Lee Fenton is stepping down as CEO of Bally Bet parent Bally’s as the organization focuses on “unacceptable” online results in North America.
Robeson Reeves, the current president of Bally’s Interactive, will take over as CEO on March 31, the company announced Monday. Fenton is also stepping down from his spot on Bally’s board of directors.
Both Fenton and Reeves joined Bally’s in October 2021 when the company finished its more than $2 billion acquisition of Gamesys. Reeves was COO of Gamesys at the time of the acquisition.
Fenton recently took responsibility for over-hiring in the interactive division. Bally’s announced in January it would lay off up to 15% of the interactive workforce.
Bally Bet, iGaming getting ‘deep dive’
Reeves did not hold back in discussing results for online casino and sports betting:
“Simply put, our North America Interactive results in 2022 were unacceptable. In response, through our announced restructuring plan of the Interactive business in January, we are taking a deep dive in our approach to North America to ensure that investments we make in sports have a near-term path to profitability.
“In iCasino states, we continue to take share in New Jersey and Ontario as we integrate this business in a scalable way.”
Bally’s preliminarily reported an adjusted EBITDA loss of $5.9 million for North American interactive in the fourth quarter, which is an improvement from the $8.3 million loss in the fourth quarter of 2021.
For the year, though, the North American segment had a negative adjusted EBITDA of $65.7 million. That is more than five times the $12.4 million loss reported for 2021. Bally’s waited to invest significantly in the Bally Bet brand until the 2.0 platform launched last year.
Big impairment charges concerning BallyBet
While other competitors are talking profitability for their betting and iGaming segments this year, Bally’s is not there just yet. The company expects an adjusted EBITDA loss between $40 million and $50 million in 2023.
Bally’s spent more than $3 billion building out its interactive offering, but it is starting to write off some of those investments.
The company reported $464 million in non-cash impairment charges in the fourth quarter, all of which were attributed to Interactive.
The biggest chunk, $390.7 million, is from the Bet.Works and Monkey Knife Fight acquisitions. The company paid $310.7 million combined for the assets. Another $73.3 million is associated with Gamesys brands that are being deemphasized for newer brands in Asia and the rest of world segment.
More interactive costs incoming?
On top of the impairment charge and all the money already spent on an iGaming offering, Reeves said the company may have more to do.
“As part of the restructuring, we are evaluating multiple options, including leasing technology structures that integrate quickly and effectively with our world class iCasino and Marketing tech stacks. We also expect our restructuring efforts to drive benefits in our International Interactive segment.”
Bringing technology in-house typically means the end of most third-party costs, so Bally’s seems to be going in the opposite direction.
Should Bally Bet parent have gone private?
The market may not have known about many of these issues had Bally’s board accepted a $2 billion takeover last year.
Bally’s Chairman Soo Kim and his Standard General offered $38 a share for Bally’s last January. That was rejected by the board in May.
BALY jumped to $36 the day the takeover bid was announced, so the premium may not have seemed like enough at the time. It certainly looks like a good deal now considering BALY closed Friday at $19.12.
Bally’s monitoring potential RSN bankruptcy
A big part of the customer acquisition plans for Bally Bet had to do with renaming 19 regional sports networks owned by Diamond Broadcast Group.
But Diamond is facing an $8.6 billion restructuring of its debt in bankruptcy court. That could leave the networks without their biggest draw of local professional teams.
“We continue to monitor the Diamond situation closely and look forward to working with the new management team,” CFO Bobby Lavan said. “Bally’s will continue to promote its brand through multiple means, including our national portfolio of Bally’s branded casinos, various media partnerships like that with Sinclair and the Tennis Channel and our global digital portfolio.”
RSN customer funnel lacking so far
At the time the board turned down the Standard General bid, Bally Bet launched its 2.0 platform in Arizona about eight months after the market went live.
“This is a significant milestone for us and represents huge efforts by the team,” Fenton said at the time. “I’m proud of all the work that’s been done to bring our technology stack together. Arizona is a key market for us with our groundbreaking WNBA partnership, marketing spend with the Diamondbacks, and our media partnership with Sinclair.”
Bally Bet, however, ranked second-to-last in terms of handle share for November, the most recent month of Arizona results. It had just $122,228 in handle for the month, or 0.02% of the entire market, according to the report. The only worse performer was Golden Nugget, which was acquired by DraftKings.