Bally’s initiates stock offering to raise $850m for Gamesys Group acquisition

Casino operator highlights Gamesys’ in-house personalization algorithm and multi-vertical gaming stack as key drivers behind purchase

Bally’s Corporation is seeking to raise $850m via a common stock offering and five million tangible equity units to fund its £2bn ($2.75bn) purchase of with Gamesys Group.

Each equity unit is comprised of a stock purchase contract and a senior amortizing note due April 15, 2024.

In a document filed with the SEC yesterday, Bally’s said it intended to use the proceeds to partially fund the cash portion of the Gamesys deal.

Bally’s chairman Soo Kim and Gamesys CEO Lee Fenton told analysts yesterday the combination would leverage Gamesys’ long-standing data-driven approach to igaming as a way to differentiate itself from US competitors.

“When we peel back the layers, we know of all of the very highly specialized and technical skills that this team has built over the more than 10 years they’ve been running this business, and that’s what we’re actually purchasing here,” Kim told analysts.

Fenton said the key to Gamesys’ success in the UK, Europe, and Asia was its “secret sauce” powered by “an algorithmically driven and highly customizable go-to market strategy that is enabled by our proprietary technology stack.”

He added: “The combination with Bally’s gives us the perfect platform to grow into our next core market and we fully expect the US to become our most significant market globally over time.”

Fenton said Gamesys would also provide Bally’s with bingo and poker operations, as well as its popular Virgin, Monopoly, and Jackpotjoy brands.

“We have the data management piece, we have additional brands like Monopoly, Virgin, Jackpotjoy, and we’ve got the experienced team in the digital space,” said Fenton, who will serve as CEO of the combined group.

“We’ve got a games studio and we bring bingo and poker to the table as well, none of which Bally’s has. I think it was the best hand-in-glove fit from a Gamesys perspective with shared a vision for the future.”

When probed on the risks associated with Gamesys’ significant unregulated revenues, most of which come from Japan, Bally’s’ Kim said: “From our perspective, obviously it’s a known risk and the way we look at it is we treat [Gamesys] as a B2B business.

“I think that there are certain protections on that business today under Gamesys but under a combined Bally’s [business], Gamesys will have even further protections,” he added.

On online sports betting, one area where Gamesys is lacking in expertise, Kim added: “Our current roadmap is to reveal on one pathway a traditional sportsbook and then eventually a sportsbook plus icasino product which frankly looks a lot like what everyone else has in the market.

“But our parallel pathway is to take advantage of the unique opportunities that come from having the rights to integrate into all of the sports that Sinclair [Broadcasting Group] has and offer something that no one has ever seen,” he added.

Elsewhere, Bally’s secured entry to Nevada this week through a $308m deal to purchase Las Vegas Strip casino Tropicana, which is currently owned by Gaming and Leisure Properties.

On the purchase, Kim told analysts: “We saw an opportunity we knew may not come again in the future and it’s very important for an operator which has national ambitions as a physical casino operator to have a Vegas presence.

“I think it is [also] important for an operator that has national ambitions as an online operator because online operators will have branded sportsbooks and physical experiences in stadiums and other public spaces and there’s no larger, more visible place than the Vegas Strip,” he said.

Gamesys this week revealed a Q1 revenue increase of 27% year-on-year to £197.8m ($272.1m).

In a trading update, the FTSE 250 operator highlighted ongoing “strong growth” across its two most significant operational markets of the UK and Asia.

Bally’s also reported a 70% rise in Q1 revenue this week for its land-based business, alongside adjusted EBITDA of more than $50m.

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