Good day, and welcome to the Ballet Corporation's third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. In order to ask a question during the session, please press the star key followed by the number one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star, then zero. I'd now like to turn the call over to Charlie Diao, Senior Vice President, Finance and Corporate Treasurer.

Please go ahead, sir.

Good morning, and thank you for joining us on today's call. The earnings release and presentation that accompanied this call are available on our website in the Investor Relations section at www.ballys.com. With me today are the Chairman of the Board, Sue Kemp, our Chief Executive Officer, Robeson Reeves, Valley's President, George Papineer, Marcus Glover, our Chief Financial Officer, and Jamin Patel, our Vice Chairman of the Board. 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 contained in our earnings release. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project non-recurring expenses and one-time costs. Today's call is also being broadcast live on our investors' website and will be available for replay shortly after the completion of this call. Let me hand the call over to Robeson.

Thank you, Charlie, and hello, everyone. We are pleased to present our third quarter results, where we continue to grow market share with a tight control of costs. Our operations perform well in competitive and mature markets. We have solid operating performance across our three business segments, with consolidated revenues rising by 9.4% and consolidated adjusted EBITDA increasing by 6.4% year over year. We also reached several significant project milestones, strengthening our foundation for 2024 and beyond. Notably, we achieved a successful soft launch of our Chicago Temporary Casino at the Medina Temple on September 9th, culminating in a formal ribbon-cutting ceremony on October 3rd. Concurrently, we completed our Kansas City property transformation and redevelopment, also in September, within budget. We see both investments in our CNR segment paying off in 2024 in growth and profit contribution as these investments bear fruit. Our Bally's International Interactive Division continues its impressive operating momentum in the UK, where we also successfully launched the Bally's branded iCasino app. We believe that Bally's brand will drive revenue and profit growth and build brand equity in the UK market. In North America Interactive, we rolled out the new BallyBet OSB app in four states and five retail locations on the Canvi and White Hat platforms. By year end, our goal is for the rollout of our BallyBet app in at least seven states in North America. Turning now to our operating fundamentals, I'll first turn it to George to discuss our core casinos and resorts performance.

Thank you, Robeson. Well, we've had a very productive third quarter in casino and resorts, successfully opening our temporary casino at the Medina Temple in Chicago. And we delivered that project inside a budget, including a three-month delay due to regulatory sign-off. We also took over the concession to operate the Bally's golf links at Ferry Point in the Bronx. While for competitive reasons, we are limited in the information that we can share today. We can disclose that the golf course operates profitably from EBITDA and cash flow perspectives. Further details regarding our plans for the site will be disclosed in the future. The casino resort's customer base remained resilient in the quarter as revenues increased 9.3% year over year, which includes a full-quarter contribution from the TROP and approximately three weeks from the Chicago Temps. Our portfolio is well-positioned, and we continue to take market share in our respective markets, which can be seen in the state's monthly gaming data, and we outperformed in most states. Our Rhode Island and Kansas City casinos were once again revenue standouts, while Blackhawk and Quad Cities were also strong. While we are closely monitoring customer spending, outside of the three very specific instances, we haven't seen major shifts in behavior. We did see a shift in behavior at the Trop in Las Vegas, at Valley's Atlantic City, both destination markets, which are hyper-competitive. Additionally, as highlighted last quarter, Evansville continues to be impacted by newer HHR facilities across the Kentucky border. My team and I continue to take proactive measures to preserve our margins and profit performance across the portfolio. From a marketing perspective, our efforts will be to continue finding ways to motivate our higher-tier customer segment, a strategy which has proven to yield solid results over time. As for DeTrop, the next milestone is Major League Baseball's vote on the A's relocation plans, scheduled for mid-November. We'll hold off on announcement of any reinvestment plans until after the outcome is known. But we're excited about the unique value-enhancing development project and the strategic opportunities that it presents for our company. Turning to the Chicago temp, we're seeing increasing volumes on a week-over-week basis while operating only 20 hours per day in a soft opening environment. We expect to start operating 24 hours per day soon, pending regulatory approval. In conjunction, we plan to implement our core marketing campaign to increase frequency of visits that will capitalize on a rapidly growing database. But to continue the ramping of this property, we remain confident in our financial expectations to generate approximately $50 million plus of annual adjusted EBITDA. Importantly, last week we received approval from the IGB to operate the temp for an additional year. or three years total until September 2026 when we expect our permanent casino to be completed for opening. Regarding the Chicago permanent facility, by the end of 2023, we will have accounted for the majority of the soft costs outlined in the budget shared when the project was announced in 2022. We expect construction of the permanent facility to commence in the second half of 2024 once the tribute company the premises in july with an anticipated property opening in september of 2026 as for financing the hard costs of the permanent facility which under the host community agreement calls for spending of 1.34 billion dollars we will communicate our plans once detailed construction plans are finalized and financing commitments are in place it's important to note that the hard costs in 2024 are earmarked for demolition and site preparation, which represents finite expenses. As a result, our capital requirements for the Chicago Permanent Casino Project in 2024 are limited, with the bulk of construction expenses expected to ramp in 2025 and 2026. Our core portfolio's near-term CAPEX cycle has peaked as our growth projects have reached completion, and we are now focused on driving increased profitability in our core casinos in 2024, ramping up the Chicago temp, communicating a concrete timeline for the TROP to bring clarity to our employees, guests, and our company, and preparing to submit our bid to operate a casino in New York at our Ferry Point location. I'll now turn it back to Rosie.

Thank you, George. Valley's International Interactive continues to show strength, particularly in the UK, where net revenues increased by an impressive 13.1% year over year in our reported financial results. We continue to gain incremental market share due to our timely adaptations in response to regulatory policy changes in the UK market. Our strategy and operating formula of increasing actives, average revenue per user, and first-time depositors, while reducing cost per acquisition, continues to yield positive results. In North America Interactive, we remain focused on expanding our iGaming footprint and maintained positive momentum. Our share in New Jersey continues to gradually increase, and we remain on track to achieve our medium-term market share goal of 6% to 8%. Early results in Pennsylvania remain encouraging since our launch in June 2020. Ontario remains an opportunity as we build our player database. Overall, our iGaming business is already generating positive returns, and we're optimistic of its continued growth and contribution. We are all hands on deck in preparing for market launch of iGaming in Rhode Island in March 2024 and look forward to introducing iGaming in a state where we have a deep database and significant brand presence. We are committed to growing our Ballybet OSB business with prudent financial approaches and disciplined marketing investments, given our belief that OSB is the path to iGaming. In terms of our near-term outlook, as you saw in our press release, we have updated our full year 2023 adjusted EBITDA guidance range for the remainder of the year. This reflects the later opening of our Chicago temporary facility and an expected sustained pullback of the trot that the AISE project ramps up. We're also considering potential foreign exchange headwinds at Bally's International Interactive, despite continued operating momentum due to the recent strengthening of the U.S. dollar. Our three operating segments are well-positioned heading into 2024 and will be focused on execution to realize a future that is very bright. In casinos and resorts, we will benefit from a full year of growth to CapEx investment projects that we completed in 2023 at Twin Rivers and Kansas City. Next, as George pointed out, we are beginning to build momentum in Chicago as we recently received regulatory approvals to expand our marketing initiatives. Consumer feedback from our patrons has been positive, and we have begun to build and leverage our database. Further, we should continue to gradually benefit from a full year of the smoking ban reversal in Shreveport. Recall, revenues fell significantly when the smoking ban was first implemented, and we're now starting to build that back. International Interactive's top line to remain solid on a constant currency basis, driven by robust underlying market share trends in the UK iCasino and the launch of Bally's OSB offering in the UK in 2024. In Asia, we continue to look for market stabilization after several months of increased volatility. We've implemented changes to tighten marketing investment and are working diligently to realize financial efficacy from these operations. In North America Interactive, we're gearing up to launch iGaming in Rhode Island, alongside the continued rollout of the BallyBet OSB app in multiple jurisdictions. In iGaming across New Jersey, Pennsylvania, and Ontario, GGR is annualizing at $100 million, with 18 months of operations in New Jersey and more recent launches in PA and Ontario. We have the experience to take share in mature markets. Although some additional costs are anticipated in half 1.24, operations are expected to improve financially as we continue to grow and scale the North America Interactive business. To this point, we have initiated a reduction of our tech organization as we will be shifting our PAM in North America to White Hat for both iGaming and OSB, given our successful experience with it to date. This is a major step towards our goal of creating a seamless customer experience and will also ensure better operational focus as our North America teams won't have to deal with the complexity of managing two separate customer support processes across our iGaming and BallyBet platforms. Given the revenue share nature of the White Hat Agreement, we expect success-based scaling of certain operating costs, which is an important consideration when we drive towards a profitable North America business. We will lose $60 million at the EBITDA level this year, $30 million next year, and expect to break even in 2025. Turning to corpora, we're working on centralizing support functions and shared services, procurement and supply chain consolidation, and implementing best practices to manage our cost structure and realize improved operating efficiencies. Earnings aside, I'd like to dig deeper into our growth pipeline and provide updates on our announced strategic development projects. As previously communicated, and as George just spoke to, we are highly anticipating next steps in terms of our Oakland A's relocation plans to our Las Vegas Tropicana site. MLB's vote is scheduled for November. The strategic opportunities this development presents for our company are highly compelling, and we are excited by the value that this transaction has created for us. remember we bought the trot for 150 million in cash with a 50-year lease now we have the a's investing 1.5 billion dollars including 380 million of public funds into this land which although we have some short-term pain this is an extremely valuable asset regarding the Chicago permanent facility George has also mentioned we are continuing to make progress with our plans and expect the construction process to commence in the second half of 2024, with an anticipated September 2026 opening. I also want to reiterate that our obligations in 2024 are limited primarily to the demo by preparation, which have finite costs. We have to meet our host community agreement for the permanent facility, which means we will spend a total $1.34 billion on project costs. We have $1.2 billion remaining, bulk of which is expected to ramp in 2025 and 2026. We will remain extremely tight with costs and scope as we will be spending to that number. We'll also be communicating additional details about our plans regarding Bally's Golf Links at Ferry Point as we prepare a formal bid under the New York Request for Applications process, which is ongoing. Remember, everyone wants New York, but we are the only one with local community support behind us. Regarding Bally's International Interactive and the UK specifically, we continue to gain incremental share and are excited for the rollout of online sports betting in 2024. International interactive segment margins remain robust, having stabilized in the low to mid-30s, and we're confident in our ability to sustain or exceed these levels. This includes in our plans to reinvest in our core UK and Asia businesses as we pursue selective growth opportunities in international markets that fit our return criteria. Turning back to North America Interactive, we're eagerly anticipating our iGaming launch in Rhode Island, which holds the potential to be transformative as a development for us, along with the continued rollout of BallyBet online sports betting across many states through 2024. Following the BallyBet rollout, we hope to leverage a common technology platform to cross-sell between our retail and digital businesses. This, in turn, supports our vision of becoming a premier, full-service, multifaceted company in the casinos and resorts, iGaming, and OSB sectors, allowing us to leverage the Bally's brand in a converged marketplace. Our goals heading into 2024 encompass building upon the momentum at our Chicago Temporary Casino, growing North America Interactive, iGaming market share profitably, rolling out BallyBet across multiple states, and growing the Bally's brand globally, including launching OSB in the UK market, where we have a scaled market presence and a deep database of patrons. In addition to our growth initiatives, it is important to underscore that our team remains committed to increasing revenues and adjusted EBITDA for our core casinos and resorts and Bally's international segments. As discussed earlier this year, our core portfolios near-term CapEx cycle has peaked and expansion projects have reached completion. Before handing to Marcus, I would like to reiterate how pleased I am with what the team is doing for me.

Marcus, over to you, and thank you all again.

Thanks, Robeson. As Robeson pointed out, our immediate focus remains closing out a strong 2023, which saw our company grow and evolve as we executed our growth initiatives. Moving into 2024, we are equally excited as the foundational elements are in place to foster continued growth across all three of our operating business segments. We remain committed to streamlining and enhancing our operational and financial performance while managing our development pipeline. Although our company is young, our outlook is promising, and we're excited about the many opportunities that lie ahead. For the third quarter, we generated approximately $633 million, which is an increase of 9% year-on-year, and adjusted EBITDA of $173 million, which is an increase of 6% year-on-year, after accounting for rent expense of $32 million. For our cash-generating segments of Casino and Resorts and International Interactive, our adjusted EBITDA margin was 33% and 35% respectively. Our Casino and Resorts portfolio demonstrated solid top-line results characterized by year-over-year organic growth in Rhode Island, Kansas City, Blackhawk, and Quad Cities, which helped offset continued growth in Atlantic City, Evansville, and Tropicana. As George mentioned during his earlier commentary, we made the decision not to implement operational changes at the Tropicana until after Major League Baseball votes on the A's relocation plans. As communicated before, Chicago experienced a several-week opening delay. We are working diligently on the revenue ramp, having recently begun marketing to our database, which is building nicely. Admissions over the first 50 days of the soft launch were very impressive at 157,000 admissions. Overall, casino and resorts reported revenues of $359 million, a 9% year-over-year increase, and $118 million of adjusted EBITDA, including a full quarter contribution from the Tropicana and three weeks from the Chicago Tempt. Excluding Atlantic City, Tropicana, and the Chicago Tempt, EBITDA margins were a solid 38% for the core portfolio. Including these properties, EBITDA margins were approximately 33%. Valley's International Interactive generated revenues of $244 million, which is an increase of 7% year-on-year, and $85 million of adjusted EBITDA, 12% increase year-on-year, at a 35% margin. Earnings were once again driven by an impressive strength in the U.K. business, which was a robust 13% for the quarter. That's in United States dollar. a result of our content and marketing optimization continuation. Looking ahead, as we previously discussed, we are committed to continuing investment in our business. We see potential for responsible growth in extending the reach of the Bally's brand and the Bally's bet OSB capabilities. We took our first step this past quarter, and we launched the Bally's brand in the U.K. Our long-term target for the Bally's international interactive segment's adjusted EBITDA margin remains north of 30%. North America Interactive generated revenues of $30 million and a negative $18 million of adjusted EBITDA. In iGaming, we gained incremental market share in New Jersey. Pennsylvania has performed well since our June launch, and we are building the business prudently. The early results have increased our excitement for the upcoming launch of iGaming in Rhode Island, where we will be the sole provider. Turning to Ballybet, we successfully rolled out our new app in four states and launched sports in five retail locations. Our marketing efforts will be measured as we look at OSB as a funnel for future iGaming growth opportunities and as an additional way to reach our core casino and resorts customers. The U.S. domestic rollout schedule remains full heading through the fourth quarter and will be live with OSB in the U.K. in 2024. As Robeson mentioned earlier, we remain laser-focused on managing cost effectively. We will grow the business prudently, and as we more fully transition to a variable cost model, now including consolidating our USPAM onto the White Hat platform for iGaming and ValiBet. This will lead to a better user experience for our customers as well as create internal operating efficiencies. Corporate expenses for the third quarter came in at just under $13 million. As we mentioned last quarter, we are managing our controllables and remain focused on continuing our integration efforts and centralizing resources to support our operating segments where advantageous. We are confident in our expense management measures moving forward. Turning to guidance, on an operating basis, we are keeping a close eye on consumer spending patterns and general economic conditions for impacts to our core casino and resorts customers. Should our indicators demonstrate headwinds, we will act swiftly and engage in actions to minimize profitability exposure and maintain our strong margin profiles. With that said, for the company overall, we are tweaking our fourth quarter outlook. As you saw in our press release, our updated full-year revenue forecast is $2.4 billion to $2.5 billion of revenue, and our adjusted EBITDA guidance range is $640 million to $655 million. These changes contemplate the delayed opening of our Chicago temp facility, the decision not to reinvest in the Tropicana, and considers the strengthening of the U.S. dollar impacting our FX exposure. While we don't take this change to our guidance lightly, our confidence heading into 2024 remains high. This begins with the full-year benefits of our growth projects completed in 2023 at Twin River in Kansas City and the ramp of our database at the Chicago Temp Facility within Casino and Resorts. We will also benefit from a full year of smoking ban reversal in Shreveport. Additionally, we expect Bally's International Interactive to remain strong on an operating basis, particularly in the UK where we are taking share, and our North America interactive loss is expected to be reduced by half. We are maintaining our 2023 capital expenditure guidance of $160 million, excluding Chicago in aggregate, as we complete our CapEx expansion cycle. At the quarter end, shares outstanding were approximately $45.6 million, and we have incremental warrants options and other dilution of approximately 13.1 million shares. 58.7 million shares outstanding is the right way to look at our capital structure. We have more than $178 million of cash on our balance sheet and $3.3 billion of net debt. I reiterate my enthusiasm for 2024 and beyond. It's quite exciting to be part of the Bally's team at such an important point along our journey. We will continue to grow with approximately $650 million of EBITDA, accounting for rent of $126 million, roughly interest expense of about $265 million, CapEx on a run rate of about $120 million a year. Exclusive of all development costs and projects, we are in the range of generating a robust pre-tax cash flow of between $150 to $175 million in our core business. The pipeline of projects ahead of us in all three of our operating segments is highly compelling and aligned with our strategic direction and focus on growth. Casino and resort development and expansion, anchored by our Chicago project, the enhanced value we created in Las Vegas in the exploration of the New York RFA, our domestic iGaming growth driven by New Jersey, Pennsylvania, and the expected launch in Rhode Island, the strength in our Bally's international interactive business, particularly in the UK, where we continue to gain shares, and continued focus on our balance sheet management addressing the untapped real estate value in our portfolio. Thank you all for listening, and now we will open up the Q&A. Operator, I'll pass it back over to you.

Thank you, sir. This time, if you would like to ask a question, please press the star and one on your telephone keypad. You may remove yourself from the queue by pressing star two. Once again, that is star one to ask a question. We'll pause for a moment to allow questions to queue.

This question comes from Barry Jonas, Truist Securities.

Hey, guys. Good morning. Can you maybe walk us through the path? can you maybe walk us through the path or ramp you expect in Chicago for the rest of this year

and next year? Thanks. Yeah. Hey, Barry, I'll let George start off with that question.

Hey, Barry, how you doing? All right. So, Barry, let me just first start with that. We delivered the construction of Chicago 10th early, and we waited for regulatory approval, and then we opened it inside of the budget. So, you know, we're effectively in a soft opening environment and only operating 20 hours per day. We anticipate IGB approval to go to 24 hours. Hopefully, we see that by year end. You know, our business is ramping. It's showing week-over-week growth, and our database has gone from zero to 27,000 customers in under two months. And, you know, they've not been marketed to at this point because marketing requires IGB approval as well. So we submitted a pretty robust marketing plan to the IGB and have received approval to launch for the first week in November. So, you know, early GDR results reflect strong table games business already. We already rank second in the state in total win, and that's growing rapidly. And that's without any marketing associated with it. So I expect to continue to ramp this business for the first six months of operations. And based on early results and how positive the customers reacted to the property, you know, I'm feeling pretty good about achieving an annual run rate of about 50 million plus EBITDA.

Got it. Got it. And you think, I mean, you previously talked about 50 to 60 for 2024. Is that still possible? I think that was communicated last quarter. Is that still a reasonable outcome?

Yeah, after the first quarter, we should be on an average rate of 50-plus.

Our next question comes from Chad Bainan, Quarry.

Morning. Thanks for taking my question. I wanted to ask about the guidance. I understand you kind of kept the same bracket from a revenue perspective, bringing it down by $100 million. But in terms of the 2.4, kind of the low end for the year, that would imply year-over-year negative growth versus Q4.22. Since then, you've added, you know, TROP, you've added the temp, you have some projects. FX is actually a positive from a year-over-year perspective. So it sounds like, you know, the quarter actually went pretty well. I understand, you know, the temp was a little bit late in terms of opening, but can you just kind of help us think of a scenario where revenues would come in at that low end, or was that just kind of a simple bracket down, and that might be very conservative?

Yeah, yeah, yeah, yeah, a couple of things, and then I'll allow my colleagues to opine as appropriate. A couple of things come into play. One is obviously the FX exposure we have on some of the currency. But also, if you think about where we are in terms of some of our respective markets, there are some competitive pressures we're experiencing that we're going to market our way through where it makes sense. and so that has some implication but you also got to take into account a little bit of what's going on with Tropicana where we had it last year for a full quarter with some of the noise around Oakland A's and the implications of what we may do with that property and the lack of investment until we find out the Oakland A's announcement there could be a little bit of pressure there but we feel pretty confident that there's some opportunity to minimize that impact on the lower end and make it more so toward the middle or the high end of that range. And so we still feel pretty confident we have some items at our disposal to minimize that

That's helpful. Appreciate that. And then just in terms of capital allocation, good free cash flow kind of forecast for next year on the core business. And it sounds like a lot of the permanent Chicago CapEx will be in 25, 26. is there availability to buy back some stock here given the dislocation in the market or is the cash on hand kind of earmarked for you know kind of standard cage cash working capital and some of

the near-term things thank you chad best way i'll answer that is look we're always our free cash that we have we're always assessing the best use of that cash we understand where the market is pricing our equity right now. And it's a very attractive price. Our next question comes from

Dan Pulitzer, Wells Fargo. Hey, good morning, everyone. And thanks for taking my questions. So one of the areas we get the most inbounds on is obviously Chicago. And I think you guys laid out some, had some comments on financing kind of TBD. But if there's any way to just kind of help us think about or frame potential avenues that might be possible where you could maybe access additional capital. And just as we think about that CapEx ramp, it sounds like, you know, second half of 2024 and 2025 is the bulk of that remaining $1.2 billion to spend. So, you know, as you think about the opening, is there any way to do a phased opening or kind of, you know, have that not be so chunky in terms of that relatively short timeframe?

Yeah, I'm going to let Charlie Dow answer that on our team.

As you know, we have a $500 million facility with Luau on the land lease, of which 200 was to make the purchase of the land, and 300 are available to draw. Obviously, we have not announced this yet relative to our path to construction financing, but be assured that's what we're focused on. When we have something to announce, we shall. And you can expect a substantial portion of the rest of the 1.2 will be, you know, there's 300 from Blue Owl. There'll be some significant amount for construction financing. Blue Owl facilities only for the land. So the security for construction and progress will be for the construction lender.

Got it. Thanks for the detail there. And just pivoting in terms of the regional portfolio, this is probably a question for George. As it relates to the margins, I think you guys, you know, called out, you know, possible uptake in marketing spend at some of your properties, just, you know, given the competitive pressures. How do you think about broadly your OpEx structure as it relates not just to marketing, but maybe some of the other pressures that some of your peers have called out, whether it's labor, insurance, utilities, et cetera?

Sure. Well, how are you doing? Well, first, let me let me just tell you that, you know, we're very careful with our fixed costs. We focus on variable costs to meet demand. So when you look at without Chicago AC and TROP, you know, we're over 38% when comparing the last year total in our total portfolio. And that's, you know, remember the TROP was acquired mid-Q3. So, you know, any additions to staff were in variable positions and are targeted for revenue generation opportunities, which is really the way we measured is based on the return on that investment. So, you know, we know how to operate and we've been able to sustain margins. As a matter of fact, we've improved 10 basis points and more margins from Q2 without Chicago and Trot. So, you know, other than other than labor costs, you know, we're still seeing the market being pretty rational from a marketing perspective. Although in some markets, they're starting to become a little bit more aggressive. But, you know, we really focus on on spending for a return.

Our next question comes from Jordan Bender.

JMP Securities. Great. Thanks for taking my question. I want to stick with the regional portfolio. It seems like the regional consumers is sticking in there just based off of kind of your commentary. There is some phrase in the slide deck here calling out some sector softness. I was wondering, is that more specific to some of these properties, Atlantic City, TROP, that you were calling out, or is there anything within the overall sector that you're starting to see

kind of pull back? Yeah, I mean, it is sector by sector. I mean, listen, when you look at the market, we're certainly seeing softness overall in all the markets. However, we're up in 10 of those 13 markets that we operate in from a market share perspective. And, you know, we're seeing a little bit of a customer shift. You know, we tend to focus a little bit more on the higher customer segments of our business to where we're seeing a better return on that. But we're certainly getting some softness in the lower 50 minus type segments of our customer base.

Okay. And then just on my follow-up, in Rhode Island, you guys have the database, iGaming just being a higher spend, stickier customer. I presume that should be an EBITDA or a contribution positive state within 24. Is that kind of the right way to think about your guidance that you just gave for your losses within 24?

Rhode Island will be a positive iGaming margin generator. Just one thing on our guidance range, the way I look at it is, although we talk about our guidance, this has the $60 million of North America interactive loss. That will go to zero. We will make sure that goes to zero. So I look at it with a $60 million swing in that. But, yeah, Rhode Island, we're very excited by that opportunity. It will be a good profit contributor for us.

Our next question comes from Jonathan Navardi, TD Cohen.

Great. Good morning. Thank you. This is Jonathan on for land. My first question is with respect to Casino Resorts in the third quarter. Margins decrease about 220 bifths year-by-year. despite the record three-quarter revenue. And could you just walk us through the puts and takes of those that led to the decrease, as well as, you know, if they are temporary in nature, how long can we expect them to last more? Hey, Jonathan, this is George. So you're

referring to a consolidated margin. You know, I just spoke recently, just briefly, I just spoke a minute ago about, you know, how you take out the TROPS and you take out Chicago, and as well as Atlantic City, and we're at the levels that we've always guided the market to. So, you know, we're going to have to see what happens with the trap, you know, with the announcement of the A's. So that's continued to be seen what happens there. And as far as Atlantic City is concerned, there are pressures in that market. And that's one of the markets that I talked about. There's a little uptick in marketing spend. We're not going to chase that, but, you know, it does cause us to react a little bit from a customer incentive perspective.

Understood. In your slide, you called out that Bows is taking share from peers on certain markets.

And can you maybe give us some examples of what the company is doing

in those markets that are driving that?

Well, I'm not going to give away any marketing secrets, But I discussed this in previous calls, is that we're seeing a better opportunity at the higher end of our customer database, and we're taking advantage of that.

Our next question comes from Jeff Stanchel.

Starting out here, on the guidance revisions, full-year EBITDA lowered $25 million at the low end, $45 million at the high end. If I'm hearing you correctly, it sounds like the only real true incremental changes here are timing for the Chicago opening and the ramp. the changes at the Tropicana, ahead of the A's, and FX. My question is, first off, am I correct in saying these three are really the only true incremental changes from the last time you updated guidance? And if so, I was hoping or wondering if you could sort of bucket them off in terms of how much each are sort of contributing to your guidance revisions.

Yeah, you're dead on with your assessment. I won't get into bucketing, but just to keep in perspective for you, the Chicago, we, again, feel very, very good about continuing to build upon that. The TROP, year on year, you know, it's one of those things where we just made a decision until we get more clarity on what the A's is going to do, are going to do, it's very difficult to put any more investment in operational change to minimize that impact. Therefore, you're seeing some of the revenue shortfall, but you're dead on with your assessment of those primary things contributing to the difference between our last guidance and what we currently issue today in our earnings.

Well, thank you, Marcus. If you're taking a longer-term view here, right, Chicago, you walked through sort of the path and some of the expected phasing of the construction spend, Tropicana and New York, longer-term subject to decision-making processes, whether regulatory or amongst the MLB that are sort of outside of your hands. But I guess my question is this, you know, let's say all three projects, you know, or sorry, you know, Tropicana, you end up going through with some sort of a development project and then New York to win the license. How much should we expect spend to be, I guess, overlap between multiple projects? Or do you think, you know, there could be a scenario where there's basically no overlap timing wise with any of the spend for the three various projects? And, you know, recognize there's a lot of variables here, but let me know if that question sort of makes sense the way I laid it out.

So, this is Sukim, the chairman. So, maybe Mark has asked me to take this one. Obviously, we have three large, exciting potential projects, and we're going to need to make sure that we balance all of them. Um, look, our highest priority is Chicago. Uh, but the nice thing is that, um, I think what, uh, what might be missing in people's analysis is that we're actually, we actually have a number to, to, to hit in terms of our spend, which is, uh, one spot, three, 4 billion of which we've already spent almost 200 million. And so the minute that numbers hit, and I think Charlie walked through a little bit of the various ways to finance that, there's, you know, obviously we have our land bank, we have the S1 still, so we're going to bring in some minority investors. There's multiple levers for us to continue to find financing there. But at the end of the day, I think there's a generalized belief that we're going to be subject to unlimited inflation. It's actually almost the opposite. The minute we hit our number, we fulfill the concept. That's the main substantive point in the host community agreement with the city. And therefore, we're allowed to open the facility. And let me tell you, we will make sure that that, you know, 4,000 game position facility opens on time and on budget. So that's the that's the main of it. The trough is actually sort of an interesting situation in the sense that, again, I think, as Marcus alluded, it's actually caused the good news has been in the very near term bad news. Because as we've lost – as we now know that at some point we will redevelop the site, that where we – when we first purchased it, it was operating at a EBITDA, you know, decently positive, and then we had the rent. And so it was a carry positive asset as the, you know, to be completely frank, the EBITDA has declined as as, you know, bookings are harder to manage because people don't know when it's going to close. And also, frankly, our employees are starting to leave as, you know, as there are new properties opening in the area and they don't know when we're going to redevelop. So in the very near term, actually, it's caused a hit to our financials. But obviously, again, as Marcus has spoken to, we believe that the asset value we have here has gone up a reasonable amount. So, look, we just have to decide, you know, based on what we think the financing and partnership picture is here, you know, how we're going to go. And so I'll just say that, look, we are well aware of where our shares trade. We are well aware of what we think the return on capital is and in properties like Chicago, New York and Las Vegas. And we will spend we will prioritize correctly and make sure that we allocate capital to what we think is the most attractive and obviously, you know, you know, force rank that capital. So it's not like we're going to run out of capital spending on everything. And then, you know, obviously, if there are projects that we think force rank lower than, you know, we would look to, you know, find partners or even offload them. So, look, I think you have to believe that the board and shareholders of this company can be rational about, you know, how we allocate capital. On New York, probably the most speculative, because obviously it's something that is just an RFP that's continuing, but again, as George pointed out, we happen to have the only site that currently has our local electives in support. Things could change, but that's pretty exciting, and obviously it's a prize that pretty much every gaming company in some way, shape, or form is competing for. So I guess the question would be, if we were to win the prize, would we be able to find the right kind of financing and partnership to get that developed? Again, that's a little further out, but I think you can make the assumption that we will make a prudent decision.

Our next question comes from Brandit Montour, Barclays.

Good morning, everybody. Thanks for taking my question. In Las Vegas, the lease you hold where the TROP is currently, that lease is arguably much more valuable today with the A's pending decision. Is there a world in which you would sell that lease to create liquidity to fund the other projects, buy back debt, or buy back equity? Just curious how you look at that or you balance that cost benefit.

Yeah, I guess the best way to answer that is I think for the right price, we probably unload anything. But if you think about the nature of that transaction, we traded into that deal with a couple of our properties and got a lease that is very attractive, and it's traded into a value that is enormous for us right now. And so whether we develop that ourselves or whether someone presents us an offer that at a minimum valued at $9 million an acre, we absolutely entertain that. But we have no plans at this moment, but should someone approach us, we'd absolutely entertain the investing of it.

Okay, great. Thanks for that. And then on International Interactive, in the prepared remarks, and I hope I caught this correctly, there's a sort of target margin of low to mid-30s. And I think you guys mentioned reinvesting or sort of ramping back, ramping up investments in Asia and maybe another locale. And I guess the question is, is there a maybe not, but is there a subtle sort of strategy shift? I mean, I think the story had been sort of cutting marketing margins had been going up quarter on quarter for the last three quarters. And so I think you guys did 35 percent this this quarter. So, yeah, are you going back on offense there, and how would you respond to that?

Yeah, thank you. Robeson here. We will spend where the ROI stacks up. We have enough, as we've been showing you, we've got real control and real grip on these businesses. So you've got your revenues, and we'll pull the levers to make sure that we extract the right EBITDA. Yeah, I think we'll hold mid-30s. But if opportunities come, we'll spend for growth. We want to get the right growth, but we want to get the right EBITDA out the back. I'm very happy with where International Interactive is. We should remember that these are highly competitive, mature markets, and we continue to grow share. I believe there's many mature markets in the world out there where we're showing that we can also grow share, such as New Jersey, such as Pennsylvania. I'm very, very positive with where we are, and we're really showing that we have a grip on our cost structures. Just to add there, we announced a headcount reduction because we've gained confidence with Guaytac and Camby providing a platform for us in North America, which will be a better product offering in the long term for us. that will result in approximately a 300-person headcount reduction. That will make us a stronger company, but also improve our margins too.

Our next question comes from Ricardo Cinchilla, Deutsche Bank.

Hey, guys. Good morning. Thank you so much for taking my question.

I was wondering if you could provide some color regarding the funding of the hard costs for the Chicago project in 2025, five perhaps including the total amount needed although you know being a rough estimate the alternatives that the company has identified like you know doing additional say leaseback transaction at the restricted group sending the money looking for a REIT partner you know what's the preferred funding source that the company at this point has identified and perhaps some color on the timing for a financing transaction and if you could also please confirm that if the company decides to raise money at the restricted group, do you guys plan to have avenues to do that, that you have enough, you know, restricted payment capacity and investment capacity to send money to the unrestricted sub? You know, is that capacity in excess of like $300 million?

I think you asked about 15 questions in that list. But fundamentally is, yes, we know what our covenants are. We know what our contractual obligations are. And to the degree that we are actually leveraged below a certain level, we have unlimited room to distribute cash. However, if we get more levered, obviously there are certain limitations. In terms of the capital plan, we told you that we have $300 million committed, unused from the existing facility. We also explained that 2024 is pretty limited in terms of just, you know, demolition and site prep. That 2025 and 2026, this was your question in terms of phasing, is where we do the construction above ground. And then in terms of construction financing, you know, you can take certain ratios and so forth. The REITs are very valuable partners with us in terms of in our sector. And you've seen many of them provide, you know, different forms of construction financing, because ultimately we think that Chicago is an asset that everybody would aspire to own in the REIT world. So I think you've got the hints in terms of where different sources of financing. In addition, we do have a land bank within our existing estate of probably $1.1 to $1.3 billion in value, depending on when we choose to monetize that. So we have, as Sue mentioned before, we have a lot of levers, but we don't really need the money until 2025. This is 2023. And then in addition, you know, we also have a minority equity raise that probably sometimes in the first quarter, first or more like second quarter. So there are a lot of pieces that will fall into place. Unfortunately, you just have to be patient.

Understood. Thank you. And, you know, if I may go with a follow up, can you please provide the covenant adjusted EBITDA for the quarter and the restricted group leverage for the LTM period?

No, but I think we said we are in the forest.

No further questions at this time. I would now like to turn the call back over to today's speakers for any additional or closing remarks.

Thank you, everyone, for all your questions today.

We'll speak to you again soon, and we'll keep you apprised of any significant movements coming up in the future. I'm very happy with that performance, and we'll keep them pushing forward. Thank you.

This does conclude today's program.

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