Tuesday, April 9, 2024

BUMPED UP.......Another Dirty Chicago Deal?

everyone gets a stack of chips, on the house

Firm that brought Bally’s to Chicago casino deal stood to profit from another Bally’s deal
The company that former Mayor Lori Lightfoot picked to own and operate the planned Chicago casino had financial ties to a consultant City Hall hired to solicit and evaluate bidders.
By Tim Novak and Robert Herguth
Jun 23, 2023, 5:30am CDT

Odds are you’ve never heard of Nomura Securities International. But the consulting firm played a key role behind the scenes in what’s likely to be one of the most consequential decisions Lori Lightfoot ever made as mayor — the selection of Bally’s to own and operate Chicago’s long-awaited casino.

City Hall hired Nomura to solicit casino operators to make their pitches to Lightfoot for the Chicago casino deal and to evaluate their proposals. Bally’s was among those Nomura solicited.

But even as Bally’s was successfully seeking Lightfoot’s blessing, it also was working on a separate, $2.6 billion deal. That was to buy an online British gaming company called Gamesys. As part of that deal, Bally’s would pay off Gamesys’s lenders, according to documents Bally’s filed with the U.S. Securities and Exchange Commission.

Among those creditors was Nomura — the consulting firm that brought in Bally’s to bid for Chicago’s casino, a Chicago Sun-Times investigation has found.

Bypassing the city of Chicago’s normal procurement process, Nomura worked behind the scenes with Lightfoot’s staff for at least nine months before it signed a $1.5 million deal with City Hall for its work to bring Chicago a long-sought casino, the Sun-Times found.

By the time that contract was signed, the casino bidding process already had been completed.

Lightfoot and her former top aides won’t say whether they knew about Nomura’s financial tie through the Gamesys deal to Bally’s. But they say Nomura “held no substantive role” in choosing Bally’s plan over those of other bidders to build the planned $1.7 billion casino complex on the Chicago River.

A Nomura spokesman says that, although the company solicited Bally’s to bid for the Chicago casino, it didn’t make any recommendations to Lightfoot’s administration about which casino operator should land the coveted deal.

A Bally’s spokeswoman says Nomura “was one of several lenders of JPJ/Gamesys prior to their acquisition by Bally’s. We would like to state that Bally’s has never borrowed funds from Nomura Holdings. There is no existing relationship between Bally’s and Nomura Holdings.”

Bally’s bought Gamesys for $2.6 billion, including $2.08 billion in cash plus 9,773,537 shares of stock, according to documents filed with the SEC. Gamesys reported that, under the deal, the company’s lenders Macquaire Corp. and Nomura International would be repaid a total of 175 million British pounds, the equivalent of about $220 million.

It’s unclear how much money either lender might have been repaid.

A Nomura spokesman says only that the debt was “extinguished” with the Bally’s purchase of Gamesys.

Bally’s is now awaiting final approval from the Illinois Gaming Board to operate a temporary casino that’s under construction at Medinah Temple in River North and eventually a permanent gambling complex on the site of what’s now the Chicago Tribune’s printing plant along the Chicago River.
RELATEDBally’s nods to Medinah’s past in Chicago casino plan — ‘not going to be your bright, flashy casino’





An artist’s rendering of Bally’s planned Chicago casino.


Provided

Officials with the gaming board, whose members are appointed by Gov. J.B. Pritzker, won’t comment on the financial connection between Bally’s and Nomura.

The Chicago casino selection process was shrouded in secrecy under Lightfoot, who rejected two more established casino operators when she announced in May 2022 that she’d chosen Bally’s.


Also unclear is how Medinah Temple was chosen as the site of the temporary casino while Bally’s builds the permanent casino. A source involved in the casino process has told the Sun-Times that Lightfoot encouraged Bally’s to choose Medinah Temple — which a spokesman denied, saying earlier this year that Lightfoot “had no involvement in the site selection of the temporary casino.”



A massive bar will greet customers at the entrance of Bally’s temporary casino at Medinah Temple, 600 N. Wabash Ave.


Terence Crayton / Bally’s Chicago Casino

Medinah Temple is owned by Chicago developer Albert M. Friedman, who was the landlord for Lightfoot’s campaign office and has been a campaign contributor, giving her $11,000 since 2019.



Medinah Temple, 600 N. Wabash Ave., the planned site of Bally’s temporary casino, until the permanent location is completed.


Anthony Vazquez / Sun-Times

In February — weeks before Lightfoot’s bid for a second term came crashing down with a third-place finish in the mayoral primary, leaving her out of the April runoff that saw Brandon Johnson elected mayor — the Sun-Times reported that Lightfoot’s campaign fund’s new chairperson was the daughter of a contractor slated to help oversee construction of Bally’s casino.

Other companies and executives who stood to gain from the casino construction also gave money to Lightfoot’s campaign, records show.


RELATEDThese are some of the people in line to profit from Lightfoot’s Bally’s casino deal

In handing Bally’s the casino deal, Lightfoot bypassed the Chicago City Council Special Committee on the Casino, angering some council members. The committee ended up meeting just once before Lightfoot picked Bally’s.



The Illinois Gaming Board at a meeting earlier this month at which the state panel gave preliminary approval for Bally’s to open a temporary casino and ultimately a permanent gambling complex in Chicago.


Robert Herguth / Sun-Times

Unlike competing bidders affiliated with Hard Rock Casino and Rivers Casino, Bally’s initially promised the city an upfront payment of $25 million, then raised that to $40 million. And City Hall projected it would bring in more taxes than the other bidders. That’s money Lightfoot wanted to use to bolster underfunded city pension funds and which she said would avoid a property tax increase.

The casino — which is set to include 3,400 gambling slots and 170 table games, a hotel and an entertainment complex — is projected to bring the city as much as more than $190 million in taxes a year, though some City Council members have questioned the validity of that projection.

A TIMELINE FOR BALLY’S SELECTION FOR CASINO

Here’s a look at the timing for how former Mayor Lori Lightfoot’s administration sought a company to build and operate Chicago’s first casino:

April 22, 2021 — City Hall asks developers to submit proposals to build and operate a casino with hotel rooms, restaurants, bars and entertainment venues. The winning bidder also would have a chance to put in and operate slot machines at O’Hare Airport and Midway Airport.

Lightfoot’s deputy mayor for economic development, Samir Mayekar, and her chief financial officer, Jennie Huang Bennett, oversaw the bidding process with help from one of the nation’s best-known gambling attorneys, Cezar Froelich, chairman of the Taft Stettinius & Hollister law firm.

Other firms were hired, most directly working for Froelich’s firm. That meant any contracts or other agreements with them were shielded from being subject to public review by news organizations or anyone else under the Illinois Freedom of Information Act.

One of those firms was Nomura Securities International, a Japanese financial company that has worked with casino companies around the world. Nomura’s job was to solicit companies to submit bids to own and operate the proposed Chicago casino and to evaluate those bids, city records show.

July 2, 2021 — A Nomura representative working on the Chicago casino project — dubbed Project Wind — begins exchanging emails with Mayekar, according to emails obtained by the Sun-Times. That happened even though, according to city records, Nomura didn’t begin working for Froelich’s law firm until months later, in November 2021. City Hall released other emails showing Mayekar and Bennett exchanged emails with two Nomura officials, Christopher Baldwin and Joshua Maio, during the bidding process.

“Under the scope of our engagement, Nomura Securities International, Inc., solicited a number of parties as potential applicants/bidders for the city of Chicago’s [request for proposals] process for a gaming license,” a Nomura spokesman says. “Bally’s was one of over a dozen parties contacted as part of the outreach.”

Aug. 6, 2021 — Lightfoot extends the application deadline for potential casino operators to bid for the Chicago casino by two months, pushing back the deadline from Aug. 23, 2021, to Oct. 29, 2021.

Aug. 18, 2021 — Mayekar and other city officials exchange emails with Nomura, all under the subject heading: “meeting with the mayor.” Lightfoot wasn’t included in those email chains.

Asked whether Lightfoot subsequently met with anyone from Nomura, her campaign spokeswoman Joanna Klonsky says, “Mayor Lightfoot has no recollection of any such request or that any meeting responsive to that request took place.”

Aug. 19, 2021 — Froelich emails Maio, explaining how they would disclose Nomura’s solicitations to the Illinois Gaming Board, whose approval of a state license to operate the Chicago casino would be needed by whichever company ended up being selected.

Froelich wrote Maio: “Josh, as an indirect agent of the city, we believe it’s preferable if we report your contacts with possible bidders on a confidential basis to the IGB. Let’s talk this afternoon on establishing a procedure.”

The gaming board won’t answer any questions regarding Nomura.

September 2021 — Mayekar and Bally’s senior vice president Christopher Jewett exchanged emails regarding the possibility of building a casino on truck yards near McCormick Place, a move opposed by developer Scott Goodman, whose Farpoint Development company had an option to redevelop that property near the convention center.

“We request that Bally’s cease and desist from making any further representations to the city about this potential casino location for which it has no legal rights,” Goodman later says in a Jan. 6, 2022, letter to Bally’s chairman Soo Kim.

Oct. 1, 2021 — Bally’s pays $2.6 billion for Gamesys Group, a British online gaming company that owed Nomura money for financing a previous gaming deal involving another company, called Jackpotjoy, according to documents Bally’s filed with the U.S. Securities and Exchange Commission.

“Nomura and its affiliates were not involved in an advisory or financing capacity in support of Bally’s acquisition of” Gamesys, according to a Nomura spokesman, who says the Bally’s deal “extinguished” Gamesys’ debt with Nomura.

As part of the transaction, Gamesys CEO Lee Fenton became CEO of Bally’s.

“We believe that Gamesys’ proven technology platform will foster our continued building of our interactive offerings in North America, including real-money gaming options in online sports betting and iGaming,” Bally’s wrote to the SEC.

Oct. 29, 2021 — City Hall announces that three companies submitted five bids to build and operate a Chicago casino. Neil Bluhm, who owns Rivers Casino in Des Plaines, and Bally’s each submitted two bids. The other bid came from Hard Rock Casino.

Nov. 2, 2021 — Days before the bidding process ended, city records show Nomura signed an agreement with Taft to evaluate and solicit casino bids for City Hall.

March 25, 2022 — Months after the bidding process ended, Jennie Huang Bennett, who was City Hall’s chief financial officer under Lightfoot, signs an agreement with Nomura’s managing director Christopher Baldwin “to solicit and evaluate bids for a casino in the city.”

“This agreement replaces the letter agreement dated Nov. 2, 2021, pursuant to which Nomura was engaged by Taft, Stettinius & Hollister LLP to perform the same services,” according to the deal Bennett signed with Baldwin.

The agreement says Nomura has yet to be paid any money at that point — though the company has been working on the casino project for nearly nine months.

Klonsky says Nomura was chosen after City Hall received proposals from three firms. It’s unclear, though, when that might have happened or which other firms submitted bids.

“Nomura’s role was specific and limited in scope to evaluating whether bidders had the wherewithal to finance the project,” according to a written statement Klonsky says she was making on Lightfoot’s behalf. “Their analysis found that all three [casino] bidders possessed that financial wherewithal. “

May 2, 2022 — Days before Lightfoot made public her selection of Bally’s, Bennett exchanges emails with Nomura, seeking updated data regarding Bally’s ability to finance the casino project.

“Jennie, we will be pleased to provide you with an updated assessment of Bally’s ability to finance the transaction and will circle back with you shortly,” Nomura vice chairman Jonathan Rouner says in an email to Bennett.

Bennett emails several parties from City Hall and Nomura, saying: “Unless I missed it, I don’t see in this document where it provides us with Nomura’s views on Bally’s ability to finance the transaction” if Bally’s chairman Soo Kim were to complete a possible leveraged buyout of the casino company — a deal that never happened.

May 5, 2022 — Lightfoot announced Bally’s will own and run the casino.

May 6, 2022 — Bennett gets an email from Nomura’s Rouner: “Jennie. Congratulations on selecting Bally’s to develop a world-class casino and resort at the Tribune Publishing Center. This is a great result for the city of Chicago! On behalf of your extended team at Nomura, thank you for the opportunity to advise the city on this important project. We look forward to its successful completion, and will be pleased to provide any additional support you may need in the process.”

May 16, 2022 — Nomura bills the city $1.5 million plus $50,000 in expenses. City Hall pays the bill on May 27.
 
I wonder whether any FEDERAL laws have been broken?

2 comments:

  1. Anonymous6/25/2023

    Everything in chicago is dirty.

    ReplyDelete
  2. Anonymous6/26/2023

    Chicago is the epi-center of the diety deal.

    ReplyDelete