Bally’s debt alert has taken center stage following its recent $3.2 billion sale of Gamesys to Intralot. This development has prompted Fitch Ratings to issue a Rating Watch Negative alert due to the increased EBITDAR leverage resulting from merging its interactive business with Intralot, along with risks from selling and leasing back Bally’s Twin River-branded casinos in Rhode Island.
Financial experts expect Bally’s to allocate revenue from this transaction towards debt reduction, particularly aiming at liabilities due in 2028, and the ongoing construction of Bally’s Chicago, a $1.7 billion megaresort. Nevertheless, Fitch has cautioned that any failure to alleviate leverage or release Twin River from its collateral could lead to a credit rating downgrade.
Bally’s Debt Alert and Its Impact
The potential downgrade hangs over Bally’s as it faces execution risks with its Chicago project and persistent pressures on U.S.-derived cash flow. The resolution of today’s Intralot deal could extend up to six months, adding an element of uncertainty.
The Bally’s and Intralot deal sees Bally’s acquiring $1.7 billion in cash and a majority share in a merged subsidiary, leaving Bally’s with a debt-to-cash flow ratio of 10 times. The sale of the Rhode Island casinos to Gaming & Leisure Properties Inc. (GLPI) for $735 million followed by a leaseback to Bally’s reveals further strategic repositioning.
Bally’s debt alert also draws attention to the need for lender consent to finalize the property deal or to refinance the credit facility. This remains a hurdle in easing the financial burden associated with Bally’s Chicago.
Market Dynamics and Future Prospects
While GLPI can purchase the casinos outright by October 1, 2026, Bally’s must manage a $58.8 million annual lease payment for Twin River. Fitch believes successful completion of Bally’s Chicago hinges on robust liquidity.
Bally’s aims to capitalize on its Chicago location’s favorable demographics, but faces a saturated market with higher tax burdens. The company has expanded its portfolio by acquiring undervalied properties and reinvesting strategically.
Despite promises, Fitch remains wary of Bally’s digital business, which continues generating negative cash flow due to intense market competition. The company’s goal of growing 11% in land-based gambling revenue this year depends on such acquisitions.
Continued monitoring of earnings from Bally’s Chicago and anticipated interactive revenue decline of 4% this year will be crucial. With $210 million cash on hand and a $135 million draw from a credit facility, Bally’s finances are under scrutiny as they navigate more challenges.
