Bally’s Corporation is one of the largest U.S. casino operators. It now finds itself in dire financial straits, entangled with over $7 billion in liabilities. Despite earlier actions this year by Bally’s to bail out its subsidiary, Star, its financial condition is still on shaky ground. Almost all of the company’s liabilities are long-term debt, in addition to $1.4B in operating lease liabilities. This combination leaves the company with immense downside risk.
In February, credit rating agency Fitch downgraded Bally’s debt rating to B-, signaling serious concerns about the company’s financial stability. Currently, Bally’s debt burden stands at roughly 10 times the corporation’s market value. The casino giant now appears to be in deep trouble. They have almost $1 billion in short-term debt, which needs to be repaid in the next twelve months. On top of all this, Bally’s has just $490 million in readily marketable assets, spotlighting the liquidity crunch it is staring down.
Bally’s Financial Overview
Bally’s Corporation has officially rebranded themselves as the poster child of financial calamity in the gaming industry. It has a sizable long-term debt load on the balance sheet in addition to the long-term lease liabilities. Combined, these two factors account for more than three-quarters of its fiscal liabilities. As it continues to try to chart a course through these stormy seas, many experts are alarmed by the prospects for its continuing viability.
The financial landscape for Bally’s is daunting. Even more startling, the company’s total liabilities have now exceeded $7 billion. Nearly $1 billion of that is due in the next 12 months, leaving the company at a literal crossroads. It has to figure out how to be more liquid and slick in its debt operations. Fitch’s recent downgrade adds insult to injury. It illustrates that the market’s opinion of Bally’s credit, or confidence in Bally’s ability to repay what it owes, has worsened.
“Beyond the short-term volatility, Nvidia remains the benchmark artificial intelligence stock and the most direct way to invest in the theme,” a sentiment echoed by investment analysts assessing broader market trends. That obsession with Bally’s short-term liquidity crisis remains the central story in coverage of the company.
Market Reactions
While Bally’s experienced turbulence, other market indices were buoyed by positive economic news in recent sessions. The Nasdaq Composite rose 0.2%, closing the day at 21,590. At the same time, the Dow Jones Industrial Average climbed 0.3%, finishing at 45,565 points. This rise in market indices occurs in the large shadow cast by the spread of earnings reports from major technology companies such as Nvidia and Microsoft.
Nvidia, specifically, recently announced projections of $54 billion in revenue for its next quarter. Analysts were a bit underwhelmed with the data center growth numbers. Nevertheless, the story remains upbeat on Nvidia, calling it the go-to choice for making plays on artificial intelligence investment.
“They weren’t blow-the-doors-off, but nor were they bad. And I think the stock price movement is going to depend a lot on what they say on the earnings call.” – Reuters
This type of measured hopefulness is echoed throughout the market as investors balance optimism about future expansion with concern over current headwinds.
The Bigger Picture
Bally’s recent predicament is symptomatic of larger trends affecting the gaming industry and the financial world at large. In a market in which investors are especially spooked by firms with little maintainable debt and a lot of liquidity. Funding for a temporary casino Bally’s, however, is in potential hot water. Its future depends on smart managerial decisions that prioritize eliminating debt and maximizing available assets.
The response of U.S. overall economic policies continues to impact the developing story on investor sentiment. Just a few weeks ago, U.S. President Donald Trump attempted to have Federal Reserve governor Lisa Cook fired. This step is sure to trigger extensive legal challenges. These political maneuvers complicate an already very complicated and volatile financial landscape.
With all its issues, Bally’s still needs to do the hard work of restoring investor confidence while dealing with its $1.5 billion in debt. The road ahead is not without obstacles, but some forward-thinking steps could go a long way in shoring up its fiscal health.
