Bally’s is looking to move on from $215 million worth of sports betting acquisitions, as it shut down daily fantasy sports app Monkey Knife Fight Tuesday and announced plans to depart from sports betting tech platform Bet.Works.
Acquired by Bally’s in 2021 for $90 million, Monkey Knife Fight posted the closure announcement on Twitter.
“There were attempts to sell and salvage the Monkey Knife Fight business, which still maintains a passionate user base,” said Lloyd Danzig, Managing Partner at Sharp Alpha Advisors. “But, today’s announcement suggests that burn rate had grown too high for the platform to sustain operations without further infusions from Ballys.”
Bally’s stock is up 1.3%, trading at $19.72 a share following the news.
‘Won’t make the same mistakes’
In a recent earnings call, newly appointed CEO Robeson Reeves referenced MKF among several “mistakes” Bally’s had made in its initial foray into sports, alongside Bet.Works, which the company acquired for $125 million.
“We’re not going to make the same mistakes we made previously, so we’re looking at all adoptions to [grow] in the most profitable way,” Reeves said. “On sports, we recognize that the Bet.Works acquisition did not give us the platform required to develop a competitive product. We didn’t react fast enough there, and this will not happen again.”
Reeves officially takes over the brand in March, after former CEO Lee Fenton resigned amid “unacceptable” North American results in February.
Between Bet.Works and Monkey Knife Fight, Bally’s recorded a $390.7 million non-cash impairment Q4 2022, according to its investor presentation for the quarter.
Bally Bet is now live in Arizona, Colorado, Indiana, Iowa, New York and Virginia, and is coming to Massachusetts in May. The company has not yet gotten off the ground in the 11 other states where it has market access.
This marks the second operator in less than a year unable to utilize an asset it bought to enter sports betting, as Fubo failed to find a buyer for the sportsbook it aquired from Vigtory.
Bally’s targets later profitability date
Bally’s expects to lose between $40 million and $50 million in adjusted EBITDA from its North American online sports betting and iGaming businesses in 2023.
While Bally’s expects the division to be profitable in 2024, competitors like BetMGM, FanDuel and Caesars are targeting profitability this year. It underscores how far Bally’s has to go in its recent venture.
It posted $487.5 million total losses for the quarter and opened the year announcing 15% reduction in workforce in an effort to save $35 million.
Who is next for Bally’s?
More blue-chip companies could be on the block this year, if Bally’s can pay.
“We are confident there are more economical and nimble solutions out there and have spent the past five months analyzing them deeply,” Reeves said.
PointsBet is in talks to sell its Australian sports betting business. The company also pulled out of Massachusetts and its deal for Sunday Night Football, citing a focus on local markets. It has live markets in 14 states, versus Fubo which was only available in three states.
But the more likely route to replace Bet.Works could be third-party leasing, which Reeves named specifically as an option. That should be music to the ears of companies like Kambi and Endeavor, which have lost customers that moved their tech in-house.
Mike Mazzeo contributed to reporting for this story.