Q1 2021 Bally's Corp Earnings Call

[music].

Good morning, and welcome to Valley's first quarter 2021 earnings conference call. All participant lines have been placed in listen only mode to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question at that time. Please press star.

All led by one on your telephone keypad.

Now I'll turn the call over to Craig Eaton Executive Vice President and General Counsel. Please go ahead.

Good morning, everyone and thank you for joining us on today's call.

By now you should have received a copy of our Q1 earnings release, which we issued earlier this morning.

You haven't the earnings release and presentation that accompanies this call are available on the Investor relations sections of our website at.

Www Dot bally's dot com under the news and events and presentations tabs with me on today's call are George Company here is our president and Chief Executive Officer, Steve Capp, Our Chief Financial Officer, Phil Giuliano, Our executive Vice President Casino operations in <unk>.

<unk> marketing officer, and Addington Danya, our senior Vice President of strategy and interactive.

Before we begin we would like to remind everyone that comments made by management today will contain forward looking statements. These forward looking statements include plans expectations estimates and projections that involve significant risks and uncertainties. These risks are discussed in the company's earnings release and SEC filings.

Actual results may differ materially from the results discussed in these forward looking statements.

In addition, during today's call management will refer to certain non-GAAP financial measures reconciliations to the most comparable GAAP financial measures are included in the schedules.

Pained in our earnings release.

Do not provide a reconciliation of forward looking non-GAAP financial measures due to our inability to project special charges within certain expenses.

Today's call is also being broadcast live on our Investor site and will be available for replay shortly after the completion of this call I will now turn I'll now turn the call over to George George.

Thanks, Greg Good morning, everyone and thank you very much for joining us on a Monday morning, we're extremely excited to take this time to recap a very successful first quarter and will provide some additional color on several recent recent announcements that we've made.

I'd like to begin by addressing the significant progress being made in response to the COVID-19 pandemic. We are encouraged by the rate.

Thank goodness of vaccinations as well as with the loosening of capacity restrictions and other COVID-19 protocols.

We were very much looking forward to continuing to safely welcome back from loyal patrons per properties across the country.

I would also like to take a moment to highlight the incredible efforts of our more than 6000 outstanding employees.

Gone above and beyond over the past year to help us not just whether the impact of a pandemic, which is truly thrive and grow as a company despite a challenging operating environment.

We greatly appreciate their efforts, which serve as the foundation of our success.

As the reopening process continues to progress across our brick and mortar locations, we're approaching historical operating levels.

That will continue to benefit from a strong rebound in demand.

Now turning to our first quarter results.

First quarter results reflected encouraging performance as the momentum that began in the third quarter of last year, which was temporarily slowed by a second wave of COVID-19 restrictions from Q4 regained traction.

So much so that we achieved record adjusted EBITDA of over $50 million for the quarter, while acquisitions closed in 2020 helped drive positive results. It is important to note that same store property level EBITDA exceeded our first quarter 2020 performance by more than 80%.

We're also pleased to report that adjusted EBITDA margins for the quarter were 27, 2%, representing an increase of 780 basis points over the same period last year.

Excluding the dilutive impact from $6 5 million of negative adjusted EBITDA Bally's Atlantic City EBITDA margins were 35, 4% more than a 500 basis point improvement from the first quarter of 2020 with 280 basis point improvement from the strong margins. We saw in Q3 2020.

At the segment level, the southeast segment recorded revenue of $64 $6 million up 153% and adjusted EBITDA of $26 4 million an increase of approximately 400% from the same quarter last year.

Once again from a same store perspective luxury led the year over year improvement with EBITDA of $14 $6 million for the quarter, an increase of 175 per cent.

<unk> adjusted EBITDA margins continue to be extremely strong with a margin of over 44% for the quarter compared to 21% in Q1 2020.

Rhode Island, we continue to benefit from the resumption of 24 seven operations in February.

<unk> have some COVID-19 restrictions pent up demand in the region and a positive customer response to our targeted marketing initiatives overall, adjusted EBITDA from Rhode Island was $24 million.

$5 4 million with 29% from the prior year we.

Adjusted EBITDA margin for Rhode Island was also extremely strong in the quarter, a 47%, which represents a 1400 and 37 basis point improvement over the same quarter of 2020.

In the west.

Kansas City had a record Q1 and its second consecutive record breaking quarter contributing over $8 million of adjusted EBITDA for the quarter.

With adjusted EBITDA margins of over 38%.

During the quarter, we commenced work on our planned capital improvement projects at the property once completed our new land based facility.

Well house all of our non gaming activities and include granted restaurants sports book retail outlets.

Facility will also linked the casinos existing parking structure to provide a stronger sense of arrival and a better customer service.

Experience.

The mid Atlantic segment saw mixed results silver had the strongest adjusted EBITDA quarter. Since we took over the property with revenues of $22 $7 million.

And adjusted EBITDA of $8 $6 million.

Resulting EBITDA margin of 37, 9% was up 20 451 basis points from Q1, 2020, and up 78 basis points from the Q3 2020 high of 37, 2%.

The other property in the mid Atlantic segment, Bally's Atlantic City was a drag on quarterly results once again.

Since the acquisition closed in late November operations have been impacted by a combination of seasonality year over year revenue impact due to COVID-19 restrictions are complex decoupling from the legacy Caesars It systems, which was largely completed in mid February.

First quarter adjusted EBITDA at the property was negative $6 $5 million on revenue of $25 $7 million.

We note that Q1 from Q4 have been traditional loss, making quarters for the property even without the complicated factors I mentioned above.

However wanted to close however wanted to close on the property as soon as possible. So that we could take charge of the transformation. We believe these impacts have begun to dissipate and we see a path to profitability as we move into historically more profitable periods in late Q2 and Q3.

We also successfully opened our permanent sports book location within the Bally's Atlantic City property during the quarter.

From our previously announced partnership with <unk> and just in time from March Madness, we're encouraged by early visitation by how the new sports book complements. The property. This represents the fifth retail sports book that we have opened over the past couple of years and free.

A central 25 foot wide standard yard led video wall flanked by 210 foot wide led video walls as well as a 10 video displays five bidding windows in 'twenty self service betting kiosks. This is one of the many developments planned here.

Certainly transforming the property and making significant progress towards returning to prominence in the Atlantic City market.

Turning to other capital expenditures, we continue to make progress on our $40 million redevelopment plan at Casino Casey. We believe this project will greatly enhance the property and overall guest experience driving growth and a solid return on our investment.

Casino Casey project is largely a second half of 2021 event, which we intend to complete sometime in 2022.

And Pennsylvania shrunk subject to regulatory approvals, we expect to begin construction on our state College, many casino development with local real estate and private equity investor iron ore in.

In the fourth quarter.

We believe that construction will take approximately one year from cost approximately $120 million.

As per Rhode Island should the legislation approving our proposed joint venture with IGT pass we're optimistic that it will by the end of June we expect our Lincoln expansion project to take 18 months.

You mentioned as soon as practical we.

We expect to incur capex in both 2021 and 2022, because we make exciting updates to twin River casino, who will provide more detail on IGT later on during this call.

Now I'll turn to a few of our pending brick and mortar acquisitions as we mentioned on our last call. We continue to expect that our previously announced acquisitions of the Tropicana Evansville and tumors Casino Hotel will both closed in the second quarter likely in June.

Pending regulatory approvals.

We're encouraged by the progress, we're making with the various regulatory bodies.

Both of these properties represent valuable additions to our growing national portfolio.

We're looking forward to welcoming them into the Bally's family.

In addition.

We recently announced an agreement to acquire the Tropicana Las Vegas Casino from gaming Leisure properties, Inc, and.

The acquisition that is expected to be accretive to bally's shareholders' long term, notably the transaction requires zero cash outlay from valleys of closing.

We expect that we will close sometime in early 2022.

Go a level deeper and as we mentioned when the transaction was announced under the terms of the agreement Bally's will pay $150 million to the property's non land assets.

While we have agreed to lease the underlying land from <unk> for initial initial term of 50 years on an annual rate of $10 $5 million.

Subject to increase over time.

Bally's and G. L. P. I will also enter into a sale leaseback transaction related to our Black Hawk, Colorado and Rock Island, Illinois Casino properties for a cash purchase price of $150 million payable by <unk>.

At least we'll have initial annual fixed rent of $12 million subject to increase overtime.

The Las Vegas strip as a preeminent destination visited by over 40 million players and guests each year.

With this addition to our brick and mortar portfolio will significantly enhance our robust customer base, which includes more than 15 million connected customers.

Unlock additional marketing opportunities for us to leverage the iconic valleys brand.

Taking a step back.

Through overall trends strengthening customer confidence limited entertainment options and our disciplined operating strategy all contributed to record results in many locations.

Starting in February and excluding the impact of weather business returned to levels similar to those in the third quarter 2020 in March where we made almost half of our EBITDA for the quarter, we began to benefit from even stronger improving trends, which have continued in April with great momentum.

We are encouraged by the increased visitation as the vaccine rollout progresses as we continue to safely welcome our customers back to our facilities. We believe we can return to pre COVID-19 levels in short order.

One of these opportunities is in the 65 and over segment.

We have seen strong rebound from this core value group, particularly in the last couple of months many are still on the sidelines.

As our country continues to make headway against the pandemic. We are confident that more of these guests will return to our properties.

In summary.

We're encouraged by the opportunity for growth on the non gaming side of the business and we will take a thoughtful approach and reintroducing. These amenities, we remain committed to a disciplined operating strategy and has delivered outstanding results over the last several quarters.

That I will turn it over to Adam to provide an update on our interactive business Eddie.

Thanks, George and good morning, everyone.

Last call we have outlined.

Continue to make excellent progress developing and diversifying our interactive business.

To begin with an update on the overall platform starting with bet that works that will serve as the anchor assets for the Bally's Interactive division and underpin our mobile sports book launches.

While we are still awaiting regulatory approval from the acquisition, which we expect will occur next month, we are actively working towards officially launching our value, but sports book in our first market, Colorado by the end of the month.

In addition, the team is working on our roadmap, but at least three additional state launches throughout the course of the year.

While the focus this year would be to get our product launched with very limited marketing it will allow us to test and deploy our new product features along with media integrated across broadcast television stations and our recently rebranded value sports our sense.

Following these initial launches we expect we will begin to layer in additional states throughout 2022, while positioning us well in key markets to take advantage of a full sports calendar. In addition to bet that works we've been strategic in acquiring complementary platforms with recent additions of monkey knife fight the fastest growing daily fantasy sports platform.

America.

And sport color, a leading global <unk> free to play game provider Monkey 95 provided us with market, leading fantasy sports content and a brand whose player database will be developed and leverage to support the launch of our batten platform.

For color will enable us to launch our own suite of free to play games. This year for interactivity within the newly launched value sports App and bally's sentence.

These top of funnel opportunities will allow us to acquire new players at a significantly lower cost and engage with our existing database of players throughout the value ecosystem.

Together with Sinclair, we are advancing our vision to change the paradigm of sports viewing by creating new and engaging lean and experiences for the sports fans across the country.

The first step in the journey was the April 1st rebranding of Sin COVID-19, former Fox Regional sports networks to value sports value sports is the home of more than half of MLB NHL and NBA games in the U S. Thus providing value brand with tremendous exposure. The recent launch of the value sports App as part of the first phase of from me.

<unk> investment that value sports is making into the expansive digital ecosystem designed to generate interest and engagement with fans throughout the day.

The App provides continuous video content and other RSL programing, keeping fans coming back throughout the day and driving increased interest in upcoming games.

We are pleased with the early reactions to value sports launches and expect more exciting upgrades to these assets as we continue to gamify the sports viewing experience rebrand.

Rebranding the <unk> with an integral part of our overall corporate rebranding initiative and we continue to make progress to rebrand our brick and mortar properties under the bally's named <unk>.

We plan to provide greater detail on that process over the coming months as the rollout officially begins.

We also recently announced a memorandum of understanding with Sinclair to collaborate on programming interactive content on the <unk> and Sinclair is other platforms, which includes the tennis channel in stadium assets, we will work together to facilitate the production and broadcast of valleys produced content during non game windows, we're confident that the engagement opportunities we will creep.

Kate will elevate the live viewing experience as an interactive content gamification strategy continues to evolve.

In addition to our partnership with Sinclair, We've also formed sports betting partnerships with MLB NBA and NHL. These.

These partnerships provide us with access to official league and team marks logos and data <unk>.

Access to these assets will enable us to enhance fan engagement with their favorite teams now.

Now, let's turn to our recently announced combination with game space as we continue to work through the regulatory process in the U K. We remain limited in what we are able to disclose at this time, but we're extremely excited with the acquisitions potential <unk>.

<unk> is a leading global online gaming operator with number one provider of bingo and casino games in the U K.

By bringing together <unk> is proven technology platform alongside its highly respected and experienced management team combined with the U S market access that valley provides we will be well positioned to capitalize on the significant growth opportunities in the U S sports betting and gaming marketplace. We firmly believe that the combination has a compelling strategic and financial rationale.

And will result in long term value creation.

We're excited to be able to speak with investors and analysts about the announcement during our recent equity offering roadshow and we look forward to providing additional details about the combination over the coming months.

Finally, I would like to provide a deep trough date on the status of our proposed joint venture with IGT.

As was announced last week there have been updates made to the enabling legislation in Rhode Island, and we are optimistic given the support of the legislature and governor that I will pass this quarter.

We expect this legislation will be accretive to us and position us to compete more effectively in the region as we feel it will provide us with state of the art Vlt's and a mechanism for ensuring that we maintain a competitive slot flow well into the future.

The extended term associated with the legislation also gives us the horizon, we need to support additional investment in our facility and amenities and would deliver a positive financial return for our shareholders, even before taking into account any improved performance driven by enhanced product offerings.

The proposed legislation would lock in a table game and VLT tax rate.

And marketing reimbursement.

And allow for greater flexibility in the use of promotional credits through 2043.

Further it would also result in favorable changes to our regulatory agreement in Rhode Island, including an increase in the maximum leverage ratio to five five times and greater flexibility of sale leaseback transactions relating to Rhode Island assets.

I will now turn it over to Steve Steve.

Thanks Patty.

Want to start with a quick update on our cash and liquidity.

We ended the quarter with cash on hand at right about $150 million. We did recently increase our revolver from 250 million to $325 million and at the end of the quarter, we had $75 million funded under the revolver still remaining availability is $250 million and that gives us total liquidity of just over $400 million.

In addition, we generated cash flow from operations of a little over $25 million in the quarter on.

From a capex front, our approach to maintenance to maintenance and growth capital investments will continue to be focused and disciplined for Q1 total capex invested was $15 million of which 7 million was maintenance.

Non maintenance them out the $8 million included just over $4 million of hurricane damage rebuild at Biloxi, which was covered by insurance proceeds received on.

On April 20th we completed a public equity offering of 12 65 million common shares at a price of $55 per share total shares issued included 165 million shares from the full exercise of an over allotment option.

Seeds from this offering net of the underwriting discount was $671 million.

In addition to that to that equity raise we also announced a sale of 909000 warrants to Sinclair broadcasting for $50 million.

We have applied the net proceeds from these equity raises to pre fund our anticipated combination with games. This.

With regard to that combination and as we've said along the way we intend to maintain optionality as it relates to the ultimate sources of funding and closing capital structure as part of this process. We continue to discuss a private offering of equity linked securities with a potential strategic investor who made an unsolicited offer some weeks ago bear in mind.

Moderate leverage and abundant liquidity have enabled us to be opportunistic in acquiring assets securing the related financing and growing the company and so we won't be changing course on those priorities moving forward with <unk>.

As George mentioned, we also announced the expansion of our relationship with <unk> through the proposed acquisition of the Tropicana Las Vegas.

This was our second transaction with <unk> and once completed will result in five of our property is being leased from <unk>. While we do remain committed to outright ownership of a good portion of our real estate portfolio. This transaction is another example of our continuing to execute on an opportunistic basis and of course, we are acquiring an asset on the strip and a debt.

Free manner with no cash out of pocket.

Another recently announced M&A comp near the strip suggests our transaction is a good one.

And with that I'll turn it back to George.

Thanks, Steve well that concludes our prepared remarks this morning.

Now I'll ask the operator to open it up for questions.

Thank you at this time I would like to remind everyone. If you'd like to ask a question. Please press star one on your telephone keypad, if you wish to remove yourself from the queue. You may do so by pressing the pound key.

We remind you to please on mute your line when introduced and if possible pick up your handset for optimal sound quality. Our first question comes from the line of John Decree of Union gaming.

Thanks for taking my questions.

One on games has to start.

In the prepared remarks.

You've discussed, possibly getting that that works app up and going.

Sooner than than perhaps closing and given the game such as a <unk> provider license in New Jersey.

Sure how UK takeover laws would affect your launch but could could they get started and getting licensed in some of your other states could you get started.

As the <unk> relationship and in making some progress on non gaming front as well.

Gerard you why don't you take that.

Okay.

Sure.

John Thanks for the question. So yes look we are working with our colleagues at game says they're already licensed as he mentioned in New Jersey, New Jersey is on our roadmap for our states, we would be launching and we will be looking to partner with them for a launch in new Jersey.

Is there any other states that you could get started on or would the focus just be just be new Jersey for now.

This is this is Craig Eaton manager.

Short answer is no.

The trend of the transaction needs to be approved regulatory.

Multiple states, obviously gains us could on their own get get an approval, but we're in that we're in.

Transaction phase right now.

That being said, we hope to close the strength.

We're aggressively pursuing this transaction close.

Thanks for that that's helpful clarity and maybe one for Steve on the financing package as you kind of rounded out the prepared remarks, you talked about your flexibility.

We've kind of gotten a lot of questions over the last couple of weeks as to what that flexibility might look like and we see your kind of cash flow generation and our model through the back half of the year as well as games here. So I was wondering if you could if you could help give us a little color on how some of that flexibility might might play out.

In terms of financing, you've obviously have <unk> in your back pocket and a possible strategic investor.

But if you think about some of the levers that you have to pull between now and potentially closing that might be helpful.

Yes.

John look at as you know, we're under reported under two seven disclosure rules under GAAP.

U K takeover code, we can't can't go into a whole lot.

I can tell you we continue to emphasize.

Optionality moving forward look there are a lot of moving variables right, including and the closing date.

LTM EBITDA our businesses as George commented specifically.

In March, but even for the whole quarter of Q1 and continuing into India through April our businesses.

Rebounding with with with considerable strength.

<unk>.

<unk> has reported recent results.

Look similar strength, so the denominator the denominator in the <unk>.

Cash flow leverage equation is a is an important piece of the puzzle right because the closing date that LTM EBITDA will dictate how much leverage we are willing to put on the company.

Also cash flow free cash flow generation, which is a function of that that same denominator of LTM EBITDA will be important from a sources of funding.

Perspective as well.

Yeah.

As well John already commented about the ITT deal or the ITT deal.

If it gets passed in Rhode Island.

It does provide more flexibility to us and our capital structure at the closing date of gains this as well so you know that.

The variables floating around are numerous and that's why we've been talking about Optionality look the good news is the credit markets remain very strong and.

We will need those to consummate the acquisition.

And so we're keeping a very close eye, there as well, but but look John it'll be up to about optionality for us in getting that getting the <unk>.

<unk> capital structure with moderate leverage which we've always.

<unk> always maintained that that'll be our focus.

As we look to close the transaction.

Thanks, Steve Optionality is good.

Tough ones out early I'll hop back in the queue. Thanks, everyone.

Thanks, John I appreciate it thanks sure you're.

Your next question comes from the line of David Katz of Jefferies.

Okay.

Hi, This is cassandra asking on behalf of day that.

So I know that there are other states that you probably need to get it much access to how do you kind of balance them acquiring properties versus taking share.

So I missed the last part I take this Andrew I missed the last part of your questions.

In terms of gaining more in market access.

Two states how do you balance.

Acquiring properties or seeking a.

Strategic partnerships with existing operators there.

Sure. So this is more along the lines of sports betting and gaming from adding I'm going to pass it over to you and you can talk a little bit about.

Not only kind of relationships, but also we're looking to enter states right now that have more of an open process and not necessarily related to access. So we're taking advantage of that as well.

Turn it over to Laura <unk>.

Thank you for the question, Yes look we're actively looking at states and regulations as they evolve in legislation as it evolves in different states.

As you May have noted we.

We're able to secure market access both in Virginia, and Iowa, two states, where we don't have physical casino properties.

A wave of new states are enacting legislation as we speak and a lot of what we're noticing is.

States are not tethering these skins and they're open for folks to apply and we are in those discussions and conversations and monitoring it very closely our goal is to get into as many states as possible and we're aggressively working on that.

Got it I appreciate it and if I may add another one.

In terms of cost of.

Customer acquisition as we've heard other operations provided Iberia and from data points, indicating where they are.

Unlike.

102600, we've heard where do you think you fall on that spectrum.

So I'm going to passenger but you added but I'll just I'll just comment that we have because of the significant portfolio of regional assets were 50 million people in our database through the conversion rate of those customers. We feel will be a lot less with alternative us learn over to Eddie.

Sure Cassandra look we've talked about this at length that we have built very significant top of funnel opportunities. We obviously havent launched yet so we don't have explicit guidance as to what the numbers are or will be just yet, but everything we've amassed today from our free to play offerings of DFS.

Ultimately converting to our value bet sports betting platform positions us well to have a lower customer acquisition costs than will be seen in the industry along with the point that George just made around the conversion and cross selling of Casino database. In addition to this I think it's important to note that our reach through Sinclair and <unk>.

All of the different assets they have both on broadcast television side, the RSM side, along with the tennis channel Stadium in store.

<unk> platforms positions us extremely well in the marketplace to capture different segments of the population and target them as we think about customer acquisition in the markets we launch.

Okay. Thank you very much.

Your next question comes from the line of Barry Jonas of true Securities.

Hey, Good morning, this is actually Matt Cole and per hour Barry.

Thanks for taking the question.

Two quick ones.

Given all the recent deals how are you guys thinking about further M&A here.

It's more of a focus on land interactive or anything else you would highlight at this point.

Sure I'll take that well, obviously, we've been very active.

We will continue to be opportunistic.

But we're going to also going to be disciplined as we have been historically.

We have a track record of acquiring pro forma net sub seven times multiples and we're going to continue to look for assets that we feel of upside.

As well as giving us access to sports betting and potentially other gaming markets.

And as Andy mentioned earlier, you know assets that complement our sports sports gaming, where sports betting and gaming initiatives like daily fantasy sports and free to play acquisitions.

Which we just closed loans.

M&A.

Although appear just beyond.

Screening side of it.

It's about how you expect to integrate sports betting our I gaming with a sports watching experience and how do we think about the key differentiators.

Sure I do you want to take that.

Okay.

Sure.

Look from a just outside of branding I think it's important that we think about the integrations. We get so if you look at what we announced with Sinclair recently to our Mou. We also have the ability to program non game windows with content that we think would cross sell well and are help create our brand.

When it relates to our sports betting product or any product that the bally's ecosystem would have but even with our current deal. We have exclusive rights to the integrations on the <unk>, where we have market access and those integrations from pre game in game post game.

The branding et cetera that allow us to target our audience with new content offering that helps us gamify, the content and keep them coming back and having them stay engaged with us.

Okay. That's helpful. Thank you.

Thanks, Matt.

Once again, if you'd like to ask a question. Please press star One. Your next question comes from the line of Jeff Satchel of Stifel.

Hey, This is actually Jackson gave on for Jeff standard all thanks for taking my questions.

I wanted to start on the brick and mortar side of the business I think what everybody's kind of trying to figure out. This quarter is how much of the strength being witnessed in March and April are truly sustainable versus one time.

Given the environment you called out lack of.

Alternative entertainment options in the release, but Theres also stimulus out there and pent up demand how do you guys view consumer behavior shifting as we get into the second half of the year and on the cost side of the business. What do you feel most confident can stay out versus what you would.

We should expect to come back in.

As things sort of normalize a bit.

Sure I'll take that Jack.

So we're certainly benefiting from providing an environment in which your customer feel safe.

Still as you said limited amount of entertainment options.

We view it long term, we're going to benefit from the.

Considerable exposure that we're getting to a younger demographic that.

From our perspective, it realizes that our facilities or facilities really provide a lot of entertainment options.

Payment options.

And you had mentioned and what we're starting to see now that's even fueling this growth is that we're starting to see a return of our older demographic I'd mentioned earlier 65 and older.

That's still substantially less than what we've seen.

Historically, we see a lot of upside still from that perspective as far as margins are concerned.

We were experiencing Hum about 500 basis points improvement on historical levels pre COVID-19 levels.

And we really feel that because we were really.

We're forced to shut down.

It allowed us to reevaluate how we operate in and as we build back to the volumes of business that we're now seeing we're able to do that more efficiently.

As a result of that.

We're seeing margins.

Effectively starting to stick from our perspective, we're seeing that in labor, we're seeing that in some cases in marketing.

So we think a good portion of this improvement will remain long term.

And it just really depends on how other operators or our competitors really react from a.

From a marketing perspective, and hopefully they had a lot they've learned as well as much as we did during this period and will be rational going forward.

Okay.

Okay, Great. That's super helpful. So for the follow up I, just wanted to switch gears to the online business.

So as you think about the marketing and some of the development costs, that's going to take to get to a competitive level of market share here in the United States shall.

Should we expect the interaction the interactive division to be EBITDA negative for a significant period of time, starting out or should we expect.

Some of the more mature games <unk> International operations.

To compensate or sort of offset the ramp to profitability here in the United States.

Just curious how youre thinking about the dynamic between those two.

I'll start and I'll pass it over to the I D.

Said earlier really limited to what we can say as a result of the U K two seven disclosure.

But I can tell you aside from access to Europe and associated free cash flow that came Cisco's does now it gives us a proven I gaming platform, which we feel is complementary to our bet works sports betting platform.

And it's going to obviously put us in a lead position to capitalize on existing and future expansion July gaming in the U S.

Looking forward to that as far as how do you why don't you take the b to b from from from.

That works as well as kind of give a little.

The idea of how we're going to launch in the U S.

Sure happy to do that and thanks for the question look I think we would like to point you to is that we have been very thoughtful in our acquisition and building out the interactive business. There are certain advantages. We have that we think will help us reduce our reliance on heavy marketing spend compared to peers and competitors.

In this space one being that we have our own market access in most states. We also have our own proprietary technology stack and third we have significant content and media footprint that gives us the impressions that we need to attract an audience and more importantly, we have the ability to program content.

On the RF sense, where there are millions of viewers today of sports.

Sports viewers today that we can engage with and interact with through our content that we put on there.

Okay.

Yeah.

Gotcha alright, thanks for thanks for the detail there that's it from me.

Your next question comes from the line of Brent <unk> of Keybanc capital markets.

Hey, good morning, guys.

Good morning firms of the apps good morning.

The app rollout it still seems like we're going to get.

Four states by football season, this year, but you mentioned <unk>.

Additional states into 2022, so maybe some more clarity on 2022, I mean, how many states could you get.

You're targeting before.

The Super Bowl or March Madness next year.

How do you want to handle that.

So thanks for the questions look I think we talked about in our prepared remarks that we will be launching Colorado, which is our first market by the end of the month, we have a current roadmap for at least three more states. This year and we plan to obviously launch those three states and if possible launch more states. Our goal. This year is to get our product.

Get it tested with limited marketing, but more importantly test the integrations that we get across broadcast television stations and our sense. So that would position us well for 2022. So you should think about 2022 is a year, where we have the full sports calendar. We would have multiple markets launched in 'twenty. One that we can expand upon in 'twenty, two and we would.

Additional states as either they open up or from our portfolio of market access that we currently hold.

Got it okay. Thank you for that clarity.

And then just on Atlantic City, I think it did six 5 million of negative negative EBITDA in the quarter is there any way to help.

Help us with how that property did in March and April maybe so we can get some kind of better run rate there.

Sure I'll handle that so obviously required we actually rushed acquire this property was getting in before 2000.

2020.

2021, so we closed on it kind of put it earlier than we probably should've group as it really is a seasonal business in Atlantic City, but we wanted to get going with the integration of that property as well as to them.

As well as to pursue sports betting and gaming opportunities there.

So.

Mentioned, the decoupling from the Caesars system.

But through a TSA arrangement, there was probably the one of the tougher.

Transitions of the property that we have everything else went very smoothly.

So we just we needed to kind of rollout of that and we just implemented a marketing calendar in mid February there.

So we're now starting to see the benefits of that particularly.

Particularly in March and still its not the season until you really get into the summer season. The summer season. There. So we're looking we're looking to bring it to profitability in the second quarter.

Which was always our plan, which was really related to now really starting to enter into the summer season, and then as you know in that market. The third quarter is really where you make the majority of Bureau free cash flow.

We feel we feel comfortable there and I have still giuliano when the line so.

To add anything to that flow from a from marketing perspective that would be helpful.

Thanks, George Yeah, we see the momentum happening with programs and maturing of the customers are responding.

The capital is being prepared we're telling a story about the capital that has to come and be finished we will open up a restaurant, which is a branded restaurants.

Jewelry language, Naples, and Martinsville open that and and about a week.

Followed by another restaurant in July, which will be a three meal restaurant up six level.

So those things have to happen customers need to see that we will start our renovations of our rooms and in August and some people would say why why August well because the sooner we get the rooms renovated the better we will do and we're also enhancing our player development staff, we have some new.

Prior to <unk> coming onboard and.

New hires coming onboard and so I like the momentum we're moving in the right direction and we're also.

Taking a deep dive into expenses, making sure that we are we.

We all find every opportunity to.

Enhance the bottom line.

Alright, thanks, guys.

Your next question comes from the line of Lance Vitanza of Cowen.

Hi, good morning.

This is John filling in for Lance.

So my first question is.

And the ZIP beating consensus estimates reflect the inclusion of our properties.

In the first quarter of 'twenty one.

So Steve you want to you want to handle that.

Talk a little bit about same store net improvement, but the but we added some from properties in the.

<unk> 2021 that were not comparable in 2020.

I actually I actually missed the question would you where would you okay.

Yeah sure.

So the.

To what extent of the circumstances.

Beating the consensus reflect the inclusion of properties.

Our acquired during the first quarter.

Well I think I think consensus was so it was inclusive generally inclusive of those properties because.

Because we know that information was pretty well known so we consider those to be one and the same but.

But look we are George George commented this.

His initial comments that the same store the same store beat year over year, which was up 80% and consensus doesn't really break break that down if you will so so listen.

The beat was significant same store the newly acquired properties folding into the portfolio.

But we just comment about valleys AC but across the portfolio, even though even the brand new properties in the portfolio.

Ramped up nicely in this.

As the vaccinations for COVID-19 take hold and.

We approach more of a stabilized post COVID-19 environment, we're seeing strength, even in even in the new properties some setting records.

And they're all time performance so strength across the portfolio of Bally's AC is the outlier at the moment.

Talked about that but.

Portfolio shaping up very well.

Got it.

A follow up for me just regarding the RFP market, obviously with seizure free they can day, having some day.

Now with like the easy time with bags like how should we look about.

With regards to the market share with value like should it be like the big farm owning 90% share in value others volume for the remaining or like how are you guys viewing day.

Market share.

Well, we certainly I'm going to turn this over to Eddie.

We want to get granular I don't know that we do at this point in time, but we're certainly as you can see we've assembled the third largest portfolio of casino assets in the U S. We own technology, we own our own technology stack.

The body, we added the bally's brand.

We talked about the significant media relationship with Sinclair.

It really the number one portfolio of live sports rights that we recently added a daily fantasy sports and likely won't be a knife fight and free to play and in game game says completes us as far as a key technology and personnel. So we feel that we're extremely well positioned and we're positioning ourselves to be a leader in that space.

And I'll Echo what George just mentioned look we think that we will be.

As a player in this space, we are having similar conversations to the ones you pointed out obviously, Arizona is an important market and you referenced the diamond backs as you may note in Arizona, we have three <unk> through the Sinclair relationship all three of them are value sports branded value sports, Arizona today, and we are looking into team relationships and partnerships.

As legislation evolves and schemes are tethered to teams and our open. So in every market, where there is an opportunity for us to partner with our value sports colleagues, we are partnering with them and are going direct.

On what the legislation allows us to you.

Got it. Thank you and just a last one from me before I get back to queue is just wanted to give them a commentary about just from the bidding in Richmond, Virginia, where we thought that you guys have done a tremendous along.

We're just kind of wondering I guess get a sense of what happened there.

Well, we certainly are not in the minds of.

Who the other people on the committee arent we.

Entered into the process a little late so we had a little disadvantaged from that perspective.

There's other parties that were on the ground a lot longer, particularly parties that are doing business in and around that market, but certainly we felt we had the best.

We had the best.

Economics for the city as well as the state we had the best location.

With the best infrastructure that could be felt could drive from those business to that market.

Uh huh.

This was it was low.

A decision that they made and we're not going to get into the specifics of that.

You know, we put our best foot forward and we felt really good about what we are.

Provided through the RFP process from Citi.

Thank you at this time there are no further questions I'll now return the call to George <unk> for any additional or closing comments.

Sure well thank you operator.

Again I wanted to thank you for joining us on today's call.

And for what has been a very successful first quarter and as we look forward to continuing this momentum into the second quarter.

This does conclude today's valleys first quarter 2021 earnings call. Please disconnect. Your lines at this time and have a wonderful day.

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