Good morning and welcome to this Valleys Corporation Investor Call. After the prepared remarks, there will be a question and answer session. Session. I would now like to call turn the call over to George Papaneer, President and Chief Executive Officer of Valleys. Please go ahead.
Well, thank you, operator. Good morning, everyone, and thank you for joining us on today's call. We're delighted to take this time to provide some additional color on today's announcements, and we appreciate you joining us. On the line with me today is Sinclair Broadcast Group's President and Chief Executive Officer, Chris Grippley BetWorks' Founder and Chief Executive Officer, David Wang and Bally's Executive VP and General Counsel, Craig Eaton. As a reminder, we have posted to the Investor Relations section of our website the deck that we will refer to on this call and the press releases outlining the announcements.
Now I'll turn it over to Craig to briefly discuss forward looking statements before we get started. Craig? Thanks, George. Before we begin, we would like to remind everyone that comments made by the management teams 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 press releases and SEC filings. During today's call, the management teams will refer to certain non GAAP financial measures. Reconciliations to the most comparable GAAP financial measures are included in the schedules contained in our presentation. I'll now turn it back over to you, George. Thanks, Greg.
So with that, let's start with slide four. Today is a truly pivotal moment for the evolution of our company, as we have made two exciting announcements that together, we believe will revolutionize The United States gaming and media industries. So on Vetworks, we are pleased to announce that we have entered into an agreement to acquire 100% ownership of Vetworks Corp. For $125,000,000 subject to customary adjustments. Half of the purchase price will be paid in Bally's common stock, which BetWorks shareholders have agreed to hold for at least one year.
BetWorks is a premier US regulated sportsbook technology platform provider to operators in New Jersey, Iowa, Indiana, and Colorado. Its proprietary tech stack and turnkey solutions including marketing, operations, customer service, risk management, and compliance. Vetworks technology is GLI 19 and GLI thirty three certified and uniquely positioned for the regulated US market. In addition, BetWorks' proven expertise as a B2B provider of player account management and sports betting technology will transform Bally's into the premier full service vertically integrated sports betting and iGaming company in The United States with a B2B2C business model. Our B2B2C model will enable us to develop new and unique products, improving our offering to consumers, execute on new innovative solutions, and most importantly, provide the necessary liquidity required to deliver engaging offerings to our player base.
The acquisition also provides us with a suite of advanced omnichannel products, platforms, software, and content solutions to advance our sports betting and iGaming capabilities. Moreover, Vetworks' veteran trading and risk services cover every corner of the sports betting world, maximizing margin and profitability. Owning Vetworks' superior technology platform will give Valleys a long term margin advantage online, and allow us to adapt our innovative product suite to go where sports betting and iGaming customers are headed quickly. Specifically, we expect to receive a margin advantage of approximately two to four percentage points for owning BetWorks player account management technology and approximately eight to 12 percentage points for owning its sports gaming engine. The acquisition is subject to regulatory approval and we expect it to close in the first quarter of twenty twenty one.
Importantly, Vetworks founder and CEO, David Wang, along with his team of 130 employees, including 90 engineers, will join Valleys and lead our new interactive division. David and his team have built Vetworks into a great business, and we are very glad to have them on board. We look forward to working together to bring this technology to to our over 14,000,000 active customers, and will experience Valley's Casinos and Valley's Interactive as a unified brand with a single player card and reward systems. I'd like to take this opportunity to formally introduce BetWorks founder and CEO, David Wang, who will provide some additional color. David?
Thank you, George, and hello, everyone. First and foremost, I am thrilled to be joining the Valley's team. BellWorks had a number of opportunities in terms of combining with gaming and entertainment companies, but Bally's was by far the best fit. Bally's tremendous brand, strong balance sheet, portfolio of successful casino operations, and significant market access across the country were extremely appealing to us. In addition, Sally's exceptional regulatory expertise, large database of 14,000,000 customers, and recently added strategic partnership with Sinclair, which will provide access to approximately 70% of the total US households, will allow us to challenge major operators in this space.
I'm also excited to create new and innovative sports betting products for Bally's and apply BetWorks' proven expertise as a b to b provider of player account management and sports betting technology to Bally's b to c arena. Finally, I look forward to driving Valley's Interactive's growth and expansion in the fast growing US sports betting and iGaming market. Valley's Interactive offerings and our associated properties will help shape how sports entertainment is defined for years to come and ensure we maintain a leading position in the B2B sector. George, back over to you.
Thank you, David. So we could not be more pleased to welcome you and the entire Vetworks team to the Valley's family. Welcome again. So building on David's comments, we're also thrilled to announce that we have entered into agreements for a long term strategic partnership with Sinclair Broadcast Group that will combine national leaders in sports broadcasting omnichannel gaming. Sinclair is, of course, a diversified media company that owns a leading portfolio of regional and national sports rights and assets.
As a result of this partnership, Sinclair will provide superior regional and national integration and content creation opportunities for Valleys across its linear and digital assets, enabling us to create an unmatched sports betting experience for millions of customers. Together, we will rebrand Sinclair's twenty one Fox RSN brands under the iconic Valleys name. Under the terms of the agreement, Sinclair will receive penny warrants to acquire 14.9% of Valley's common shares as well as warrants to purchase up to a total of an additional 10% of Bally's common shares contingent on the achievement of various performance metrics. Conclear will also receive options to purchase 5% of Bally's common shares in four tranches, which purchase prices start at $30 per share and escalating to $45 per share, exercisable after four years. Over the ten year term, Sinclair RSN portfolio will also receive annual naming rights fees and a committed percentage of Valley's interactive marketing spend.
Turning to slide five. We'll now provide an overview of how Valley's corporate structure will evolve as a result of these transformational announcements. So turning to Slide six. As we announced in our press release last night, Valleys Corporation will now have distinct operating divisions, Valleys Casinos and Valley Interactive. Valleys Casinos will comprise our physical casinos and land based operations, while Valleys Interactive will include new and existing contracts for sports betting and iGaming, including all of BetWorks sports betting operations.
This revised structure will better position us to pursue lucrative opportunities in new and attractive markets in the fast growing U. S. Sports betting and iGaming industry. Let's turn to slide seven. Over the past few years, we've engaged in strategic and opportunistic expansion of our gaming and entertainment operations, even amid the COVID-nineteen pandemic.
With the recent closing of Valley's Atlantic City, our physical property portfolio now includes 10 casinos across six states. When all pending transactions are completed, our geographic reach will expand to 14 casinos across 10 states, with additional states expected to come. We will also have live sporting betting operations in six states, which currently account for approximately 80% of the total U. S. Sports betting revenues, with a strong database that will include approximately 14,000,000 customers.
Clearly, we are a proven buyer with sellers, given our ability to close during the most difficult times. We've been able to acquire and integrate casinos because of our strong balance sheet coming into the crisis. The land bank of assets that we have just begun to tap and return to positive free cash flow in Q3 twenty twenty. Just the last year, we have expanded into seven additional states. We have really achieved explosive growth and we are just getting started.
Turning to slide eight. Through these transactions, we will achieve seamless player card integration between land based and digital play, enabling us to have a 360 degree view of our offerings, thereby enhancing the player experience. Importantly, we also have the ability to provide advanced bonuses and rewards along with new and unique promotional opportunities. Our omnichannel strategy will allow us to significantly expand our strong player database, while capturing all key demographics and enhancing engagement with players across different channels and mediums. Turn to slide nine.
Our vision is to become the premier full service vertically integrated omnichannel US gaming company with a b to b to c business that integrates physical casinos and online gaming. In just a few short years, we have evolved from a regional casino operator to what we believe to be an undisputed national leader in gaming and entertainment. And these announcements further advance our goals and objectives. Turn to Slide 10. We look forward to the road ahead and are confident that we have all of the ingredients to achieve our vision and deliver significant long term value for shareholders.
First, on our capital. We continue to maintain strong liquidity, a considerable unencumbered real estate portfolio and a conservative balance sheet with one of the lowest leverage profiles in the gaming industry. Along with historical strong free cash flow generation, the combination has allowed us to be opportunistic in our objectives for growth as an omnichannel provider of brick and mortar and interactive gaming and entertainment to a large and growing customer base. In terms of market access, as I mentioned earlier, we have engaged in strategic and opportunistic expansion of our gaming and entertainment operations. When all pending transactions are completed, our geographic reach will expand to 14 casinos across 10 states, with additional states expected to come.
We remain disciplined in our approach to evaluating M and A. Our player database will have approximately 14,000,000 customers, a strong foundation on which to build our future sports betting and iGaming services. Upon closing the BetWorks acquisition, we will have an opportunity to participate in all states where we own a property or have market access, with our own unique sports betting and iGaming operations, subject to regulations. Vetworks also has contracts in place to operate in 11 more states, subject to regulation. In terms of local access and regulatory acumen, we retain a unique local touch across our operations.
In addition, we have deep knowledge of the markets and regulatory landscape across the regions with which we operate. As you know, we recently acquired the iconic Valleys brand, which is synonymous with U. S. Gaming and entertainment and commensurate with the premier properties and amenities in our portfolio. We will be undertaking a comprehensive national rebranding initiative by which we will unite our high quality customer offerings and future mobile and online sports betting and gaming initiatives under the Bally brand.
By acquiring Bally's proprietary tech stack and turnkey solutions, include marketing, operations, enhancing our competitive position within The US gaming and entertainment industry. Finally, our partnership with Sinclair will provide us with immediate national brand recognition that will support the development of our player database, which I mentioned will include roughly 14,000,000 customers. The regional structure of Sinclair's networks will also allow us to market, design, and integrate products on a state by state basis, deliver one of a kind online gaming experiences through bespoke offerings tailored to local audiences. Importantly, Sinclair's twenty one Fox RSN brands will be rebranded using the Valley's name. When you combine all of these elements, we feel we have really transformed what was already a highly successful company and created new and significant opportunities for long term value creation.
Turning to Slide eleven. We believe the market opportunity in U. S. Sports betting and iGaming is large and rapidly growing. Through our long term strategic partnership with Sinclair and the acquisition of Betworks, we believe that we are very well positioned to capture a significant share of the fast growing U.
S. Sports betting and iGaming market. According to research by the major investment banks, as well as our estimates, The U. S. Sports betting and iGaming market is expected to grow to $12,000,000,000 by 2025 and reach $50,000,000,000 in maturity.
I will now turn it over to Chris to provide some additional color on Sinclair and our partnership.
Thanks, George. Turning to slide 13. Sinclair is a leading and diverse portfolio of media assets across TV stations, tennis channel, RSNs, national networks, and streaming assets. Combined, the RSNs and broadcast stations reach 70% of US households. We are one of the largest owners and operators of TV stations covering 88 markets, and we have affiliation agreements with all the major networks and a leading news organization with over two thousand five hundred hours of local news content produced each week.
We have the largest portfolio of RSNs, 23 RSN brands in total, covering 45 professional sports teams in MLB, NBA, and NHL. We have Tennis Channel, which is a linear and digital network covering all things tennis and tennis lifestyle, with rights to 96% of the live tennis on US television. We have Stadium, a sports focused linear and digital network that produces unique original sports studio content and has rights to numerous division one conferences and secondary professional sports leagues. We also have many digital platforms, including STIRR, our free ad supported streaming platform that has over 100 channels and a unique locally focused channel, STIRR City. STIRR combines access to local and national news, sports, movies, and entertainment both on a live and on demand basis.
Turning to slide 14. Our RSNs are the largest portfolio in The US, reaching tens of millions of subscribers in 17 of the top 25 DMAs across three networks, including YES, Marquee, and the 21 RSM brands which we plan on rebranding with the Valley's name. Sinclair is the exclusive provider of local sports content to more than half of The US MLB, NBA, and NHL teams. And we have long term rights with these teams with a weighted average remaining life of ten years. Sinclair's massive RSN distribution footprint provides viewers with over 4,600 games and twenty four thousand hours of new content per year.
And we have significant shelf space across our footprint to air new content that can drive calls to action for Valleys, deliver studio shows focused on sports betting, and instructional videos. Turning to slide 15. Our broadcast portfolio includes 190 TV stations covering 88 DMAs across The US. Some of the most popular content including Big Four affiliate coverage to all major professional leagues, college sports, and temple events. Many of our stations are award winning for their quality reporting and are the go to source of local news and sports with trusted talent, producing over two thousand five hundred hours per week of local news and having the most significant sporting events on television.
Furthermore, they have a significant digital presence with over 100,000,000 average monthly uniques on their sites and mobile apps. Slide 16. Tennis Channel is all things tennis sports and tennis lifestyle through Tennis Channel, Tennis dot com, Tennis Magazine, TC Plus, and Tennis Channel International. It has comprehensive coverage rights to 119 live tournament events representing 96% of all live tennis on US television, including the ATP, WTA, ITS, and Grand Slams. There's always a match to watch and bet on.
It has a prime audience for sports betting as the fastest growing US cable network among adults eighteen to forty nine and twenty five to fifty four. Sports betting is an integral part of the tennis culture globally, with tennis being the second most balanced sport in the world. Stadium is a 20 fourseven coverage, has 20 fourseven coverage of breaking news and highlights across all collegiate and professional sports. It reaches 19,000,000 linear households and 40,000,000 OTT households and is experiencing rapid growth. It has an efficient and award winning content production capability that will provide exciting opportunities for Valleys to deliver unique sports betting focused studio shows.
Turning to slide 18. George covered some of these points in the beginning, but I will provide a little bit more detail on our partnership. In terms of the commercial arrangement, this is a ten year term with mutual options to extend. Valleys will integrate content into Sinclair's broadcast stations and sports networks, tennis channel, and our digital assets. Furthermore, our stadium network and programming will also integrate with the Valley name and content.
Our RSN portfolio, currently branded as Fox Sports, will be rebranded using the Valley name. Over the ten year term, Sinclair's RSNs will receive annual naming rights and a committed percentage of Valley's interactive marketing spend. As we dig into more detail later in the presentation, Sinclair and Valley's will co develop apps to create additional monetization opportunities and content offerings. The agreement also provides flexibility for Sinclair to monetize its assets with other gaming operators and for Valleys to grow media with other partners. As George noted upfront, a hallmark of this transaction is strong economic alignment between Sinclair and Valleys.
Sinclair will receive penny warrants to acquire 15% of Valleys common shares, as well as warrants to purchase up to an additional 10% of Valley's common shares contingent on achievement of various performance metrics. Sinclair will also receive options to purchase 5% of Valley's common shares in four tranches, with purchase prices starting at $30 per share and escalating to $45 per share exercisable after four years. Now I'll turn it back to George to cover slide 19.
Thanks, Chris. Let's turn to slide 19. This transformative partnership combines leaders in sports broadcasting and omnichannel gaming to create what we believe is an unmatched sports betting experience for millions of customers. By leveraging the expansive reach of Sinclair's leading portfolio of regional sports bet networks, stations, tennis channel and other digital assets, we will now be able to reach viewers across national, regional, and local platforms on an unprecedented level. Importantly, we gained the ability to engage directly with local sports fans, the single most desired audience for sports betting.
We will also have national integration opportunities across Sinclair's linear and digital assets with the ability to customize marketing programs at all levels. We expect to deliver an enhanced customer experience that will increase viewership and fan engagement, effectively attracting and retaining customers to the Bally's interactive platform. Partnership also provides us with immediate national brand recognition that will support the development of our player database, which will also include roughly 14,000,000 customers delivering significant shareholder value. Finally, this partnership is fully aligned, both strategically and economically. And Sinclair will own a minority stake in Valley's Corporation as we work together to deliver unrivaled sports betting and iGaming offers on an unprecedented level.
Now I'm going to turn it back to Chris.
Thanks, George. Turning to slide 20. Our national, regional, and local linear and digital platforms will allow Ballet's to customize its marketing strategy specific to local fans and preferences or reach the masses. 21 of our regional sports network brands covering over 40 professional sports teams that are currently branded Fox Sports will be rebranded using the Valley's name across all linear and digital properties. In addition to our RSNs, our local broadcast TV station networks covering almost 40% of The US TV households, will provide Valley's additional opportunities to be integrated into the local sports conversation nationwide.
As our integrated partner, Valley's will have access to our national networks and platforms, which include Tennis Channel, Stadium, and STIRR that complement Valley's local marketing strategy. Focusing on the map, following Valley's acquisition, they will have market access in 10 states, of which six are covered by one of our RSNs. With the regionalized rollout of sports betting legalization, state by state advertising is essential for customization and reaching targeted audiences in sports betting markets, and we bring that in spades. Our portfolio of assets do just that. And as Valleys continues to execute on their market access strategy and as legalization continues to roll out, we will be able to leverage an increasing amount of our assets as it relates to sports betting for the benefit of Valleys.
Slide 21. We believe that gamification of live sports will enhance the fan experience and drive engagement and viewership across Sinclair's linear and digital properties. This gamification experience or real money will create a virtuous cycle of gaming driving viewership, driving more gaming, and so on and so forth. Survey data confirms that sports bettors watch more sports than non bettors, and they also follow more teams. Additionally, the demographic with the most interest in gaming is adults ages 18 to 24 and 25 to 34, the most valuable demographic from a media perspective.
Across this demographic, a staggering 60% are interested in sports betting. Slide 22. New and enhanced content across Encelair's linear and digital properties, including jointly developed game focused content, will significantly enhance the viewer's experience with gaming content with their favorite local teams and players, free to play games allowing viewers to compete with an opportunity to win unique local prizes in a screen environment, and the ability to interact with local talent and connect with other local fans across digital and social platforms. Slide 23. We are excited for Bally's to be our exclusive integrated partner across our linear and digital sports properties in markets where they operate.
We believe by integrating Odds and other sports betting content and insights into our programming across the local TV stations, tennis channel, and the RSNs, and by providing innovative ways for our audience to interact with our talent, we will enhance the viewer experience. A key initiative we are working on is our new sports app that is intended to give viewers a more dynamic and personalized viewing experience. As part of the naming rights, Valleys will be branded across our new app we plan to launch in the spring. The increased functionality of the app will allow for greater inactivity and a superior viewing experience. Additionally, we're very excited to work with Valleys and leverage the technology of Vetworks to deliver a more gamified experience and sports betting activities for viewers in a best in class mobile and digital environment.
Slide 24. The combination of the assets and capabilities that Sinclair and Valleys are bringing to the table will create an unmatched consumer experience and will efficiently attract and retain customers to the ValleyBet platform. We think this partnership is a big win for local sports fans and will drive audience and audience engagement. Wagering increases time spent on linear and digital platforms. In a recent study, approximately 50% of RSN subscribers noted that they're much more likely to watch games if betting is allowed.
Action on the game, either free to play or real money majoring, will drive TuneIn. Our integrations do not exclude the teams and leagues from striking their own marketing deals. There is plenty of room in the category for various deals with different parties. With Valley's land based footprint and ability successfully execute accretive acquisitions, Valley's has been able to secure select market access partnerships with other major online gaming operators. Valley's is supportive of us engaging with such partners on other marketing opportunities on our assets.
The partnership will integrate Valleys into the local sports conversation, which will drive efficient customer acquisition and retention while enhancing the overall viewing experience for our users. Now I'll pass it back to George to close.
Thanks again, Chris. So let's turn to slide 25. Now I thought it would take a moment to recap highlights of the BetWorks and Sinclair agreements. Through these transactions, we believe Valleys will become the premier full service vertically integrated sports betting and iGaming company with B2B2C business enabling us to capitalize on lucrative opportunities in the fast growing U. S.
Sports betting and iGaming industry. Betworks and its proprietary tech stack and turnkey solutions will provide us with a suite of advanced omnichannel products, platforms, software, and content solutions. Through our partnership with Sinclair, we'll have the ability to reach and engage directly with local sports fans, the single most desired audience for sports betting. As we have said, we are strategically and economically aligned with Sinclair, as they will receive a minority stake in Valleys Corporation. We look forward to partnering with Sinclair to create unrivaled sports gamification content on a national scale.
Today's announcements represent the latest step in our long term growth, development and unification strategy and advance our recent accomplishments by positioning us to deliver significant long term value creation for our shareholders. We hope to get out on the road virtually of course over the next couple of months and provide further updates. We will now open up the call for any questions. Thank you. Thank you for your time.
Your first question is from the line of Barry Jonas with Truist Securities.
Good morning and congratulations guys. I'd like to start with getting a sense of what sort of market share expectations or maybe aspirations do you have now as you think about the sports betting and iGaming opportunity? Thanks.
Sure. This is George. So we developed a range of expectations for sports betting and iGaming. But I think safely, we could take an average of 10% of market share.
Great, great. And George, how are you thinking about customer acquisition cost strategies? I guess more directly, how much losses will you be willing to tolerate for Valley's Interactive?
Well, let me start by saying, as a result of having 14,000,000 physical customers in our database as a result of our regional portfolio of assets, we believe that our customer acquisition cost is going to be less than some
of
our competitors. So we think that there's to be certainly some margin improvement as a result of that. I can tell you kind of the range where we believe those acquisition costs will be. We think we'll be in the less for conversion of our physical customers, but we'll probably wind up being in the about $300 range per customer.
Great. And then just in terms of, overall, you know, losses, of any expectations, know, what the path how long the path profitability could be?
You know, we're we're obviously requiring a tech stack provider that's already been providing to a few states. So they're relatively self contained as far as profitability. And we're just going to be adding to their opportunity to expand our markets where we're going to be able to provide access to those markets. So they'll be continuing to focus on their B2B, but also on the B2C as it relates to the access new markets that we're currently in.
Okay. Great. And the last one sorry. Go ahead. I'm sorry.
This is Chris. I just wanted to point out one of the one of the reasons that we found Valley such an attractive partner is they produce significant free cash flow on an annualized basis, which could be used to find this interactive opportunity. And and so we'd expect very full dilution going forward as as as this platform gets filled out.
Great. And I guess last for me, does Sinclair plan to pursue gaming licensing now or down the road?
No, that's not in the cards for Sinclair. We have this as a passive for us, and we're counting on Valleys to be our licensed partner.
Thank you.
Your next question is from the line of John Genides with Wolfe Research.
Thank you. Good morning. Two two for Chris. Chris, first, with the transaction touching all of your properties, how did the economics flow between the stations and Diamond? And then separately, you're in carriage negotiations with a couple of distributors for Park.
On a practical level, do you think this transaction has any impact on those discussions?
Okay. Yeah. So there are streams of payments, going to the RSNs that I noted, the naming rights fee and also a very significant, marketing commitment, which will go against the RSNs. And then the equity that I mentioned is the compensation for the overall deal and the other properties that are involved in the transaction. And in terms of our pending negotiations around distribution, I think that absolutely will be a factor.
As I mentioned, it is a proven phenomenon, not only from research, but also markets overseas that have legalized that that gaming, and in particular, real money sports betting, creates a virtuous circle of, of viewership. More gaming creates more viewership, creates more gaming, which creates more viewership. So, you know, this is is going to be a huge megatrend in sports, washing through and and ultimately making, sports and sports rights more valuable.
Thank you.
Your next question is from the line of Dan Kurnos with The Benchmark Company.
Great, thanks. Good morning. You guys talked about co production here. Is there any more color you guys can provide us on investment from both parties, around either content and or app development, sort of quantity of apps or where we might find those falling. Of, you know, on focus getting
the DTC app so you have that Already, you know, we already have significant amount of of content and and studio shows. We'll just now be integrating Valleys. We're already creating a brand new state of the art digital platform, which is due to launch in the spring, which will house our direct to consumer offering that you referenced. And now we will just we'll roll in valleys, and we'll we'll roll in more features, focused on sports betting and and sports betting information. So, we don't expect significant incremental cost here, and it really just leverages everything
that we're already doing today.
And if I could follow-up on the advertising piece because I think there's a little bit confusion out there, in terms of the interactive spend. Is there any inventory either being given, at the broadcast level and or the RSN at either a discounted rate? Or, is there any incremental inventory freed up, or is it all just integration around ancillary programming, new programming you might create, and Valley is, spending incremental advertising dollars at the RSN level to promote the entire product?
Yeah. So there there is no, advertising given away, per your question. There are Valleys will be integrated into pregame game and and postgame, content and and then has committed to spend and to buy additional advertising through those time periods to to to create the calls calls to action. So it's it's it's all incremental from from our perspective.
Alright. Perfect.
Thanks very much, and congratulations, guys. Thank
you.
Your next question is from the line of John DeCree with Union Gaming.
Good morning everyone and congratulations again on assembling this partnership here. Mike, I have one question related to Slide 18, perhaps for Chris and George, maybe separately. I think the second to last bullet talked about the flexibility of each partner to either, I think, monetize some of your assets, Chris or or Valley George, to use some other media partners. Maybe, Chris, if you could talk about what what that might entail anecdotally, what that might look like, and and George, same for you, how you could use other media partners potentially?
Well, I think the spirit of this transaction is that we are picking each other as our primary and preferred partner. You know, us it valleys to us for for sports betting and and then vice versa for for media. There's a recognition that this is a big space. Valleys won't be able to buy all of our ad inventory, and so there are no restrictions on us doing sales and partnerships with other sports betting partners. In terms of and for Bally's, you know, and and we're not in every single market that we're in most markets.
Valleys can certainly do other media partnerships as well.
Yeah, so John, Chris touched on what I was going to say is currently, once our pending transactions are completed we'll be in 14 we'll have 14 casinos in 10 states. Currently there is some overlap. So obviously in the overlap with some players RSNs we'll take advantage of that which I believe initially will be Mississippi, Missouri, Louisiana, Nevada, Indiana, and Illinois. So we're gonna continue to focus on expanding into opportunities in states that we're currently not in. So, you know, they're free to continue to evolve their business as as we are.
That's that's helpful. That clarifies it. Thanks, Scott. David in here. Pending the timing of of a reasonable timeframe would be before we see maybe a Valley branded sports betting app actually be able to get live?
Is there a target state or jurisdiction that you'd look to get going in first?
Yes, so I'm not gonna speak to the technical aspects, I can tell you our thought process is about Q2. We will be in, let's say, four of the six states, New Jersey, Colorado, Iowa, and Indiana. There's other states that we're working on to participate in. So we're gonna move very quickly.
Your next question is the
for taking my questions. Chris, maybe a couple. First, I just wanted to be clear on the economics. So there's the naming rights and the marketing commitment and the viewership upside. Is there a revenue sharing arrangement as well on the sports betting?
Or does the equity stake kind of take the place of potential revenue share? And will that stake be held at the TV station level or at the diamond level of Sinclair? And then also, Chris, I was just wondering if you could speak a little bit to the agreements with the teams. I think you've always kind of got a kind of rolling basis of team renewals. Do you think it's going to change the way that they look at the value of the RSNs, the way they look at kind of a cost or revenue share as well as how you and the teams might think about opportunity going forward.
Thanks.
You might be on mute, Chris.
Oh, sorry. I was on mute. Thank you. So lots to cover there. This is a a system wide deal, that, includes all of our export outlets, which, you know, are quite significant, outside of the RSNs.
And, and and you were right in in your, your statement that there are there is no explicit revenue share. We've we have solved for that part of the equation, via the, the ownership, significant economic alignment there.
Yep.
And and the equity will sit at SBG. And then in terms of the your question around how the teams will view it, Look, I think this is a if you ask any of the leagues, you talk to the teams, they're very excited about sports betting because it creates more engagement. And at the end of the day, that's what drives value for teams. They are engaged fans. And and then furthermore, you know, most of the leagues have, sports betting, authorized partners, which, you know, get them a direct stake in the handle related to their sports.
It's a win win for everybody.
Great. Thank you.
Your next question is from
the line of Jordan Bender with Macquarie.
Good morning. Thanks for taking my question. Can you talk about the performance metrics for Sinclair to acquire the additional equity and then any time for those metrics?
Sure. So, the metrics are around Valley Bets
first time depositors,
and, you know, we have not disclosed Nothing will be easily achievable with the
Okay. And then, George, your omnichannel approach, what percent are those?
He had a conversion rate of about 10%.
Alrighty. Thanks for the color. Thanks, guys.
Thank you.
Your next question is from
the line of Patrick Barrett with Octagon.
Hi guys, congratulations. Wanted to ask about the app and curious to know if the end state or a future ambition for the app is to have in game wagering that is, you know, alongside viewing, like, an iPad or on a smart TV. And if so, you know, how do the, the RSN agreements with the teams and the leagues, you know, allow for that? I mean,
you have be in market. You have to have
a cable subscription. Can you describe how you expect that dynamic might evolve?
Sure. So, look, the the the overall vision, which this is a keystone component of, is is to gamify sports. I talk about this a lot, but it's you know, to to say it in in as brief as briefly as we can is is to make watching sports like playing a video game. We think this will, dramatically increase the attractiveness of sports engagement, especially from the younger generation. As I noted, 60% of all eighteen to thirty four year olds are interested in sports betting, and and a lot of that's, you know, driven by their, connection to to video games.
And so, being able to watch and play is is and and making that, you know, ultimately, we wanna make that a single screen experience or single screen, you know, all visual experience with a second screen used for control. So, that that's that is the direction we're headed in. And the more people, the more viewers that we can convert from traditional linear viewing over to our new app, or or to Valley's app, the, you know, the faster we can get to, you know, that vision. And so, so that's that's that's where we're headed and and getting people onto digital and streaming experiences will will help us get there.
But at present, does the app have the ability to offer to games, right, in markets? So if you're in Cleveland, you know, can you watch the Cleveland Indians
on the app? Yes. It will have, you know, it's gonna its first iteration,
when it
launches in the spring, will have authenticated, streaming, for for for existing subscribers. Then shortly thereafter, we'll start to, offer direct to consumer experiences for people that are outside of
the pay to new bundle.
Great. Thank you very much.
Your next question is from the line of Alexia Quadrani with JPMorgan.
Hi. Thank you. This is David on for Alexia. Chris, I was wondering if you could just elaborate on that last point that was going be my question on how this partnership now changes or accelerates plan to offer the RSNs of the DTC offering, I mean, that I think you were sort of alluding to on on your last earnings call.
Yeah. Well, we have a pretty aggressive plan to, transform the RSNs through direct to consumer, through gamification, and through fandom based community. So, you know, this is a very important step in that strategy, and, you know, we will be launching, direct to consumer next year, which I think, you know, not only fuels the the the transformation I just spoke about, but also fuels this partnership.
Okay. And then just, you know, maybe as a follow-up to that, outside of the actual game coverage, can
you just speak to how
the partnership changes? Are you planning to program into the remaining hours of the day where the live sports aren't on?
Yeah. We have as I as I mentioned in the presentation, we have significant shelf space on many of our outlets, and the most obvious of which is is the RSNs who who don't have premium programming outside of the pre, post, and the and the games. And so we're targeting that sort of shoulder programming, which which isn't heavily viewed as as being revamped for for programs focused on, sports betting, like a a talk show getting you ready for for the night ahead, and and telling you giving you the stats, information, and analytics that you need to get ready for for the games, the games that evening.
K. Thank you.
Operator?
Your next question is from
the line of Michael Kupinski with NOBLE Capital Market.
Thank you, and congratulations. My question is more from the standpoint of does this, follow just the traditional sports betting or does this provide a platform for esports betting as well? You know, many of these, traditional sports teams are kinda doing affiliation agreements with, with with esports, and I was just wondering if this platform allows for growth into that area as well.
Well, I'll let George speak to whether esports is is part of the sports betting paradigm. It's certainly a component of our strategy here on on the media side. We have we just invested in a company called PlayFly, which which has a has the largest collegiate esports platform in the country. And when we're always looking for additional content in the esports side to add to our portfolio.
And this is David. Let me jump in on this point. The FedWorks platform currently today offers esports betting. Esports betting, as most know right now, has is regulated state by state. So this will be dependent on how states perceive eSports going forward in terms of how we pull it out.
But it is something that we're looking at and we're currently doing.
Great. Thank you.
We have time for one more question. Your final question is from the line of Lance Vitanza with Cowen.
Hi there. Thanks for doing this call this morning. This is Chris Tennant on for Lance. Chris, if you could just circle back to the comments you made, I appreciate you confirming that the equity in Valleys is going to sit at Sinclair. But in terms of the committed marketing spend, are there minimums?
Is it a percentage of another number? And is it being directed specifically to Diamond? Will Diamond record those revenues coming through?
Yes. It is a it's a percentage of of the spend that Valley Interactive makes, and it will be, it'll be directed towards DRSNs and Diamond.
Okay. Great. And then just if I get one more on the regulatory process. Do you guys foresee any issues, or can you just talk about, what the gating items are, the the hurdles in terms of making sure that that Sinclair can can get a sign off on on owning five or 10 or 20% of of Valleys so that, you know, all these gaming authorities can kinda tease us up?
George, do you wanna speak to that?
Sure. So we're generally, from our gaming perspective, generally we receive all necessary regulatory approvals. So we're ready to move forward.
Alright. Do we have any
Yes, so if there's no further questions, I just want to thank everyone for joining us on today's call so that we could provide more detail on what we consider to be transformational announcements. Thank you again. Enjoy your day.
This concludes the Bally's Corporation investor call. Thank you for your participation. You may now disconnect.