Bally's Corporation

Good day and thank you for standing by. Welcome to the Bally's Corporation first quarter 2023 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a 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 Jeff Chelson, VP of Corporate Development and Strategy for Bally's. Please go ahead, sir.

Good morning, and thank you for joining us on today's call. The earnings release and presentation that accompany this call are available on our website in the investor relations section at www.bally's.com. With me on today's call are Chief Executive Officer Robeson Reeves, George Papineer, Bally's President, Bobby Lavin, outgoing Chief Financial Officer, and happy to welcome Marcus Glover, incoming Chief Financial Officer, pending regulatory approval. In addition, we are joined by Jayma Patel, Vice Chairman. 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 a reconciliation of forward-looking non-GAAP financial measures due to our inability to project non-recurring expenses and one-time items. Today's call is also being broadcast live on our investors' website and will be available for replay shortly after the completion of this call. Let me hand the call over to Robeson.

Thank you, Jeff, and hello, everyone. Before diving into our quarterly results, I'd like to address this morning's press release announcing a number of changes to our senior management team. Bobby Levan, our Executive Vice President and CFO is leaving Bally's to explore another opportunity. I would like to thank Bobby for all his contributions. You will truly be missed. At the same time, I am pleased to welcome Marcus Glover as Bally's incoming Executive Vice President and Chief Financial Officer pending regulatory approval. Marcus will lead us in the next stage of our growth, drawing on his deep operational gaming experience and financial acumen Marcus, would you like to say a few words?

Yes, thank you, Robeson. It's a great time to join Bally's. I've spent roughly two decades between Caesars and MGM, holding leadership roles across all functional areas. We have a great group of professionals at Bally's, and I look forward to leveraging my experience and partnering with our team as we build upon the foundation that is in place. Thank you, and back to you, Robeson.

Marcus, thank you. I'm excited about what we can do together. Further, Charles Jiao will be joining as Senior Vice President, Finance and Corporate Treasurer, reporting into Marcus, also pending regulatory approval. Rounding out these organizational changes, Jamin Patel, a well-regarded gaming veteran and current board member of Bally's, was appointed Vice Chairman and will chair the Operational Integration Committee, which is a newly created board committee that will focus on strengthening global processes for streamlining operations and reducing costs, as well as the creation of a global coordinated corporate center. With that said, I am extremely pleased to report a very strong cause for the company overall and discuss our achievements since I took over as CEO. As you know, we're now several months into my tenure, and I've had a chance to review each aspect of our business using the data-driven analytical approach I promised when I became CEO. I've also gotten to know our shareholders and stakeholders on a deeper level. While we are never satisfied and can always be stronger, I continue to be wholly impressed with our team globally. My excitement for the progress we have made towards the integration of Bally's internal systems and its three operating businesses has never been greater. Over the past two weeks, there have been several positive material changes to our business operations. as I'm sure you are all aware, on Thursday, April 27th, the UK government released its white paper review of the 2005 Gambling Act. After four years of ongoing consultation, we are pleased this has been released and we hope it will bring some clarity to UK gambling operators. We continue to review these proposed measures and will work constructively with both the government and Gambling Commission to find an effective solution. which ensures the reforms are appropriate and guarantee a safe and sustainable future. We are in a strong position as we have been preparing our business strategy and compliance. We have already implemented several voluntary changes that are aligned with the white paper, including betting limits and so on. The regulatory framework in the UK has created a dynamic where smaller players are enabled to compete, leading some to exit allowing larger players who are already highly compliant to consolidate the market and gain share, a trend we have highlighted before and which we believe will continue into the future. We embrace regulation and recognize that gaming is a public-private partnership. Secondly, on Tuesday, May 2nd, we announced partnership agreements with Cambium White Hat Gaming fulfilling our promise to partner with best-in-class technology providers to drive our North America sports betting platform. The North America infrastructure we had in place for sports was inefficient. I own that. And with these new partnerships in place, our cash burn and development costs will go down sharply. Our spend will be performance driven. In the future, as the sports product scales, we have the opportunity to acquire a license to a limited part of Canby's online and retail technology source code at our option. We will evaluate this as our North American sports betting business grows. These partnerships will leverage Camby's and White Hat's proven technology integration and track record of executing quick launches to support the expansion and enhancement of Bally's online and retail sportsbooks, driving further customer engagement with the Bally's brand. Camby will provide its suite of omnichannel products, trading capabilities, content solutions, and liability management to deliver online and retail sports betting entertainment. Well, White Hat will supply its PAM solution, which includes its proprietary cashier, multiple RGS integrations, and its traveling wallet. Bally's intends to derive deal synergies by integrating these technologies with our state-of-the-art data and marketing technology stacks, playing to our strengths. As a result, we will significantly reduce the fixed costs associated with powering BallyBet's OSB platforms by transitioning to a variable cost model based on a percentage of net gaming revenue generated. These cost savings coupled with driving further engagement in the Bally's brand will better position the company to deliver near and long-term results for investors while simultaneously reducing our economic risk. Importantly, as mentioned above, We have also reserved the right to acquire a license to a limited part of Cambly's online and retail technology source code if certain performance metrics are achieved in the future. By the end of 2023, Bally's anticipates that these partnerships will provide omnichannel support to power BallyBet's platform across seven states and at four retail gaming locations. It is our intention to also leverage these partnerships globally as we consider launching OSB in the UK and Europe as well. Post our OSB relaunch, we'll be back on a path to diversify our revenues and EBITDA streams with ample cross-sell opportunities between our retail and digital businesses. This, in turn, will support our vision of becoming a premier full service vertically integrated casinos and resorts online sports betting and i-gaming company allowing us to leverage our valley's brand globally turning to our operating segments the casinos and resort segment continues to show its strength despite certain markets being severely impacted by inclement weather such as lake tahoe which was hurt by unprecedented snowfall, and Evansville, which was impacted by tornadoes late in March, as George and his team continued to execute at an extraordinary level. In fact, we generated record 1Q revenues of $329 million, that's up 9.4% year-on-year, and EBITDA of $105 million. We're starting to see the full benefits of the casino assets we acquired last year being integrated into our business and property improvements and cost controls we have been implementing throughout the portfolio taking hold. Importantly, as we discussed earlier this year, our portfolio's near-term capex cycle has peaked as several of our growth projects have come to or are nearing completion. This includes our upgrade of our flagship Twin Rivers Casino in Lincoln, Rhode Island, which was finished in April. And as our Kansas City expansion spend comes to an end this summer, our progress in Atlantic City should also be noted. We are certainly on our way to delivering consistently strong operating performance for the foreseeable future. We look forward to the opening of the Chicago Temporary Casino in late summer 2023, which is on track to generate 50 million plus EBITDA in 2024. We're also advancing the full build of Bally's Chicago Permanent Facility, which is expected to open in 2026, which has an estimated run rate in excess of 250 million EBITDA. We believe there is unquestionable pent-up consumer demand for this project, and we couldn't be more excited to begin producing results. Our core casino and resorts customer remains highly resilient despite rising economic headwinds with trends in April remaining consistent with the 1Q results outside of a slight calendar shift. While we're keeping a close eye on spending trends and the health of the consumer generally, we haven't seen any signs of material impact on our business. International Interactive had a strong start to the year, with continued content, marketing, and jackpot optimizations taking place. The UK business has remained strong, growing 9.6% in the first quarter on a constant currency basis, well ahead of the market. The formula of ARPU up, FTDs up, while CPA is significantly down, is playing out and will drive performance throughout the rest of the year. April results are up 13% year on year. In Asia, the changes we have implemented over the past several months continue to produce results with trends remaining positive in the quarter, despite facing difficult comparisons. Note, comparisons do get easier from here. While international interactive margins settled in the low-mid 30s from the record 39% we generated in 4Q, we believe we can sustain margins at or above these levels as the changes we have implemented are structural. This is inclusive of our plans to reinvest in our core UK, including launching the Bally's brand and the OSB and Japan businesses. We also seek growth opportunities in rest of Europe, Asia, and rest of the world, including Brazil. Turning back to North America Interactive, we continue to be eye-gaming first. We're executing well in New Jersey, where our share surpassed 4% in February, well on our way to achieving our 6% to 8% longer-term share goal. Ontario continues to progress and we're excited to launch in Pennsylvania in May. Overall, our iGaming business is generating positive returns and we are very optimistic about this. We also look forward to potential iGaming legislation in Rhode Island as a bill was recently introduced into the legislature. In summary, our goals for the remainder of 2023 include Opening the Chicago Temporary Casino on time and on budget this summer. Grow North America Interactive in a profitable way, including increasing our iGaming market share. Launch OSB in seven states and in markets outside of North America. Harness our omnichannel data capabilities and grow the Bally's brand globally. It is important to note that in addition to the above initiatives, we remain keenly focused on growing our revenues and EBITDA for our core casinos and resorts and our international interactive segments. Before turning to Bobby, I'd once again like to thank him for his leadership and contributions and wish him well in his next endeavor. Bobby, over to you for a view of our financial results.

Thanks, Robeson. Moving to the segment details. For the quarter, we are pleased to have achieved strong results across all three of our segments, casinos and resorts, international interactive, and North American interactive. We generated revenues of $598.7 million, plus 9.2% year-over-year, adjusted EBITDA of $126.4 million, plus 10.2% year-over-year, despite higher rent in the quarter. and adjusted EBITDA of 157.6 million after accounting for rent expense of 31.2 million. Our adjusted EBITDA margin was 21.1% versus 20.9% in 1Q22, and our adjusted EBITDA margin was 26.3%. Casinos and resorts reported 105.1 million of EBITDA. This includes negative 800,000 of EBITDA for Atlantic City. Excluding Atlantic City and Tropicana, which are lower margin properties, EBITDA margins were 37.8% for the core portfolio. EBITDA margins were 32% compared to 1Q22 EBITDA margins of 29.1% for all of casinos and resorts. Additionally, while most of the portfolio performed well with strength out of Rhode Island properties, Atlantic City, and Kansas City, our results were negatively impacted by material weather disruptions in Tahoe. Similarly, towards the end of March, our Evansville property was negatively impacted by tornadoes, which struck the area. The cumulative effect of Tahoe and Evansville caused a $3.5 million shortfall at those two properties. Including the impact above, we are still pleased with how Casino's resort segment performed for the quarter. International Interactive generated $80.2 million of EBITDA at a 32.6% margin. The UK was plus 9.6% year-over-year, and international as a whole was up 7.2% on a constant currency basis. Performance was driven by continued revenue strength in the UK, in addition to content, marketing, and jackpot optimizations taking place. As we mentioned in our last earnings call, we continue to invest in the business. This includes launching the Values brand across Europe. Inclusive of this incremental spending, our long-term international interactive EBITDA margin targets remain in excess of 30%. North America Interactive generated a negative $10.5 million of EBITDA. We continue to be eye-gaming first and are very pleased with the performance year-to-date in New Jersey. New Jersey is contributing over $1 million in profit contribution a month and growing as we scale into certain variable cost service providers. Lots of momentum here. Ontario continues to progress, but we are still tweaking certain aspects of the business and will be launching Pennsylvania in May. Overall, our iGaming business is generating positive contribution margins, which we anticipate will continue to strengthen. Turning back to sports betting, as we announced on May 2nd, and as Robeson talked about earlier, we have partnered with Cambian White Hat Gaming to power our online and retail sports betting business, Valley Bet. Valley intends to integrate these technologies into our proprietary database and marketing technology stacks. By transitioning to a leased-based partnership model, We've reduced our fixed costs and will now operate under a much more economical variable cost structure based on a percentage of net gaining revenue generated. This is more efficient model and better position the company to manage our risk by limiting our expenses while preserving our upside earnings potential. Additionally, our restructuring program we announced in January has gone deeper and there are cloud and infrastructure costs that we have not cut yet that we can reduce with the signing of Camby. Alibet is expected to relaunch across seven states and at four retail gaming locations by the end of 2023, beginning in the very near term. We will also leverage these partnerships in the UK and Europe as well. We continue to focus on profitability and cost cuts through our business segment, having incurred $16.8 million in restructuring charges in 1Q23. The cuts were implemented quicker and deeper than originally anticipated when we announced our restructuring plans for international and North American interactive businesses earlier this year today we haven't seen any material change in consumer spending patterns at our casino resorts outside of the specific weather impacts called out for one queue and a slight calendar shift in april we do begin to witness a material change we have a handful of levers we can pull to maintain a strong profile so turning to guidance with all the previous spoken we are upgrading our guidance to tighten the range to 665 million to 700 million of ebitda This reflects FX rates and our confidence in the strength of our business globally. It also considers our belief that the white paper released by the UK government won't have an impact on our international interactive financial results. Corporate expense for the quarter came in $3.5 million higher than our expectations due to one-time costs and some carryovers from 2022. We do not expect this to be the run rate, and you should look at the run rate back down to $13 to $14 million. We're reducing our 2023 capital expender guidance from $170 million to $160 million, with maintenance capex at the casinos of $50 million, gross capex at the casinos of $70 million, and we are lowering our software development cost projections for the year to $40 million. We continue to evaluate our software development costs and expect that to continue to shrink throughout the year. During the quarter, we repurchased 1 million common shares for an aggregate purchase price of $19.8 million. Separately, we also went into the market and repurchased $15 million of our face value 2031 bonds for $10.6 million. At the quarter's end, shares outstanding were $45.8 million, and we have incremental warrants, options, and other dilution of $13.8 million shares. $59.5 million shares outstanding is the right way to look at our capital structure. We have more than $344 million of cash on our balance sheet and $3 billion in net debt as of the end of the quarter. We have ample liquidity to fund all of our announced projects and will invest with care in North America. Our long-term commitment is to be sub five times debt to EBITDA, which we continue to expect to hit in mid-2024. Lastly, as announced this morning, I'll be moving on for another opportunity. I believe in the value of the value story, particularly Chicago, our iCasino growth trajectory, and the unique way we look at sports and growth in the international interactive segment. not to mention the untapped real estate value in our portfolio. Thank you for your time and consideration, and I look forward to supporting Marcus and the rest of the team from the sideline. Let's open the call up to the Q&A operator.

At this time, if you would like to ask a question, please press star one on your touchstone phone. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question. We will pause for a moment to allow questions to queue. Our first question comes from Barry Jonas with Truist Securities. Please go ahead.

Thank you. I'm going to start with the management transition. First off, Bobby, it's been a pleasure. Best of luck. Welcome, Marcus. I guess I'm just curious, what was most appealing about this role for you? And with that Robeson, why was Marcus the right person for the CFO role?

Yeah, I'll jump in, Robeson, and share my enthusiasm and excitement and then pass it to you. Look, I think the best way to describe it is I've spent a considerable amount of time in the industry working with some of the larger companies. And looking at the Valley story, the entrepreneurial spirit of the company, we're still a speedboat right now. And so we can take advantage of opportunities by being a little more nimble. But I expect to come in and continue building upon the foundation that Bobby has put in place and look to bring the right mix of financial discipline and operational experience as well as corporate leadership during an important juncture for our company. So exciting times and look forward to working with Robeson and the team and George and being a strategic partner as we look to move forward and advance our strategies.

Thanks, Marcus. And in my response, I want to say thank you again to Bobby for everything he's done. Without his support, we wouldn't have been able to make it through the transition and combination of these companies. I'm very excited about Marcus joining. What I truly value in his abilities is his deep understanding of all the levers that you can pull within a casino operation, which can grow our business. Combining that with his financial acumen, and wide-ranging knowledge, I see him as driving our growth across all areas of our business, casino, resorts, and interactive. So I'm delighted that he's on board and part of the team.

That's great. And then just as a follow-up, Robeson, I wanted to maybe talk a little bit more about the white paper. I think the guidance, the low end of the guidance improvement to some degree relates to

white paper but curious to get your thoughts maybe short term long term what you see as the financial implications for ballet here um well the short term it's worth thinking about when uh the consultations will close so actually changes are likely to only occur to the propositions that we deploy in the uk in 2024 There will be a short-term impact on how players can engage with our offerings. But actually, the wider economic impact on the competitor landscape will keep on moving smaller operators away. So I see this as a short-term, tiny, tiny impact, low, low single-digit, But actually, we're already gaining share by people's sentiments from other operators, almost pulling back in the marketplace today. For long term, this means the biggest operators will continue to grow. And I'm excited about getting the clarity of the white paper. I've said many times that the only way you can solve for growth is by knowing all your variables in a formula and having a few constants. We've been provided with those constants, and we have clarity. So I'm excited about what the white paper brings for us in the medium and long term.

Great. Thanks, everyone.

The next question comes from Jeff Stantial with Stifel. Please go ahead.

Hey, good morning, everyone. I'll start by echoing Bear's commentary and extend our congratulations to both Bobby and Marcus on their respective new roles. Maybe starting off on guidance, you know, you talked about some talent effects, some greater conviction in kind of the direction business trends are heading in. Can you just frame out a bit more of the decision to raise the low end of guidance but leave the high end intact with some of those drivers in mind that you discussed earlier?

Yeah, I mean, Jeff, we only gave her full year guidance at the end of February. right? And so it's only May. You know, trends are moving in the right direction. So, you know, we're just going to take a more, you know, conservative approach to upgrades early in the year. But we are feeling very good with where things stand.

I understand. That makes sense. Thanks, Bobby. And then moving to the North America Interactive side of things, restructuring efforts, sounds like they're pacing quite nicely. You know, you talked to Some targets for go-lives under a new partnership with Canby, seven states by year end. With all of this in mind, just curious if you have any thoughts so far on what you think losses might look like next year. Should we expect a pretty significant step down from the 40 to 50 guided for this year as you shift more towards variable and away from fixed cost structure? Just any kind of color there on what you're expecting as you transition to a new strategy would be helpful. Thanks.

Yeah, I mean, Jeff, I'm sorry, go ahead.

No, Bobby, you close this one.

Yeah, as we said, in 24, we expect to close the gap. So iCasino is moving faster than we thought. You know, it's really going to come down to how much are we willing to invest in customer acquisition on sports? which, as of right now, we are looking at on a very conservative basis.

Understood. That's helpful. Thanks, Bobby. I'll pass it on.

The next question comes from Chad Beynon with Macquarie. Please go ahead.

Morning. Thanks for taking my question, and best wishes to Bobby, and welcome, Marcus. Looking forward to working with you. Firstly, I wanted to ask about Tropicana, given the news that we've heard about some movement out there with Oakland Athletics potentially moving to a different site off the strip. Given that, Formula One, a number of other kind of non-gaming things, how does Tropicana fit into your strategy, either from an omni-channel standpoint or just an asset value standpoint? Thank you.

Sure, I'll take maybe the first part of that question. So, hey, Chad. So, you know, the age story is going to play itself out. The way we view the property is we feel we have a little hanging fruit that we can execute that's going to allow this property to pay for itself. So, it kind of gives us the luxury to consider all types of development options, including adding development partners long-term. You know, we sit on a 35-acre site. We view it as one of the busiest work corners of the Las Vegas Strip. There's a lot of interest in potential outside investment. We're a disciplined company. So, again, we have a long-term view on this investment, and we're going to be patient about looking for the right project with the appropriate returns. And in the meantime, we do view this as a benefit to our regional casinos where there's an opportunity to drive some cost traffic or cost business to the property.

Great. Thank you. And then from a capital allocation standpoint, so you have essentially higher free cash flow estimates for the year with the higher EBITDA range and the lower CapEx. It sounds like the projects are kind of, you know, as expected in terms of cost or maybe even a little bit lighter. So as it relates to the repurchasing of the million shares in the first quarter and the 5 and 7, 8 bonds, How should we think about further repurchases as we kind of move throughout the year, given where the debt and equity is currently trading? Thanks.

Yeah, I mean, we will continue to evaluate the best allocation of capital. Priorities from our perspective are buying back shares, buying back debt, and Chicago. And so right now, we believe that the way that those three are set up, we can do all three from a balanced approach, but we'll always continue to evaluate the market on a month-to-month basis.

Thanks, Bobby. Appreciate it all. Best of luck.

The next question comes from Dan Pulitzer with Wells Fargo. Please go ahead.

Thanks. Hey, good morning, everyone. And Marcus, welcome. And Bobby, wish you the best of luck on your next endeavor. First question, North America Interactive. Just wanted to delve a little bit deeper there. How should we think about the opportunity for labor efficiencies as you transition part of the tech stack to Cambian White Hat? And maybe in terms of timing or any anecdotes or data points you could provide there? And then further bridging to 2024, I mean, how should we think about, I guess, I know the guidance is effectively unchanged today, but as we think about rolling through this year and maybe upside in 2024, can you maybe help us think about the revenue upside as well as the cost component of it that could drive higher profitability than where we're thinking today?

Thanks, Dan. So when I look at North America Interactive, we're taking a sort of double-end view here. So firstly, I'm going to touch on sports. So we have reduced from a fixed cost model to really a variable cost model. There are some minimums that, as Bobby indicated earlier, that we are now passing through. So now it's fully variable cost. With the Acambi White Hat solution, a good way to model it is to think about our costs being in the mid-teens of NGR for sports. Now, in iGaming, also, we are throwing off positive gross profits, currently plus a million, and will continue to grow. us moving significantly forward and as bobby said it's it's in our gift exactly what our estimates for our losses are in 2023 and then moving into 2024 it's all about getting the balance of revenue and loss we will make these judgments as we go everything is going to be performance based if it means that we should be spending more money now to grow the revenues for longer term profitability we will do that and we will analyze this deeply. I believe that we should constantly be assessing, but our structure is now in the right place so that we can actually rent before we have the option to buy, as we made clear with our Canby deal. We have the option to bring that technology in-house when we reach sufficient scale so we can continuously maintain good margins and convert our revenue into a profitable business. Hopefully that gives you some of the guidance there, Dan, that you're after.

Yeah, let me just put some numbers around it. So, Dan, if you look at New Jersey, we've gone from zero to five million of NGR in about 15 months, monthly. Ontario just crossed a million. We launch in Pennsylvania. And so those are kind of, you know, the three sort of primary iCasino states for us. Those businesses continue to grow. You know, New Jersey, you know, is generating more than a million of profit a month. And the cost base of that is fairly fixed. On the sports side, you know, right now we're still burning a million on sort of sports infrastructure before even access. And so the faster we roll out can be, the faster we can shut down 1.0 because 1.0 takes a significant amount of legacy cloud costs. There are some people costs that we haven't restructured yet. There is some just office space, things like that. So the faster that Canby is rolled out and the faster that the iCasino grows, the gap closes very quickly. And so you can go and do the math where we're at a 4% market share in New Jersey. We're projecting that we'll get to 6% to 8%.

apply some of that to pennsylvania and ontario and you you can get to our eye casino numbers in 24. got it that's that's really helpful i appreciate the color and just for a follow-up um in illinois on the brick and mortar side there's been some some some reports that there could there could be a possibility of vgt's down the down the road i mean if you can kind of frame out how you think about the likelihood of that legislation or the impact to the temporary versus permanent casino, and maybe if there was any kind of provisions in your contract there that would give you a little bit of cushion.

Sure, Dan, I'll take that as George. Well, you know, in our opinion, it would not make economic sense for the city from a tax perspective. Certainly not a job creator, and you could argue would have a negative effect on union jobs but but in any event it's something the new administration really needs to evaluate uh the distinguishing factor is you know we're we're building a fully integrated destination casino and they're completely uh they have a completely different experience um you know from from a chicago temporary impact i mean the it's not an eminent thing it's not happening overnight so we'll be able to ramp up that operation uh build significant database in the market One of the unique differences between a casino and BGTs is they're not really allowed to capture or use a database to market. So it's really a completely different type of experience. And we don't think it's the same customer at all.

Got it. Appreciate all the color. Thanks.

The next question comes from Lance Vitanza with TD Cowan. Please go ahead.

Hi. Thanks, guys. Most of my questions have been addressed, but congratulations on the quarter. I guess just to sort of return to the question of the balance sheet, you repurchased stock at close to $20 per share, which I appreciate, but the stock's below $16 this morning. You finished the quarter with a lot of cash, and you said you have more than enough liquidity to fund your planned expenditures. You beat on the quarter, you improve your guidance, and yet the stock is down again. So the question is, why would Bally's not be in the market this morning buying more shares?

Well, there's a technicality on why we're not in the market this morning, which is you have a blackout window to a certain point in time. But we will continue to buy back shares, buy back debt, and invest in Chicago as directed by the board.

Okay. And then maybe just back on the Tropicana in Las Vegas, how would you describe the status of that property today from the standpoint of cash flow, investment, et cetera? I know obviously the future is up in the air, but what's going on there today?

This is George J. Lance. So I think I touched on that a little bit. We view the property based on the current rate of cash flows. and there's some low-hanging fruit that we've kind of been in a little bit of a suspense state to see how the age story plays out, that we could literally fund the carrying costs of that property. So from that perspective, that's where I went back to talking about the luxury of trying to really develop this thing right. And we're going to look at the right project with the right returns.

Could you help us quantify those carrying costs that you mentioned?

Sure, Bobby could correct me if I'm wrong, but it's about $20 million.

Thank you.

The next question comes from Jordan Bender with JMP Securities. Please go ahead.

Great. Thanks for taking my question. I want to start on the release from last night, just on the potential for an IPO in Chicago. Is there anything to kind of share on that that you can share? And would that impact the ability to sale lease back that property or I guess any other properties within your portfolio? Thank you.

So, you know, I don't want to get in front of, you know, there's a turn gun jumping. So, so we'll be quiet on the IPO, but we have said publicly that we would IPO 25% of Valley Chicago. The, nothing restricts sale-leaseback. We already have a sale-leaseback on Chicago. And we do believe once the Chicago project is up and running, we could evaluate a significant sale-leaseback to bring the whole balance sheet to, you know, finality. Okay.

And then just on my follow-up, the timeline on the 6% to 8% market share in New Jersey, I guess, how should we think about kind of the bridge between your current share and that long-term share? Thank you.

I think that we should consider the 6% to 8% as where we will get to over the next 12 to 18 months.

Great. Appreciate it. Thanks, guys.

The next question comes from Ricardo Chinchilla with Deutsche Bank. Please go ahead.

Hey, guys. Thank you so much for taking my question. I was wondering if you could provide the regulatory EBITDA and regulatory leverage at quarter end, and if you could please comment a little bit more on your willingness to buy back bonds versus stock, acknowledging that there's finite cash flow and limited restricted payments capacity and both require, you know, the use of restricted payment capacity and cash. You guys previously mentioned that you were spending $100 million in share repurchases. Is now, is that amount, you know, going to remain? If you guys think that it makes more economic sense to buy back that, any color on your willingness to, on those buybacks would be very helpful.

The regulatory EBITDA is $673 million against 3.406 of gross debt. You know, as we said, we continue to evaluate our book, you know, regularly. We think that there's a balanced approach to repurchasing shares, repurchasing debt, and investing in Chicago.

Thank you. moving to you know the north american uh interactive segment now that you have in place that uh you know deal with cambium with whitehead does this mean that you guys eventually would stop developing your you know your uh own technology solution or is it just you contemplating to the future you know using you know developing this technology any any color you know what would be the best way going forward would be helpful.

So Cambium White Hat will provide us with our platform and sports betting solution. There's still a requirement to deliver fantastic iCasino and marketing data. The biggest opportunity I see is actually harnessing our Omni data capabilities across both retail and interactives. So we'll definitely be investing in that space because I see that as the pure accelerant to bring all of our operating businesses together. So we'll invest in making sure that we become omnichannel. But we won't have to invest in sports when it costs a lot. So we'll just be on a variable cost structure or in the PAM to get live into many states before the revenues really start flowing. But yeah, we will continue to invest in technology. Technology will allow us to grow in the long term.

Perfect. Thank you so much for taking my questions. And best of luck to you, Bobby.

It appears we have no further questions at this time. I will now turn the program back over to CEO Robison Reeves. Please go ahead.

Thank you, everyone, for your time. We will speak to you all very soon. And all the best, Bobby. And I'm glad we had a strong quarter. So thank you for listening. Bye-bye.

This does conclude today's program. Thank you for your participation. You may disconnect at any time.