Four reasons why Bally’s is the hottest company in the Gaming Intelligence Hot 5020th December 2021 11:28 am GMT
In his first major interview since the acquisition of Gamesys, chief executive officer Lee Fenton explains why Bally’s is unique among its North American peers and why it could become a model for the rest of the industry
- The first digital-first omnichannel operator in North America
Then-Gamesys CEO Lee Fenton admits that he did not spend much time preparing for his first call with Twin River chairman Soo Kim. In 2019, the casino operator had a portfolio of five properties that it had gradually acquired over the past two years. It was headquartered in Rhode Island, where two of its casinos are located. But he took the call. It would be rude not to and you never know where these things might lead.
He was glad he did. He came off the call impressed, and eager to find out more.
Fenton recalls Kim telling him: “Everyone thinks I’m building a regional casino operation and whilst I am, I am doing that in part because I want to overlay digital and become a digital-first business. I’m starting to assemble the parts to do that.”
Over the following year, some of those parts would fall into place. Kim took advantage of Caesars’ combination with Eldorado to acquire casinos in three additional states, and to acquire the Bally’s brand. It also acquired sports betting engine Bet.works and signed a deal with Sinclair Broadcasting Group, which would see Fox Sports regional TV stations rebranded Bally Sports.
“When we started to compare the two businesses, a lot of what they had, we wanted access to,” says Fenton. “Primarily, North America and sports betting technology.”
The addition of Gamesys to the Bally’s Group gave Kim one of the interactive gaming industry’s most experienced operators and one of its canniest management teams. It is unusual for the CEO of an acquired European company to emerge as CEO of the US acquirer. However, this was not just a show of faith in Fenton and his team, it was a statement of intent.
When Bally’s acquired Bet.works it revealed its ambition “to become the premier, truly integrated, omnichannel US gaming company”. At the time it was easy to overlook this statement as slightly overblown rhetoric. Following the Gamesys acquisition, all of a sudden the rhetoric started to make sense.
- A unique merger of unique assets
Since the merger of Bally’s and Gamesys completed in October, Fenton has not spent a great deal of time at his home near Kew Gardens in West London.
He has spent a great deal of time on the road getting to know the Bally’s business in the US and learning how a land-based casino works. He will be assisted here by his predecessor as CEO, George Papanier, who has taken charge of retail operations after the merger.
One of the unique things about this merger is the equal weight of revenue coming from retail and digital.
“I think that changes the mindset a bit,” says Fenton. “The first conversations are all about customer data and technology, and how we can leverage those things to do better by our customers.”
Gamesys has always had this philosophy and Fenton was delighted to discover that it goes to the heart of Bally’s culture.
“The metrics that we look at first every day are all about engagement and activity - not revenue. We figure that if we have people engaged then revenue will come over time.”
As the former Gamesys CEO makes his way around the US market he will do so at the helm of one of the industry’s best known brands.
“A gaming brand needs bags of two things. One is trust and one is entertainment. I don’t think those brands grow on trees. That’s why Bally’s was very interesting to me,” says Fenton. He goes on to emphasize that “local brands matter”.
Gamesys has direct experience of the importance of local brands from its experience in New Jersey’s iGaming market, where it launched the Tropicana Casino and Virgin Casino online casinos in 2013. The market access contract Gameys signed with Tropicana stipulated that the two products had to be exactly the same, to avoid Gamesys favouring one over the other.
Despite their supposed equality, the Tropicana Casino has always been significantly bigger than Virgin, says Fenton. The New Jersey experience has also exposed the flaws in this type of relationship.
“The same dollar of revenue that showed up for the Tropicana online was smaller than the one in retail because they had a partner that had to get paid,” says Fenton. “We have a different dynamic. We have been making sure there is no lack of incentive either on digital or retail to just service the customer. When you own all of those component parts and you own all the revenue coming through it, you make better business decisions.”
- From New York to Japan, a global operation
Another thing that makes Bally’s unique is that it is a regulated US gaming company that is comfortable working in Asia’s largely unregulated markets. It is the group’s highest growth region and accounted for almost a third of Gamesys revenue at the time of the merger. Its key market in the region is Japan.
Fenton quips: “Japan has probably been our most stable regulatory market for the last eight years.”
The land of the rising sun has been in the process of regulating land-based casino gambling for some time and Fenton assumes the government will get around to online gambling eventually.
“Integrated casino resorts were supposed to be open in time for the Olympics but there’s not a shovel in the ground,” says Fenton, so he is well aware this might take some time.
“I’ve always said that regulation is something we should embrace, because it creates a level playing field for everybody. You’ve just got to do it better than the next person.”
For Gamesys this is about customer service first and foremost but also producing unique games for each market. Making unique content has been a key focus in Asia and has been a cornerstone of a growing B2B business in the continent.
While regulation may or may not be forthcoming in Japan, it has come to New York with an attendant 51 per cent tax rate. It was enough to scare off some operators but not Bally’s, which won an online sports betting license along with eight other operators. While the tax is eye-wateringly high, Fenton points out that it is the most populous state to regulate and it will have “only” nine operators compared to 25-27 in neighbouring New Jersey.
“Nobody volunteers for a 51 per cent tax rate,” he continues. “We are pleased to be in the market. As we do in some of our retail establishments in high tax jurisdictions, you have to change the way you operate, and the way you market and the way you retain. It will be interesting to see how the different postures of different companies work.”
- A bright future
Fenton acknowledges that he and his colleagues have a lot of hard work to do. The Gamesys acquisition followed so quickly on the heels of nine properties to the casino portfolio that there are still some left to be rebranded under the bright red Bally’s logo.
Bally’s will complete this process by the end of the year, with just a few of the larger pieces of exterior signage to be changed in a few properties during Q1 next year.
“Going forward all of our investment decisions will consider technology at the property level and in particular how technology at the property level can be used to enhance the omnichannel experience of a customer,” says Fenton. “This week we will be launching the first Bally branded app since the Gamesys completion and that will be for the launch of Bally Casino in New Jersey. As we also own a large property in Atlantic City, we will have an ideal testing ground to understand what technology adds most value to our customers both on property and beyond.”
Fenton acknowledges that technology in retail casinos has not been at the cutting edge - “to put it slightly mildly”.
During his tour of Bally’s properties he says he sat in the lobby at Bally’s Atlantic City and watched customers coming in and going up to a machine and printing out their statements.
“There is no reason why that technology doesn’t exist on the smartphone in their pocket,” says Fenton. “It would be better for the customer but it would also bring the relationship with the company onto their device as well as in retail. All of a sudden we are stretching beyond the walls of the casino. That is just one very simple example that we have been knocking around over the past few weeks.”
If the retail estate can do with a technology reboot, then so can the company’s BallyBet sports betting app, which is only available in Colorado and Iowa, where it has minimal impact.
“We call it BallyBet 1.0,” explains Fenton. “It was a product that was put out the door relatively quickly after the Bet.works acquisition.”
He goes on to sing Bet.works’ praises as a brilliant company with a fantastic betting engine. However, he does not think the final product that the customer sees is strong enough to invest in and roll out aggressively.
The front end will be rebuilt by Gamesys and its newly-acquired Degree53 design studio. It will sit on the Gamesys player account management system and it will plug into the betting engine and the feed aggregation from Bet.works.
“That will give us a product we can get behind and be proud of,” predicts Fenton.
BallyBet 2.0 will be supported by Bally Sports, a network of 21 regional sports TV stations that cover 45 professional teams, carry around 5,000 live games per year and reach 70 per cent of US households. It came about through a long-term partnership deal with Sinclair Broadcasting that also saw them take a significant stake in the company.
“Ahead of the launches of our apps around the US, the Bally Sports channels do a tremendous job of building brand awareness and trust as well as legitimacy in sport for the launch of BallyBet,” explains Fenton. “But the deal goes way beyond naming rights and in multiple states we have already been rolling out free-to-play games promoted on air, and synced to the broadcast, to drive engagement beyond the passive viewing of a game. Going forward this will evolve into wagering opportunities both in second screen form and in participation directly from a single video stream - be that over broadcast or streaming.”
It is a unique customer acquisition and engagement funnel that takes inspiration from the success of Sky Betting & Gaming in the UK and looks to boost it to the next level.
“We’ve been very acquisitive over the past two years. 2022 is a year of execution,” continues Fenton. “We need to bring these companies together - particularly on the digital side. We have assembled some fantastic people, some fantastic technology and some fantastic knowhow. We need to put that together and get product out into the market and let people see some of the metrics. And hopefully they’ll be good metrics.”
Part of the rationale for Bally’s acquisition of Gamesys was that it brings together two heavily cash generative businesses. Fenton says the company can afford to take its time to build the right products.
“We have the benefit of at least we both make money. I wouldn’t want to be in the business of hemorrhaging cash and thinking when the hell do I stem this.”
There are a lot of Stateside competitors doing just that. The all-new Bally’s is unique in many aspects but there is a lot of work to be done to make sure that omnichannel dream becomes reality.
“We will be one of the first to really go at it in anger,” concludes the CEO. “Our challenge is to make it all work together and make it work together beautifully. It’s fascinating and it will be super-interesting to see what we can do with those two worlds coming together.”