Announcing record-setting revenue from casinos and igaming, Bally’s Corp. reported $606.2 million in net revenue today. Cash flow came in at $161.4 million. This diverted Wall Street analysts from a bottom line that swung from a $59.5 million profit last year at this time to a $25.7 million loss.
CEO Robeson Reeves laid particular emphasis on the interactive sectors, domestic and foreign, saying North American performance “continues to ramp up.” Bally’s is in the process of changing platforms for its online operations to Kambi and White Hat Gaming. “We intend to be live in three states by summer’s end,” Reeves predicted.
The CEO reiterated previous revenue guidance for the company, even allowing for $10 million in costs related to Bally’s Pennsylvania launch and the Kambi/White Hat switch. “I remain deeply impressed with our global team and the progress we continue to make,” he said.
Added Chief Financial Officer Marcus Glover, “The initial results” in Pennsylvania and Ontario “have exceeded our expectations.”
Reeves said interactive business “is ultimately about product. Product in the end will win out. It’s about how you utilize your data platforms.” He explained that Bally’s is looking to spend more effectively to attract the right sort of customer. Hence the outsourcing to Kambi.
With regard to the much-discussed Oakland Athletics baseball stadium planned for the site of the Tropicana Las Vegas, Reeves said, “We couldn’t be more excited about this one-of-a-kind, transformative project,” adding that it “naturally increased” the value of the Trop site itself.
The Chicago temporary casino, set for Medinah Temple, was reported to be on track for a September opening, with Reeves forecasting $50 million to $60 million in 2024 cash flow from the property. He said it was engendering favorable feedback from people who had toured it.
Smoking in Bally’s Shreveport was described by Reeves as “an incremental driver of performance,” as the city resumed a policy of allowing tobacco within casinos to better compete with Bossier City. Reeves said that when smoking was banned, “Revenues fell over 20 percent and have yet to recover.”
Reeves appeared to reposition the company with regard to sports betting, describing it as “a funnel” to channel customers toward higher-margin igaming. Added Glover, “Sports is a great launch to our customer base, but we will be very prudent moving forward.”
Brick-and-mortar casinos were said by Reeves to be trending well, “even with some of our properties facing incremental competition.” He added that the capex-upgrade cycle at Bally’s core properties had peaked, although an expansion of Bally’s Kansas City continues.
Glover allowed that casinos had experienced “some headwinds” in Atlantic City, Evansville (Indiana), and Las Vegas. But “Overall, we’re pleased with the strength and resilience of the casino sector. We haven’t seen a significant change at our resorts. That being said, we’re keeping a close eye on consumer behavior.”
Difficulty at Tropicana Evansville was attributed by the CFO to “heavy competition within an hour of the property.”
Regarding the Las Vegas Tropicana, Glover said Bally’s is trying to “show strength and certainty,” due to customer concerns created by the baseball deal. Casino-division President George Papanier added that the Tropicana was ahead of schedule in terms of operating performance, despite having been in the portfolio less than a year.
The first analyst question zeroed in on Bally’s $3.2 billion debt load (against $184 million cash on hand). Glover responded, “Right now our focus is on the development pipeline. As it relates to Tropicana [redevelopment], that pathway is pretty far out,” adding that he was encouraged by the Las Vegas Strip location’s strategic potential.
Bally’s anticipates a March 2024 inception of igaming in Rhode Island, where the company enjoys a monopoly. Asked whether this would cannibalize land-based revenues, Reeves responded, “It’s just a different form of spending. It’s additive.”
Turning to the performance of its newly enlarged Twin River casino in Lincoln, Papanier explained that the “key element is to retain and attract slot and, more so, table-game business.” To that end, Twin River was doing “a little better than expectations,” with slot win up four percent and table winnings seven percent higher.
Internationally, Reeves was sanguine about the Tory government in the United Kingdom’s recently released White Paper on gambling. “We embrace regulation and recognize that gaming at its core is a public/private partnership,” he remarked. Bally’s saw a 12 percent increase in British takings, as the international-interactive division pulled in $248 million. In North America, by contrast, it rang up an $18 million negative return on investment.
Other overseas activity was described as “robust” in the third quarter following a “strong” second one. “In Asia, we continue to look for stability after several months of volatility,” Reeves stated. Bally’s hopes to launch online sports betting in Brazil in 2024.
Closer to home in New Jersey, the BallyBet online market “continues to creep higher and we’re working on building our presence in Ontario.” The Garden State performance, Reeves said, “is going to be driven by how much we can utilize our retail-casino database. As we introduce sports into New Jersey, we’ll see share increase too.”
As for the performance of Bally’s Atlantic City, Papanier was upbeat in spite of the headwinds Glover cited: “Since we rebranded, we had a good summer in ’22,” followed by a record July this year, with the casino “exceeding all expectations.”
Bally’s executives could make no such promises with regard to digital profitability. “Overhang from prior platforms,” Glover said, needed to be removed, partly through write-offs. “We expect to reduce our loss significantly by the second quarter of next year.”
Reeves closed the call with a promise to Wall Street. “We’ll be speaking to you with any major updates very soon.”
