Bally's has been piling its chips higher than ever on a bet that bricks-and-mortar casinos can thrive even as gambling moves onto phones and computer screens.

Now that stack is wobbling.

Earlier this month, the global casino operator gave investors a big scare about whether its heavily leveraged balance sheet could support major developments in New York, Chicago and Las Vegas. Bally's warned in a quarterly filing that unless it secured new financing or completed other planned transactions, it might violate liquidity and leverage requirements under its revolving-credit facility within a year.

"The conditions and events raise substantial doubt about the Company's ability to continue as a going concern," the filing said.

The filing sparked a freakout on Wall Street, which has been getting increasingly worried about competition from online sports betting and prediction markets. Bally's shares plunged 26% on the first trading day after that August filing and continued to fall. The stock has recovered slightly and closed at $9.43 Friday, about 33% below its prewarning close.

After its stock tanked, Bally's tried to play down the disclosure. In a follow-up statement, the company pointed out that accounting rules prevented it from counting loans and asset sales still being negotiated until definitive agreements were signed.

Company officials also told investors and analysts that these steps would enable Bally's to satisfy the liquidity and leverage requirements at issue.

"Bally's fully expects that it will meet future funding needs," the company said.

The stock market selloff came two months after Fitch Ratings put a negative outlook on Bally's already junk-rated credit, citing its heavy borrowing, cash-flow deficits and uncertainty about financing its developments.

"Leverage is not sustainable at current levels," Fitch said in a June report.

The current Bally's grew out of Twin River Worldwide Holdings, a Rhode Island casino operator that bought the rights to the storied Bally's brand from Caesars Entertainment in 2020 and adopted it as its own. Today the company owns 20 casinos in 11 states as well as online-gambling, lottery and casino interests overseas.

Bally's financial woes come as new competitors reshape the gambling business. Americans are betting more than ever, but much of the growth in gambling is done online, not traditional casinos.

Revenue from state-regulated sports betting jumped 23% to nearly $17 billion last year, while online casino revenue climbed 28% to $10.7 billion, according to the American Gaming Association. Combined global monthly trading volume on Kalshi and Polymarket surged from less than $5 billion last September to nearly $24 billion in April, according to Pew Research Center.

Meanwhile, revenue from traditional casino games rose just 2.3%, to $50.9 billion.

"There's no reason to think it's a growth industry long term," said Jeffrey Stantial, a gaming analyst at Stifel.

The largest new project Bally's has under way is a $4 billion resort overlooking the East River in the Bronx, N.Y., that is scheduled to open in 2030. Preliminary site work has started on the 3-million-square-foot casino complex at Bally's Golf Links, the former Trump-operated golf course that the company took over in 2023.

Bally's nabbed one of three New York City casino licenses awarded by the New York State Gaming Commission in December. The licenses were among the industry's most coveted prizes because the city, with 8.6 million residents, had no full-service casino until this year.

Bally's also is spending $1.7 billion in Chicago on a resort containing what will be the city's largest casino. On the Las Vegas Strip, the company is planning a $1.2 billion hotel-casino complex on the same site as the new 33,000-seat ballpark under construction for the Athletics-the former Oakland, Calif., Major League Baseball team-who are scheduled to begin playing there in 2028.

Behind all this is Soo Kim, Bally's 51-year-old executive chairman, a Seoul-born, Queens-raised hedge-fund investor who built his career finding value that others overlooked. He started his push into gambling more than a decade ago, when his hedge fund became a leading owner of a bankrupt North Las Vegas casino that Kim helped turn around before the investor group sold it for a big profit.

Kim accelerated Bally's expansion during the pandemic after seeing business surge when casinos in Mississippi reopened in May 2020. Concluding that the government-imposed shutdowns wouldn't suppress demand for long, he went on a buying spree while much of the industry retrenched.

"Mostly everything he's done has worked out," Stantial said.

Kim acknowledges that the Bronx, Chicago and Las Vegas projects are on a different scale from anything Bally's has undertaken. But in an interview with The Wall Street Journal-conducted earlier this summer before the company's going concern disclosure-he said all the projects make sense given the unique niche they will fill.

In Las Vegas, Kim envisions baseball fans walking through Bally's restaurants, bars and entertainment spaces on their way to A's games, much as fans now stream through the neighborhoods surrounding older urban ballparks.

"It's not like we're dragging them into a casino," he said. "We're pulling them into an entertainment district."

Kim sees the Bronx as the biggest opportunity because the New York region has an unusually small supply of casino gambling relative to its enormous population. Even after all three newly licensed casinos open, he said, the market will have far fewer gaming positions per resident than Illinois.

"The Bronx could be insane," Kim said, adding, "And that's insane good."

Bally's permanent Chicago casino, scheduled to open next year, has been hitting bumps. The City Council lifted Chicago's ban on video-gambling terminals-slot and poker machines commonly installed in bars and restaurants that create more competition for gamblers in the city. Chicago officials say such a move is legal.

But Bally's says its 2022 agreement with the city prohibited such a move and has threatened legal action. Bally's also has warned that it will slow down work on its planned hotel and other amenities if Chicago moves forward with its video gambling plan.

Some analysts say Wall Street overreacted to Bally's disclosure in August. Barry Jonas, a gaming analyst at Truist Securities, said the company still has numerous ways to relieve the financial pressure it is facing.

For example, Bally's could complete financing for the Bronx project or raise money by selling investments or other assets.

"Soo has proven time and time again his ability to navigate the credit markets," Jonas said.

Even Fitch sees some financial breathing room. Although the ratings firm flagged pressure on Bally's revolving-credit facility, it noted that the company's next bond maturity-a $750 million issue-isn't due until 2029.

Still, Bally's financial balancing act leaves it especially vulnerable if the economy falters. "You hit these levels of leverage and you start worrying: If we hit a recession, there are going to be challenges," Jonas said.