Bally’s to ‘evaluate’ North American Interactive division after $22.7m losses in Q3

Bally’s Corporation senior leadership indicated that it will further evaluate its North American Interactive division after it posted losses of $22.7m during Q3, whilst other core business divisions posted positive net incomes
Image: Shutterstock

Bally’s Corporation senior leadership indicated that it will further evaluate its North American Interactive division after it posted losses of $22.7m during Q3, whilst other core business divisions posted positive net incomes. 

Publishing its Q3 financial report, Bally’s recorded total corporate revenues of $578.2m, up 83.7% on Q3 2021’s figure of $314.8m. 

The corporation also noted an adjusted EBITDA figure of $151.0m, up 93.6% on last year’s figure of $78.0m.

Bally’s North American Interactive segment under the spotlight despite importance

Despite these increases in total revenues and earnings, it was Bally’s North American Interactive division that came under the spotlight, with CEO Lee Fenton noting that it would be placed under evaluation to “refocus efforts where we have faster paths to profitability”. 

The North American Interactive division posted revenues of $22.1m from operations in New Jersey via its platform, which was revealed to have a 3.5% market share in the Garden State. New Jersey igaming operations also had a GGR of around $12m, with an NGR of around $8.3m.

Fenton told investors on the corporation’s earnings call: “New Jersey is shaping our blueprint thinking for future states. 

“North America Interactive continues to be in both development and ramp-up mode. New Jersey had $12m of GGR and $8.3m for NGR from our igaming offering, showing discipline in bonuses and giving us a contribution margin. We rolled out the new lobby and more games from multiple partners during the period. 

Despite the North American Interactive division posting a net loss of $22.7m and a negative adjusted EBITDA of $19.6m, Fenton outlined an ambitious expectation for the rest of the year’s performance, whilst hinting towards further US igaming expansion in the future.

“We expect New Jersey gaming to continue to grow and be profitable for the rest of the year,” he outlined. “We are targeting six to eight points of market share in 2023 after the implementation of omni-channel rewards, along with improvements in payment processing and marketing tools.

“Our Bally-branded app of New Jersey continues to deliver a very attractive cost of acquisition for depositing players even before the marketing tech stack improvements that will be coming in 2023. Different states will have different characteristics and our focus is on creating the blueprint for states to have a similar time before we invest in the rollout.”

Bally’s CFO Robert Lavan told investors that the interactive division was impacted by “approximately $7m of EBITDA drag from non-core assets”. He also explained that any future state launches will be supported as the firm will fully expense the upfront and ramp-up costs for expansion. 

This was driven by the “incremental” expenses for state-by-state launches in North America which offset the strength of its casino and resort division. 

Operational highlights

Other highlights of the quarter included 12 months of the Gamesys integration into Bally’s business, which Fenton noted was contributing to a “powerful global business with a diversity of revenues”. 

The firm also rolled out its new combined app housing both sports betting and igaming in Ontario, expanding its digital reach in North America. 

Fenton explained that igaming is a “priority” for the firm despite the interactive business being subject to those aforementioned evaluations. 

“Igaming states are our priority and we will focus resources in markets including Pennsylvania, and Ontario, as well as states that we believe will regulate our gaming in 2023.”

Meanwhile, the casino and resorts division posted total Q3 revenues of $328.5m, with a $51.0m net income and positive adjusted EBITDA of $106.9m. This performance, Fenton explained, was “tremendous” for the company.

Rounding off, Bally’s updated its full-year guidance, anticipating revenues and adjusted EBITDA of approximately $2.25bn and $540m respectively. The adjusted EBITDA figure takes into account anticipated full-year losses of $75m for the North America Interactive business.

CFO Lavan concluded his address by explaining the company’s balance sheet: “We ended the quarter with $3.3bn of net debt. We have ample liquidity to fund all of our announced projects and continue to invest with care in North America interactive. Our long-term commitment is the sub 5x depth EBITDA which we expect to hit in mid-2023.”