Gaming investors have choice words for Bally’s board and buyout offer

Dumpster on fire
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One group is unimpressed with Bally’s Chairman Soo Kim’s second offer to buy out shareholders and take the company private.

In an open letter to the Board of Director’s, K & F Growth Capital Co-CIOs Dan Fetters and Edward King ripped apart the proposed buyout and also provided a detailed list of how they believe the company can attain profitability while still remaining public.

“Bally’s trades with clear intrinsic undervaluation compared to its potential and, equally, this undervaluation is for an obvious reason: the market has lost confidence in the Company’s current strategy and financial stability,” the letter note.

The authors detailed a six-pronged strategy that refocused the company’s strategy on the regional casino management that brought its initial success. In addition to focusing on regional brick-and-mortar, the letter recommends offloading Gamesys, the European online gaming company Bally’s acquired in 2022.

“There is minimal overlap between the legacy international Gamesys business and the core U.S. casino operations,” they noted. The group also suggested abandoning Bally Bet Sportsbook and focusing purely on iGaming. The letter referred to the company’s approach to interactive as an “unmitigated disaster”, citing the expensive acquisitions of companies like Monkey Knife Fight and Bet.Works that have since been shuttered and the failed partnership with Sinclair broadcasting.

K & F is not impressed by the huge Chicago casino project or Bally’s attempts to secure a downstate New York casino license either. They suggested minimizing financial risks on the ongoing project in Illinois and jumping ship on attempts in New York given the company’s chances of receiving one of the licenses are slim.

While K & F own less than one percent of Bally’s stock, King and Fetters are well respected in the gaming industry. In addition to K & F, both are also founding partners in Acies Investments.

Bally’s has appointed an independent group to look into the buyout offer from Kim’s company Standard General. The company rejected the first offer from Kim in 2021.

Bally’s stock prices bounced after news of the potential buyout and are up nearly $4 a share from the $9.75 pre-announcement price.