Despite recording best-ever third quarter revenue of $632.5 million (a 9.4 percent improvement from last year at this time), Bally’s Corp. came up $61.8 million shy of profitability.
In a potentially related development, the company announced the elimination of 300 positions, as it shifts responsibility for its interactive operations to White Hat Gaming. Shares of Bally’s dropped nearly 16 percent on the New York Stock Exchange, to $7.70 at press time.
Company executives stressed the “successful soft launch” of Bally’s Casino at Chicago’s Medinah Temple throughout the call. The temporary casino has welcomed 157,000 visitors as of today and ranks second in Illinois for gross gaming revenue, behind only Rivers Casino Des Plaines. This was, Bally’s said, achieved without any marketing spending.
Bally’s President George Papanier started by blaming Illinois regulators for “a three-month delay” in opening the temporary, before praising “trending volumes on a week-over-week basis. We remain confident in our expectations” of $50 million a year in cash flow from the temporary, which will operate through September 2026.
Las Vegas, Atlantic City, and Evansville were all identified as soft spots in the company’s financial performance. The Indiana casino was negatively impacted, according to Bally’s execs, by historical-horse-racing machines proliferating in Kentucky.
Nothing was said about Atlantic City, but the Las Vegas underperformance was attributed to uncertainty about the Tropicana’s future, as well as the defection of customers and employees to rival casinos, due to that uncertainty. Executives said they were in a holding pattern for—or “eagerly awaiting” as CEO Robeson Reeves put it—Major League Baseball’s impending vote on potential relocation of the Oakland Athletics to Las Vegas.
If approved by team owners, that would move the team to a purpose-built stadium where the Tropicana now stands. As for the resort currently there, Glover said that it was difficult to assess its competitive position “until we gain any more clarity on what the A’s are going to do.”
Reeves emphasized that Bally’s paid only $150 million for the venerable resort, adding, “Although we have some short-term pain, this is an extremely valuable asset.” Chairman Soo Kim noted that the Tropicana was profitable when Bally’s bought it and the asset value has only increased.
Pressed by a stock analyst to sell the Tropicana lease, Glover noted that its current value is “enormous.” He continued that, at the right price, he would be amenable to flipping it.
A nearer-term action item is the Chicago megaresort. Papanier said that all “soft costs” associated with the project had been addressed and construction would begin in the second half of next year.
“We will be extremely tight on costs and scale,” added Reeves, “as we’re building to that [$1.2 billion] number.” He was seconded by Kim, who said, “We will make sure the 4,000-gaming-position facility opens on time and on budget.”
Between capex investments made in 2023 and the vast bulk of Bally’s Chicago megaresort costs falling into 2025-26, Bally’s leadership presented a sanguine outlook for the coming year. Reeves pointed to “prudent financial approaches” to online sports betting, reiterating his view of it as a pathway to igaming, now the company’s focus.
“We continue to grow market share with tight control of costs,” said Reeves, noting the inception of online Bally’s Casino in the United Kingdom and the year-end goal of revamping BallyBet online in seven states domestically. He called early results in Pennsylvania “encouraging,” adding that igaming overall is “already generating positive returns.”
On other fronts, Reeves and CFO Marcus Glover hailed the resumption of smoking at Bally’s Shreveport, which they reported as redounding to the benefit of revenue at the Louisiana casino. Reeves also predicted a 2025 breakeven point for the company’s interactive division, which recorded $17 million-plus in negative return on investment in the third quarter.
Bally’s continues to pursue a casino megaresort in New York City, where Reeves stressed local support manifested for a development on the former Trump Links at Ferry Point. He articulated the company’s 2024 goals as building on the Chicago market, growing the North American interactive market, and increasing global awareness of the Bally’s brand.
“Our immediate focus is closing out a strong 2023,” remarked Glover. “Although our company is young, our outlook is positive.”
The CFO revised earnings guidance for the balance of the year, lowering revenue projections to the $2.4 billion-$2.5 billion range, while cash flow is now expected to hit between $640 million and $650 million.
“Our confidence going into 2024 remains high,” Glover said. “There are some competitive pressures that we’re experiencing,” he allowed, “that we’re going to have to market through.”
“We’re seeing a better opportunity at the higher end our customer database,” Papanier elaborated, “and we’re taking advantage of that.”
Queried on possible stock buybacks, Glover said, “Free cash that we have, we’re always assessing the best use for that, [but] it’s an attractive price.” Added Kim, “We’re well aware of where our shares trade.”
Responding to a question about Bally’s spending priorities between Chicago, Las Vegas, and New York City, Kim said that the Windy City was the highest and that New York was “a little further out. We’re not going to run out of capital,” he reassured Wall Street boffins. “The board and shareholders are going to be rational as to how we allocate.”
