Following a turbulent 2022, especially in the fourth quarter, Bally’s Corporation reportedly plans to drop its Monkey Knife Fight Daily Fantasy Sports Division. MKF is one of the bad bets that Bally’s has recently staked.
Things are looking rather bleak for casino and entertainment giant Bally’s Corporation, which recently announced its preliminary financial results for the fourth quarter. In Q4 2022, the company posted a staggering $428 million loss through its North American online arm, from $567.7 million in revenue. Moreover, while Q4 revenue increased by almost $30 million year-over-year, the net loss over the same period significantly increased by an astonishing 300% compared to 2021.
Now, reports from sources close to the matter indicate that the casino giant is searching for prospective buyers for its underperforming Monkey Knife Fight (MKF). Besides the colossal loss, Bally’s Corp is vehemently fighting its impending bankruptcy position by offloading its underperforming assets. From the look of things, it appears that the MKF Daily Fantasy Sports (DFS) division will headline the chopping board.
MKF Fails to Live Up to Its Initial Hype
When Bally’s acquired MKF in 2021, the platform was the fastest-growing daily fantasy sports site in North America by then. At the time, the acquisition made Bally’s the third sports betting company in the US to have a fantasy sports segment. As a result, the deal was considered a massive win for Bally’s standing, particularly with the enormous plethora of fans who had been raving for a dynamic and creative slate of daily sports and e-sports contests.
Fast forward to 2023, and all the fanfare and potential that the fantasy platform held appears to have been a house of cards. Bally’s now projects that the MKF platform will record a net gaming revenue of $4.7 m in 2022, much lower than 2021’s figures by 36%.
With Bally’s planning to offload all its burdened assets, it makes sense that MKF is at the front of the firing line, considering its abysmal performances.
A Crushing Year for Bally’s Corporation
Bally’s Corporation took a beating in the 2022 calendar year. While revenue for the said year jumped from $1.32 billion in 2021 to $2.25 billion, the fourth quarter blow was heavy enough to shake the company to its core.
However, it’s worth pointing out that the enormous Q4 loss is primarily due to the company’s projected non-cash charge worth $390.7 million. This charge is part of Bally’s asset impairment analysis and annual goodwill for its online operations in North America. The acquisitions of MKF and Bet.Works were the main drivers of this loss as their value was re-evaluated to be worth much less than their price consideration during their buyout.
On top of that, the company also took a $73.3 million loss in its international interactive segment. This loss, on the other hand, was tied to Bally’s Gamesys takeover.Despite all the setbacks, Bally’s President of Interactive, who also happens to be the incoming CEO, Robeson Reeves, sought to dispel all the doomsday talk of the company by highlighting some positives. He noted that:
Quote“As our businesses continue to integrate, we are pleased to achieve record results in both our casinos and resorts and International Interactive segments. Our core businesses are generating fantastic cash flows. UK revenue grew 12% organically in the fourth quarter as regulations continue to play through, while in December, Asia saw positive year-over-year organic growth, proving that our initiatives to maintain a competitive advantage in that market are effective.”
Even with the wave of optimism from the current CEO, he couldn’t hide that things haven’t been all rosy for the gaming giant, saying:
Quote“Simply put, our North America Interactive results in 2022 were unacceptable. In response, through our announced restructuring plan of the Interactive business in January, we are taking a deep dive into our approach to North America to ensure that investments we make in sports have a near-term path to profitability.”
BallyBet and a Handful of Stale Investments
Out of all Bally’s initiatives, BallyBet must be the one whose apparent failure stings the most. The company spent a whopping $2.08 billion in cash plus $500 in shares to complete the BallyBet. However, the 2022 takeover deal has since turned sour, with BallyBet failing to channel even 1% of its active markets.
Other substantive acquisitions that crushed Bally’s balance sheet to the verge of bankruptcy include:
Cumulatively, when these assets were acquired, they were worth $651.9 million. However, their value, as we speak, has plummeted to just $236.9 million.
A New Dawn for Bally’s
As Bally’s seeks to steady its rocking boat, the company also announced that Robeson Reeves would replace Lee Fenton as CEO. With the rest of the financials to be released later, what they will say about the entire picture of the company’s performance remains to be seen.
Besides getting rid of non-performing assets, Bally’s also plans to reduce its US online working presence by 15% as it tries to keep afloat while navigating the murky waters of poor financials.
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