Bally's Corporation: Navigating Turbulent Waters in the Gambling Industry
In the ever-changing landscape of the gambling industry, Bally's Corporation finds itself in a precarious position, facing challenges that cast a shadow over its future prospects.
Bally's foray into the sports betting arena has been a tumultuous one, notably with the recent relaunch of its app after a costly misstep with Bet.Works. The gamble to join forces with Kambi did little to immediately reverse the tide, leaving stakeholders anxious about the company's trajectory. The recent overhaul of the app architecture raises questions about Bally's ability to stay competitive in an increasingly crowded market.
The CEO, Robeson Reeves, candidly admitted to the shortcomings, acknowledging the misfit of the Bet.Works app and its financial repercussions. The $150 million acquisition in 2020 turned out to be a costly mistake, and the subsequent relaunch seems to be an attempt to rectify past errors. However, the question remains: Is it too little, too late?
Bally's Corporation recently released its third-quarter results, showcasing a mixed bag of positives and negatives. On the positive side, there's a positive net income and Adjusted EBITDA, indicating some level of financial stability. The diversified revenue streams across gaming, hotel, food, and beverage sectors paint a picture of resilience. However, the storm clouds gather with substantial long-term debt, potentially impacting financial flexibility. The North America Interactive segment's negative contribution to Adjusted EBITDA raises concerns about the effectiveness of recent strategies.
Despite growth at 13% in the English market, the broader picture for Bally's remains uncertain. The incorporation of Tropicana Las Vegas into its portfolio is a notable move, yet the company acknowledges the need to evaluate money-losing ventures in North America Interactive.
Reeves' comments on Bally's Q3 performance reflect a mixed sentiment. The opening of the Chicago Temporary Casino and completion of the Kansas City redevelopment are touted as significant milestones. The rollout of the new Bally Bet OSB app is presented as a positive step, with strong user engagement and technology integration. However, the optimism is tempered by the acknowledgment that there's "all to do."
Adding another layer of complexity, Bally's is evaluating its money-losing businesses in North America Interactive and redirecting efforts where faster paths to profitability exist. In the challenging landscape of the gambling industry, such strategic reassessments are crucial.
Looking ahead, Bally's has updated its guidance for 2022, projecting revenue and Adjusted EBITDA of approximately $2.25 billion and $540 million, respectively. These figures reflect the integration of regional casino properties and the impact of state-by-state launch costs in North America Interactive.
Financially, the company executed a capital return program during Q3, repurchasing 5.4 million shares of its common stock. Bally's currently has $215.4 million available for further capital return, subject to regulatory and debt limitations.
As someone with experience in the gambling industry, it's evident that Bally's Corporation stands at a crossroads. To navigate these turbulent waters successfully, the company needs to address its app-related challenges, carefully manage its debt, and make strategic decisions that prioritize profitability. Only time will reveal whether Bally's can turn the tide and emerge stronger in the competitive world of online sports betting and gaming.