Bally’s is working hard to reinvigorate its position in the American gambling landscape.
The company last week announced record Q2 revenue of $606 million, up almost 10% year over year in mixed economic conditions. Its core casino segment anchored the growth with an 11% increase to a record $333 million for the quarter.
Bally’s continues to back its full-year revenue guidance of $2.5 billion to $2.6 billion, targeting $665 million to $700 million in adjusted EBITDAR.
“Our confidence in our guidance is premised on our core businesses remaining strong, our growth projects coming online, and our North America interactive iGaming business continuing to ramp up,” CEO Robeson Reeves said.
Losses adjust upward for interactive
Although the overall outlook for 2023 has held through the first half, the current breakdown reflects higher-than-expected losses for the North American interactive segment.
Much of the anticipated $50 million to $60 million in adjusted EBITDA losses stems from the relaunch of Bally’s online casino and the integration of a new sports betting tech stack utilizing technology from Kambi and White Hat.
Bally Bet does not currently offer online sports betting in any US market amid the changeover.
Bally Bet sportsbook as loss leader
When it comes to Bally’s US sports betting endeavors, it is hard to look at the last five years as anything other than a failure.
The early acquisition of bet.works turned out to be the wrong direction in retrospect, a $125 million mistake as the company ultimately decided to pivot to this new third-party solution. The transition into phase two is underway in the current quarter, and it remains to be seen what Bally Bet can do with a fresh start for the upcoming football season. Prior to its shutdown, it was scavenging on less than a tenth of a percent of the total volume in the markets it served with the first-generation product.
While the new tech stack hints at a renewed effort, executives were quick to reiterate the relative position of sports betting within the Bally’s product mix. Don’t expect a lot of fanfare around the relaunch.
“I think sports is a great launch to engage our customer base,” Glover said, “But we will be very prudent and optimize marketing expense as we move forward. Obviously, we have some media partnerships and some rev share agreements that take shape in that segment. But we will be very, very prudent as we move forward, with the focus keenly on iGaming and the upside in those markets — specifically New Jersey, Pennsylvania and then soon to be Rhode Island.”
Bally Bet plans to relaunch its sportsbook in three states this summer and a total of seven by the end of the year. The company’s core business will continue to revolve around its brick-and-mortar resorts for the foreseeable future, however, with Bally Bet primarily serving to funnel customers into categories with larger operational margins.
Brick-and-mortar business frames Bally’s Q2 results
For Bally’s as a whole, the second quarter was about positioning itself for long-term gains in a handful of key markets.
Nevada has suddenly gotten become interesting thanks to the new partnership between the Oakland Athletics and Tropicana Las Vegas, which Bally’s acquired the operations of last year for $148 million. The A’s plan to convert 9 acres of the property into their new permanent home, a monumental move that figures to drive significant value to the adjacent Tropicana casino operation.
The city expects around 2.5 million annual visitors to the grounds of the ballpark.
Chicago here we come
Bally’s is also in the early stages of a huge casino development project in Illinois, which will ultimately spawn a new destination resort in the heart of downtown Chicago. Construction of a temporary gaming facility is on pace for a September opening, with the permanent casino scheduled to open sometime in 2026.
Bally’s expects to generate as much as $5 million in monthly revenue from the temporary operation, according to CFO Marcus Glover.
A Pennsylvania casino is on the Bally’s radar too, as it works toward the completion of its new satellite casino near Nittany Mall in State College. Casino properties in Kansas City and Rhode Island have also enjoyed a refresh in recent months, and the latter represents another major focal point of the corporate outlook.
“We expect to be mining the returns from those expansion plans in the back-half of 2023, particularly in the fourth quarter,” Bally’s President George Papanier said.
Bally’s interactive plans come back into focus
On the Interactive side, it is a tale of two companies.
Revenue from Bally’s international interactive operations grew 5.6% to $248 million for the quarter, while the North American segment continues to operate at a significant loss. Quarterly adjusted EBITDA net losses hit $17.7 million on $25.3 million of gross revenue from the region.
It is not often that a state like Rhode Island can dominate an earnings report for a gambling company, but Bally’s is keenly focused on the opportunity there. New online casino legislation enacted earlier this year will give Bally’s an interactive monopoly in the small market that is on track to launch in early 2024.
Reeves called the pending launch “a potential long-term game changer” for the company’s iGaming business in North America.
A path to profitability?
Zooming out on the map, the presentation highlighted an increased focus on interactive gaming in New Jersey, Pennsylvania, and Ontario for the remainder of 2023 and beyond. In New Jersey specifically, Bally’s says it is about halfway to its goal of reaching 6%-8% market share.
As for profitability, the North American interactive segment is seemingly still at least a year away from breaking even on the bottom line.
“Hard to say that we’ll get there by the end of this year, even into next year,” Glover told investors. “We expect to reduce our loss significantly by the second quarter next year, but the focus is on continuing to build up this platform and our infrastructure so that we can be strong in the iGaming space and honor our strategic partnerships and media partnership commitments.”