Bally's Corporation delivered a mixed bag of results in its preliminary fourth-quarter earnings report released on Monday. The company also revealed that CEO Lee Fenton would be stepping down as of March 31, to be replaced by Robeson Reeves, president of Bally's Interactive division.
The casino and legal sports betting company posted Q4 revenue of $576.7 million, a slight 5.3% year-over-year increase over the same quarter in 2021. This result narrowly beat street estimates despite the meagre $26.3 million in revenue generated by Bally's North American betting sites.
Analysts generally welcomed the results, and shares in Bally's Corp (NYSE: BALY) were up nearly 2% to $19.51 in mid-afternoon Monday trading, up 5.5% YTD.
Bally's also reported a massive fourth-quarter net loss of $476.8 million, more than quardruple the $115.29 million net loss recorded in Q4 2021. However, this year's Q4 number was inflated by one-time write-downs of assets in its Interactive division (which it described as non-cash goodwill and asset impairment charges).
Monday's preliminary earnings reports also revealed that adjusted EBITDA for Q4 came in at $145.8 million, a substantial 22.8% YoY gain from the same period in 2021.
But arguably the most impressive number reported was that Full Year 2022 revenue soared mightily by 70.6% year-over-year to $2.26 billion, as compared to $1.45 biillion in 2021.
North American nightmare
These upbeat earnings numbers were overshadowed by the staggering $428 million net loss registered by Bally's North American Interactive unit in 2022, as compared to a negligible net loss of $36.9 million in the previous year. However, much of the year's loss is the result of one-time Q4 impairment charges.
The Bally Bet sportsbook is currently live in six states in the U.S. regulated legal sports betting market, as well as in Ontario. Bally Bet is planning to launch in Ohio early in 2023, where it has entered into a multi-year partnership with the NFL's Cleveland Browns to launch a sports betting lounge at First Energy Stadium.
Incoming CEO Reeves characterized the poor performance of its online unit as "unacceptable" and reiterated Bally's restructuring plan previously announced in January.
"Simply put, our North America Interactive results in 2022 were unacceptable," said Reeves. "In response, through our announced restructuring plan of the Interactive business in January, we are taking a deep dive in our approach to North America to ensure that investments we make in sports have a near-term path to profitability."
New year, new opportunity
Bally's delivered an upbeat assessment of its 2023 prospects and projected that FY2023 revenue would fall in a range of between $2.5 billion and $2.6 billion, exceeding industry analysts' forecast of $2.46 billion.
The news comes as newly designated CEO Reeves, who previously served as COO of Gamesys prior to its $2.7 billion acquisition by Bally's in 2021, attempts to stem the cash burn from Bally's money-losing North American sportsbook.
"I am honored to lead Bally's and grateful for the support and confidence shown in me by my fellow board members," said Reeves. "We are a unique company with a robust core and an extraordinary set of opportunities ahead of us. I look forward to working hard with my Executive Team and all our teams to take those opportunities and maximize our growth."
Incomig CEO Reeves also highlighted Bally's continued growth in its core casino and resorts segment and improved international sportsbook results.
A breakdown of Q4 2022 results shows that $319.2 million was generated by Bally’s Casinos and Resorts business segment, a YoY gain of 14.9%. Meanwhile, $231.2 million in revenue flowed from Bally’s International Interactive division, which represented a minor decline of 8% from the same quarter in 2021.
"As our businesses continue to integrate, we are pleased to achieve record results in both our Casinos & Resorts and International Interactive segments," said Reeves.
"Our core businesses are generating fantastic cash flows. UK revenue grew 12% organically in the fourth quarter as regulations continue to play through, while in December, Asia saw positive YoY organic growth, proving that our initiatives to maintain a competitive advantage in that market are effective."
Bankruptcy filing will have no impact on Bally's Corp
Monday's earnings preview also saw Bally's Corp CFO Bobby Lavan dismiss any concerns that the pending bankruptcy filing by Diamond Sports would have any material impact on the gaming giant, headquartered in Providence, Rhode Island.
In 2020, Bally's signed a deal that would see it pay a reported $88 million for 10 years' naming rights to 21 Sinclair channels (previously under the Fox brand), now known as Bally Sports Regional Networks. These RSNs are operated by Sinclair's wholly-owned subsidiary, Diamond Sports, which in November reported a $1.2 billion quarterly loss and a 10% fall in subscribers.
Said Lavan: "In 2020, Bally's acquired naming rights over Diamond's regional sports networks. Sinclair Broadcast Group separately agreed to promote the Bally's brand over Sinclair networks. However, the Bally's brand and naming rights are owned by Bally's alone. Bally's has no liability related to Diamond's debt and Diamond holds no equity or other ownership rights in Bally's.
"We continue to monitor the Diamond situation closely and look forward to working with the new management team. Bally's will continue to promote its brand through multiple means, including our national portfolio of Bally's branded casinos, various media partnerships like that with Sinclair and the Tennis Channel and our global digital portfolio."
In January, Bloomberg reported that Diamond was preparing for a Chapter 11 bankruptcy filing and would "probably skip a mid-February $140 million interest-only payment servicing (on) $8.6 billion in debt."
However, the looming Chapter 11 filing does not necessarily mean that Diamond will walk away from its contractual obligation to pay 16 NBA, 14 MLB, and 12 NHL teams future broadcast rights fees of $12.7 billion. However, there may well be pressure on the sports franchises to renogiate the deal in light of Diamond's precarious financial situation.
