Bally’s Corporation senior management has confirmed that the company has laid off around 300 members of its technology team in favor of integrating the White Hat player account management system for both online sports betting and online casino products.
CEO Robeson Reeves confirmed that the move was part of a strategy to “improve the operating margin” of the North American Interactive unit, which is projected to lose around $60m in 2023.
Bally’s continuing to reshape North America Interactive
Reeves cited the success of the rollout of the White Hat PAM solution on the relaunched BallyBet sportsbook app in the last few months in the decision behind making the switch on the igaming app. He also explained that migrating would help to create “a more seamless” user experience.
The CEO told investors: “This is a major step towards our goal of creating a seamless customer experience and will also ensure better operational focus at North America teams won’t have to deal with the complexity of managing two separate customer support processes across our igaming and BallyBet platforms.
“Even with the revenue share nature of the White Hat agreement, we expect success, based on scaling of certain operating costs, which is an important consideration when we drive towards a profitable North American business.”
The comments were made as Bally’s reported its Q3 earnings, in which it confirmed an operating loss of $61.8m despite recording record revenues of $632.5m.
The North American Interactive unit, which has been under heavy scrutiny after losing over $400m in 2022, generated revenues of $29.6m, marking an increase of 33.9% year-over-year, driven by the rollout of the Bally’s online casino app in Pennsylvania and improvements made in New Jersey in the last few months.
After launching in Pennsylvania in June, Bally’s estimates that it has gained 1-2% market share in its first full quarter of operations and, in its first 100 days, PA deposit volumes were 3x larger than Bally’s New Jersey’s first 100 days.
Elsewhere on the igaming front, Bally’s is looking ahead to launching its online casino in Rhode Island next year, where it will hold a monopoly in the market. Citing a healthy player database from its land-based operations in the state, management confirmed that Rhode Island will be an EBITDA-positive contributor for the NA Interactive unit, helping to achieve its aim of breaking even for FY2025.
BallyBet rollout continues
Bally’s also revealed that it is seeking to launch BallyBet in three more states in the US before the end of the year. Already operating in four states on the relaunched platform, utilizing the Kambi sportsbook, the firm is aiming to use BallyBet as a funnel for igaming players, which would indicate the new states to launch may be those that have legalized online casino markets.
Marcus Glover, EVP and CFO of Bally’s, explained: “Our marketing efforts will be measured as we look at OSB as a funnel for future igaming growth opportunities and as an additional way to reach our core Casino Resorts customers. The US domestic rollout schedule remains full heading through the fourth quarter.
“We remain laser-focused on managing cost-effectively, we will grow the business prudently. And as we more fully transitioned to a variable cost model now including consolidating our US PAM onto the White Hat platform for igaming and BallyBet.”
Three casino projects in the pipeline
On the casino side of the business, George Papanier, President of Casinos and Resorts, explained that there are three crucial projects ongoing: the temporary Chicago property, the ongoing saga at the Tropicana and the New York bidding process.
The former, which Bally’s is treating as their immediate priority, was the hot topic of conversation on the earnings call as analysts dug their teeth into the details.
Papanier confirmed that the project is currently under budget despite having to wait for regulatory approval. He also stated that, given Bally’s doesn’t have marketing approval, the takeup is already positive.
He stated: “Our base has grown from zero to 27,000 customers in under two months and they’ve not been marketed to at this point because marketing requires IGB approval.
“I expect to continue to ramp this business for the first six months of operations and based on early results, and how positively customers reacted to the property, I’m feeling pretty good about achieving an annual run rate of about $50m plus.”
Bally’s noted that the Tropicana has provided a drag on earnings given the uncertainty around the MLB vote on the Oakland A’s relocation decision. However, it remains positive about the future as it invested $150m in acquiring the property and the A’s intend to invest $1.5bn to develop a new ballpark at the Tropicana site.
In New York, the firm is bidding to host a casino at the Golf Links in the Bronx, after acquiring the land from the Trump Organization this summer. Chairman Soo Kim radiated confidence in the project, claiming it is currently the only bidder with locally elected support.
Kim told investors: “We happen to have the only site that currently has our local elected- support. Things could change, but that’s pretty exciting. It’s a prize that every gaming company, in some way, shape, or form is competing for so I guess the question would be, if we were to win the prize, would we be able to, you know, find the right kind of financing and partnership to get that developed? That’s a little further out but I think you can assume that we will make a prudent decision.”
Despite posting record revenues and adjusted EBITDA of $173.2m, Bally’s has lowered its full-year revenue guidance to $2.4-$2.5bn, reflecting the later opening of the Chicago temporary property and the decision to stall investment in the Tropicana. Meanwhile, the operator projects adjusted EBITDA of $640-$655m for the full year.
