Bally’s Corporation to sell Asian Interactive Business

Garance Limouzy November 4, 2024

SiGMA news

Bally’s Corporation has announced its decision to divest its Asian interactive business, and to sharpen its focus on operations in North America and Europe. The transaction was with the U.S. Securities and Exchange Commission (SEC), which was submitted on 31 October 2024, with a public disclosure following the next day. Asia interactive business has established a significant presence in Japan, operating four brands: CasinoSecret, Vera&John, InterCasino, and Yuugado. While specific details regarding the buyer remain sparse, the agreement indicates that the purchaser is a new entity formed by members of the carved-out business’s management team. Under the terms of the sale, certain intellectual property rights will be placed in a trust and licenced to the new owner for a period of five years, with the option for extension. Bally’s will also provide transitional services to ensure a smooth handover of operations. However, once the transaction concludes, the corporation will no longer be involved in the management or governance of the Carved-Out Business.

Market challenges in Japan

Bally’s decision comes amid ongoing challenges in the Japanese market. During a recent earnings call, CEO Robeson Reeves stressed the difficulties faced in Japan, particularly the impacts of yen devaluation on business performance. He noted, “Attracting new players has become increasingly difficult, which has affected overall engagement.” The CEO’s remarks were echoed by K&F Growth Capital, a significant shareholder, who expressed concerns regarding Bally’s engagement in the Japanese market amid its current regulatory landscape. In light of these challenges, Bally’s aims to concentrate its capital and resources on its operations in North America and Europe. The corporation stated that the divestiture will enable more focused management and aligned ownership for the Carved-Out Business, allowing both parties to thrive in their respective markets.

Minimal financial impact expected

Financially, Bally’s anticipates that the impact of this sale on its adjusted EBITDA and free cash flow will be minimal. The corporation expects a modest decline due to the shift in revenue streams, as future financial statements will reflect only licensing and royalty income from the new owner. Despite this, Bally’s expects improved profitability margins associated with these licensing revenues, as is standard within the gaming industry.

Expansion plans in North America

Additionally, Bally’s is moving forward with its ambitious plans in North America, including the development of a new property in Las Vegas, which is set to open in tandem with the Oakland Athletics’ new stadium in 2028.