Bally’s Q2 revenue jumps to $552.5 million, aided by interactive growth

Bally's Corp Q2 22 Earnings
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Bally’s Corporation’s conservative approach continues to pay dividends. According to the Q2 earnings call on Thursday, the company’s overall revenue more than doubled year over year. While net income is down, adjusted EBITDA is up substantially as well.

Here’s a look at the top line numbers and how they compare YoY:

Revenue of $552.5 million, up 106% from $267.7 million in 2021

Net income of $59.5 million, down 14% from $68.9 million in 2021

Adjusted EBITDA of $141.2 million, up 70.5% from $82.8 million in 2021

“Our second quarter results reflect continued strength in our Casinos & Resorts segment, record margins in our International Interactive segment, and continued growth in our North America Interactive segment, particularly in in New Jersey, despite headwinds from significant FX volatility and challenges in Atlantic City. We are pleased with the company’s record cash flow from operations in the quarter and are focused on continued incremental cash flow generation initiatives,” said Bally’s CEO Lee Fenton.

Bally’s Interactive will focus on online casino states first

This is the third full quarter since the acquisition of European company Gamesys. The European business from the Gamesys side of the company has been a massive contributor to revenues since the merger. However, CFO Bobby Lavan cautioned he expected that vertical to remain relatively flat into 2023.

With the continued delay of the British government’s white paper on the 2005 Gambling Act, Lavan and Bally’s are more bearish than bullish about the European market, expecting they “have to sort through some of the dynamics.”

On the US side of things, the interactive division posted $24.8 million in net income losses and adjusted EBITDA losses of almost $17 million. In 2021, net income losses amounted to $3.2 million and adjusted EBITDA was $93. In the past year, the scope of North American interactive has expanded greatly to include Arizona, Indiana, Virginia, and online casino in New Jersey.

Nonetheless, the North American interactive division continues to take a restrained marketing approach as they improve the product. Here’s what Fenton had to say:

“I’ve said the product isn’t exactly where we want it to be today. Even the igaming product in New Jersey, we’ve got lots of things that we can still migrate over across from the UK, which I think will enhance that product. Sports product, which is live now in Arizona, and in New York, we haven’t been heavily spending behind or pushing hard because we still have quite a few content integrations to do…the likes of [SportRadar], [BetGenius], IMG, etc. They’re all coming and that will bring a much higher volume of sports. So we haven’t been pushing that until we’ve got a much richer event lineup inside of that app.”

The marketing spend is not nonexistent. For example, Bally Bet signed a partnership deal with the New York Yankees just this week. However, the company plans to take a specific market-by-market approach. As one slide on the presentation deck prominently stated:

“Get it right then invest not invest then get it right”

Bally’s has online sports betting market access to several states, including Tennessee and Louisiana, but those will be on the back burner in favor of states with online casino or the prospect of legalizing online casino soon.

“With a CPA sub-$250 before marketing tech stack improvements, New Jersey is the model we will apply to the rest of our North American rollout. Each state will be different and our focus is on creating a blueprint for each state of a similar type before we invest in that rollout. iCasino states are our priority and we will focus our resources in live markets including Pennsylvania and Ontario, as well as those states we believe will regulate AI gaming in the next two years,” Fenton said.

Bally’s building temp casino at Chicago’s Medinah Temple

Much of the talk on the Q2 call was understandably about Bally’s plans in Chicago. After being selected to build the first downtown Chicago casino, it will be a major piece of the company going forward. The permanent facility at Chicago Tribune printing plant in River West will not open until 2026.

In the meantime, the company is planning to open a temporary property next summer.

We will open a temporary facility in June 2023 at the Medinah Temple in the heart of Chicago. The site and location of that project is unique and will help develop the customer list in support of Bally’s Interactive, and ultimately, the opening of the permanent facility,” Bally’s President of Retail George Papinier noted. “We expect to invest $70 million to open the temporary facility and the property is projected to deliver at least $50 million of EBIT dar in the first year of opening, not counting any benefits to Bally’s Interactive.”