The Bally Manufacturing Corporation was founded by Raymond Moloney on January 10, 1932, when Bally's original parent, Lion Manufacturing, established the company to make pinball games. The company took its name from its first game, Ballyhoo. The company, based in Chicago, quickly became a leading maker of the games. In the late 1930s, Moloney began making gambling equipment, and had great success developing and improving the mechanical slot machines that were the core of the nascent gaming industry. After manufacturing munitions and airplane parts during World War II, Bally Manufacturing Corporation continued to produce innovations in flipperless pinball machines, bingo machines, payout machines and console slot machines through the late 1950s. They also designed and manufactured vending machines and established a coffee vending service. The company made a brief venture into the music business with their own record label, Bally Records.

Moloney died in 1958, and the company floundered briefly. With the financial failure of its parent company, Bally was bought out by a group of investors in 1963. Throughout the 1960s, Bally continued to dominate the slot machine industry, cornering over 90% of the worldwide market by the end of the decade. In 1964, Bally introduced the first electromechanical slot machine in 1963, called the "Money Honey.", Bally became a publicly traded company and made several acquisitions, including German company Guenter Wulff-Apparatebau (renamed Bally Wulff) and Midway Manufacturing, an amusement game company from Schiller Park, Illinois.