Deadline Extended: Bally’s Bold Play | Ep. 777

: Is that really kind of a sign of confidence that you want to kind of put out to the market? I don't know. And it's definitely the number one variable. I think it's going to kind of, we really have to see what the prospectus put come comes through if this deal goes ahead. The M &A saga continues for a vogue and its shareholders as dealmakers have agreed to extend negotiations with Bali's Intralot. to a new deadline of the 8th of June. Although protracted, the statement details that discussions between the parties continue to be constructive and all parties are focused on reaching an agreement. Leading the hunt, Bally's Intralot remains open to changing the structure of its deal and consideration for revoke shareholders. Yet, there is no certainty that a deal will proceed. The extension was announced alongside Bally's Intralot publishing its first combined results showcasing the strength of its new interactive unit and its ambitions to make a significant impact on the UK iGaming market. Welcome back to iGaming Daily, supported by Optimove, the creator of positionless marketing and the number one player engagement solution for sports betting and iGaming operators. I'm Charlie Horner and with me to discuss all things Ballis, Intralot and Evoke is SBC Media's editor-at-large Ted Manmure and editor of SBC News Ted Orme-Clay. Ted M how's things? Very well Charlie. And I'd like to begin today's podcast by uh wishing Rachel Kennedy from Payment Expert a safe maternity leave. And yeah, and thanks for all the work she's done on a great website. Yeah. Yeah, indeed. We'll echo that. Good luck, Rachel. Ted OC, how are you? Yeah, pretty good. Thank you. Yeah. Yeah, I guess. Concur what Ted said, all the best to Rachel as she heads off on leave. But yeah, good to be here, Charlie. Obviously we've got quite an interesting story here, one that we've been covering quite a lot on SBC News. em And yeah, probably one of the big defining stories of the year so far. Yeah, certainly one of the biggest M &A deals that we're looking at in the industry so far this year. I don't know about you, Ted and Ted, but I was out. yesterday with my yellow, Jim White yellow tie on as it was deadline day right up until the deadline. We're waiting with the eager anticipation for a decision either way only to be told that Evolkan Ballez and Tralata are pushing back the deadline to the 8th of June. Any surprises for you guys on this one? Ted M, how about you? Not really, when I thought it would always go down to the wire and if they had a chance to extend it, would it would be done so. I just think that again, there's like so many kind of spinning plates and stuff to kind of settle on, not so much about the deal itself, but much more about the financing and the of the debt accumulation and what the organisation is going to look like if they both agree to proceed with it. I think there's a lot of stuff to iron out. It's a complex deal, isn't it? Ted, I'll say, how have you perceived this? I think I really just echo what Ted said. I don't find this overly surprising. There was quite a short time frame between it being confirmed that talks are underway and what the deadline would be. It was only really a couple of weeks and there is a lot to consider here. So yeah, not too surprising that Ballad intro lot requested an extension and not overly surprising that Evoke accepted it. Evoke's been looking for looking for a buyer for some time apparently. Since they initiated that strategic review back in December where they said we are looking at potentially selling some assets or selling the whole group. Bali's intralot has clearly been em on the hunt for opportunities to expand m its profile internationally. So yeah, it's not too surprising that they want to give themselves more time to potentially reach an agreement and that there's a lot of factors to consider here. exposure in the UK, the significant amount of debt both companies are carrying. So yeah, they're not overly surprised and they'd want more time to mull over that and consider all their options. Yeah, I guess the reason why this deadline was set in the first place really was because there was a leak in the UK press reporting that a potential deal was in the works, so both companies had to come out and tell shareholders. Ted, obviously you mentioned one element that we have to consider here, which is the debt that both companies hold. This is a bold move. It comes with its complexities. Let's just remind listeners that the offer is, or the potential offer is somewhere in the region of a valuation of 220 million pounds, around 50 pence per share. What sort factors do you think evoke investors are considering when they mull over any deal or they talk about any potential deal here. uh Ted or C? I mean, yeah, going back to the point I mentioned just a second ago, Charlie, a big one for them will be debt. Bally's intro put out its Q1 statement this morning and revealed that good revenue growth for them, pretty solid performance in Q1, but they're still carrying uh a huge amount of debt. I think it was just under 1.5 billion off the top of my head. Our colleague Patrick covered it this morning on SBC News. Evoke is also carrying a huge amount of debt. think for H1 last year it was something like, I want to say 1.8 billion off the top of my head. Hope I got that right. So yeah, a combined entity would have a significant amount of debt attached to it. They need to find ways to address that. to maybe secure some sort of write-off, em plan out strategically long-term how they're going to pay that off and how that could impact em future financial statements and so on. So yeah, the debt is a really big element to consider. think that's probably one of the, in fact, that might be the biggest thing to consider really. In my mind anyway, Ted, do you have a different opinion on that? I think you're absolutely right. mean, is embedded in this deal and especially how you're to do that with bondholders and what kind of terms of grace you're going to get on that. I think the kind of, I wouldn't say kind of paranoia, but the kind of underlying concern here is what shape of a new company are you going to present to market? is it again, because we've also seen kind of Bodies go from this position where it was stuck in debt and then had to sell the intralot unit, I mean sorry, the interactive unit to intralot to kind of escape its debt run, just return back to it. Is that really kind of a sign of confidence that you want to kind of put out to the market? I don't know. And it's definitely the number one variable. And I think it's going to kind of, we really have to see what the prospectus put comes through if this deal goes ahead. I'll stick with you here, Ted, because one concern that people may have, or particularly evoking investors may have with this deal, is the valuation. They might want to extract more value out of this deal. How much flexibility do you think Balliz Intralot might have, considering when you look at their balance sheet, the significant debt already loaded onto that business? You see, that is a comeback and so there is kind of some flexibility there, right? To kind of review the deal terms. But however, I think that this is a camp that is so, you know, solely playing kind of hardball. The other thing is like just how desperate are baddies to get kind of this foothold in the UK. It might have kind of other other avenues to pursue and is necessarily kind of like that integration of Jackpot joy. of its interactive unit with William Hill, is that going to be kind of the success story or is that going to be kind of the pillar or platform to future growth? There are so many kind of uncertainties to put forward, as in it's so kind of execution dependent and also I'm kind of managing that debt that's going to kind of override everything that this business does. um I don't know who really has that full confidence that this is. a deal that kind of pleases every single barter. And TEDOC, let's consider revoking this as well. We know that their strategic review has been going on for some time as well. Do you think if all investors have and leadership for that matter have the room to play hardball on an offer like this? Or do you think that they will look to extract more value out of this offer or they'll look to accept a 220 million valuation? Yeah, it's a complicated one because I if you look at if you look at that 220 million evaluation like that's just a drop in the ocean of what evoke paid for William Hill back in 2022 was it they I think they paid 2 billion for that for that brand so yeah, they're not exactly getting a great return on some previous investments and if want to put it that way in regards to this offer but at the same time their market cap has fallen significantly in the years since that deal and They've been affected by some regulatory headwinds. They're going to be affected by these new taxation headwinds in the UK. This is just also the fact the UK is a highly competitive market and they've got a lot of pretty tough competitors to go up against over here. yeah, Ted mentioned earlier, maybe it will depend on how desperate are Bally's intralot to expand in the UK to build up their foothold here. But also on the inverse, we could say how desperate are Evoque. to secure a sale and either of some assets or of the whole group. yeah, there's a bit of, there's just a lot of speculation here. We've got a lot of guesswork going on. just, you know, you need to try and guess their motivations behind what the decisions might be. It's hard to say. You know, obviously with the tax stuff going on, Evoke, like many others, has said that it's confident it will be able to... Despite it despite overall seeing the taxes as having a negative impact on the UK market They're confident. They'll be able to secure more shares of a companies lose shares of a companies have to bail out But like I said, they're not the only ones who have said this floor has said that and Tain said that smaller brands like s markets as markets Sorry have said that to us to put to SPC news in some interviews recently and not everyone's going to be able to achieve that You know, if someone's gonna someone's got to collapse and lose market share for other people to secure market share and no one thinks it's going to be them. em And that dynamic is really going to reshape the UK market and Evoke might be quite keen to secure some sort of buyout against that backdrop. Well let's take that into consideration and Ted M, with all those headwinds that we know are there in the UK, who has the leverage in this deal? Do you think you he has the leverage or do you think it's badly? It's like, does it have that room to play hardball? I think it's bad news just because they can put the deal forward and okay. Um, I think, know, the new business, um, they've got this kind of plan to go to market. However, what we're not getting here is kind of what is kind of the clearer picture for bad news plans with a vogue. Should he, should the deal be accepted? And I think that if you take that to go to Vanuatu, they can poke so many holes in there. mean, one question that hasn't been asked is what is the future of William Hill? And do you keep William Hill? Do you then kind of transfer it to or do you just replace it with Bally's UK? Do you restart fresh? It's a tough time on the high street. Maybe it's time to, yeah, uh to let go of the William Hill brand. Also the platform integration where you see those synergies between Jackpot, Choy and taking over that William Hill platform. And that essentially would have been the fourth to fifth restart, the William Hill, onto a new system. It's a brand that just continues to fumble. I think the only certainty is I think that as soon as gets this deal gets announced, I think the city analysts, they're going to poke so many holes in how this business formation is going to work. Yeah, it's really intriguing. uh I think you're right to question the future of William Hill. I think particularly from a retail perspective, right? Because we know that Intralot have this online lottery driven business. They bought ballets to increase that online casino and sports book capability. And then to pivot to William Hill and the retail stable that they have, seems like a strange integration to have to make so soon after that big merger. So plenty of questions that we'll continue to ask and to analyse on our network. But Ted, Ted, we'll take a quick break and we'll come back and we'll break down Ballet's Intralot's Q1 earnings. Learn how OptiMove's positionalist marketing is changing how iGaming teams operate. Discover how operators are using OptiMove's positionalist marketing platform to launch personalised CRM campaigns, dynamically change casino lobbies and bet slips, and create engaging gamified experiences. Learn more at OptiMove.com. Welcome back to iGaming Daily. Now, Bally's Intralot, as well as pushing back the deadline for this potential evoke offer to the 8th June, has updated investors on its Q1 earnings and it says, It's a big moment really because it's one of the first real glimpses that we've got of this new PLC player in the iGame in space. Ted OC, could you give us the run down of some of the key numbers that we should be aware of from the report? Well, from a revenue standpoint, it was a pretty solid Q1 for them. Revenue was up 180.5 % year over year to £268 million. Adjusted debit DA was up 231.8 % to over 100 million. So yeah, can't really argue with that figure that, you know, on the face of it, that's a pretty positive start to the year. Obviously, you've kind of got to consider the differences in the company between this year and last. Obviously, last year it was intra a lot as a standalone business. This year, you've had that acquisition of Bally's International Interactive last year, the subsequent. kind of effective merger between Bally's Corporation and Intralot to create Bally's Intralot. Yeah, difficult to make a year over year comparison. Yeah, exactly. Yeah, when you've had that sudden, all that revenue that's now been added to you from these, yeah, from Bally's Interactors pre-existing operations. Yeah, shows decent growth there. Obviously, like we said though, the whole thing, in the background of that, you've got all of the debt that we talked about earlier. There were some loans taken out last year to help. crop up that merger that I just mentioned. em yeah, from a revenue standpoint, looks like they've had a pretty solid start to the year for the first three months of 2026. And Ted, we know that Ballis in Trilaut is looking at the UK as a key growth market. Might be worth just running down its current presence in the UK, some of those brands that already operates and we've touched on Jackpot Joy, but are there any other brands that it runs in the UK? Okay, so it's in Britain, like for like kind of breakdown on UK performance, but it does say that UK is a growth market with 10 to 11 % growth year on year. And we know that it is kind of the majority of revenues by the kind of section of Jackpot Joy. Look, one thing to kind of notice, going back to what Ted said is that in terms of status now, you're looking at a of a PLC that says on interactive is generated one billion in revenues with an adjusted meter of 430 million. And it implies that it can get a margin of 40%, right? However, I think that again, you got to take that with a lot of kind of scrutiny because we got upcoming headwinds in the UK from the tax regulator, from the RGT tax hike to 40%. So that's definitely going to be kind of a margin pool on them. In terms of where you see them growing in the UK now going back to kind of the numbers here and what Ted was saying about debt is that especially if it enlarges itself by the acquisition of evoke I have to be you have to be kind of reflective of what evokes performers came in and one thing to me one thing that kind of grabs my attention is just how much debt William Hill are paying month on month, sorry, on a quarterly basis to service that debt, which is now at 60 % of EBITDA. So even before, sorry, 60 % of earnings, so even before you get to EBITDA, 60 % of all kind of income generated has to go towards servicing debts. Now, if that kind of gets piled on with Bally's intralot, right, it's it's not a positive sign to do to start a new business on. Well it's eye watering levels of debt you would suggest it's yeah it's it's um significantly leveraged. Let's look at Bally's Intralot in the context of its UK growth ambitions because we know that it's really looking at the UK to be the pillar of its strategy moving forward. How do we assess Bally's Intralot compared to some of the other UK operators, TEDOC. Because is it looking to compare itself with the big four group of operators? Well, you it's got a very, very different operating history. Obviously, Intralot as a business was historically a lottery technology company. Bally's in the US, mean, our colleague Joe has mentioned, Joe from Our Gaming Expert has mentioned this on a previous podcast about how Bally's Corporation in the US kind of has that history of omni-channel operations and of taking on some struggling businesses and revamping them. So maybe they're looking at the UK and William Hill as being a similar kind of opportunity to do that. But when Bally's Interop was formed last year via that merger that we mentioned earlier, initially it seemed like their focus would be quite heavily on opportunities in the US state lottery sector, I guess by extension, like provincial lotteries in Canada as well, as well as some activities in Europe. But that really seemed like, at least to us at the time, that seemed like a focal area. em Their involvement in these talks around Evoque is a quite a big divergence away from that, know, to acquiring a company that has a huge online betting presence, online gaming as well via some of the 888 brands and Mr. Green, a big presence on the UK high street via William Hill. And yeah, you know, by acquiring those brands, it probably would put them in the same ballpark as your Entains and your Flutters in the UK. But yeah, like say, it's... It's a bit of a curve ball from where I think we initially expected Bally's intro to be heading when it was formed last year. I think here it just comes down to the bottom line and how much profits and earnings they can take. uh Yes, if they're pitching now as they stand that they can get a billion in revenues and you had William Hill. ah Yeah, mean, certainly in income it would match the other PLCs, but I think that where the markets care is down to profitability and margin. And I don't think it would come close to the others. It's got too many adjustments to carry on. Yes, certainly. So let's wrap things up then by taking into consideration Evolks and Balles, Intralox Q1s, and then looking at this deal. A, how confident are you that this deal will happen? And then B, what oh How successful do you think this venture or potential venture would be? Ted, I'll see how about you kick us off. Oh God, I don't know. We don't ask easy questions on iGame of Daily. How confident I am it will happen. The fact that it's been extended, the fact that Bally's requested an extension instead of just saying no, we'll leave it after considering it, after considering what, makes me lean more towards the fact that they are... I think they might be leaning more towards saying yes, we'll put a firm offer out there. They're just ironing out some of the details because they've not had a great deal of time to do so seems. And you've got to consider very heavily how we're going to sort out the debt problem before we pull the trigger and put an offer out there. I guess it also depends on do we know if there's any other talks with other buyers going on but these are the only ones we've had confirmed so far and if Avoka are that desperate to get a deal and secure a buyer then yeah obviously I really see any reason why it wouldn't happen. What was the other part of your question? How confident am I about how it would work out? Like said earlier, Bally's does have a bit of a history of coming in and taking on struggling brands and offering them commercial lifeline. So guess there's no reason to say that they couldn't do that in the UK. But this is also hugely one of the most challenging years that the British market has had for a long, long time, not only just because of the taxes, but just sort of general regulatory and political uncertainties. and we should expect local councils to get some more powers over gambling licensing you know for retail venues later this year and that that is something that will the William Hill will have to consider pretty heavily in any strategic planning and yeah you know not say I think there's no reason to say baleys can't can't replicate what it's done in other markets over here but it's it's going to be one of the toughest jobs he's had I Saddam, same question to you. What's your outlook for this deal? um I think the deal will proceed in some terms. I'll leave the debt negotiations down to the gods of corporate finance. However, think in terms of the... uh You know, how confident am I of baddies interactive in this kind of journey into UK gaming? Look, mean, you are saying even refers if we reflect back to when Triple 8 acquired William Hill and many kind of viewed that as an opportunistic deal by Triple 8 that just didn't didn't work out. uh Um, what this deal doesn't have or the deal makers don't have in their kind of, um, armory here is that there isn't this kind of confidence to UK gaming and it's kind of, are going through a period of structural adjustment and it's also how does that kind of scenario kind of impact any M and A play in iGaming? Um, ah I think that If baddies are to be successful with the acquisition of Evoque, it has to fundamentally and put to bed these kinds of structural issues with William Hill, the retail unit, it's online underperformance. And what are kind of the competencies of Evoque in the UK, which is its biggest market, right? And, you know, how is that coming? How is it, is it going to bring that, bring that back into light and into focus? It's been a very, very long journey for William Hill in which he has never been able to kind of uh answer kind of its liabilities and its limitations. And I don't think that changes under the baleys. Well, it's a fascinating story and one we'll continue to monitor. uh Ted, Ted, will see you on June the 8th with my yellow tie on again as we approach the second deadline day. But for now, thanks for taking the time. Thanks to Optimu for supporting the show as always. And to our audience, for tuning in to today's episode of iGaming Daily and come back tomorrow to keep up to date with all the latest global gambling news. you