Bally’s revised both its revenue and earnings projections downwards following its Q2 results, in which the acquisition of Gamesys among other businesses helped boost revenue beyond $500m.
The operator had previously projected revenue of between $2.4bn and $2.5bn, with adjusted earnings before interest, tax, depreciation and amoritsation (EBITDA) expected to be between $560m and $580m.
However, it has now downgraded the revenue figure to between $2.2bn and $2.4bn, while EBITDA projections are now between $535m and $550m.
This, it said, was due to results so far this year, as well as foreign exchange movements and lower expectations in Atlantic City.
As the business acquired UK-based online gaming business Gamesys during the second half of 2022, among other acquisitions that year, Q2 revenue was up by almost 100% to $552.5m.
Most of this recovery came from gaming, where revenue more than doubled to $455.1m.
Hotel revenue was up by slightly more than 50% to $33.9m, while food and beverage revenue grew to $27.4m. Retail, entertainment and other revenue also more than doubled, to $36.0m.
Breaking revenue down by division, the original Bally’s land-based business was the largest segment, bringing in $299.9m, up 14.4%. The North America online business brought in $18.1m, which corresponded to a roughly 3% market share. Chief executive Lee Fenton said, though, that this market share could more than double, as the business would focus more on marketing once it has an optimised product using Gamesys technology for the US and Canada markets.
“We are going to keep the marketing dollars back until the product is the best it can be,” he said.
Fenton added that the business was going to focus on online casino rather than sports betting in North America.
“We are leaning into igaming,” he said. “Anywhere igaming is legal is where we want to be.”
The international interactive division- mostly from Gamesys – contributed $234.6m. The business did not report a figure from this division from Q2 of 2021, but Fenton said that revenue had declined mostly due to a drastic reduction in marketing spend. Given this reduction, he said the performance was extremely impressive.
“Astounding results really, in that we reduced marketing down so heavily, but only took FTD [first time depositers] down 9% while marketing was down by 30%,” he said.
Costs, though, rose more rapidly than revenue, by 149.6% to $467.2m. Costs of sales for gaming more than tripled to $204.5m, making this the largest expense. Advertising, general and administrative costs, meanwhile, were up by 79.5% to $181.7m.
Despite the rapid rise in costs, operating income was still up, by 6.0% to $85.3m. When also accounting for $20.4m in other expenses – mostly related to interest – the business made $64.9m before tax, down by 32.3%.
After taxes, profit came to $59.5m, which was down by 14.7%.
Meanwhile, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) came to $141.2m, which was up by 70.2% year-on-year.
For the first half of the year, revenue was $1.10bn, of which $918.8m came from gaming. Operating costs came to $992.9m, meaning operating income dipped slightly to $107.8m.
After other costs and tax, profit was up by 5.5% to $61.4m.
During the quarter, Standard General – which owns a 20% stake in Bally’s – submitted a bid to acquire the rest of the business, valuing the operator at $2.07bn. However, this was ultimately rejected by the Bally’s board.
Also in Q2, the business also won the rights to operate a casino in downtown Chicago.
Bally’s Chicago was chosen as the preferred bidder following a request for proposals process. Other finalists had included Rush Street Gaming and Hard Rock, while other bids from Bally’s and Rush Street to build casinos in other locations in Chicago were eliminated at an earlier stage.