Bally's sold its Tiverton casino. Now, it wants more subsidies from the state.
PROVIDENCE – After selling – and then leasing back – one of the two state casinos Bally's runs for the Rhode Island Lottery, the company is now asking for more concessions from state lawmakers.
Still unanswered are questions about Bally's financial health following the recent downgrade of Bally's credit rating by Moody's Investors Services, as well as questions about the sale of the state casino in Tiverton.
The McKee administration has been unwilling, to date, to release documents that might shed further light on Bally's initial request to sell its Rhode Island casino properties in both Lincoln in Tiverton to Gaming & Leisure Properties.
Ultimately the Tiverton casino alone was sold and leased back in January 2023 in a $625.4 million deal that included Bally's Biloxi Hard Rock casino.
How much of that sale was attributable to the Tiverton casino is "proprietary," according to Bally's spokeswoman Patti Doyle.
In response to a Journal public records request, the Rhode Island Lottery also declared "confidential" the sales and leaseback documents for the Tiverton casino.
The Tiverton casino produces a smaller, but not insignificant portion, of the $316 million in video-slot dollars the state is counting on getting this year from the two casinos.
It is also unknown whether the documents change in any way the ownership, and potentially, the terms of the casino deal the General Assembly approved in 2021 after a bare-knuckle fight between competing gambling players.
All this is happening as Bally's related legislation [H 8244] heads for a State House hearing on Thursday night.
What does it matter?
The two Bally's-run casinos are home to about 3,900 video-slots in Lincoln and 1,000 in Tiverton, placed there by the Rhode Island Lottery under terms expected to generate $316 million of the $428.8 million in gambling revenue the state expects this year, despite a drop in casino business.
Add to that 32 table games at Tiverton and 23 poker tables and 91 table games at Lincoln, which are also down year-over-year.
Go deeper: Breaking down the bill
The bill introduced earlier this month at Bally's request doubles the gambling-on-credit limit for state casino patrons to $100,000.
That proposed change is presented in "blue," indicating new language in the legislation.
Less obvious are the proposed changes that are not "blue-lined" that would provide the company with:
Additional state marketing subsidies, after a down year in casino activity. How much? "The change isn’t about Bally’s adding more marketing dollars,'' but "preserving an appropriate amount of promotional points following a down year," says Doyle.
The opportunity to renegotiate the manner in which the company's debt ratio is calculated as the company scrambles to keep other commitments, including its commitment to build a new casino in downtown Chicago. The bill lets the company use "net debt" instead of "gross debt" and/or allows Bally's to get credit for developmental projects, like its Chicago project, as opposed to strictly acquisitions, when they buy casinos.
Perhaps most significantly: the ability to negotiate future changes to its current General Assembly-approved casino operating agreement with the McKee administration directly, without need of legislative approval.
This last feature is worded in such a way that the Lottery and the Department of Business Regulation would be given the authority to approve, on their own – "notwithstanding any" laws or regulations to the contrary – "one or moreamendments" to Bally's agreement with the state.
The potential amendments are not specified, but they may – "among other things" – include a change in the company's "maximum leverage ratio."
In March, Moody's explained its reasons for downgrading Bally's outlook this way:
"The downgrade and negative outlook reflect Moody's expectation for leverage to remain elevated at over 7 times over the next two years. The company has increased funded debt levels by ... acquiring its New York golf course property. The company is [also] planning on constructing a new casino facility in downtown Chicago," the outlook reads. "Moody's anticipates it will contribute to elevated leverage levels over each of the next two years on a consolidated basis."
Behind-the-scenes: GLP not operating casinos
In January 2023, the Lottery and the state's Department of Business Regulation signed off on Bally's sale of the Tiverton casino real estate – along with its Biloxi Hard Rock casino – to Gaming & Leisure Properties [GLPI] under terms where Bally's committed to leasing the casino back and retiring at least $150 million of its debt.
Not much else about the sale or the “Facility Sale Leaseback” is spelled out in the approval letters the Lottery made public.
A request letter that was made public about the sale said GLP, which bought the Tiverton property, "does not operate any business but rather only passively owns real estate (through its GLP operating subsidiary), which it leases to unaffiliated operators."
"GLP owns the real estate associated with 57 casinos in 17 states operated by a broad group of gaming companies including Bally's, which previously sold and leased back several casinos to GLP," the letter says.
This article originally appeared on The Providence Journal: Bally's sold Tiverton casino property, but wants more from RI lawmakers
