Executive Summary / Key Takeaways

• Bally's Corporation is executing a transformative strategy, evolving from a regional casino operator into a diversified gaming and entertainment company with significant interactive and development arms.
• Recent performance reflects this transition, with Q1 2025 revenue impacted by strategic divestitures (Asia Interactive) and acquisitions (Queen Casino), while core Casinos & Resorts faced temporary macro and operational headwinds.
• The company is leveraging its proprietary technology stack to drive efficiency and differentiation, particularly in its interactive segments, positioning itself for growth in the competitive online gaming landscape against larger peers and pure-play digital operators.
• A substantial development pipeline, including flagship projects in Chicago and Las Vegas, is expected to be a key long-term value driver, funded by core operations and strategic financing arrangements, though execution and funding risks remain.
• While facing profitability challenges and high debt levels compared to larger competitors, Bally's is focused on operational efficiencies, interactive segment profitability, and disciplined capital allocation to navigate market volatility and realize its integrated vision.

Setting the Scene: A Gaming Giant in Transition

Bally's Corporation stands at a pivotal juncture, actively reshaping its identity within the dynamic global gaming, hospitality, and entertainment industry. No longer solely defined by its portfolio of regional casinos, Bally's is aggressively pursuing an omni-channel strategy, aiming to seamlessly integrate its physical assets with a growing digital footprint in online gaming and sports betting. This strategic evolution positions Bally's to compete across multiple fronts, challenging both established integrated resort giants like Caesars Entertainment (CZR) and MGM Resorts International (MGM), as well as pure-play digital operators such as DraftKings (DKNG) and regional players like Penn National Gaming (PENN).

The industry landscape itself is undergoing significant shifts, driven by the accelerating digitalization of gaming, expanding regulatory frameworks for online betting, and persistent macroeconomic volatility impacting consumer discretionary spending. Bally's strategic response involves leveraging a history of opportunistic acquisitions to build scale and diversify its revenue streams, while simultaneously investing in technology and major development projects designed to capture future growth. The company's journey, marked by rapid expansion in its land-based portfolio followed by the transformative acquisition of Gamesys Group, underscores a commitment to becoming a prominent, full-service, vertically integrated entity under a single brand.

Technological Foundation and Interactive Ambitions

Central to Bally's integrated strategy is its evolving technology stack, largely built upon acquisitions like Gamesys and Bet.Works. This proprietary technology is intended to provide a differentiated offering and exclusive content across its interactive platforms. While specific, directly comparable quantitative metrics versus all competitors are not always publicly detailed, the company highlights tangible benefits from its tech investments. For instance, the technology enables faster iGaming launches and is expected to drive improved user experience and operational efficiency. Management has noted that the transition onto platforms like Kambi (KAMBI) and White Hat Gaming has been well-received by customers and is helping to differentiate the Bally Bet offering.

The strategic intent behind these technological initiatives is clear: to enhance the competitive moat, particularly in the burgeoning North American interactive market. By consolidating technology stacks, Bally's aims to reduce costs and improve fluidity for players across different state boundaries, simplifying operations and potentially saving on marketing expenses. The view is that OSB serves as a crucial funnel for the more profitable iGaming segment, and technology is key to optimizing this conversion and achieving profitability in the North America Interactive segment. While larger competitors like CZR and MGM have significant resources, Bally's is betting that its agile, integrated tech approach can enable faster innovation cycles and more cost-effective customer acquisition in digital channels compared to some rivals. The company is also investing in brand advertising in the UK and exploring new content like online Pachinko in Asia to drive user engagement and growth, leveraging its technological capabilities.

Segment Performance and Operational Realities

Bally's operates through three reportable segments: Casinos Resorts, International Interactive, and North America Interactive. Recent financial performance reflects a mixed picture, influenced by strategic actions and market dynamics.

In Q1 2025, total revenue decreased 4.7% year-over-year to $589.2 million. This decline was primarily attributable to the strategic sale of portions of the International Interactive business in Asia in Q4 2024. However, this was partially offset by the contribution from the acquisition of Queen Casino Entertainment, which closed on February 7, 2025.

The Casinos Resorts segment saw revenue increase by 2.6% year-over-year in Q1 2025, reaching $351.2 million. This growth was mainly driven by the addition of the Queen properties. However, performance was negatively impacted by severe weather conditions across the portfolio in January and February, as well as ongoing disruptions from bridge construction near the Rhode Island properties and challenges in Atlantic City following team turnover. Management noted that underlying operating trends remain strong outside of these temporary headwinds and that efforts are underway to enhance profitability and leverage synergies across the integrated portfolio. For context, Q3 2024 segment revenue declined 2% year-over-year, and Adjusted EBITDA decreased 15%, with margins at 28% compared to 33% a year prior. Q1 2024 Adjusted EBITDA was $89.4 million, down 15% year-over-year, with margins impacted by weather and other factors, though excluding certain properties, margins were noted as solid at 35%.

The International Interactive segment experienced a significant revenue decrease of 22% year-over-year in Q1 2025, primarily due to the divestiture of the Asia business. Despite this, the UK operations continue to perform strongly, driven by share gains and efficient customer acquisition. In Q3 2024, this segment's revenue declined 5% year-over-year to $231 million, but Adjusted EBITDA increased 5% to $90 million, with margins improving by approximately 400 basis points year-over-year to 39%. This highlights the segment's ability to enhance profitability despite top-line fluctuations, particularly through strategic cost management and focus on high-performing markets like the UK.

The North America Interactive segment saw revenues increase by a modest 3.9% year-over-year in Q1 2025. This segment continues to be an investment area, with a focus on ramping up iGaming operations in states like Rhode Island (where Bally's is the sole provider) and expanding the Bally Bet OSB footprint. While still incurring Adjusted EBITDA losses, management expects these losses to narrow non-linearly as the year progresses, driven by iGaming growth and operational efficiencies from platform consolidation. In Q3 2024, the segment generated $46 million in revenue (up 55% YoY) but an Adjusted EBITDA loss of approximately $11 million. Q1 2024 saw revenue of $41.5 million (up 70% YoY) and an Adjusted EBITDA loss of $10.2 million.

Overall, while consolidated net income remains negative (Q1 2025 net income of $34.5 million, Q1 2024 net loss of $173.9 million, full-year 2024 net loss of $567.75 million), Adjusted EBITDA and EBITDAR metrics provide a clearer view of operating performance before significant non-cash items and one-time costs. Consolidated Adjusted EBITDA was $83.3 million for the Successor period (Feb 8 - Mar 31, 2025) and $24.4 million for the Predecessor period (Jan 1 - Feb 7, 2025), compared to $116.5 million for Q1 2024.

Strategic Development Pipeline

A key component of Bally's long-term strategy is its significant development pipeline, designed to create flagship destination properties and expand its market presence.

The most prominent project is the Bally's Chicago permanent casino. Demolition and site preparation are underway at the River West campus, with hard construction costs estimated at approximately $1.3 billion remaining, concentrated in 2025 and 2026. The target opening date is September 2026. This project is supported by a $940 million strategic construction and financing arrangement with GLP, an affiliate of GLPI (GLPI), which also includes a new master lease agreement for the site. The temporary casino in Chicago continues to ramp up operations, focusing on building a customer database (over 113,000 customers by Q3 2024) and gaining market insights, having welcomed over 1.3 million visitors in its first year.

In Las Vegas, the Tropicana property was closed on April 2, 2024, and demolition is expected in October 2024. This clears the way for the development of a new integrated resort and ballpark, with Bally's preparing to hand over a 9-acre portion to MLB's Athletics for stadium construction starting in 2025. Bally's aims to have initial casino, hotel, and retail offerings ready when the A's begin playing in 2028 and is actively assessing options for the remaining valuable land.

Bally's is also pursuing a downstate casino license in New York, proposing a world-class integrated resort adjacent to Bally's Golf Links at Ferry Point in the Bronx. The licensing process is prolonged, with bids expected in late June 2025 and decisions in early 2026. This project, if successful, would add another major market presence.

This staged development pipeline is intended to be funded by cash flow from core operations and strategic financing, maximizing benefits while allowing flexibility for market shifts.

Liquidity, Capital Structure, and Risks

Bally's relies on existing cash, operating cash flow, its Revolving Credit Facility, and debt/equity issuances to fund its operations, capital expenditures, acquisitions, and debt service. As of March 31, 2025, the company had $209.7 million in cash and cash equivalents and $54.9 million in restricted cash.

The company carries a substantial debt load, with total long-term debt (net) of $3.43 billion as of March 31, 2025. This includes a Term Loan Facility, Senior Notes, and the $500 million Senior Secured Notes due 2028 issued in connection with the Queen merger. The company was in compliance with its debt covenants as of March 31, 2025. Significant operating lease obligations total $5.23 billion in minimum future payments.

Capital expenditures for Q1 2025 were $30.5 million (Successor period) and $16.4 million (Predecessor period), excluding spending on the Chicago and Tropicana permanent developments. The 2024 CapEx guidance is $165 million, excluding these major projects. The company has a $700 million capital return program authorized, with $95.5 million available as of March 31, 2025, but does not currently intend to pay common stock dividends.

Key risks facing Bally's include macroeconomic sensitivity impacting discretionary spending, inflationary pressures on labor costs, execution risks and potential cost overruns on major development projects (Chicago, Las Vegas, New York), regulatory changes (especially in interactive markets like the UK), intense competition from larger, well-capitalized peers and agile digital operators, and the ability to successfully integrate acquired assets and achieve profitability in the interactive segments. The ongoing Rhode Island bridge disruption also poses a localized, temporary risk to property performance.

Outlook and Guidance

For the full year 2024, Bally's has reiterated its guidance, expecting revenue in the range of $2.5 billion to $2.7 billion and Adjusted EBITDAR in the range of $655 million to $695 million. This guidance incorporates the closure of Tropicana, the continued ramp-up of the Chicago temporary casino, expected growth in the International Interactive business (despite the Asia divestiture impact), and an anticipated Adjusted EBITDA loss of approximately $30 million in the North America Interactive segment. Management expects the NAI loss to decrease non-linearly throughout the year as iGaming scales and efficiencies are realized.

The projected annual effective tax rate as of March 31, 2025, is notably high at 204%, driven by the tax treatment of US pre-tax losses (due to valuation allowance on interest) versus international pre-tax income.

Management's outlook hinges on successful execution across multiple fronts: stabilizing and growing the core Casinos & Resorts business despite headwinds, driving profitability and growth in the International Interactive segment (particularly the UK), achieving scale and narrowing losses in North America Interactive, and progressing the major development projects on time and within budget.

Conclusion

Bally's Corporation is navigating a complex transition, simultaneously managing a diverse portfolio of land-based casinos, integrating significant acquisitions, building out a global interactive presence, and undertaking ambitious development projects. The core investment thesis centers on the potential for substantial value creation from the successful execution of this multi-faceted strategy, particularly the ramp-up of the Chicago permanent casino and the achievement of profitability in the North America Interactive segment, supported by the stable cash flow from its established properties and UK interactive business.

While the company faces significant challenges, including high debt levels, intense competition from larger, more profitable rivals, and execution risks inherent in large-scale developments and interactive market expansion, its strategic focus on an integrated omni-channel model and leveraging its technology stack provides potential avenues for differentiation and growth. Investors will need to closely monitor progress on the Chicago and Las Vegas developments, the trajectory of profitability in North America Interactive, and the company's ability to generate sufficient cash flow and manage its capital structure amidst ongoing market volatility. The success of Bally's hinges on its ability to synthesize its diverse assets and initiatives into a cohesive, profitable, and growing enterprise.