Bally’s Corporation recently finalized the sale of its interactive business operations in Asia and other select international markets—a strategic move intended to sharpen the company’s focus on its North American and European ventures. This segment, formally referred to as the Carved-Out Business, includes popular brands like CasinoSecret, Vera&John, InterCasino, and Yuugado, primarily influential in Japan.
Strategic shift to focus on core markets:
In a significant corporate decision, the management of the Carved-Out Business has formed a new entity to acquire the operation. This transition is facilitated through an exchange for a note, with Bally’s entrusting the ownership of essential intellectual property to a trust. According to MSN, this IP will be licensed back to the purchaser for a five-year term, with potential extensions and include transition support services from Bally’s, although Bally’s will not partake in managing or governing the sold business.
This deal, disclosed through a Form 8-K filing with the U.S. Securities and Exchange Commission on October 31 and published the following day, is not expected to impact Bally’s financial health materially. Specifically, the company forecasts only a modest decline in Adjusted EBITDA and free cash flow, thanks to strategic cost reductions and a simplification of the organizational structure aimed at offsetting the financial shifts.
The transaction aligns with Bally’s broader strategy to concentrate its capital and resources on enhancing its business footprint across North America and Europe. “This Carved Out Business will benefit from focused management attention and aligned ownership,” stated the company’s spokesperson. Moving forward, Bally’s financial outlines will solely reflect licensing and royalty revenues from this deal, with profitability margins expected to improve under the new IP license business model.
Robeson Reeves, CEO of Bally’s, during the Q2 earnings call, acknowledged the challenges faced in the Japanese market, notably the yen’s devaluation affecting consumer engagement. “Capturing a new audience has been more challenging,” said Reeves. However, he remains optimistic about the market’s resilience and the company’s ability to adapt operationally to maintain profitability.
Responses from shareholders and future prospects:
The decision to divest has not gone unnoticed by shareholders. Earlier in the year, K&F Growth Capital openly criticized Standard General’s acquisition proposal of Bally’s, urging instead for a focus on offloading its Japanese and other international online assets. K&F argued that distancing from the Japanese market could potentially improve Bally’s capital access under the current regulatory conditions.
Nevertheless, Standard General succeeded in its takeover, finalizing the acquisition in July. This has paved the way for Bally’s to recalibrate its strategic focus extensively toward North America and Europe. Additionally, Bally’s is advancing its physical presence in North America with the new Las Vegas property set to open in sync with the Oakland Athletics’ new stadium in spring 2028. This development, confirmed by Bally’s chairman Soo Kim, is part of an ambitious plan to align the launch of the casino’s first phase with the ballpark’s inauguration.
Bally’s anticipates revealing its Q3 results on November 6, following significant structural changes anticipated to bolster its strategic positioning in North America and Europe. With these transitions, Bally’s aims to fortify its market presence and financial stability, ensuring sustained growth and profitability in its prioritized markets.
