The “twin paths” of Bally’s

March 5, 2023 11:16 AM

The “twin paths” of Bally’s

Photo: Shutterstock
  • Ken Adams, CDC Gaming Reports
March 5, 2023 11:16 AM
  • Ken Adams, CDC Gaming Reports

Just when you thought the battle for the top tier was over, another company starts climbing the ladder.

Bally’s, originally known as Twin River Worldwide Holdings, is the latest in a long line of casino companies that has expanded from one or two casinos in a single locale to other jurisdictions and dozens of casinos.

The first few of those outward-expanding empire-building companies were Harrah’s, Wynn, and Showboat. In 1978, there was only one place to expand to: Atlantic City. So that is where they went. Later, Harrah’s and Showboat set sail for Australia. After a few years, Steve Wynn decided that Las Vegas was the only place for him. It took two decades before Wynn Resorts ventured away from home again.

When Atlantic City opened, casinos companies realized two sources of revenue were better than one. As other jurisdictions authorized casino gambling, Nevada casino companies were in line for the new opportunities — three separate sources of income were better than two and so on. Harrah’s was the first to develop a national strategy; at one point, the company committed to having at least one casino in every jurisdiction. Now operating under the Caesars’ brand, the company has 50 properties in 17 states and generates $4 billion a year in revenue.

While the major Nevada casino companies were searching the country for new opportunities, other gaming companies also began to develop a national strategy. Penn National and Churchill Downs began their corporate lives in horse racing, which had been in a long slow decline until tracks were allowed to have slot machines. With the machines, horse racing again became viable, but the operators still wanted a more diverse revenue base. Penn and Churchill cast their nets into other states and on casinos without racing. Between the two, they now operate approximately 60 properties in more than 20 states.

New opportunities for expansion continue to present themselves. In 2022, Illinois was taking bids for six new casinos, including one for Chicago. Arkansas, Virginia, and Nebraska have also joined the casino party. New York is now entertaining bids for three licenses. Caesars, Penn, Churchill Downs, and Hard Rock are submitting their bids everywhere.

Another new jurisdiction that the major companies want to enter is cyberspace. Igaming generated $3.5 billion in gross gaming revenue in 2021 and $4.5 billion in 2022. The igaming numbers are particularly impressive, given that only six states currently authorize remote casino games. Also in cyberspace, online or mobile sports betting GGR is equivalent to igaming, bringing the total to nearly $10 billion in 2022.

Bally’s has become a player in most new and emerging markets.

Bally’s began life as BLB Investments, which then morphed into Twin River. Its primary asset was Lincoln Park in Rhode Island, a dog track with slots. In 2007, Twin River expanded Lincoln Park into a full-fledged casino and rebranded it as Bally’s Twin River Lincoln. In 2014, the company purchased the Hard Rock in Biloxi, Mississippi. The next year it purchased the Newport Grand in Rhode Island and moved it to a new facility in Tiverton, Rhode Island. Now, in March 2023, the company owns 15 casinos in 10 states, a horse track in Colorado, and online sports betting in 14 states. It recorded $2.2 billion in revenue in 2022, an increase of 70 percent over 2021.

Standard General, a hedge fund, is Bally’s majority stockholder with 22.4 percent of the company. Soo Kim, a founder of Standard General and a principal partner, is chairman of the board of Bally’s. In 2020, Twin River purchased the Bally’s brand from Caesars. In November 2020, Twin River officially rebranded as Bally’s, trading under the stock symbol BALY. Caesars was in transition period after its merger with Eldorado Resorts that was finalized in July 2020. The combined Caesars had too many properties, often competing with one another in the same city. For business and sometimes regulatory reasons, the new Caesars needed to sell off some of its assets. That provided an opportunity for Bally’s to acquire additional properties.

According to Soo Kim, the long-term future for Bally’s and, indeed, for gaming, consists mostly of internet casinos and sports betting. However, the company also sees a real future in brick-and-mortar. Bally’s was awarded the license for a Chicago casino and is in the process of constructing a temporary that will operate until a permanent facility can be built; the permanent is targeted for 2026. The corporation has just completed redevelopment projects in Rhode Island, Atlantic City, and Kansas. And it is contemplating a bid for a New York City license. It’s a full plate, to put it mildly; in an article for the Nevada Independent, Howard Stutz predicted that its Las Vegas property, the Tropicana, will have to wait. Bally’s has neither the personnel nor capital to redevelop the Trop at this time.

The market apparently also feels that Bally’s plate may be too full. Bally’s traded at $20.59 on Friday March 3, down from $34.20 on March 4 and $71.58 on March 12. Of course, part of the change is the market; most gaming companies were also down over that period. Caesars traded at $54.43 on March 3, down from $80.83 on March 4. However, it is also a reflection of the market’s dissatisfaction with the results of sports betting. Bally’s, like the other sports betting companies, has spent heavily on marketing, promotions, and bonuses and is still looking for a profit.

Soo Kim says Standard General is in this for the long-term. He acknowledges that some changes need to be made, but insists that the company is on the right track. Bally’s problem, however, is that it is not on one track, but two disparate paths: sports-igaming and casino-resorts. To further complicate its ability to clearly define its mission, each jurisdiction for casinos and sports is different and requires different strategies. Like its former name Twin River, Bally’s is on “twin paths” with many confusing and tempting little byways.