Bally’s North America Interactive still a loss maker in Q2

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Bally’s North America Interactive unit has gone through a revamp, which will continue throughout the summer, but the changes have not turned into a profit just yet. 

Management indicated that its sports betting and online casino unit will not turn a profit until the end of 2024 at the earliest as the group continues to invest, albeit “prudently” in the platform. 

Addressing investors on the Q2 investor call, CFO Marcus Glover said that it could be the start of 2025 before the unit makes a profit. 

Asked for a timeline on when the North American Interactive division could be EBITDA positive, Glover admitted that it was still somewhere down the line, explaining: “(It’s) hard to say that we’ll get there by the end of this year, even if into next year. We expect to reduce our loss significantly by the second quarter next year but the focus is on continuing to build up this platform in our infrastructure so that we can be strong in the gaming space on our strategic partnerships.”

CEO Robeson Reeves explained that the revamped BallyBet, now using the Kambi and White Hat platform, will launch in three states over the summer and in seven later in the year. 

Reeves explained: “We have made significant progress transitioning Bally Bet on to the Kambi and White Hat technology platforms, which is on track to roll out this summer. We intend to be live in three states by summer’s end and at least seven states and four retail locations.”

Bally’s reported its Q2 financials earlier today, declaring revenues of $606.2m, up 9.7% year-over-year. This comprised record casino revenue of $333.2m, up 11% YoY. 

The North America Interactive unit generated $25.3m in revenue, growing thanks to successes in the online casino markets in New Jersey and Pennsylvania. However, the unit still made a loss of $35.5m in Q2, with the changes made not positively impacting the bottom line as of yet. 

Management still believes that the changes will pay off, though. Reeves explained that the relaunch of Bally Bet will act as a funnel to catch new online casino players and is happy for Bally’s to invest in the sports platform to earn these conversions and achieve strong performance in online casino. 

He told investors: “I look at sports betting much more as a funnel. We will be prudent with our investments when we go into sports. With regards to estimates on North America Interactive increasing, essentially, our balance sheet cash flow spend comes down sooner the p&l expenses will come down, but it’s not in the same linear way. 

“We absolutely will be prudent in North America Interactive. But I’m very confident about the igaming opportunities. Pennsylvania has performed well, from a launch perspective, we will balance that out from a tax perspective to make sure that we (get) good profitability.”

When explaining the decision to outsource the sportsbook platform to Kambi, Bally’s explained that it does help to reduce costs, but that it can lead to increased focus on data analysis to improve the type of customer that it can attract. 

Data analysis, Reeves explained, is essential to improving the bottom line of the flailing unit. 

“Our essence is about how we can analyze and understand consumer leads and integrate that into our product experience. That is the true capability and that’s what’s driven growth historically for all of our interactive businesses, because then you can spend more effectively to acquire exactly the right consumer and retain that consumer by communicating with them in their language with the right rewards and the optimized level.”

Another key talking point in the investor call was the rollout of online casino in Rhode Island from next year, in which Bally’s will be the sole operator. The passage of the bill means Bally’s will have a monopoly of the market from next year, giving the firm a significant boost to a vertical that it expects to perform strongly in. 

However, investors were concerned that the impact of online casino could take away custom from the Twin Rivers casinos in the state. Management, however, shrugged this off. 

“Everywhere we’ve launched and we’ve seen igaming alongside casinos and resorts, it’s just a different form of engagement. We’ve seen spend layering on top of one another. This protects us in different times as well. It won’t cannibalize, it’s additive. People engage both at home and socialize more in the retail establishment. 

“So we see this as totally incremental and we are the sole operator. I’m very excited about Rhode Island. I think it will be material in driving igaming performance, and actually North America Interactive business.”