Chicago temporary casino results and construction of permanent location highlight Bally’s earnings call

February 21, 2024 8:34 PM
Photo: Bally's Corp. (courtesy)
  • David McKee, CDC Gaming Reports
February 21, 2024 8:34 PM
  • David McKee, CDC Gaming Reports
  • United States
  • Illinois
  • Nevada
  • United Kingdom

Top executives of Bally’s Corp. were enthusiastic over the performance of the temporary Bally’s Casino in Chicago’s Medinah Temple. The property, which topped $10 million in gross gaming revenue last month, was one of several inflection points in Tuesday’s fourth-quarter earnings call.

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“We have an exceptionally robust core to our business,” said CEO Robeson Reaves, “and we see an exciting future ahead.” He called the last quarter of 2023 “strong,” featuring revenue of $612 million, a six percent improvement.

Looking ahead, Reaves foresaw “unparalleled development opportunities. We view our business through a lens of high confidence. We’re crafting a bright future and setting a new industry standard.”

Highlights of the quarter included casino and resort revenue of $342.3 million, a seven percent uptick, and international interactive revenue of $236 million, a two percent upward nudge. American igaming revenues leapt almost 27 percent to $33.4 million, but experienced negative cash flow of nearly $10 million, largely due to the relaunch of BallyBet.

Of the interactive performance, Reaves said, “Our UK operations continued to accelerate,” benefiting from strategic reorganization and cost efficiencies. Domestically, BallyBet is now live in seven states, with online sports betting “a foundational step toward successful igaming futures.” Even so, the company projected a negative return on investment in the U.S. of $30 million for 2024.

With the Chicago temporary now fully operational and still ramping up marketing, Reaves turned his focus toward permanent Bally’s Chicago, which he said is on track for a debut in the third quarter of 2026, despite the project having to be quickly redesigned. He said the $1.1 billion in construction costs were in hand, with the remainder of the financing being obtained currently.

As for the Tropicana Las Vegas, scheduled for closure April 2, construction of a ballpark for the Oakland Athletics “will likely begin” this summer, while Bally’s ponders the rest of the site. “The A’s are still finalizing their plans and we’re just evaluating our options,” added company President George Papanier.

Reaves laid out a vision for a five- to 10-year development pipeline of casinos, including New York City, where Bally’s now owns the former Trump Links golf course. “We believe we have a highly competitive, attractive proposal,” the CEO said. “We’re working on presenting an appropriate plan,” offered Papanier when pressed for details. Any operator will be successful in the Five Boroughs, he added, “but the first thing is to acquire a license.”

Papanier said that Bally’s enjoyed “robust performance” at its resorts, especially those in Rhode Island, Kansas City, and the Quad Cities. He added that he was “quite pleased” with Bally’s Atlantic City, which “outperformed high expectations in a highly competitive environment.”

Chicago was, Papanier continued, the beneficiary of “commendable efforts … including the building out of our database,” which now numbers 65,000 names. Parking options near Bally’s Casino have been expanded, as have shuttle-bus operations, and a high-limit gambling area has been added to the casino. Papanier said he was “extremely excited about our permanent facility. We are here to stay. What we’re seeing is primarily skewed toward a younger demographic. The goal is to build up the database and transfer 100 percent of that to the permanent facility.”

Last year “finished on a strong note,” added CFO Marcus Glover, who saluted the resorts division for “solid top-line results.” For the full 2023, casino revenue was up 11 percent, while the Asian interactive market was stabilizing and the United Kingdom one was up by double digits.

Bally’s has $163.2 million cash on hand, according to Glover, who projected revenue of $2.5 billion to $2.7 billion in 2024, with projected capex expenditures of just $165 million, largely related to site preparation in Chicago and possibly Las Vegas.

Returning to the subject of UK interactive operations, Reaves related, “We’re working very closely with the Gambling Commission. The discussion is rational, with the focus on protecting the consumer.” He said that smaller operators were likelier to be adversely affected by the Commission’s recommendations, with Bally’s picking up market share.

Reaves foresaw a “more robust” business model emerging from the White Paper’s reforms. “We are the biggest igaming operator in the U.K,,” he added, “without sports [betting], and that’s going to help the funnel” to igaming when Bally’s adds online sports wagering to its British offerings.

Reaves was asked if Bally’s was considering exiting any digital markets in the United States and gave a firm no. “We’re being measured in our marketing approach,” he explained. “We will stay in all these states.”

Although the company recently repurchased $70 million of low-priced BALY stock, it would make no commitment to future buybacks.