Although Bally’s Corp. CEO Lee Fenton’s tenure doesn’t end until March 31, he was absent from Thursday’s brief (32-minute) earnings call, which featured CEO-to-be Robeson Reeves, Chief Financial Officer Bobby Lavan, and President George Papanier, whose portfolio is the brick-and-mortar business. Asked what Fenton had meant to him, Reeves replied, “He has been a wonderful mentor and I owe so much to him.”
Bally’s posted fourth-quarter revenues of $576.7 million and a net loss of $487.5 million, largely driven by a write down in the value of certain assets (chiefly Bet.Works and daily-fantasy-sports venture Monkey Knife Fight) of $464 million. Cash flow in the quarter was $145.8 million. Looking forward, the call was long on new future strategies and short on specific color, with several Wall Street analysts rebuffed in their attempts to obtain granular detail.
Although Reeves’ remit has been described by the company and Reeves himself as primarily occupied with Bally’s interactive efforts, where it has struggled, he began by emphasizing, “We will execute on building the $1.7 billion Bally’s Chicago.” Later in the call, Papanier returned to the subject, saying he fully expects to open the Medinah Temple temporary casino this summer, explaining, “There’s no more [civic] approvals required.”
Papanier wouldn’t discuss strategy regarding Bally’s approach to New York City, where it has been reported to be considering subleasing a Trump Organization-owned golf course in the Bronx. However, he did say, “We see a huge potential in that market” and that he was looking at a two-stage development (temporary casino first, resort later) similar to what’s being done in Chicago. Company execs noted that they had $400 million cash on hand and $3 billion in net debt and were aiming to bring their leverage to below five times EBITDA by the middle of next year.
“We’re seeing growth in unique customers,” Papanier continued, as well as in high-value customers. Bally’s is focusing more on table-game players, thereby skewing their demographic younger, especially as players in the 65-or-older bracket are still slow to return post-COVID. Papanier said the emphases on tables and the Asian demographic were particularly helpful at newer-owned properties.
Although Bally’s execs stressed that the Tropicana Las Vegas is still an asset new to the company fold, they were noncommittal as to its future.
“We’ve bought what we define as a long-term option,” said Papanier, raising the prospect of a managerial flip (the real estate is owned by Gaming & Leisure Properties) or “the right project at an appropriate return.” He provided no hard news on the Oakland Athletics, who have apparently moved on from the Tropicana, first reported to be in talks with Circus Circus owner Phil Ruffin and now with the Rio, in their quest for a Las Vegas baseball-stadium site.
Whether in Las Vegas or elsewhere, consumer habits were described as steady. “We’re seeing really solid spend,” said Reeves. “We’re not any strain there at all.”
Added Lavan, “If we hold trends where we are today, we’ll be above our [revenue] guidance,” but he expects a consumer pullback between April and June.
“It’s still a tight labor market,” remarked Papanier, “and hard to fill jobs to meet demand.”
One region into which the Bally’s executive team would like to expand is South America, particularly Brazil, where legalized gambling has very recently been enabled. “We’re absolutely looking to expansion in South America,” said Reeves. “I particularly like the Brazil market. We think it has great potential and will be a strong pillar for us.”
In the interactive sphere, there was good news from the United Kingdom, where revenues rose 12 percent. Reeves called the numbers “strong … well ahead of the market [with] smaller operators going away and the bigger operators,” such as BallyBet, “gaining market share.”
Stateside, Bally’s $4 million a month in gross gaming revenue from its internet casino in New Jersey was highlighted, as was the March-to-June launch of BallyBet in Pennsylvania.
One analyst asked for a timeline for when the interactive division would be profitable, but received no definitive answer. Said Reeves, “We’re in it for the absolute long haul, but we won’t make the same mistakes we’ve made before. … You firstly have to build people’s trust in your proposition,” then business will improve over time.
As far as reversing any mistakes was concerned, Reeves stated, “Our technology pipeline has been totally reworked.” The Bet.Works acquisition “didn’t give us the platform to develop a more competitive product. This will not happen again.” He promised to “follow the data,” focusing on scalable opportunities and pursuing them harder, deemphasizing sports betting to an “acquisition tool” to obtain customers.
Added Lavan, “We continue to focus on profitability in cutting costs.”
As for what his managerial style would be, Reeves said, “I’ll play to my strengths. They’re in data and leveraging technology across all of our assets. … We’ll push hard.”
