Bally's Corporation (BALY) Q1 2023 Earnings Call Transcript

Bally's Corporation (NYSE:BALY) Q1 2023 Earnings Call May 9, 2023 10:00 AM ET

Company Participants

Jeff Chalson - Vice President of Corporate Development and Strategy

Robeson Reeves - Chief Executive Officer

George Papanier - President

Robert Lavan - Outgoing Chief Financial Officer

Marcus Glover - Incoming Chief Financial Officer

Jaymin B. Patel - Vice Chairman

Conference Call Participants

Barry Jonas - Truist Securities

Jeffrey Stantial - Stifel

Chad Beynon - Macquarie

Daniel Politzer - Wells Fargo

Lance Vitanza - TD Cowen

Jordan Bender - JMP Securities

Ricardo Chinchilla - Deutsche Bank

Operator

Good day, and thank you for standing by. Welcome to the Bally's Corporation First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. [Operator Instructions].

I'd now like to turn the call over to Jeff Chalson, VP of Corporate Development and Strategy for Bally’s. Please go ahead, sir.

Jeff Chalson

Good morning, and thank you for joining us on today's call. The earnings release and presentation that accompany this call are available on our website in the Investor Relations section at www.ballys.com.

With me on today's call, our Chief Executive Officer, Robeson Reeves; George Papanier, Bally’s President; Bobby Lavan, outgoing Chief Financial Officer; and happy to welcome Marcus Glover, incoming Chief Financial Officer; pending regulatory approval. In addition, we are joined by Jaime Patel, Vice Chairman.

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 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 items.

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.

Robeson Reeves

Thank you, Jeff, and hello, everyone. Before diving into our quarterly results, I'd like to address this morning's press release announcing a number of changes to our senior management team. Bobby Lavan, our Executive Vice President and CFO, is leaving Bally’s to explore another opportunity. I would like to thank, Bobby for all his contributions, you will truly be missed.

At the same time, I am pleased to welcome Marcus Glover as Bally's incoming Executive Vice President and Chief Financial Officer, pending regulatory approval. Marcus, will lead us in the next stage of our growth, drawing on a deep operational gaming experience in financial acumen.

Marcus, would you like to say a few words?

Marcus Glover

Yes. Thank you, Robeson. It's a great time to join Bally’s. I've spent roughly two decades between Caesars and MGM, holding leadership roles across all functional areas. We have a great group of professionals at Bally’s, and I look forward to leveraging my experience and partnering with our team as we build upon the foundation that is in-place.

Thank you, and back to you, Robeson.

Robeson Reeves

Marcus, thank you. I'm excited about what we can do together. Further, Charles Diao will be joining as Senior Vice President, Finance and Corporate Treasurer, reporting into Marcus, also pending regulatory approval.

Rounding out these organizational changes, Jaymin Patel, a well-regarded Gaming Veteran and current Board member of Bally’s, was appointed Vice Chairman and will Chair the Operational Integration Committee, which is a newly created Board Committee that will focus on strengthening global processes for streamlining operations and reducing costs, as well as the creation of a global, coordinated corporate center.

With that said, I am extremely pleased to report a very strong quarter for the company overall and discuss our achievements since I took over as CEO. As you know, we're now several months since my tenure, and I've had a chance to review each aspect of our business using the data driven analytical approach, I promise when I became CEO.

I've also gotten to know our shareholders and stakeholders on a deeper level. While we are never satisfied and can always be stronger, I continue to be wholly impressed with our team globally. My excitement for the progress we have made towards the integration of Bally's internal systems and its three operating businesses has never been greater.

Over the past two weeks, there have been several positive material changes to our business operations. First, as I'm sure you are all aware, on Thursday, April 27, the UK government released its white paper review of the 2005 Gambling Act. After four years of ongoing consultation, we are pleased this has been released, and we hope it will bring some clarity to UK gambling operators.

We continue to review these proposed measures and will work constructively with both the government and Gambling Commission to find an effective solution, which ensures the reforms are appropriate and guarantee a safe and sustainable future. We are in a strong position, as we have been preparing our business strategy and compliance. We have already implemented several voluntary changes that are aligned with the white paper, including betting limits and so on.

The regulatory framework in the UK has created a dynamic where smaller players are enabled to compete, leading some to exit, allowing larger players who are already highly compliant to consolidate the market and gain share, a trend we have highlighted before and which we believe will continue into the future. We embrace regulation and recognize that gaming is a public private partnership.

Secondly, on Tuesday, May 2, we announced partnership agreements with Kambi and White Hat Gaming, fulfilling our promise to partner with best-in-class technology providers to drive our North America sports betting platform. The North America infrastructure we had in-place for sports was inefficient. I own that. And with these new partnerships in-place, our cash burn and development costs will go down sharply.

Our spend will be performance driven. In the future, as the sports product scales, we have the opportunity to acquire a license to a limited part Kambi’s online and retail technology source code at our option. We will evaluate this as our North American sports betting business grows.

These partnerships will leverage Kambi’s and White Hat's proven technology integration and track record of executing quick launches to support the expansion and enhancement of Bally's online and retail sportsbooks, driving further customer engagement with the Bally’s brands. Kambi will provide its suite of omni-channel products, trading capabilities, content solutions and liability management to deliver online and retail sports betting entertainment.

While, White Hat will supply its PAM Solution which includes, its proprietary cashier, multiple RGS integrations and its traveling wallet. Bally’s intent to derive deal synergies by integrating these technologies with our state-of-the-art data and marketing technology stacks playing to our strengths.

As a result, we will significantly reduce the fixed costs associated with powering Bally Bet’s OSB platforms by transitioning to a variable cost model based on a percentage of net gaming revenue generated. These cost savings coupled with driving further engagement in the Bally’s brand will better position the company to deliver near and long-term results for investors, while simultaneously reducing our economic risk.

Importantly, as mentioned above, we have also reserved the rights to acquire a license to a limited part of Kambi’s online and retail technology source code is certain performance metrics are achieved in the future. By the end of 2023, Bally’s anticipates that these partnerships will provide omni-channel support to power Bally Bet’s platform across seven states and at four retail gaming locations. It is our intention to also leverage these partnerships globally, as we consider launching OSB in the UK and Europe as well.

Post our OSB re-launch, we'll be back on a path to diversify our revenues and EBITDA streams with ample cross-sell opportunities between our retail and digital businesses. This in turn will support our vision of becoming a premier, full service vertically integrated casinos and resorts online sports betting and iGaming company, allowing us to leverage our Bally’s brand globally.

Turning to our operating segments. The Casinos & Resorts segment continues to show its strength despite certain markets being severely impacted by inclement weather such as Lake Tahoe, which was hurt by unprecedented snowfall, and Evansville, which was impacted by tornadoes late in March, as George and his team continue to execute at an extraordinary level.

In fact, we generated record 1Q revenues of $329 million, that's up 9.4% year-on-year and EBITDA of $105 million. We're starting to see the full benefits of the casino assets we acquired last year being integrated into our business and property improvements and cost controls we have been implementing throughout the portfolio taking hold.

Importantly, as we discussed earlier this year, our portfolios near-term CapEx cycle has peaked as several of our growth projects have come to or are nearing completion. This includes our upgrade of our flagship Twin River’s casino in Lincoln, Rhode Island, which was finished in April, and as a Kansas City expansion spend comes to an end this summer, our progress in Atlantic City should also be noted. We are certainly on our way to delivering consistently strong operating performance for the foreseeable future.

We look forward to the opening of the Chicago temporary casino in late summer 2023, which is on-track to generate $50 million plus EBITDA in 2024. We'll also advancing the full build of Bally’s Chicago permanent facility, which is expected to open in 2026, which has an estimated run-rate in excess of $250 million EBITDA. We believe there is unquestionable pent-up consumer demand for this project, and we couldn't be more excited to begin producing results.

Our core casino and resorts customer remains highly resilient despite rising economic headwinds with trends in April remain inconsistent with the 1Q results, outside of a slight calendar shift. While we're keeping a close eye on spending trends and the health of the consumer generally, we haven't seen any signs of material impact on our business.

International Interactive had a strong start to the year with continued content, marketing and jackpot optimizations taking place. The UK business has remained strong, growing 9.6% in the first quarter on a constant currency basis well ahead of the market. The formula of ARPU up, FTD's up, while CPA is significantly down, is playing out and will drive performance throughout the rest of the year. April results are up 13% year-on-year.

In Asia, the changes we have implemented over the past several months continue to produce results with trends remaining positive in the quarter, despite facing difficult comparisons. Note, comparisons do get easier from here. While International Interactive margins settled in the low mid-30s from the record 39%, we generated in 4Q, we believe we can sustain margins at or above these levels as the changes we have implemented are structural.

This is inclusive of our plans to reinvest in our core UK including launching the Bally’s brand and the OSB and Japan businesses. We also seek growth opportunities in rest of Europe, Asia and rest of world, including Brazil.

Turning back to North America Interactive, we continue to be iGaming first. We're executing well in New Jersey where our shares surpassed 4% in February, well on our way to achieving our 6% to 8% longer term share goal. Ontario continues to progress and we're excited to launch in Pennsylvania in May. Overall, our iGaming business is generating positive returns and we are very optimistic about this. We also look forward to potential iGaming legislation in Rhode Island, as the bill was recently introduced into the legislature.

In summary, our goals for the remainder of 2023 include opening the Chicago temporary casino on time and on budget this summer. Raleigh, North America interacted in a profitable way, including increasing our iGaming market share. Launch OSB in seven states and in markets outside of North America. Harness our omni-channel data capabilities and grow the Bally’s brand globally. It is important to note that in addition to the above initiatives, we remain keenly focused on growing our revenues and EBITDA for our core Casinos & Resorts and our International Interactive segments.

Before turning to Bobby, I'd once again like to thank him for his leadership and contributions and wish him well in his next endeavor. Bobby, over to you for a review of our financial results.

Robert Lavan

Thanks Robeson. Moving to the segment details. For the quarter, we are pleased to have achieved strong results across all three of our segments, Casinos & Resorts, International Interactive, and North American Interactive.

We generated revenues of $598.7 million plus 9.2% year-over-year. Adjusted EBITDA of $126.4 million plus 10.2% year-over-year despite, higher rents in the quarter, and adjusted EBITDAR of a $157.6 million after accounting for rent expense of $31.2 million. Our adjusted EBITDA margin was 21.1% versus 20.9% in 1Q, ’22, and our adjusted EBITDAR margin was 26.3%.

Casinos & Resorts reported a $105.1 million of EBITDAR. This includes negative $800,000 of EBITDAR for Atlantic City. Excluding Atlantic City and Tropicana, which are lower margin properties, EBITDAR margins were 37.8% for the core portfolio. EBITDAR margins were 32% compared to 1Q ‘22 EBITDAR margins of 29.1% for all casinos and resorts.

Additionally, while most of the portfolio performed well, with strengthened our Rhode Island Properties, Atlantic City and Kansas City. Our results were negatively impacted by material weather disruptions in Tahoe. Similarly, towards the end of March, our Evansville property was negatively impacted by tornadoes, which struck the area. A cumulative effect of Tahoe and Evansville caused a $3.5 million shortfall at those two properties. Including the impact of both, we are still pleased with how Casinos & Resorts segment performed for the quarter.

International Interactive generated $80.2 million of EBITDA at a 32.6% margin. The UK was plus 9.6% year-over-year, and international as a whole was up 7.2% on a constant currency basis. Performance was driven by continued revenue strength in the UK, addition to content, marketing, and jackpot optimizations taking place.

As we mentioned in our last earnings call, we continue to invest in the business. This includes launching the Bally’s brand across Europe. Inclusive of this incremental spending our long-term International Interactive EBITDAR margin targets remain in excess of 30%. North America Interactive generated a negative $10.5 million of EBITDAR. We continue to be iGaming first and are very pleased with the performance year-to-date in New Jersey.

New Jersey is contributing over $1 million of profit contribution a month, and growing as we scale into certain variable cost service providers, lots of momentum here. Ontario continues to progress, but we are still tweaking certain aspects of the business, and we'll be launching Pennsylvania in May. Overall, our iGaming business is generating positive contribution margins, which we anticipate will continue to strengthen.

Turning back to sports betting, as we announced on May 2, and as Robeson, talked about earlier, we've partnered with Kambi and White Hat Gaming to power our online and retail sports betting business, Bally Bet. Bally’s intends to integrate these technologies into our proprietary database and marketing technology stacks. By transitioning to a leased based partnership model, we've reduced our fixed cost and will now operate under a much more economical variable cost structure, based on a percentage of net gaming revenue generated. This is more efficient model and will better position the company to manage our risk by limiting our expenses, while preserving our upside earnings potential.

Additionally, our restructuring program we announced in January has gone deeper and there are cloud and infrastructure costs that we have not cut yet that we can reduce with the signing of Kambi. Bally Bet is expected to re-launch across seven states in a four retail gaming locations by the end of 2023, beginning in the very near-term. We will also leverage these partnerships in the UK and Europe as well.

We continue to focus on profitability and cost cuts through our business segments, having incurred $16.8 million in restructuring charges in 1Q ‘23. The cuts were implemented quicker and deeper than originally anticipated, we’ve announced our restructuring plans for International and North American Interactive businesses earlier this year.

Today, we haven't seen any material change in consumer spending patterns at our Casinos & Resorts outside of the specific weather impacts called out for 1Q and a slight calendar shift in April. We do begin to witness a material change. We have a handful of levers we can pull to maintain a strong profile.

So, turning to guidance. With all the previous spoken, we are upgrading our guidance to tighten the range to $665 million to $700 million of EBITDAR. This reflects FX rates and our confidence in the strength of our business globally. It also considers our belief that the white paper released by the UK government, won't have any impact on our International Interactive financial results.

Corporate expense for the quarter came in $3.5 million higher than our expectations due to one-time cost and some carryovers from 2022. We do not expect this to be the run-rate, and you should look at the run-rate back down to $13 million to $14 million. We're reducing our 2023 capital expenditure guidance from $170 million to $160 million with maintenance CapEx at the casinos of $50 million, gross CapEx at the casinos of $70 million and we are lowering our software development cost projections for the year to $40 million. We continue to evaluate our software development cost and expect that to continue to shrink throughout the year.

During the quarter, we repurchased 1 million common shares for an aggregate purchase price of $19.8 million. Separately, we also went into the market and repurchased $15 million of our face value 2023 -- 2031 bond for $10.6 million. At the quarter's end, shares outstanding were 45.8 million and we have incremental warrants options and other dilution of 13.8 million shares. 59.5 million shares outstanding is the right way to look at our capital structure, with more than $344 million of cash on our balance sheet and $3 billion of net debt as of the end of the quarter. We have ample liquidity to fund all of our announced projects and will invest with care in North America. Our long-term commitment is to be sub five times debt-to-EBITDA, which we continue to expect to hit in mid-2024.

Lastly, as announced this morning, I'll be moving on for another opportunity. I believe in the value of the Bally’s story, particularly Chicago, our iCasino growth trajectory, and a unique way we look at sports and growth in the International Interactive segment, not to mention the untapped real estate value in our portfolio.

Thank you for your time and consideration, and I look forward to supporting Marcus and the rest of the team from the sideline.

Let's open the call up to Q&A, operator.

Question-and-Answer Session

Operator

[Operator Instructions]. Our first question comes from Barry Jonas with Truist Securities. Please go ahead.

Barry Jonas

Thank you. I'm going to start with the management transition. First off, Bobby, it's been a pleasure best of luck. Welcome Marcus, I guess I'm just curious what was most appealing about this role for you. And with that Robeson, why was Marcus, the right person for the CFO role? Thanks.

Marcus Glover

Yes. I'll jump in, Robeson, and share my enthusiasm and excitement and then pass it to you. Look, I think the best way to describe it is, spent considerable amount of time in the industry working with some of the larger companies and looking at the Bally’s story, the entrepreneurial spirit of the company, we're still a speedboat right now. And so, we can take advantage of opportunities by being a little more nimble. But I expect to come in and continue building up on the foundation that, Bobby has put in-place and look to bring the right mix of financial discipline and operational experience as well as corporate leadership during an important juncture for our company. So, exciting times and look forward to working with Robeson and the team and George, and being a strategic partner as we look to move forward and advance our strategies.

Robeson Reeves

Thanks, Marcus. And in my response, I want to say thank you again for, Bobby for everything he's done, without his support, we wouldn't have been able to make it through the transition and combination of these companies.

I'm very excited about, Marcus, joining. What I truly value in his abilities is his deep understanding of all the levers that you can pull within a casino operation, which can grow our business. Combining that with his financial acumen, and wide ranging knowledge, I see him as driving our growth across all areas of our business casinos, resorts, and interactive.

So, I'm delighted that it's on board and part of the team.

Barry Jonas

That that's great. And then just as a follow-up, Robeson, wanted to maybe talk a little bit more about the white paper. You know, I think the guidance the low end of the guidance improvement to some degree relates to the white paper, but curious to get your thoughts maybe short-term, long-term, what you see as the financial implications for Bally’s here.

Robeson Reeves

Well, the short-term, it's worth thinking about when the consultations will close. So, actually changes are likely to only occur to the propositions that we deploy in the UK in 2024. There will be a short-term impact on how players can engage with our offerings. But actually, the wider economic impact on the competitor landscape will keep on moving smaller operators away. So, I see this as short-term, tiny, tiny impact, low-single-digits, but actually we're already gaining share by people's sentiment from other operators almost pulling back in the marketplace today.

For long-term, this means the biggest operators will continue to grow, and I'm very -- I'm excited about getting the clarity of the white paper or so many times that the only way you can solve for growth, is by knowing all your variables in the formula and having a few constants. We've been provided with those constants when we have clarity. So, I'm excited about what the white paper brings for us in the medium and long-term.

Barry Jonas

Great. Thanks, everyone.

Operator

The next question comes from Jeff Stantial with Stifel. Please go ahead.

Jeffrey Stantial

Hi, good morning, everyone. I'll start by echoing, Barry's commentary and extend our congratulations to both Bobby and Marcus on their respective new roles.

Maybe starting-off on guidance, you talked about them tailwind, FX, some greater conviction and kind of the direction business trends are heading in. Can you just frame out a bit more of the decision to raise the low-end of guidance, but believe the high-end intact with some of those drivers in mind that you discussed earlier.

Robert Lavan

Yeah. I mean, Jeff, we only gave her full year guidance at the end of February, right? And so it's only May. You know, trends are moving in the right direction. So, we'll -- we're just going to take a more, conservative approach to upgrades early in the year. But, we are feeling very good with where things stand.

Jeffrey Stantial

Understood. That makes sense. Thanks, Bobby. And then moving to the North America Interactive side of things, restructuring efforts sounds like they're pacing quite nicely, you talk to some targets for go live under new partnership with Kambi, some say it's by year end. With all this in mind, just curious if you have any thoughts so far on what you think losses might look like next year? Should we expect a pretty significant step down from the 40% to 50% guidance for this year, as you shift more towards variable and like from fixed cost structure just any kind of color there on what you're expecting. I think transition on this actually would be helpful. Thanks.

Robert Lavan

Yes. I mean, Jeff, I’m, sorry. Go ahead, Robeson.

Robeson Reeves

No. Bobby, you close this one.

Robert Lavan

Yeah. I as we said, ‘24, we expect to close the gap. So, iCasino is moving faster than we thought. It's really going to come down to how much are we willing to invest in customer acquisition on sports, which as of right now we are looking at on a very conservative basis.

Jeffrey Stantial

Understood. That's helpful. Thanks, Bobby. I'll pass it on.

Operator

The next question comes from Chad Beynon with Macquarie. Please go ahead.

Chad Beynon

Good morning. Thanks for taking my question. And best wishes to, Bobby and welcome, Marcus, looking forward to working with you. Firstly, I wanted to ask about Tropicana given the news that we've heard about, some movement out there with Oakland Athletics potentially moving to a different site off the strip. Given that Formula 1, a number of other kind of non-gaming things, how does Tropicana fit into your strategy, either from an omni-channel standpoint or just an asset value standpoint? Thank you.

Robert Lavan

Sure. I'll take maybe the first part of that question. So, hi, Chad. So, the age story is going to play itself out. The way we view the property is, we feel we have low hanging fruit that we can execute. That's going to allow this property to pay for itself. So, kind of gives us the luxury to consider all types of development options including adding development partners long-term. We sit on a 35 acre site. We view it as one of the busiest work orders in Las Vegas strip. So there's a lot of interest in potential outside investment.

We're a disciplined company. So again, we have a long-term view on this investment and we're going to be patient about looking for the right project with the appropriate returns. And in the meantime, now we do view this as a benefit to our regional casinos, where there's an opportunity to drive some cost traffic or cost business to the property.

Chad Beynon

Great. Thank you. And then from a capital allocation standpoint, so you have essentially higher free cash flow estimates for the year with the higher EBITDA range and in the lower CapEx, it sounds like the projects are kind of as expected in terms of cost or maybe even a little bit lighter. So, as it relates to the repurchasing of the million shares in the first quarter, and the -- I'm sorry, [5 and 78] (ph) bonds. How should we think about further repurchases as we kind of move throughout the year given where the debt and equity is currently trading? Thanks.

Robert Lavan

Yes. I mean, we will continue to evaluate the best allocation of capital. You know, priorities from our perspective are, buying back shares, buying back debt, and Chicago, right? And so right now, we believe that the way that those three are set-up, we can do all three from a balanced approach. But we'll always continue to evaluate the market on a month-to-month basis.

Chad Beynon

Thanks, Bobby. Appreciate it all. Best luck.

Operator

The next question comes from Dan Politzer with Wells Fargo. Please go ahead.

Daniel Politzer

Hi, good morning, everyone, and Marcus welcome. And Bobby, wish you the best of luck on your next endeavor. First question, North America Interactive, just wanted to delve a little bit deeper there. How should we think how should we think about the opportunity for labor efficiencies as you transition, part of the tech sector to Kambi and White Hat. And, maybe in terms of timing or any anecdotes or data points you could provide there. And then further bridging to 2024, I mean, how should we think about, I guess, I know the ups that the guidance is effectively unchanged today, but as we think about rolling through this year and maybe upside in 2024, can you maybe help us think about the revenue upside as well as the cost component of it, that could drive higher profitability than where we're thinking today?

Robeson Reeves

Thanks, Dan. So, when I look at North American Interactive, we're taking a sort of double-end view here. So firstly, I'm going to touch on sports. So, we have reduced from a fixed cost model to really a variable cost model. There are some minimums that as, Bobby, indicated earlier, that we are now passing through. So now it's fully variable cost. With the Kambi, White Hat solution, the good way to model it is to think about i-costing in the mid-teens of NGR for sports. Now in iGaming also, we are throwing off positive gross profits.

Currently plus a $1 million and will continue to grow. I see us moving significantly forward. And as Bobby said, it's in our gift exactly what our estimates for our losses are in 2023 and then moving into 2024, it's all about getting the balance of revenue and loss. We will make these judgments as we go. Everything is going to be performance based. If it means that we should be spending more money now to grow the revenues for longer term profitability, we will do that and we will analyze this deeply. I believe that we should constantly be assessing. But our structure is now in the right place, so that we can actually rent before we have the option to buy as we made clear with that can be built. We have the option to bring that technology in-house when we reach sufficient scale. So we can continuously maintain good margins and convert our revenue into a profitable business. Hopefully that gives you some of the guidance there, Dan, that you're asked.

Daniel Politzer

And yes.

Robert Lavan

Robeson, let me just -- let me put some numbers around it. So, Dan, if you look at New Jersey, we've gone from zero to $5 million of NGR in about 15 months -- monthly. Ontario just crossed a $1 million. We launch in Pennsylvania, and so those are kind of, the three sort of primary iCasino states for us. Those businesses continue to grow. New Jersey, is generating more than a $1 million profit a month, and the cost base of that is fairly fixed.

On the sports side, right now, we're still burning a $1 million on sort of sports infrastructure before even access. And so the faster we roll out Kambi, the faster we can shut down 1.0, because 1.0 takes a significant amount of legacy, cloud cost or some people cost that we haven't restructured yet. There is some just office space, things like that. So the faster that Kambi is rolled out and the faster that the iCasino grows, the gap closes very quickly. And so you can go and do the math, where we're on a 4% market share in New Jersey. We're projecting that we'll get to 6% to 8%, apply some of that to Pennsylvania and Ontario, and you can get to our iCasino numbers in ‘24.

Daniel Politzer

Got it. That's really helpful. Appreciate the color. And just for a follow-up on Illinois on the brick and mortar side, there's been some reports that there could be a possibility of VGT is down the road. I mean, if you can kind of frame out how you think about the likelihood of that legislation or the impact to the temporary versus permanent casino. And maybe if there was any kind of provisions in your contract there that would give you a little bit of cushion.

George Papanier

Sure. Dan, I'll take that it’s George. Well, in our opinion, it would not make economic sense for the city from a tax perspective. Certainly not a job creator and could argue would have negative effect on union jobs. But in any event, it's something the new administration really needs to evaluate. The distinguishing factor is, we're building a fully integrated destination casino, and they're completely they have a completely different experience. From a Chicago temporary impact, I mean, it's not an imminent thing. It's not happening overnight, so we'll be able to ramp-up that operation, build significant database in the market, but the unique differences between iCasino and VGT is they're not really allowed to capture or use a database to market. So, it's really a completely different type of experience. And then we don't think it's the same customer at all.

Daniel Politzer

Got it. Appreciate all the color. Thanks.

Operator

The next question comes from Lance Vitanza with TD Cowen. Please go ahead.

Lance Vitanza

Hi, thanks guys. Most of my questions have been addressed, but congratulations on the quarter. I guess just to sort of return to the question of the balance sheet. And you repurchased stock at close to $20 per share, which I appreciate, but the stocks below $16 this morning you finished the quarter with a lot of cash, and you said you have more than enough liquidity to fund your planned expenditures, you beat on the quarter, you improved your guidance and yet the stock is down again. So, the question is, why would Bally’s not be in the market this morning buy more shares?

Robert Lavan

Well, there's a technicality on why we're not in the market this morning, which is you have a blackout window to a certain point of time. But we will continue to buy-back shares, buy-back debt and invest in Chicago as directed by the Board.

Lance Vitanza

Okay. And then maybe just back on the Tropicana and Las Vegas. How would you describe the status of that property today from the standpoint of cash flow, investment, etcetera. I know obviously the future is up in the air. But what's going on there today?

George Papanier

Yes, sorry. This is George, Lance. So I think I touched on that a little bit. We review the property based on the current rate of cash flow, and there's some low hanging fruit that, we kind of been in a little bit of a suspense state to see the -- see how the [ace] (ph) story plays out, that we could literally fund the carrying cost of that property. So from that perspective, that's where I went back to talking about the luxury of time to really develop this thing right. And we're going to look at the right project with the right -- great returns.

Lance Vitanza

Could you could you help us quantify those carrying costs that you mentioned?

George Papanier

Sure. Bobby, could correct me if I'm wrong, but it's about $20 million.

Lance Vitanza

Thank you.

Operator

The next question comes from Jordan Bender with JMP Securities. Please go ahead.

Jordan Bender

Great. Thanks for taking my question. I want to start on the release from last night, just on the potential for an IPO in Chicago. Is there anything to kind of share on that if you can share. And would that impact the ability to sale leaseback that property or I guess, any other properties within your portfolio? Thank you.

Robert Lavan

So, I don't want to get in front of, there's a turning gun jumping. So we'll be quiet on the IPO, but we have said publicly that we would IPO 25% of Bally’s Chicago, the -- nothing restricts sale leaseback. We actually -- we already have a sale leaseback on Chicago. And, we do believe, once the Chicago project is up and running, we could evaluate a significant sale leaseback to bring the whole balance sheet to finality.

Jordan Bender

Okay. And then just on my follow-up, the timeline on the 6% to 8% market share in New Jersey. I guess, how should we think about the bridge between your current share and that long-term share? Thank you.

Robeson Reeves

I think that we should consider the 6% to 8% is where we will get to over the next 12 months to 18 months.

Jordan Bender

Great. Appreciate it. Thanks guys.

Operator

The next question comes from Ricardo Chinchilla with Deutsche Bank. Please go ahead.

Ricardo Chinchilla

Hi, guys. Thank you so much for taking my question. I was wondering if you could provide the regulatory EBITDA and regulatory leverage at quarter-end. And if you could please comment a little bit more on your willingness to buyback bonds versus stock acknowledging that there's finite cash and limited restricted payments capacity and both require, the use of restricted payment capacity and cash. You guys previously mentioned that you were spending a $100 million in share repurchases, is now -- is that amount going to remain? If you guys think that it makes more economic sense to buyback that? Any color on your willingness to on those buybacks would be very helpful.

Robert Lavan

The regulatory EBITDA is $673 million against $3.406 million of gross debt. As we've said, we continue to evaluate our book regularly. We think that there's a balance approach to repurchasing shares, repurchasing debt, and investing in Chicago.

Ricardo Chinchilla

Thank you. And moving to the North American Interactive segment. Now do you have in-place that deal with Kambi and with White Hat, does this mean that you guys eventually would stop developing your own technology solution, or is it just to contemplate into the future you’re seeing developing this technology? Any color on what would be the best way going forward, would be helpful.

Robeson Reeves

So Kambi and White Hat will provide us with a platform and sports betting solution. There's still a requirement to deliver fantastic iCasino and marketing data. The biggest opportunity I see is actually harnessing our omni data capabilities across both retail and interactive. So we'll definitely be investing in that space, because I see that as the pure accelerant to bring all of our operating businesses together. So, we'll invest in making sure that we become omni-channel. But we won't have to invest in sports, when it costs a lot towards the variable cost structure, or in the pattern to get live into many states before the revenues really start flowing. Yes, we will continue to invest in technology. Technology will allow us to grow in the long-term.

Ricardo Chinchilla

Perfect. Thank you so much for taking my questions, and best of luck to you, Bobby.

Operator

It appears we have no further questions at this time. I will now turn the program back over to CEO, Robeson Reeves. Please go ahead.

Robeson Reeves

Thank you everyone for your time. We will speak to you all very soon and all the best, Bobby. And I'm glad we had a strong quarter. So, thank you for listening. Bye-bye.

Operator

This does conclude today's program. Thank you for your participation. You may disconnect at any time.