Bally's Corporation

Good day, and thank you for standing by. Welcome to the Bally's Corporation second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be question and answer session. In order to ask a question during the session, please press the star key followed by the number one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I'd now like to turn the call over to Bobby Levan, Chief Financial Officer for Bally's. Please go ahead, sir.

Good morning, everyone, and thank you for joining us on today's call. The earnings release and presentation that accompany this call are available in the investor relations section of our website. With me on today's call are Lee Fenton, Chief Executive Officer, George Papenier, President Retail, Robeson Reeves, President Interactive, Amit Patel, Senior Vice President and Regional General Manager, and Joanne McHale, Senior Vice President of Design and Development. Before we begin, we would like to remind everyone that comments made by management today will contain forward-looking statements. These forward-looking statements include plans, expectations, estimates, and projections that involve significant risks and uncertainties. These risks are discussed in the company's earnings release and SEC filings. Actual results may differ materially from the results discussed in these forward-looking statements. In addition, during today's call, management will refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP financial measures are included in the schedules contained in our earnings release. We do not provide reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges within certain expenses. Today's call is also being broadcast live on our investor site and will be available for replay shortly after the completion of this call. I'm handing it over to Lee.

Thank you, Bobby, and hello, everyone. We now have three quarters under our belt since the combination of Bally's and Gamesys, and we've made considerable progress over the past 10 months. We've rolled out the Bally's brand across our property portfolio and the Sinclair RSNs. We bought Bally's iCasino to life in New Jersey, we have developed our foundational OSB product and begun its deployment. We've won the bid to develop the first downtown casino in Chicago, and we brought together the company as one valise with a single purpose and a set of DNA that we will embed further as we progress. While we are now a more unified company, we recognize we're going into some global turbulence. And I believe the significant cash flow generation of our casinos and resorts and international interactive segments continue to be one of our critical success factors. Since we reported the second quarter, we've had a number of puts and takes on our business. In casinos and resorts, Lincoln continued to outperform expectations, post-removal of mass mandate and the return of smoking. However, the turnaround of Atlantic City will take longer than we'd hoped for. with AC having negative 3 million of EBITDA versus our expectations of a positive 4. AC is not where we want it to be. Now, most of the renovation program is complete. We've moved to restructure our cost base there for the go forward. And from August, we've taken out costs which should generate 10 million of annualized savings at the property. We are heartened by improvements on handle and drop, and getting some recent bad luck behind us on hold, the earnings trend there will get better. The rest of the portfolio performance was in line with expectations. Our EBITDA margin, XAC, is slightly ahead of expectations at 39%. In International Interactive, we found a bottom in the UK in June, plus 2% year over year on a constant currency basis. despite us lowering marketing spend by around 30% and reducing bonusing to deliver margin enhancement. July performance was more positive still and saw our highest monthly actives for 2022 so far. The comparisons get easier through the third and into the fourth quarter, and we're making good progress with more dynamic jackpot strategies and enhanced customer journeys powered by machine learning. As we all know, the UK white paper was delayed once more, and we await a new government in September, but we expect that to arrive with the consultation period beginning soon thereafter. A mixture of currency weakness that impacted the customer experience and lower than expected FTDs led to a flat quarter in Asia. FTDs were down as we moved a large affiliate promotion back into Q3, so expect some improvement then. Also in the second half, we see growth from our recently launched Sportsbook with the benefit of the World Cup at the end of the year and increased uptake from our Refer a Friend program that has increasing traction in the region. We will continue to harvest Spain and our wind down of the rest of Europe. North America Interactive is still in ramp up mode despite having an early version of the product and without the full feature set we have in the UK New Jersey had almost 3 million of NGR in our B2C iCasino in June, with contribution margin in the mid-30s. We expect New Jersey B2C to continue to grow and be profitable for the rest of the year. We are targeting 6% to 8% market share in 2023 after the implementation of omnichannel rewards by the end of this year, along with improvements in payment processing and marketing tools. With a CPA sub $250 for four marketing tech stack improvements, New Jersey is the model we will apply to the rest of our North American rollout. Each state will be different, and our focus is on creating a blueprint for each state of a similar type before we invest in that rollout. iCasino states are our priority. and we will focus our resources in live markets, including Pennsylvania and Ontario, as well as those states we believe that will regulate iGaming in the next two years. Our foundational sports product is now live in Arizona and New York and will be greatly enhanced by the integration of much higher volume of sports and events over the coming months. Our player funnel continues to evolve, leveraging our unique asset collection. Our model is to focus on minimizing and optimizing customer acquisition costs and building a loyalty loop for continuous engagement, lowering churn, and driving the customer experience. Over the next year, we'll continue to integrate with our casino database, providing a unified wallet and omnichannel rewards, and develop owned proprietary technologies that provide customers unique, engaging experiences everywhere. Our partnership with Sinclair today provides strong awareness for the Bally's brand, but to this point we've not taken full advantage of the Sinclair relationship more broadly, despite adding around 100,000 players to our free-to-play offering promoted from Bally Sports. We are working together with Sinclair to design and build a watch and bet product that will further evolve our strategy and keep our costs of acquisition down. Our focus is on the continued development of our product and the market blueprints rather than an aggressive rollout strategy. Now, I wanted us to take a few minutes to cover the exciting developments in Chicago. Technology isn't going to be everything to online gaming. We also need flagship properties that establish our brand presence and provide a true omnichannel experience. So let me turn it over to George to introduce the Ballet Chicago team and discuss the road ahead for that development.