Nevada regulators seek answers on Bally’s bid to go private; company details Tropicana closure

March 21, 2024 9:20 PM
Photo: Shutterstock
  • Buck Wargo, CDC Gaming Reports
March 21, 2024 9:20 PM

The Nevada Gaming Commission approved licenses Thursday for Bally’s executives in connection with the Tropicana Las Vegas, which is set to close April 2. However, commissioners unsuccessfully sought answers on a bid by Bally’s Chairman Soo Kim’s hedge fund, Standard General, to buy the remaining stake in the company.

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Standard General owns a 23% stake in Bally’s as its largest shareholder and is seeking to buy the shares at $15 each. Its offer of $38 per share in 2022 was unsuccessful.

News of this latest offer came out after Bally’s executives appeared before the Nevada Gaming Control Board on March 6 to discuss the closure of the Tropicana. The demolition will pave the way for the construction of a $1.5 billion baseball stadium for the A’s and a new resort on the 35-acre site.

Commissioner Brian Krolicki told Bally’s attorney Dan Reaser that, since the Control Board meeting, there have been numerous comments, including by Chairman Kim, about the status of the company and consideration of going private. “When you have an outstanding offering like this, there’s very little we can say,” Reaser said of the offer by Standard General made on March 12.

Krolicki said he understands sensitivities about the information and what can be shared, but that the offer has been made public. He said he wanted to get as much information on the record about the status, calling it an “interesting time for the company.”

Bally’s, which carries more than $3.6 billion in long-term debt and reported a $172 million loss in 2023, told the Gaming Control Board that it’s seeking $800 million to finance its $1.7 billion casino in downtown Chicago. Kim has suggested that going private could address those issues.

“Unfortunately, there’s not much I can say outside of what’s been made public,” said Marcus Glover, Bally’s chief financial officer and executive vice president, who claims he’s removed from that matter. “The Board has formed a special committee to consider the offer and at some point will engage professional services to form a legal and financial advisory to help them through this process.”

Reaser pointed out that a previous offer by Standard General went through a similar process and was rejected by the board of directors.

A temporary casino at Medinah Temple in Chicago opened in September and had the third highest profit amongst 16 Illinois casinos in January. But it has fallen below expectations from the city of Chicago.

Glover said Bally’s is building momentum for the temporary casino, where revenues are increasing every month. The company will get access to its permanent site in July and begin site work then.

Ameet Patel, senior vice president and regional general manager of the western region for Bally’s who oversees the Chicago assets along with the Tropicana and its property in Lake Tahoe, said the Las Vegas closing for April 2 is on track. Bally’s held a job fair Tuesday for 700 displaced employees and will hold another on Friday. “The feedback we got from our team members has been extremely positive,” Patel said of the job fair that included gaming and non-gaming companies.

Reaser said the demolition plan for the Tropicana site is still being finalized.

The Tropicana will have about 600 employees on the closing date and will be down to 100 employees after that for 90 days, Patel said. Only engineering, maintenance, and security will be on the property after that date. About 70% to 80% of the 700 employees so far have the opportunity to work elsewhere, Patel said.

The Tropicana had about 1,000 employees in January when the closure was announced and the property started reducing games as employees found jobs elsewhere, Reaser said.

The Tropicana site is owned by Gaming and Leisure Properties that leases it to Bally’s for $10.5 million a year.