UK
On Monday, Bally's (NYSE: BALY) moved one step closer to obtaining a casino license in New York City, which would result in a sizable payout for the Trump Organization.
Bally's is one of the last three applicants who were recommended to be granted such permits by the New York Gaming Facility Location Board on Monday. Bally's would be responsible for paying $115 million to the Trump Organization, which is led by President Trump's son Eric, if it were approved to construct a $4 billion casino hotel in the Bronx.
The lease for Trump Golf Links at Ferry Point was acquired by the area casino operator in late 2023 through an agreement with the president's business organization. The agreement said that Bally's would pay the Trump Organization an extra $115 million in the event that a gaming venue was subsequently constructed on the property, in addition to the $60 million that was already paid to the Trump Organization.
Although Bally's fulfilled its pledge to remove the Trump name from the golf course, the $115 million payment to the Trump Organization is unlikely to be well received by city dwellers, who find the president to be extremely unpopular.
Bally's Finances May Be Examined
Given Bally's perilous financial situation, one may argue that competitors withdrew or failed to move past the community advisory committee (CAC) stage, which is why Bally made it as far as it did in the New York casino competition.
Regulators in New York will now examine Bally's financial situation and capacity to access capital markets. A potential sale of the operating company (OpCo) rights to the now-demolished Tropicana on the Las Vegas Strip is one method, according to analysts, for the regional casino to bring the Bronx casino to reality.
"The license in New York leads us to believe the company will either sell the OpCo at the old Trop site or bring in a partner to help fund the construction in New York,” said Citizens analyst Jordan Bender in a note out Monday. “We expect the heavy spending for the project to occur later in the decade, following the completion of Chicago, whereby the sale-lease-back of Lincoln for $735 million could be utilized to support the construction costs during the heavy spending phase in 2028.”
Bally's has a lot on its plate between Chicago, Las Vegas, New York, and the acquisition of Star Entertainment in Australia, and none of those endeavors are inexpensive.
Great Performance Is Needed in New York
Given that Ferry Point is only eight minutes from the proposed Metropolitan Park location in Queens and twenty-five minutes from MGM's Empire City Casino in Yonkers, Bally's will be at the center of the fiercely competitive New York casino market.
Additionally, new gambling establishments in the Big Apple could steal the show from Bally's namesake casino on the Atlantic City (AC), NJ Boardwalk, as well as other businesses there.
“We believe its property in AC will see cannibalization, yet its database will allow it to cross-sell players between the two assets,” adds Bender. “The NYC market will act as one of the largest casino markets in the U.S., yet we believe execution needs to be flawless given the cost of capital, the tax rate (30%), the maintenance capex required, and the competitive landscape in the market.”
