Bally’s appears to be fine with slow-rolling its marketing for Bally Bet as the focus remains on states with iGaming.
North American interactive revenue hit $33.4 million in the fourth quarter, up 26.9% from the year before, though its adjusted EBITDA loss grew to $9.8 million. Bally’s is modeling a $30 million adjusted EBITDA loss for North American interactive in 2024, with the focus on using sports betting as an iGaming acquisition tool.
“We expect full-year adjusted EBITDA to improve significantly as marketing efforts will remain measured, given our view of OSB as a funnel for iGaming growth,” CFO Marcus Glover said on Wednesday‘s fourth quarter earnings call.
Disappointing news for Kambi?
The comments about measured marketing efforts and focus on iGaming is almost exactly the opposite of what Kambi wanted to hear.
Kambi, which began powering the latest iteration of Bally Bet in August, said it expected more out of Bally’s in terms of promoting the sportsbook. Outgoing Kambi CEO Kristian Nylén hoped that would change this year:
“Yes, we expected them to push the product much more,” Nylén said about Bally’s on his earnings call. “They have chosen another strategy. I don’t know if they’re waiting to reach a certain amount of states before pushing sports betting or what is holding them back. But we certainly expect them to become much larger than they are at the moment.”
This strategy from Bally’s is not surprising, though. On its first quarter 2023 conference call, then-CFO Bobby Lavan said Bally Bet costs would come down to what the company wanted to invest in user acquisition, which at that time was expected to be “very conservative.”
More interactive writeoffs
Bally’s spent more than $3 billion to build out its interactive segment, both in North America and internationally. Once it was clear those investments were not working as planned, Bally’s started to write off the losses and took a $390.7 million non-cash impairment in the fourth quarter of 2022.
Add another $59.7 million in impairments to that list. The biggest chunk, $54 million, is related to a long-standing trademark acquired in the Gamesys deal.
The other $5.7 million is related tech that will no longer be utilized after the interactive restructuring.
What was positive for Bally Bet?
Bally’s CEO Robeson Reeves noted North American iGaming benefited from “solid New Jersey and Pennsylvania iGaming results” in the fourth quarter.
The company is looking forward to the launch of iGaming in Rhode Island, where Bally’s is the sole operator. Once that market is live, Bally’s domestic player account management (PAM) will shift to White Hat Gaming, which will both mitigate costs and improve user experience, Glover said.
Profitability for the interactive segment hinges on Rhode Island’s performance and any other states that could legalize iGaming this year or next.
“We’re very focused on investing in iGaming as that’s where we’re achieving our greatest return,” Reeves said.
Bally Bet not leaving New York … yet
There is no intention of leaving any sports betting-only markets just yet, Reeves said when asked about the recent WynnBet sale of its New York license to Penn.
Bally’s has hopes of landing one of the downstate New York casino licenses, so the company waiting to see the outcome of that before making a decision is not surprising.
“No, we don’t have any intention to leave any of these markets,” Reeves said. “We’re being very measured, as we’ve said in our marketing approach. We have got a great partnership with both Kambi and White Hat, which has enabled us to manage the appropriate investment costs across all of these states. We do view sports as the pathway to iGaming. Today, we will stay in all these states.”
