’s Chicago Casino has long been marred by certain financial concerns. Because of that, the company seeks an initial public offering that would see it sell a 25% interest in the property.

However, Bally’s IPO plans are to sell shares strictly to people of color and women. This decision to exclude white men has been deemed discriminative by many investors who have critiqued the company’s approach.

As a result, legal challenges have emerged, which could potentially incur significant costs, according to the company. For context, the lawsuits in question were filed by the Wisconsin Institute for Law & Liberty against Bally’s Chicago Casino, the Illinois Gaming Board and the City of Chicago itself. Mark Glennon also filed a separate complaint against the same entities.

In a filing with the Securities and Exchange Commission (SEC), the company said that it expects to expend a lot of time and resources to defend these lawsuits – an issue that would be only exacerbated if similar lawsuits were to be filed in the future.

In addition to that, the lawsuits will have the added detriment of diverting the attention of the company’s management.  

IPO Failures Could Spell Trouble for Bally’s

Bally’s IPO plans were delayed after a troubled IPO attempt two years ago. Although the SEC did not clarify why it declared the IPO ineffective, this was a major setback for the company’s Chicago plans.

In any case, the new IPO prospectus does not seem much different from the one two years ago and seems to still include the same restriction. However, Bally’s admitted that it could be potentially required to seek investors or transferees who do not meet the criteria or, in a worst-case scenario, terminate the IPO.

In addition to that, the Host Community Agreement could also be modified or terminated. In the latter case, Bally’s could lose its license to operate a casino in Chicago.

Bally’s Highlighted Its Commitment to the Bronx Area  

In the meantime, Bally’s is continuing the fight for one of the three downstate New York licenses. The company once again highlighted its commitment to serving as a driver of positive change in the Bronx area by saving a Catholic all-girls school from certain closure.

The move was widely praised by local leaders who thanked the casino company for its incredible contributions.

Elsewhere, Bally’s just entered into a binding term sheet with the Australian gaming giant Star Entertainment Group, setting out to assume control of the latter company and help it resolve its financial hurdles.