Bally’s Corporation notified employees the company would lay off up to 15% of its interactive workforce. The letter, filed with the Securities and Exchange Commission on Thursday, cited slower-than-expected growth of the North American interactive market.
While CEO Lee Fenton’s letter did not specify which interactive divisions would be targeted for the layoffs, the company’s online sportsbook, Bally Bet, has been under the corporate microscope for some time.
Bally Bet’s slow roll
Online sports betting has become a competitive market and launch promotions are costly. Meanwhile, Bally has been candid about the slow progress of Bally Bet. In Bally’s last two quarterly earnings calls, CEO Lee Fenton has been, at best, cautiously optimistic about its prospects.
In August, Fenton noted, “The sports product is live in Arizona and New York, but we haven’t been heavily spending behind or pushing hard because we want a few more improvements.”
Later, during November’s earnings conference call, Fenton noted, “Our progress on sports has taken longer than we expected and we will not support the sports iGaming markets with marketing dollars until we have got the user experience and the technology where we want it.” He also stated, “We’ll be minimizing the losses related to sports betting – and in the end that’s what North America Interactive should be.”
That doesn’t mean Bally Bet won’t continue to expand. But it may dictate where Bally Bet expands.
Bally’s online casinos and sportsbooks: Hand in Hand
Bally Bet currently operates in Arizona, Colorado, Indiana, Iowa, New York, Virginia, and Ontario. Bally’s also runs online casinos. Bally Casino has launched in New Jersey and Ontario. Although the company does not break out the performance between its online sportsbook and online casino, it appears the online casino rollout has been smoother and more profitable. So much so, the company is prioritizing states that with legalized online casinos — or states soon to legalize online casinos — for its overall expansion.
In November Fenton said, “iGaming states are our priority and we will focus resource in markets including Pennsylvania and Ontario as well as states we believe will regulate iGaming in 2023.”
In other words, Bally Bet’s future launches will likely be limited to those states that have legalized — or will soon legalize — online casinos.
Aggressive pandemic hiring coming home to roost
In the letter to employees, Fenton also cited the company’s high employment levels. “The pandemic boosted our business and we continued to hire at full pelt. I now can see that we may have over hired in some areas and I take full responsibility for that.” But Fenton has a lot of company on that front.
During the pandemic’s tight labor market, companies operated under the “more is better” model, but that model became unsustainable. In November, Meta CEO Mark Zuckerberg apologized to his employees for the company’s 13% workforce reduction, citing surplus hiring. Stripe CEO Patrick Collison also weighed in, "We overhired for the world we're in. We were much too optimistic."
Bally’s diversification, however, should help stabilize the company going forward: Bally’s operates more than a dozen land-based casinos across the United States; it owns Monkey-Knife Fight, the third-largest daily fantasy sports operator in the US; and it has extensive international online operations through its acquisition of Gamesys Group.
