‘They knew this was illegal and hoped no one would notice,’ a lawyer challenging Bally’s race-based investment opportunity told National Review.
The city of Chicago, Illinois gambling officials, and the developers behind a planned Windy City casino are breaking the law by barring white men from investing in the venture, according to a lawsuit by a conservative civil rights group.
The American Alliance for Equal Rights, led by conservative activist Edward Blum, and two white investors filed a lawsuit on Wednesday charging that Bally’s plan to limit its initial public offering to racial minorities and women is illegal racial discrimination.
The lawsuit comes after Bally’s warned last month that the plan to exclude white men from investing could lead to costly legal challenges that could imperil the casino project.
“Bally’s is just another woke corporation that got into bed with Chicago politicians to do a deal,” Dan Lennington, a lawyer for the Wisconsin Institute for Law & Liberty who is representing the plaintiffs, told National Review. “They knew this was illegal and hoped no one would notice. We did, and now their entire $1.7 billion project is at risk.”
A Bally’s spokesperson told National Review in an email that the company has a “binding Host Community Agreement with the City of Chicago to build what will be the best regional casino in the country” and that “Bally’s honors its commitments.”
“The Bally’s Chicago IPO complies with our obligations under the Host Community Agreement with the City of Chicago,” the company spokesperson added.
The $1.7 billion casino — with a 3,000-seat theater, six restaurants, and a 500-room hotel — is planned for a 30-acre site on the Chicago River. Plans ramped up after lawmakers in 2019 expanded gambling throughout the state by amending the Illinois Gambling Act.
The act allows the Chicago leaders to issue a single casino owner’s license and gives the city substantial regulatory power. It also requires that applicants for an owner’s license must contain “evidence the applicant used its best efforts to reach a goal of 25% ownership representation by minority persons and 5% ownership representation by women,” according to the lawsuit.
In 2022, under the leadership of former Mayor Lori Lightfoot, the city entered into an agreement with Bally’s to develop the casino.
On December 30, Bally’s announced an initial public offering of a 25 percent equity stake in the casino to raise $250 million to fund the project. City leaders called it a chance to “create generational wealth” and an opportunity for residents to not just be “a consumer but to be an owner.” But in an email, Ameet Patel, president of Bally’s Chicago, explained that the investment opportunity would be “set aside for investors that meet the Qualified Investor Criteria,” according to the lawsuit.
“In general,” Patel explained, “adults who are women and people of color are eligible and fit the City of Chicago criteria.”
However, in a preliminary prospectus filed with the U.S. Security and Exchange Commission in December, Bally’s Chicago warned that excluding investors by race “may result in lawsuits against us and the City of Chicago.” Bally’s “could incur substantial costs defending the lawsuit and the time and attention of our management would be diverted from our business and operations,” the company added.
If the courts were to find the race-based exclusions 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,” the company wrote.
The lawsuit was filed in U.S. District Court for the Northern District of Illinois. The defendants are the city of Chicago, Bally’s Chicago, and the Illinois Gaming Board.
Two plaintiffs named in the lawsuit, Richard Fisher and Phillip Aronoff, are both described as retired residents of Texas who are regular investors. Both are “interested in and able, ready, and willing to invest in Bally’s Chicago, Inc., but they cannot because of their race,” the lawsuit states. “In short, Defendants have stacked the deck against them, a hand Defendants cannot play.”
“This race-based stock offering is illegal, and this Court should declare it as such,” the lawsuit adds.
The lawsuit comes as President Donald Trump has taken aim at race-and-identity-based diversity, equity, and inclusion programs since resuming office this month.
“With the Trump Administration’s new direction on racial equality at the federal level, the focus will now shift to states, local governments, and private companies that persist in unlawful discrimination,” Lennington, the WILL lawyer, told the Chicago Sun-Times.
Blum, the founder the American Alliance for Equal Rights, led the successful effort challenging race-based admissions practices at Harvard and the University of North Carolina at Chapel Hill. In 2023, the Supreme Court ruled that race-conscious admissions policies at the schools violated the Equal Protection Clause of the 14th Amendment.
Bally’s, the Rhode Island-based gambling and entertainment company, states on its website that it truly believes that “a diverse environment breeds creativity and innovation, giving employees from different cultures, backgrounds, and experiences the opportunity to be heard.” It claims that in at 2022 employee survey, the company had a 94% Positive rating” for its DEI policies, and “96% Feel free to be their authentic selves at work.”