A controversial minority set-aside for Bally’s Chicago has been redrafted into an initial public offering (IPO), announced April 23. Bally’s says it is “extending” its IPO “with a preference for residents of Chicago and other parts of Illinois.”
While the new criterion doesn’t exclude a pair of white Texas litigants from buying into the $1.7 billion Bally’s Chicago, it does complicate their path, given the Illinois-residency preference. Former congressional candidates Richard Fisher and Phillip Aronoff, both from Texas, sued Bally’s and the City of Chicago, claiming that their rights were being violated. The previous IPO was restricted to women and minorities.
In their court filing, Fisher and Aronoff asserted that Bally’s was affronting “the Civil Rights Act of 1866, the first Ku Klux Klan Act, and years of Supreme Court precedent.”
Bally’s was also sued by the conservative American Alliance for Equal Rights, which claimed that “a race-based stock offering is illegal and this court should declare it as such.” Another litigant was the similarly conservative Wisconsin Institute for Law & Liberty.
However, Damon Jones of the University of Chicago’s Harris School of Public Policy had already counseled the minority community against investing in Bally’s. He told The TRiiBe, “When people have really good investment opportunities, they don’t advertise them. They keep them to themselves. [As] a general financial rule, if someone is advertising it to you, question it.”
Crain’s Chicago Business characterized the revised IPO as Bally’s “making a tweak it’s wagering will win over both progressive Chicago officials and a Trump administration hell-bent on crushing diversity requirements.”
Complicating the situation, Bally’s host-community agreement with Chicago mandates that one quarter of ownership in Bally’s Chicago go to “minority individuals and minority-owned and controlled businesses.” Failure to comply would place Bally’s in breach of contract with the city.
But Fisher and Aronoff can take advantage of a loophole in the prospectus, one that permits residents of Texas, New York, and Florida to invest in the casino. This is consistent with the initial IPO (which wasn’t approved by the Securities & Exchange Commission).
The prospectus further states, “We intend to provide preferential allocations … to City of Chicago residents and Illinois residents during this offering.” Shares of Bally’s Chicago will be offered in four tranches: a limited (500-share) class of $250 each, as well as in denominations $2,500, $5,000 and $25,000 (the largest class).
During the first IPO, which closed January 31, Bally’s sold only $13.2 million in shares out of a desired $250 million.
Nonetheless, Loop Capital Markets CEO Jim Reynolds stated, “We’ve seen interest from thousands of people who appreciate having access to this unique investment opportunity in a one-of-a kind casino and resort project in the city of Chicago.”
Added Kim, “We take pride in having attracted a substantial amount of interest in ownership from women and minority groups. To make this investment available to even more Chicagoans who make this City [sic] so great we are extending our investment opportunity. … We remain steadfast to our commitment to the City of Chicago and the development of a thriving community.”
