Bally’s files prospectus for new Chicago IPO program geared towards city, state residents

In a new prospectus filed to the US Securities and Exchange Commission yesterday, Bally’s laid out the details for an initial public offering (IPO) for its Bally’s Chicago subsidiary. This is the second attempt by Bally’s to roll out an IPO for the $1.7 billion (£1.28 billion/€1.5 billion) casino, due to open in September 2026.

The first IPO attempt this year was geared specifically towards women and minority groups. In its host community agreement with the city, Bally’s is required to pledge at least 25% of project equity to “Minority individuals and Minority-Owned and Controlled Businesses”.

However, the SEC never took action on the first prospectus, rendering it void. Bally’s was also sued by two white Texas residents who claimed that the restricted offering was discriminatory and unconstitutional. This time around, the company seems to be broadening the criteria for potential investors.

“We currently intend to provide preferential allocations … to City of Chicago residents and Illinois residents during this offering,” the prospectus reads. As with the first offering, residents of Florida, New York and Texas may also invest.

It remains unclear whether the SEC will now respond to this second attempt. Bally’s did confirm to iGB that the new offering still complies with the city’s minority ownership requirements. Loop Capital Markets will again serve as the lead placement agent for the offering, as it did in the first iteration.

Four share classes offered

According to the prospectus, Bally’s Chicago is offering four share classes, Classes A1-A4. Bally’s listed 500 A1 shares to be sold at $250 per share; 1,000 A2 shares at $2,500 each; 1,000 A3 shares at $5,000 each; and 7,500 A4 shares at $25,000 each. Each share purchased is matched by subordinated loans that add up to $25,000 in aggregate. Class A4 shares carry no loans, Class A3 carry $20,000, Class A2 carry $22,500, etc.

“In connection with this offering and the concurrent private placements, we intend to enter into an amended and restated subordinated loan agreement with Bally’s Chicago HoldCo pursuant to which Bally’s Chicago HoldCo, as lender, will make subordinated loans to us, as borrower, in various tranches and in varying amounts based on the total number of Class A-1 Interests, Class A-2 Interests and Class A-3 Interests sold in this offering and the concurrent private placements,” the prospectus reads.

Investors will not be made parties to the subordinated loan agreements. There is also a fifth set of Class B interests listed, but those don’t appear to be made available through the IPO.

“Class B Interests are not being offered hereby, and are held exclusively by Bally’s Chicago Holding Company, LLC,” per the filing.

Shares sold in March via ‘private placements’

With regard to private placements, Bally’s said it already sold a number of shares to certain investors on 10 March. A total of 1,185 Class A shares were sold — 272 Class A1, 281 Class A2, 171 Class A3 and 461 Class A4 — for a sum of $13.2 million.

These investors “represented to us in writing that such private placement investor qualified as an ‘Accredited Investor’ as such term is defined by Regulation D promulgated under the Securities Act, and has provided us with additional documentation to assist us in verifying such private placement investor’s status as an Accredited Investor”, per the prospectus.

Additionally, another 2,800 Class A4 shares were sold “to Bally’s Chicago HoldCo, LLC”. It is unclear whether the sold shares are to be subtracted from the 10,000 total shares listed.

What exactly am I buying?

Shares made available through the IPO will not be listed on traditional stock exchanges. As such, investors will not be able to trade the shares like they would for typical stock holdings. Selling, in particular, may be difficult.

“You cannot freely sell your Class A Interests,” the filing reads. “Each Class A Interest is subject to strict controls that limit transferability.” Shares also cannot be transferred to other portfolios like 401(k)s, IRAs, etc.

The shares with subordinated loans attached (Classes A1-A3) may not be sold until the loans have been repaid, lest the investor should choose to “repay in full the pro rata amount of the remaining balance of the Subordinated Loans then outstanding attributable to such Interests before or substantially concurrently with such transfer and conversion”.

Overall, the investment is highly speculative and is similar to the first iteration, which drew heavy criticism. The offering is geared towards groups that may not typically have access to such investment opportunities, but the riskiness of the investment is hard to ignore.

“There is no trading market for our Class A Interests and, due to transferability restrictions, an active market for our Class A Interests will not likely develop in the future,” the filing reads. “Therefore, our Class A Interests will have limited liquidity and holders of our Class A Interests may not be able to monetize their full investment in our Class A Interests, if at all.”