Why Bally’s Sports Betting M&A Spree Might Just Be Getting Started

Posted on March 11, 2021

Bally’s is “just getting started” on its plan to remake itself into a technology company, according to company chairman Soo Kim.

That likely means more M&A, even beyond Bally’s recent acquisition spree.

“Realistically, we are not done,” Kim told LSR. “We are just getting started. We want to be a technology company. The purchases we’ve made are not just for the technology, but for the people who built and run the technology.

The Bally’s metamorphosis

In recent months Bally’s has undergone a dramatic transformation. First, it rebranded from Twin River after acquiring the brand name and the Bally’s property in Atlantic City.

Then it acquired platform Bet.Works for $125 million to power the coming launch of Bally Bets. It also scooped up the naming rights to more than 20 regional sports networks in a separate deal with Sinclair Broadcast Group.

From there, Bally’s bought DFS firm Monkey Knife Fight (MKF) for up to $90 million in stock, then added free-to-play games provider SportCaller for another $40 million.

The company now has around 200 technologists in-house via those deals.

So, what next?

Own the full gambling ecosystem

Bally’s aims to own as many different touchpoints with US gamblers as possible. That means the company is looking at sectors like online casino and potentially horse racing and poker.

It also recently made a $100 million offer for esports company Allied Esports Entertainment, Inc.

“We do have guys looking to develop internal versions of these products,” Kim said. “But at some point, you can’t do that anymore. Acquiring outside isn’t necessarily our default but it is a very strong pathway.”

Is online sports betting in a bubble?

Kim also played down the idea that some of the price tags in the US sports betting sector were inflated.

“I just look at our own valuation and I’d say that’s not frothy,” Kim said. “Our casinos are reopening and they generate $300 million of operating profit. That’s $4 a share of cash earnings.

“So our stock has run a bunch and is now at 16x earnings. That’s the same as the S&P 500 but we have a ton more growth potential than the S&P 500 with our online business. So I can’t speak to the rest of the market but I know where we trade and we are very reasonable.”

Best of both worlds for Bally’s?

Kim also suggested Bally combined the best of both worlds, holding advantages that online-only operators were missing.

That includes:

  • Wide-ranging (and free) market access
  • Free advertising and retention via land-based casinos.
  • Free cash flow from those casinos to reinvest.

Kim explained:

“Our huge advantage over companies like DraftKings and PointsBet is we make money every day. The biggest flaw with those businesses is they need a strong market.

“The market is green or red for them every day and it has to be green when they need to tap it for cash to keep spending.”

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Brad Allen

Brad has been covering the online gambling industry in Europe and the US for more than four years, most recently as the news editor at EGR Global.

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