Chicago rolls the dice on Bally’s. Hedge fund owner Soo Kim says the rebranded casino company will deliver. – Chicago Tribune

When Mayor Lori Lightfoot named Bally’s the winner of a yearlong vetting course of Thursday, it ended an intense competitors that noticed 5 proposals from 4 growth groups narrowed down to at least one Chicago on line casino.

The Bally’s proposal to construct a $1.74 billion on line casino complicated in River West is anticipated to generate $200 million in annual tax income for the town, remodel a 30-acre industrial website right into a bustling leisure vacation spot and ship the Chicago Tribune printing plant packing from its longtime residence alongside the Chicago River.

For Soo Kim, the 47-year-old chairman of Bally’s and founding accomplice of New York hedge fund Customary Normal, the on line casino firm’s largest shareholder, staking turf in Chicago will likely be no much less transformative.

“This issues to our firm,” Kim mentioned Friday. “That is one thing that will likely be our most necessary property by far.”

As soon as a Chicago-based on line casino operator, the Bally’s identify was bought in 2020 by Twin River Holdings, a publicly traded Rhode Island firm, which owns and manages 14 casinos throughout 10 states. In June 2021, Bally’s made its entree into Illinois with the $120 million acquisition of Jumer’s On line casino & Resort in Rock Island, which it renamed Bally’s Quad Cities.

Kim is trying to make Chicago the flagship of Bally’s 2.0, a hodgepodge of properties from Nevada to Atlantic Metropolis, New Jersey, assembled largely in the course of the darkest days of the pandemic.

“Throughout COVID, we went procuring and we purchased 10 casinos,” mentioned Kim. “We purchased the model identify as a part of one of many purchases, and that actually modified our firm in an enormous method.”

Born in Korea and raised in Queens, New York, Kim has been inserting more and more huge bets on funding alternatives since graduating from Princeton. He began his profession as an analyst at Bankers Belief in 1997 earlier than working at a number of giant hedge funds. In 2007, he launched Customary Normal, a New York-based hedge fund that has centered on TV stations, casinos and different distressed properties.

Customary Normal purchased into the predecessor on line casino firm, Twin River, after it emerged from chapter in 2011. Kim joined the board in 2016 and have become chairman in late 2019 because the hedge fund constructed up a 22% stake. A January bid by Customary Normal to purchase out the opposite shareholders at $38 per share, which valued Bally’s at $2.07 billion, was rejected by a particular committee of the board Thursday.

“It’s over,” Kim mentioned. “We made a bid. We thought that the inventory was low cost. They mentioned they don’t wish to promote at that worth.”

Through the pandemic, the on line casino firm went on an opportunistic shopping for spree as casinos quickly shuttered and valuations plummeted. In 2020, Twin River purchased the growing older Bally’s on line casino in Atlantic Metropolis from Caesars Leisure for $25 million, and likewise acquired the rights to the Bally’s identify. The rebranded Bally’s has since invested $100 million in renovating the Atlantic Metropolis property, however creating the proposed Chicago on line casino represents a a lot larger dedication — and alternative.

Bally’s reported $548.3 million in income and a web earnings of $1.9 million in the course of the first quarter, in response to monetary outcomes introduced Thursday. The corporate projected income between $2.4 billion and $2.5 billion for the yr.

In 2021, Bally’s generated $1.32 billion in income and a web lack of almost $72 million.

The town and its on line casino marketing consultant, Las Vegas-based Union Gaming, projected that Bally’s Chicago on line casino would generate $816 million in annual adjusted gross receipts — the cash saved after winnings are paid out — by yr six, or roughly a 3rd of the chain’s complete present gaming income.

Rivers On line casino Des Plaines, the state’s highest-grossing on line casino, generated $458 million in adjusted gross receipts final yr, in response to the Illinois Gaming Board.

The Chicago on line casino can be the biggest within the state, with a capability of 4,000 gaming positions — twice these allowed at some other on line casino in Illinois. It could additionally carry with it the very best on line casino tax fee within the state, at about 40% of adjusted gross income.

Kim is assured Bally’s will hit its targets, however some analysts are skeptical.

“I don’t suppose these projections will likely be met,” mentioned Alan Woinski, president of Gaming USA, a Florida-based business analyst.

Woinski mentioned metropolis casinos have had a tough observe document lately, and that areas on the outskirts of cities usually do higher. He cited “ease of entry” as the primary consider a on line casino’s success.

Chris Grove, a accomplice with Eilers & Krejcik Gaming, a California-based analysis and consulting agency, mentioned the potential market in Chicago justified the town’s income projections. However Grove, a River North resident, likewise cautioned that the Bally’s location could restrict the upside.

“I believe there are some critical questions that also must be answered about how you progress folks out and in of that space effectively in a method that looks like a optimistic expertise to them,” Grove mentioned. “And as a neighborhood, I don’t see apparent solutions to that problem with infrastructure as it’s.”

The town is planning intensive roadwork enhancements on the website, together with widening the Chicago Avenue bridge to alleviate the prevailing visitors bottleneck. The necessity to get a bounce on that undertaking derailed Bally’s plans to make use of a former Tribune Publishing warehouse at 700 W. Chicago Ave. as its non permanent on line casino whereas Freedom Middle is demolished and the everlasting facility is constructed.

On the metropolis’s urging, Bally’s signed a letter of intent to make use of the landmark Medinah Temple constructing in River North as its non permanent on line casino. Kim mentioned Friday he would favor the Chicago Avenue website and was “not loopy” about switching to Medinah Temple. Bally’s will proceed to search for alternate options for its non permanent on line casino, he mentioned.

In March, Lightfoot narrowed down 5 proposals to a few finalists: Bally’s on the Chicago Tribune Publishing Middle, Rivers at The 78 within the South Loop and Laborious Rock on the proposed One Central growth on the Close to South Facet.

Along with an upfront fee of $40 million, the town cited Bally’s as the one bidder that doesn’t have already got a on line casino property within the Chicago space, making it extra more likely to function independently and maximize revenues for the Chicago on line casino.

Florida-based Laborious Rock Worldwide operates greater than a dozen casinos, together with a Laborious Rock On line casino in Gary and a just lately opened on line casino in Rockford. Chicago-based Rush Road Gaming owns 4 casinos, together with Rivers On line casino Des Plaines.

The town initiatives that the Chicago on line casino will “repatriate” as much as $331 million in gaming income that crosses the border into Indiana every year. The Chicago on line casino may siphon some {dollars} from the competing suburban casinos.

Rivers On line casino Des Plaines doesn’t anticipate to lose any floor to Bally’s Chicago.

“Rivers Des Plaines is essentially the most profitable on line casino within the state and the overwhelming majority of its enterprise comes from inside 20 miles of the property,” Tim Drehkoff, CEO of Rush Road Gaming, mentioned in an emailed assertion. “Rush Road’s bid for the Chicago alternative acknowledged the large alternative for the Metropolis and its chosen accomplice to seize gaming clients heading to Indiana.”

A spokesperson for Laborious Rock declined to remark Friday.

Kim mentioned Bally’s could have “some influence” on the suburban casinos, however he expects to develop the gaming market by drawing vacationers to a Chicago on line casino.

Regardless of his issues about entry, Grove mentioned having a on line casino within the metropolis will open the door to vital new tourism and leisure {dollars} at Bally’s.

“I don’t know {that a} journey out to Des Plaines or a visit over to Hammond is basically within the itinerary of somebody coming to Chicago for a weekend or coming in for a conference for a few days,” Grove mentioned. “However you place a on line casino within the metropolis, and unexpectedly that turns into so much simpler to make.”

The Bally’s complicated will embody an exhibition corridor, a 500-room resort, a 3,000-seat theater, an out of doors music venue, six eating places and a on line casino with 3,400 slots and 170 sport tables. It is going to additionally function a reputation with a colourful historical past in Chicago.

Based in 1932 as a Chicago-based pinball producer, Bally’s is a storied firm that diversified into the whole lot from casinos to well being golf equipment over time earlier than promoting off its components and fading into company obscurity within the new millennium.

Chicago-based Bally Leisure spun off its health division, Bally’s Well being & Tennis ― then the nation’s largest chain of well being golf equipment — in 1995. Bally Whole Health filed for chapter safety twice in the course of the Nice Recession and is now defunct.

In 1996, Bally Leisure — the on line casino father or mother firm that had properties in Las Vegas and Atlantic Metropolis — was acquired by Hilton Inns Corp. for $3 billion, together with the belief of $1 billion in Bally’s debt. The gaming division of Hilton advanced into Caesars Leisure, the biggest on line casino firm on this planet.

When Kim acquired the rights to the Bally’s identify in 2020, Caesars retained the identify for its Las Vegas on line casino. However Caesars is anticipated to rebrand it as a Horseshoe property when Bally’s closes on its $150 million acquisition of the Tropicana in Las Vegas, which it agreed to purchase greater than a yr in the past.

Kim mentioned the Tropicana will be a part of the fold and take the Bally’s identify within the late second or early third quarter.

Bally’s nonetheless has some enterprise to care for earlier than launching in Chicago, together with discovering a brand new residence for the Chicago Tribune printing plant.

The on line casino firm has an possibility to purchase the 30-acre website Freedom Middle from Dallas-based Nexstar Media Group, which acquired it in 2019 as a part of its $4.1 billion buy of Tribune Media — the previous broadcast father or mother of Tribune Publishing. The Bally’s plan requires demolishing the 41-year-old plant and relocating the Tribune printing operations to make method for constructing the everlasting on line casino.

Bally’s additionally must win over a majority of aldermen on the Metropolis Council, after which win approval from the Illinois Gaming Board.

If authorised, Bally’s goals to open a brief on line casino by the second quarter of 2023, with the everlasting on line casino slated to open within the first quarter of 2026.

Kim mentioned Bally’s is as much as the problem of constructing the formidable on line casino complicated. And he discounted options that Bally’s was given a glide path to the undertaking by the town, noting the scope of the proposal doubled on the metropolis’s behest.

“We consider very firmly that we’ve gained on the deserves, that the town has pushed a tough cut price,” Kim mentioned.

rchannick@chicagotribune.com