Bally’s took a circuitous route to a third party-powered sports betting app, but it should mean lower costs associated with Bally Bet, CEO Robeson Reeves said.
The company essentially threw out old plans earlier this year when it wrote off multiple acquisitions related to sports betting made over the past few years. Bally’s announced a new partnership with Kambi for its sports betting technology and White Hat for its player account management system.
“The North American infrastructure we had in place for sports was inefficient,” Reeves said on the company’s first-quarter earnings call this week. “I own that. And with these new partnerships in place, our cash burn and development costs will go down sharply as spend will be performance-driven.”
The new plan sets Bally’s up better for both near- and long-term results for investors. These relationships could also be expanded to international as Bally’s considers launching online sports betting in the UK and Europe as well, Reeves added.
Bally Bet could be self-operated again
Bally’s is not ruling out the possibility of running its own technology again, though.
The agreement with Kambi allows Bally’s to buy a limited source code for online and retail sports betting, should that be more economical for the company. Bally’s will evaluate that option as the North American sports betting business grows, Reeves said.
The plan is for Bally Bet to be live on Kambi’s technology in seven states by the end of the year. Right now, Bally Bet is live in six states with Massachusetts the likely seventh:
- Arizona
- Colorado
- Indiana
- Iowa
- New York
- Virginia
Q1 performance by the numbers
Bally’s North American interactive division lost $10.6 million in adjusted EBITDA on $24.4 million in revenue, compared to losses of $19.3 million on $15.2 million in revenue last year.
That improvement is mostly due to costs saved by the restructuring plan for interactive. That restructuring saw 15% of the interactive workforce cut and cost $16.8 million total, with $5.9 million attributed to North America.
Bally’s expects the North American interactive business to lose between $40 million and $50 million in adjusted EBITDA this year.
Bally Bet customer costs will dictate ’24 loss
Bally’s should begin to “close the gap” in interactive losses next year, outgoing CFO Bobby Lavan said.
How much is spent outside of Bally’s costs with Kambi will come down to what the company wants to invest in customer acquisition.
Right now, Bally’s is considering that customer acquisition spend on a “very conservative basis,” Lavan said.
Bally’s remaining iGaming first
Bally’s, like other smaller sports betting operators, honed its focus in on iGaming as its primary interactive driver.
Its online casino in New Jersey is up to about $5 million in net gaming revenue 15 months after launch, Lavan said. That translates to profit of more than $1 million, and growing.
Bally’s currently has a 4% share in New Jersey. That should grow to its target of 6% to 8% in 12 to 18 months, Reeves said.
Its online casino in Ontario is also seeing about $1 million in monthly revenue, Lavan added. Bally’s will launch online casino this month in Pennsylvania for a third online casino jurisdiction.
