Bally's Finally Buys Standard General Operator for $4.6 Billion: Deal Prospects Analysis

Standard General, a hedge fund overseen by Bally's Chairman Su Kim, has successfully negotiated the acquisition of the casino operator after several years of attempts. The deal, which was announced on July 25, 2024, is valued at $4.6 billion. According to a statement from Bally's, Standard General will buy the company's outstanding shares at $18.25 each, reflecting a 71% premium compared to the 30-day volume-weighted average price per share on March 8, the last trading day before a previous offer of $15 per share was made public. The hedge fund has also committed $500 million to support the transaction. 

Soo Kim, Bally’s chairman and managing partner at Standard General, expressed that this acquisition offers Bally’s shareholders a substantial cash premium and assures them about their investment's value. He also noted that shareholders who choose to retain their shares will have the chance to benefit from the long-term growth prospects of the expanded equity portfolio.

Bally’s CEO Robson Reeves stated that the company is well-prepared to advance its growth initiatives for shareholders, which encompass both the interactive and land-based sectors. 

However, not everyone shares this optimism. Barry Jonas of Truist published a research note downgrading Bally’s shares following the announcement of the deal. He pointed out that Bally's stock reached a high of $70 in March 2021 but has since declined, attributing the downturn to factors such as "NA Interactive’s failed strategy, changes in leadership, and high leverage (6.3x net debt on 2025E EBITDAR)." The company is currently leveraging debt across various markets, including a significant retail deal in Chicago, the construction of a new casino for the MLB's Oakland Athletics in Las Vegas, and a new land-based casino in Pennsylvania. 

Bally's to merge with QC&E, expanding portfolio to 19 casinos

As part of the agreement, Bally's will merge with The Queen Casino and Entertainment (QC&E), a regional operator also owned by Standard General. QC&E manages four casinos across three states, including DraftKings at Casino Queen in East St. Louis, Illinois, Queen Marquette in Marquette, Iowa, and both Queen Baton Rouge and Belle of Baton Rouge in Louisiana. 

Bally's has already established a presence in Shreveport through a recent partnership with the real estate investment trust Gaming and Leisure Properties (GLPI). Following the agreement with Standard General, Bally's will own and/or operate three of the 20 licensed casinos in Louisiana. 

With the addition of Bally's assets, the newly formed company will manage a total of 19 casinos in 11 states and will continue to be publicly traded. Shareholders will have the option to retain their shares through a rollover provision, with two shareholders, Sinclair Broadcast Group and Noel Hayden, already choosing to do so. This rollover will ensure that at least 47% of Bally's outstanding shares will be integrated into the new entity.

The transaction is anticipated to finalise in the first half of 2025. Bally's has announced that it will release its second-quarter results by July 31 but will refrain from discussing the merger during its upcoming investor meeting.

Three tries and the deal finally happened

The deal was approved only on the third try — Standard General has been trying to buy Bally's for three years. The first offer was made at $38 per share in January 2022. Shortly thereafter, Bally's rejected that price. Then-CEO Lee Fenton claimed that the company had a "significant opportunity."

The company's shares steadily declined over the next two years. The fall in the stock led to a lower-priced offer in March. Bally's formed a special committee to consider the proposal. Ultimately, the company's management decided that now was the right time to accept the offer.

Jaimin Patel, the committee's chairman, said on Thursday that "it was determined that the cash consideration from Standard General would provide meaningful and immediate value to shareholders."

Bally's Expands Chicago and Las Vegas

Overall, it’s been a busy month for Bally’s. On July 12, the company announced a massive deal with GLPI for a total of $2.07 billion in funding, including $940 million for the Chicago casino development. GLPI purchased the property for $250 million, and Bally’s will lease it for a minimum of $20 million per year.

The operator also agreed to sell and lease Bally's Kansas City and Bally’s Shreveport casinos for $395 million. The annual rent for those properties will start at $32.2 million. GLPI will have the right to buy and lease Bally’s Twin River Lincoln casino in Rhode Island for $735 million through 2026. The annual rent will be $58.8 million.

With Chicago funding in hand, Bally’s has now cleared its biggest hurdle. The company previously said it was $800 million short of funding for the project, which drew sharp criticism. Chicago Mayor Brandon Johnson once expressed scepticism about Bally's ability to complete the deal. But now the project appears to be back on track, with a fall 2026 opening.

Progress is also being seen at the Tropicana site

In addition to Chicago, Bally's is also moving forward with the demolition of the Tropicana Las Vegas.

On July 11, Bally's filed an application with Clark County for a permit to demolish the long-standing property. According to the Las Vegas Review-Journal, the application sets a tentative deadline between September 30 and October 8. GLPI owns the 35-acre site where the Tropicana sits, and Bally's purchased the right to operate a business on the property through 2021 for $148 million.

Once the building is demolished, construction will begin on a $1.5 billion stadium that is expected to be completed in time for the 2028 MLB season. The stadium will occupy nine of the 35 acres of the site. Bally's gave up the casino in exchange for the right to build a new casino on the remaining property.

By the time the stadium is completed, Bally's Chicago will have been in business for about two years. If the profits are satisfactory, further work with GLPI may be possible. Bally’s temporary casino at Medinah Temple has generated $62.7 million in adjusted gross revenue this year, the fourth-highest total in the state during that period.

Bally’s also has major commitments in New York, where it is among 11 contenders for three casino licences in the downstate.

Bally’s launched its Bally Bet digital platform in New York City in July 2022. Since then, the company has signed a 20-year agreement with New York City to lease the former Trump Golf Links site in the Bronx. The company is owed $60 million in rent. As part of its plan, Bally’s wants to give up 17 of the 192.5 acres of land for the casino project.

New York City officials are scheduled to select three licensees in 2025.