Bally's Corporation released its Q3 2022 results today, reporting negligible third-quarter profits of $593,000 as compared to $61 million recorded in the same period last year.
The entertainment giant, which owns the legal sports betting operator Bally Bet, did, however, report total quarterly revenue of $578 million, a significant 83.7% year-on-year increase over last year's Q3 revenue of $314.8 million.
The third-quarter revenue number was also a marginal 4.7% increase over the $552.5 million reported in the previous quarter, while earnings per share of $0.01 barely edged Bally's into positive territory, although this fell far short of street expectations of 30 cents EPS.
Casinos and resorts reported $119 million of EBITDA, which includes a positive $9.5 million of EBITDA for Atlantic City. Excluding Atlantic City, EBITDA margin was 39.5% which was in line with Bally's forecast in the high 30s.
Bally's Corp CEO Lee Fenton tried to put a brave face on the results by explaining that the company is still identifying non-performing, loss-making assets that were part of its wave of acquisitions over the past two years.
These acquisitions include its $2.7 billion purchase of online gaming operator Gamesys Group, $148 million buyout of the Tropicano Hotel and Casino in Las Vegas, and $125 million takeover of Bet.Works, a leading sports betting platform provider.
"We pulled together a fairly large number of assets in a small space of time," Fenton said during a conference call following the earnings report. "We’ve now had 12 months of looking at that and knitting that picture together [and] the assets that are not showing us a near-term path to profitability will of course be under the microscope, as they should be.
Fenton added that they are evaluating how all of their assets fit together, and will make the decisions "quickly" in terms of what doesn’t work.
"The overall strategy remains," said Fenton. "We’re identifying effectively what becomes non-core."
Bally's focusing on New Jersey, Pennsylvania, Ontario
Fenton was particularly hopeful that New Jersey will become an important driver of earnings growth with respect to Bally's North American iGaming operations, noting that they are targeting 6-8 points worth of market share in 2023.
"North America interactive continues to be in both development and ramp-up mode," said Fenton. "New Jersey had $12 million of GGR and $8.3 million of NGR from our iGaming offer in Q3 — We expect New Jersey iGaming to continue to grow and be profitable for the rest of the year."
Fenton also discussed how Bally's is following a "blueprint" with respect to entering new markets, which will see it focus more on product offerings rather than "being overly aggressive" in its rollout strategy.
"Our progress on sports has taken longer than we expected and we will not support the sports iGaming markets with marketing dollars until we are comfortable that we have got the user experience and the technology where we want it," said Fenton. "Different states will have different characteristics, and our focus is on creating the blueprint for states of a similar type before we invest in rollout.
"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 iGaming in 2023."
During the course of the conference call, Bally's CFO Bobby Lavan indicated that he believes that future growth prospects will be driven more by online casino operations than online sports betting sites, while expressing enthusiasm over early figures in the Canadian province of Ontario.
"There’s about $7m in the third quarter of losses, that we view as non-core or we need a plan to make sure they are at least flat," said Lavan. "iCasino in New Jersey continues to ramp up, we’re very excited about early results in Ontario, and we’ll have iCasino Pennsylvania next year.
"We’ll be minimizing the losses related to sports betting – and in the end, that’s what North America Interactive should be. The trajectory is positive, and we’re feeling very confident about that — we just really need to look inside at those $7 million in losses and have a path. Because burning money for money’s sake was where the market was two years ago is not where we’re going in the future."
North American expansion and high expectations for Ontario market
Fenton also expressed enthusiasm over the company’s ongoing expansion in the North American market as well as the launch of a new Bally Bet sportsbook app in the largest market in Canada.
"Yesterday in Ontario we launched our first combined casino and sportsbook app," said Fenton. "We will continue to focus on the iGaming sector in Ontario, which we expect to become one of the most significant markets of scale in the North American footprint."
He also noted that Bally's recently launched Tropicana Las Vegas, and plans to continue driving a multi-channel portfolio in the U.S., hoping to match the status of Bally's international arm.
"International Interactive returned to growth in the UK, with record margins across the platform, offset by foreign exchange headwinds," added Fenton. "While North America Interactive experienced continued growth with New Jersey iGaming and the launch of our new combined app housing both sports and iGaming in Ontario."
