CHICAGO — Two white men are accusing the city of Chicago and Bally’s Corp. of discriminating against them, saying they too should be able to participate in Bally’s recent offer of a 25 percent ownership stake in its Chicago casino geared toward women and people of color.
The lawsuit, filed Wednesday in U.S. District Court in Chicago, alleges the city violated the rights of Richard Fisher and Phillip Aronoff, two white men from Texas, who are unable to invest in Bally’s minority ownership stake because of their race. The American Alliance for Equal Rights, a conservative legal group dedicated to challenging diversity and equity initiatives, joined the men in filing suit.
“This race-based stock offering is illegal, and this court should declare it as such,” the 29-page complaint reads.
Bally’s won Chicago’s casino bid in 2022 after then-Mayor Lori Lightfoot selected the company over several competitors. Bally’s proposal included the highest projected annual payout for the city: nearly $200 million, along with a $40 million upfront payment and $4 million in annual payments.
As part of that deal, Bally’s is required to offer women and people of color a collective 25 percent equity stake in the $1.7 billion casino currently under construction in River West.
Last month, Bally’s announced details of the investment offer. The minority investment stake lets individuals invest anywhere from $250 to $25,000 per share in Bally’s Chicago casino.
The investment offer was created as an accessible opportunity for underrepresented groups to build “generational wealth,” Chicago officials previously said. However, Loop Capital, the offer’s underwriter, stated publicly that it would not verify the sex or race of applicants.
Daniel Lennington, a lawyer for the plaintiffs, said in an email that Bally’s was verifying race and sex because prompts for the offer ask prospective investors if they meet the definition of a minority.
“So they are, in fact, verifying race and sex because people who click ‘no’ are not qualified,” wrote Lennington, who works for the Milwaukee-based Wisconsin Institute for Law & Liberty.
The lawsuit seeks to remove the investment requirements, allowing Fisher and Aranoff to participate in the Class A investment offer — effectively making it accessible to all white men.
“Bally’s has a binding Host Community Agreement with the City of Chicago to build what will be the best regional casino in the country. Bally’s honors its commitments. The Bally’s Chicago IPO complies with our obligations under the Host Community Agreement with the City of Chicago,” Bally’s said in a statement Thursday.
The city did not respond to requests for comment. The Illinois Gaming Board said in an emailed statement it does not comment on pending litigation.
In documents filed with the Securities and Exchange Commission, Bally’s outlined potential issues with the minority investment offer, saying it “may result in lawsuits against us and the City of Chicago by persons that do not meet” the minority requirement.
“If any person were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit, and the time and attention of our management would be diverted from our business and operations,” the document states. “Furthermore, in the event that a court were to find the Class A Qualification Criteria to be invalid or unconstitutional, the Host Community Agreement could be terminated, which could adversely affect our ability to operate our casinos and could materially adversely affect our business, financial condition, and results of operations.”
Bally’s Casino is offering 10,000 Class A shares, granting investors partial ownership in Bally’s Chicago. These investors will collectively own 25 percent of the casino, according to documents filed with the Securities and Exchange Commission.
The investment offer is open to residents of Illinois, New York, Texas and Florida who qualify under the offer’s requirements. Through the offering, the company plans to raise $250 million to repay loans associated with building the permanent casino in River West.
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Industry experts have deemed the investment a long-term, high-risk opportunity, warning investors of the potential to “lose all your money.”
Investors will not receive dividends or payouts until “approximately three to five years after our permanent resort and casino begins operations,” according to publicly available investment documents. Additionally, Bally’s is not required to pay out dividends, and if the casino never opens or goes out of business, investors will lose their entire investment.
The investment window closes Friday.
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