Posted on: July 28, 2024, 06:32h.
Last updated on: July 28, 2024, 06:32h.
With the company accepting a takeover offer from its largest shareholder and the fate of the Tropicana site on the Las Vegas Strip still up in the air, Bally’s (NYSE: BALY) signaled commitment to Sin City.
In an interview with the Las Vegas Review-Journal, Bally’s Chairman Soo Kim, who’s also the founder of Standard General — Bally’s biggest investor and the buyer in a $4.6 billion takeover announced last week — called Las Vegas “the gaming capital world.” He added that US casino center is part of the operator’s long-term strategy.
We aspire to be an omnichannel operator (and) we aspire to be an international operator. (But) I think you have to be in Vegas,” said Kim in the interview. “Having a presence in Vegas is actually quite strategic for us.”
In an April 2021 transaction, Bally’s bought the non-land assets of Tropicana Las Vegas for $148 million. That deal was finalized in September 2022. Penn Entertainment (NASDAQ: PENN) previously operated that casino hotel. Bally’s only other Nevada venue is in Lake Tahoe.
Kim Sees Opportunity at Tropicana Site
Tropicana Las Vegas was shuttered in April and demolition is scheduled for October. Soon after acquiring the operating rights to the venue, Bally’s signaled that it could consider tearing it down and later building a from-the-ground-up integrated resort that improved upon the old Tropicana.
To some extent, Tropicana’s fate was sealed in May 2023 when Bally’s and the Oakland A’s announced a binding agreement that paved the way for the land occupied by the once iconic Strip casino resort to become the home of a new baseball stadium. The A’s move to Las Vegas is far from a done deal and that coupled with Bally’s debt burden has prompted some analysts and investors to question the future of the Tropicana site.
“There’s a certain pessimism (in the markets)…but, what I would say about the Tropicana (site) is that I think it’s a tremendous opportunity,” Kim told the Review-Journal. “I think the right project (there) will be financed, and I feel quite confident in that.”
On the company’s third-quarter earnings conference call last November, Bally’s CEO Robeson Reeves said the operator would be open to selling Tropicana’s operating rights, but added the venue’s current value is “enormous.”
“Although we have some short-term pain, this is an extremely valuable asset,” he told analysts.
What Future Holds for Bally’s in Las Vegas
In the most optimistic scenario, the A’s proceed with their move to Las Vegas, a stadium is built on the Tropicana site, and Bally’s procures the financing needed to develop another casino hotel near the new stadium.
On the company’s second-quarter earnings call last Friday, Gaming and Leisure Properties (NASDAQ: GLPI) CEO Peter Carlino said that scenario is possible. Kim told the Review-Journal he concurred with that view.
“(Bally’s has) taken a pretty active lead role now in the process — I’ll call it the process there in Las Vegas. Pretty clear to us that the stadium will likely be built and that the design will work in conjunction with what planning that Bally’s is doing at the site,” Carlino told analysts.
GLPI owns Tropicana’s real estate and agreed to a series of transactions with Bally’s that provide crucial financing for the gaming company’s permanent casino hotel in Chicago.
