Bally’s (NYSE:BALY) said on Monday it will build a satellite casino near Penn State University in Centre County. This is a move one analyst views as smart, given the company’s geographic diversification efforts and market access ambitions.
Construction on the Category 4 gaming venue is slated to start in the first half of this year and take about 12 months to complete. Bally’s will spend about $120 million on the project. It will also partner with businessman Ira Lubert.
The operator will retain a majority of the land-based casino’s revenue and, perhaps most importantly, 100 percent of the economics derived from the related internet casinos and sports betting businesses.
The company’s Pennsylvania plans come less than two months after it revealed it will pay $85 million over 10 years to put its name on 21 regional sports networks (RSNs) owned by Sinclair Broadcast Group. The move aims to significantly bolster the operator’s sports betting footprint.
A year ago, Bally’s, then known as Twin River Worldwide Holdings (TRWH), was a small regional gaming firm with just a handful of venues in its home state of Rhode Island, as well as Delaware, Mississippi, and Colorado.
Over the course of 2020, however, the company morphed into one of the industry’s most noteworthy growth stories and one of its most prolific dealmakers. Accounting for the Keystone State news and assuming no other acquisitions are made — unlikely, given the firm’s track record — Bally’s will soon operate 15 gaming properties in 11 states when pending deals are completed.
The Pennsylvania project with Lubert, coupled with its purchase of Bally’s on the Atlantic City boardwalk, which was recently completed, mean the company operates in two of the largest iGaming and sports wagering markets in the US.
“Pennsylvania is one of the largest online gaming markets in the US thus far, with trailing 12-month sports betting/iGaming gross gaming revenue (as of November) of $167M/$502M (compares to NJ at $361M/$920M),” Stifel analyst Steven Wieczynski in a note to clients. “Assuming management’s broadly targeted 10% market share, this implies a $67M GGR opportunity at trailing 12-month levels, while we expect the market to continue to see strong growth over the next several years.”
Aside from Casino KC in Missouri, all Bally’s properties operate in states where sports betting is legal, and the same is true of its pending deals.
The company is planning to roll out its sports wagering mobile app in Colorado, Indiana, Iowa, and New Jersey in the second quarter, with a Pennsylvania debut expected in the July through September period.
“While we think Monday’s announcement signals continued execution on a potentially attractive sports betting and iGaming opportunity, we are reiterating our ‘Hold rating’ for the time being, as we think the strong initial market reaction to BALY’s two-part sports betting announcement has already priced in meaningful upside,” said Wieczynski.
The analyst has a $50 price target on the stock, implying upside of 7.5 percent from where the shares closed on Jan. 4.