Bally’s Corporation — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter report. Bally’s operates land-based casinos and resorts, a racetrack, and online gaming and sports betting businesses across three segments: Casinos & Resorts, North America Interactive, and International Interactive.
Financial performance
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $2.256 billion | $1.322 billion |
| Operating income (loss) | $(293.0) million | $93.4 million |
| Net income (loss) | $(425.5) million | $(114.7) million |
| Diluted loss per share | $(7.32) | $(2.31) |
| Adjusted EBITDA (non-GAAP) | $548.5 million | $329.9 million |
| Cash from operating activities | $271.0 million | $82.8 million |
| Capital expenditures | $212.3 million | $97.5 million |
Revenue increased 70.6%, with gaming revenue up 75.2%. Management attributed growth to fewer pandemic-related operating restrictions, improved consumer confidence, and acquisitions. Acquisitions contributed an aggregate $868.7 million of revenue year over year, including Gamesys and other 2021 acquisitions and Tropicana Las Vegas, acquired in September 2022.
Net loss widened substantially, principally reflecting $464.0 million of impairment charges: $390.7 million related to North America Interactive and $73.3 million for an International Interactive trademark. Depreciation and amortization also more than doubled to $300.6 million. The reported operating margin was negative 13.0%, versus positive 7.1% in 2021; net loss was 18.9% of revenue, versus 8.7%.
Segment Adjusted EBITDA was $345.6 million for Casinos & Resorts, $(65.7) million for North America Interactive, and $321.7 million for International Interactive. North America Interactive’s loss increased from $12.4 million, reflecting acquired businesses and market-launch costs. Casinos & Resorts EBITDA rose 8.8%; management cited higher customer volumes, partly offset by local regulatory changes, including smoking bans. International Interactive EBITDA increased with the full-year inclusion of Gamesys, acquired in October 2021.
Cash, debt, and liquidity
- At year-end, cash and cash equivalents were $212.5 million; restricted cash was $52.7 million. Net cash used in investing was $302.9 million and net cash provided by financing was $43.2 million.
- Debt principal outstanding was approximately $3.56 billion, including $1.93 billion under the term loan, $137.0 million drawn on a $620 million revolving facility, and $1.50 billion of senior notes due 2029 and 2031. The balance-sheet carrying value of long-term debt, including the current portion, was $3.49 billion.
- Net interest expense was $208.2 million; cash interest paid was $200.9 million. A 1 percentage-point increase in effective interest rates was estimated to add about $20.6 million to interest expense over the next twelve months.
- Operating lease liabilities were $836.1 million, with $1.71 billion of undiscounted minimum payments remaining. Bally’s also recorded a $200 million financing obligation for the Bally’s Chicago ground lease.
- Management stated that cash balances, operating cash flow, and revolving-credit availability were expected to meet operating, capital expenditure, and debt-service needs. Debt agreements and the Rhode Island Regulatory Agreement impose restrictions, including on dividends, indebtedness, and other actions.
Material changes, outlook, and risks
- During 2022, Bally’s acquired Tropicana Las Vegas, launched Bally Casino in New Jersey and a combined casino/sportsbook app in Ontario, and advanced property renovations. It signed an agreement for a planned $1.7 billion Bally’s Chicago resort; a temporary casino was expected to open in the second half of 2023, subject to approvals.
- Management expected 2023 capital expenditures to decrease from 2022. Project milestones included the Kansas City redevelopment targeted for summer 2023, the Twin River casino expansion expected in the second quarter of 2023, and continued Atlantic City upgrades. The filing does not provide a consolidated earnings or revenue guidance range.
- On January 3, 2023, Bally’s completed a $635 million sale-leaseback/capital-contribution transaction for the real estate at Tiverton and Hard Rock Biloxi. The company said a substantial portion of proceeds would reduce debt; the properties were to be added to the GLPI master lease, increasing minimum annual rent by $48.5 million.
- After year-end, Bally’s acquired Casino Secret for approximately €43.9 million and announced an Interactive restructuring expected to generate $10–$15 million in cash severance charges in the first quarter of 2023.
- Key risks include high leverage and variable-rate debt, substantial lease commitments, acquisition integration and impairment exposure, competitive and costly online-gaming launches, gaming-license and regulatory requirements, consumer discretionary spending, inflation and labor costs, foreign-exchange exposure, and cybersecurity and payment-processing reliance. Bally’s also disclosed meaningful online revenue from jurisdictions where it does not hold a local license.
- The financial statements received an unqualified audit opinion. Management and the auditor reported effective internal control over financial reporting as of year-end, but Tropicana Las Vegas was excluded from the assessment while its controls are integrated. Previously reported weaknesses concerning foreign-currency accounting were reported as remediated.
Most important facts for investors to verify
- Whether the large North America Interactive impairment and operating losses signal further deterioration, and whether the announced restructuring improves segment profitability.
- Actual proceeds applied to debt from the Tiverton and Biloxi transaction, resulting debt levels, and the effect of the added GLPI rent obligations on cash flow.
- Progress, financing, regulatory approvals, costs, and opening timelines for Bally’s Chicago and the other major property projects.
- Debt covenant headroom, refinancing capacity, and sensitivity to further interest-rate changes, alongside the company’s substantial lease obligations.
- Whether International Interactive forecasts and brand performance support the carrying values of goodwill and intangible assets; management disclosed sensitivity to forecast revenue, discount rates, and royalty assumptions.
- How online-gaming regulation, responsible-gambling requirements, and the legal status of markets where Bally’s operates affect revenue, costs, and licensing risk.