Will Bally’s planned $1.7 billion Chicago casino get built by 2026? The odds may be shrinking.

To paraphrase Mark Twain, reports that the planned $1.7 billion Bally’s Chicago permanent casino may be doomed before the first shovel is planted are, according to the company’s chairman, greatly exaggerated.

Responding to doubts raised this week by Mayor Brandon Johnson about the viability of the ambitious project selected by the previous administration to be the first Chicago casino, Bally’s Chairman Soo Kim said that the River West entertainment complex will be built as planned.

“We remain confident that this project will be done on time and on budget,” Kim told the Tribune Thursday.

Analysts and investors, however, are increasingly concerned that the permanent  Bally’s Chicago Casino may be delayed or downsized, given an $800 million funding gap and a more challenging financing environment than when the project was awarded two years ago.

Some believe that Rhode Island-based Bally’s, an upstart public gaming company that adopted a storied name and aggressively built a portfolio of 16 casinos in 10 states, mostly through acquisition, might be better off not developing its grand Chicago flagship as planned.

“I think it’s pretty obvious that the timeline is going to be way too tight to get this entire thing built, considering they still need more financing,” Alan Woinski, president of Gaming USA, a Florida-based industry analyst, said Friday. ”Making this smaller is probably the best thing they could do.”

In 2022, Rhode Island-based Bally’s won a heated competition to build the Chicago casino at the 30-acre Freedom Center printing plant site, a proposal that included an exhibition hall, a 500-room hotel, a 3,000-seat theater, 10 restaurants and 4,000 gaming positions.

Bally’s Chicago launched a temporary facility at Medinah Temple in September, and plans to open the permanent casino by September 2026.

But at a Chicago Sun-Times Editorial Board meeting Monday, Johnson reportedly said it was “still to be determined” whether the full $1.7 billion entertainment complex would be built as planned.

Kim, chairman of Bally’s and founding partner of its largest shareholder, New York hedge fund Standard General, said he believed the mayor’s quotes were taken out of context.

“We have had nothing but positive interactions with the administration,” Kim said. “We have not heard these doubts directly.”

Johnson softened his stance slightly at a news conference Wednesday, expressing confidence in his administration’s ability to “work through” the process with Bally’s in getting the permanent casino built.

He left the door open to some change in plans, however.

“It’s a variety of things,” Johnson said. “It’s not just about remediation of space, making sure that the timeline and the budget is in agreement or in alignment. And so much like what we’ve done with other deals that we inherited that did not quite meet the moment of where we are today versus when that agreement was initially established.”

An administration spokesperson declined to elaborate on Johnson’s comments Friday, but issued a statement in support of the reiterated Bally’s pledge to build the permanent casino.

“The city is pleased that Bally’s has reached its highest revenue numbers so far, and continues to be committed to the permanent casino project,” the spokesperson said.

In May, Bally’s Chicago generated a record $11.7 million in adjusted gross receipts and also hit new highs in admissions at its temporary Medinah Temple casino. But the numbers still fall short of city projections, with long-term growth hinging on the planned permanent casino at the soon-to-be demolished Freedom Center printing plant site

Last year, Bally’s agreed to pay Tribune Publishing, owner of the Chicago Tribune and other newspapers, $150 million to vacate the 43-year-old Freedom Center by July 5 to break ground on the new casino complex. The Tribune shifted printing operations last month to the former Daily Herald facility in Schaumburg, which it purchased for an undisclosed price.

The city was holding a public meeting at the Jesse White Community Center on Friday night to discuss the demolition process at Freedom Center. A demolition application has been filed but the timeline for leveling the 43-year-old printing plant has yet to be determined.

Despite an ostensibly clear path to demolition, Bally’s is navigating both a March buyout offer from its largest shareholder and an $800 million funding gap to build its planned $1.7 billion Chicago casino complex, fueling some doubts that the permanent facility will get off the ground.

Bally’s had $169 million in cash and $3.6 billion in debt at the end of the first quarter, according to its most recent financial reports.

When Bally’s was chosen to build the Chicago casino in May 2022, Kim told the Tribune at the time that the scope of the proposal was doubled at the behest of then-Mayor Lori Lightfoot’s administration, which wanted to create an entertainment complex and tourist magnet, rather than just a big box filled with gaming tables and slot machines.

While still modest compared with the over-the-top opulence of some Las Vegas resorts, there were some rumblings within the gaming industry that the planned Chicago complex was a reach for Bally’s, which had built up its chain of mostly smaller casinos through an opportunistic buying spree during the pandemic.

The ongoing funding gap has accentuated those concerns for investors.

Lance Vitanza, senior analyst in TD Cowen’s equity research group, said the risk around financing the Chicago project has grown as interest rates and inflation remain stubbornly high, creating a tight credit market for Bally’s, which told investors in February it needed to secure another $800 million to cover $1.1 billion in remaining costs to build the permanent casino.

“I think investors are increasingly concerned with every passing day,” Vitanza said Friday.

On Wednesday, the Fed held the benchmark rate steady at a range of 5.25% to 5.5%, where it has been since July 2023. Before that, the Fed increased rates 11 times over 16 months as it attempted to tame inflation, boosting the benchmark rate from near zero at the onset of the pandemic.

Waiting for rates to come down may no longer be a viable option for Bally’s if it wants to build the planned permanent casino by September 2026, Vitanza said. At the same time, he believes Bally’s will be able to secure the balance of financing for the project.

“I think this project is much more likely to get done by Bally’s than not,” Vitanza said.

Other logistical hurdles remain, including the revelation in January that Bally’s would have to relocate the 500-room hotel tower to avoid damaging city water pipes near the Chicago River.

It is unclear how the buyout offer to take Bally’s private would impact plans for the permanent Chicago casino, but Kim called it a vote of confidence by the company’s largest shareholder.

Kim’s Standard General, which owns 23% of Bally’s, submitted an offer to buy out the rest of the stockholders at $15 per share, valuing the company at about $648 million. The Bally’s board formed a special committee and retained Macquarie Capital as its financial adviser to evaluate the offer and explore strategic alternatives.

Bally’s has not provided any subsequent updates on the status of the buyout offer.

In April, a minority investor that owns less than 1% of Bally’s stock, weighed in with a letter urging the board to reject Standard General’s “woefully undervalued” proposal and suggested the company offload or bring in a partner to develop the permanent casino.

Kim said Thursday that his buyout offer should reassure investors – and the city – that Bally’s has the wherewithal to build the Chicago casino complex as planned.

“Judge me by my actions,” Kim said. “I obviously believe and am confident that this company can meet all of its obligations, including building Chicago.”

Bally’s stock closed at $11.22 per share Friday, valuing the company at about $454 million.

Chicago Tribune’s Alice Yin contributed.

rchannick@chicagotribune.com