Bally’s Corporation has reached a settlement in a federal lawsuit stemming from its previous policy to limit early investment in its Chicago casino project to women and minority groups. The case, filed by the conservative legal organization American Alliance for Equal Rights (AAER) and two white male plaintiffs, Richard Fisher and Phillip Aronoff, alleged racial discrimination under federal civil rights laws.

The agreement was filed in U.S. District Court in Chicago, with no details disclosed regarding the terms of the settlement. The city of Chicago and the Illinois Gaming Board, both named in the suit, declined to comment. Bally’s also did not respond to inquiries regarding the settlement.

Initial investment plan revised following pushback:

Initially, Bally’s offered a 25% ownership stake in the $1.7 billion casino exclusively to investors who identified as women or members of historically disadvantaged racial or ethnic groups. This was aligned with a Host Community Agreement forged with former Mayor Lori Lightfoot’s administration, which was part of the city’s broader commitment to creating wealth in underrepresented communities.

The offering, filed with the U.S. Securities and Exchange Commission (SEC) in December, attracted over 1,500 interested investors. However, Bally’s returned the deposits by February after the SEC had not granted approval. In April, the company revised its IPO criteria, removing race and gender restrictions but maintaining a preference for residents of Chicago and other parts of Illinois.

Bally’s clarified in its updated prospectus that participation in the IPO was open to all backgrounds. However, the agreement with the city requiring 25% minority ownership still stands, meaning the company must find other avenues to fulfill that contractual obligation.

Lawsuit claimed civil rights violations:

The suit, filed in January, argued that excluding individuals from investment opportunities based on race or gender violated the Civil Rights Act of 1866 and other legal protections. The plaintiffs asserted they were denied the opportunity “based on immutable characteristics,” and the legal challenge was framed as a broader fight against what the group considers discriminatory diversity, equity, and inclusion (DEI) policies.

Dan Lennington, deputy counsel for the Wisconsin Institute for Law & Liberty and an attorney representing the plaintiffs, said, “From the beginning, this investment plan raised serious legal and ethical concerns and has since been abandoned.” He added, “This case should serve as a warning to other companies that hope to dole out investment opportunities based on race. It is illegal and we’ll fight it wherever we can.”

Patrick Callahan, a Chicago lawyer who was also reportedly unable to invest, called the resolution a “big victory,” but expressed skepticism about whether Chicago’s leadership would ensure nondiscriminatory policies going forward.

Meanwhile, Bally’s efforts to open the permanent facility at 777 W. Chicago Avenue by its projected September 2026 launch have encountered multiple hurdles. Construction was delayed due to concerns about city water mains beneath the site and later halted again following a demolition error that caused debris to fall into the Chicago River.

The project faced another pause last month when an investigation by the Chicago Sun-Times revealed a waste management contractor with past links to organized crime had been involved at the construction site. State gaming regulators intervened following the report.

Despite the turbulence, Bally’s continues operating a temporary casino at the Medinah Temple in River North, though returns have been underwhelming. In April, the venue brought in over $11 million, according to state figures. Still, the company has warned in filings that its casino shares are “highly risky and speculative” and suitable only for investors who can tolerate the potential loss of their full investment.

In an April SEC filing, Bally’s noted the lawsuit could result in “substantial costs” and warned that changes to its Host Community Agreement could negatively affect its ability to operate.