No White Men Allowed In Bally’s Chicago Casino Share Offering Promoted By City Officials

By Mark Glennon of Wirepoints

Bally’s, the big casino operator, is selling shares only to women and minorities in its new gambling resort mecca being built in Chicago’s River West neighborhood. A minority preference of some kind was a condition to city approval of the project, and this is what the city and Bally’s agreed to.

Yes, that appears blatantly illegal, but wait to understand the deal before deciding whether it’s truly doing any favor for women and minorities. Opinions may vary on that. The offering is being promoted by the City of Chicago Treasurer and some city aldermen.

Let’s start with city officials hyping the sale, as reported by The Triibe. Last Thursday, “City Treasurer Melissa Conyears-Ervin and members of the Chicago Aldermanic Black Caucus hosted an information session in the 21st Ward, the city’s largest Black ward, to inform residents about an opportunity for minorities and women to “create generational wealth” by buying shares in Bally’s Chicago, Inc.

“The most captivating part,” The Triibe wrote, “was when residents learned that they could put up as little as $250 of their own funds to partake in the investment that presenters expressed as the biggest benefit to the Black community.”

“Generational wealth”? “Captivating”? “Benefit to black community”?

Here’s the deal that’s offered, which is detailed in the company’s S-1 filing with the Securities Exchange Commission and other company materials: Instead of just buying one share for $25,000, a buyer can put up as little as $250 and Bally’s will loan you the remainder of the purchase price. You thus buy an “Interest,” as it’s called in the offering documents.

A buyer will never see any dividends until the loan is repaid plus interest at 11% annually, compounded quarterly, and that could be a long, long time, if ever. The company says in its S-1 that it currently expects not to have cash available for distribution until approximately three to five years after the Chicago facility opens, which they are targeting for September 2026. “However, this may fluctuate depending on ”the ability to generate cash from operations and its cash flow needs and payments on senior debt.” At 11% compounded quarterly, the loan balance would double in less than six and a half years.

The good news is that the loans are nonrecourse, meaning a buyer is not personally liable for repayment; only the shares that would be bought with the loan is at risk. A buyer therefore could put down the small amount of $250 in exchange for a hope and a prayer that everything will go well and the investment eventually pays off.

That’s not necessarily irrational, being akin to buying a cheap, out-of-the-money option on a stock. Kind of like playing a slot machine though hopefully with fair odds. I can’t assess whether it’s a fair bet of that type. But it’s hardly a ticket to “generational wealth.” The Interests are indeed highly risky and speculative, just as the offering documents say.

The Interests are subject to extensive transfer restrictions and won’t, at least initially, be traded on any public exchange, so “you may find it difficult to sell your Class A Interests,” as the S-1 mildly puts it.

If that’s not enough, read the Risk Factors section of the S-1 – all 40 pages of it. It’s daunting, to put it mildly. Also daunting is the corporate structure behind the process through which earnings would flow to pay off the loans.

All this comes as concerns mount that the gambling business in Illinois is cannibalizing itself through the proliferation of betting sites and methods. That was reflected in the most recent report last year by Illinois Commission on Governmental Forecasting and Accountability. There “are concerns of oversaturation,” as the report put it, and Illinois casino revenue was essentially flat from 2023 to 2024.

Aside from all women, the minorities for whom the offering is open is broad and vague. It includes pretty much any group that the City of Chicago decides is disadvantaged, which you can see in the relevant section from the S-1, reproduced below.

Loop Capital Markets LLC is the lead placement agent on the offering, meaning they quarterback the deal for Bally’s. Loop is a prominent, politically connected, minority-owned financial firm in Chicago.

City of Chicago Treasurer Melissa Conyears-Ervin is perhaps among the politicians least qualified to be promoting the deal. She was fined last year for violating the government ethics ordinance by firing whistleblowers and improperly using city resources. We’ve criticized her here for failing to provide even the most basic information that should be expected from a treasurer and for a misguided divestiture from fossil fuel makers.

Ald. Ronnie Mosley (21st Ward) was also there Thursday night boosting the deal. “Tonight is about a new opportunity on how to participate, about not just being a consumer but to be an owner,” he told the crowd of a couple hundred people, according to The Tribe.  

They apparently sold many in the room at Thursday’s event, according to The Triibe, whose article also reads like a puff piece. They quoted one attendee from Chicago’s Chatham neighborhood who said, “It’s so many ways you can invest. I mean, to go from $250 all the way to $25,000, I mean, if you don’t have any money and all you have is 250 and they let you in,” she said. “That’s, like, a no-brainer for me, and then it’s a no recourse loan, so therefore you’re not liable for it if it [the project] doesn’t go through.”

Could the deal be challenged as illegal discrimination? Yes, absolutely. I can think of no plausible defense to such a challenge and I have found no precedent for a similarly exclusionary securities offering.

Is it the type of deal that should be sold for minorities to build “generational wealth”? Absolutely not.

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Groups eligible to buy interests, from S-1:

This offering is only being made to individuals and entities that satisfy the Class A Qualification Criteria (as defined herein). Our Host Community Agreement with the City of Chicago requires that 25% of Bally’s Chicago OpCo’s equity must be owned by persons that have satisfied the Class A Qualification Criteria. The Class A Qualification Criteria include, among other criteria, that the person:

• if an individual, must be a woman; ​
• if an individual, must be a Minority, as defined by MCC 2-92-670(n) (see below); or
• if an entity, must be controlled by women or Minorities.

​MCC 2-92-670(n), in turn, defines Minority as:

• any individual in the following racial or ethnic groups:
• African-Americans or Blacks (including persons having origins in any of the Black racial groups of Africa);
• American Indians (including persons having origins in any of the original peoples of North and South America (including Central America) and who maintain tribal affiliation or community attachment);
• Asian-Americans (including persons whose origins are in any of the original peoples of the Far East, Southeast Asia, the islands of the Pacific or the Northern Marianas or the Indian Subcontinent);
• Hispanics (including persons of Spanish culture with origins in Mexico, South or Central America or the Caribbean Islands, regardless of race); and
• individual members of other groups, including but not limited to Arab-Americans, found by the City of Chicago to be socially disadvantaged by having suffered racial or ethnic prejudice or cultural bias within American society, without regard to individual qualities, resulting in decreased opportunities to compete in Chicago area markets or to do business with the City of Chicago. Qualification under this clause is determined on a case-by-case basis and there is no exhaustive or definitive list of groups or individuals that the City of Chicago has determined to qualify as Minority under this clause. However, in the event the City of Chicago identifies any additional groups or individuals as falling under this clause in the future, members of such groups would satisfy the Class A Qualification Criteria.