Good day and thank you for standing by. Welcome to the Bally's Corporation Third Quarter 2021 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 Bobby Lavan, Senior Vice President, Finance and Investor Relations for Bally's. Please go ahead, sir..

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

With me on today's call are Lee Fenton, Chief Executive Officer; George Papanier, President Retail; Robeson Reeves, President Interactive; and Steve Capp, Chief Financial Officer. Before we begin, we'd 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, involve significant risks and uncertainties. These risks are discussed in the Company's earnings release and SEC filings. Actual results may differ materially from the results discussed in these forward-looking statements.

In addition, during today's call, management will refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP financial measures are included in the schedules contained in our earnings release.

We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges within certain expenses. Today's call is also being broadcast live on our Investors site and will be available for replay shortly after the completion of this call. Now I'll hand it over to Lee..

firstly, to drive awareness of the Bally's brand at a local level using proprietary assets and partnerships, building structural cost advantages relative to the competition. Secondly, to launch iCasino and OSB products that are loved by our customers.

Thirdly, for interactive teams to work hand in glove with their retail colleagues to leverage our footprint and deliver an omnichannel experience that is both relevant and value adding to the customer.

And lastly, to develop content and consumer programming that creates unique opportunities for customer engagement with the Bally brand on a daily basis. In the quarter, we made good progress on our app launches. We launched the Bally Eye Casino in New Jersey before the end of the year. We are currently live with Bally Bet 1.0 app in Colorado and Iowa.

And in the coming months, we will launch in Indiana, Virginia and beach sites. Our significant focus, though, is on the launch of Bally Bet 2.0 in the first half of 2022.

This new app will see us play to our strength as we integrate the Bet.Works B2B part pain engine and the Gamesys B2C technology, data-driven experiences and scalable player large cycle management tools.

The Bally Bet 2.0 will launch third in Arizona, focused on the core sports experience, but once deployed that will help us scale quicker across multiple states and we will update on that progress over the coming months.

Brand awareness is strong and improving through the visibility given across Bally Sports, the free-to-play offering through our portal business and our daily fantasy business, Monkey Knife Fight that is now available in 38 states. Moving on to the performance of the Gamesys business in the quarter.

As a reminder, we closed the acquisition of Gamesys on October 1. Revenue and EBITDA was a record performance on a constant currency basis. Revenue was $279 million and EBITDA was $84 million. Revenue increased 6% year-on-year, while EBITDA increased 7%. U.K.

revenues increased 9% and Asia increased 10% while Europe was down 25% as we are exiting noncore markets in Netherlands and Germany due to regulatory changes that accounted for 200 basis points of headwinds in the quarter. In the U.K., active users were up 3% on the year prior.

Our transition of the half bingo proposition to double gobble bingo in September has been well received by the market with us retaining in excess of 95% of revenues and growing, and it gives us an improved trademark license rate and a 10-year term for the brand. Average stake size in the U.K. in the quarter was 85p compared to 86p the year prior.

Our average state size in slots for the quarter was 75p versus 76p a year prior. We continue to believe that the average bet size, customer profile, responsible gaming standards and a lack of dependence on VIP business puts us in a favorable position as the U.K. progresses the gambling app review.

We have always been and will continue to be the leader of best practices in market. In Asia, active users were up 47% year-on-year. Our strong growth comes from localized games in the market and leading customer acquisition practices.

We continue to enhance our offering in Asia, most notably with daily free games that increased reach and frequency with more exclusive content to enhance retention and extending our customer service hours to 24/7. Our approach to customer service is unique in the market.

Distribution costs, which is variable costs, including marketing, licensing, gaming tax and processing fees was 53.7% of net revenue versus 53.8% in the year prior. Administration costs, which are fixed costs, including compensation, professional fees and G&A was 16.2% of net revenue, the same as in the same quarter in the prior year.

The Gamesys business has a very predictable cost structure, and we'll look to maintain that going forward. Adjusted EBITDA of $84 million is a record for the Company and a good benchmark for profitability through -- into the future. Prior to handing it over to Steve, I just want to leave you with a few more points.

In the U.K., Gamesys has grown from a 9.6% market share in 2016 to a 13.3% market share in 2021. This was the best market share growth of any of our peers. This growth came from being a data first company, using analytics to drive best-in-class LTV determinations, which leads to better decision-making on CAT and life cycle management to lower churn.

We will deploy all these tools into the North American interactive environment. Another key factor in growth was customer centricity. We do not need to be first to market with an inferior product. Customers will always have choices, and we will take a customer-centric view of our products.

We will launch when the product is right, and we are willing to seek short-term gains to build long-term trust and value.

Our analytics and life cycle management will be important to North American Interactive, but will also apply to retail casinos, and we are starting to implement new technologies into the casino for better marketing analytics and driving a true omnichannel experience.

The Bally's brand is very recognizable and it's critical for us to continue to build both the awareness and the relevance of the brand. My time at Gamesys saw the Company become a leader in the U.K. in sustainability, responsible gaming and being at the forefront of ESG in the industry.

In my first month at Bally's, we've hired group heads of sustainability and diversity and inclusion. These issues will be at the forefront of our minds, particularly as more focus is put on the North American gaming industry with the growth of online gaming.

Finally, I get that the Bally's story has been a little complex up to now due to the incredibly fast growth of the group through multiple acquisitions. It is our job to simplify the story for investors with clarity on the numbers and the road map and execute very tangible progress through 2022 to create long-term value.

With that, I will pass it to Steve who will provide some incremental color on the quarter..

Thanks, Lee. Very glad to be here with you today. Good morning, all. Thank you for attending the call. For the third quarter, we reported adjusted EBITDAR margins for retail casinos of 34.9%.

This includes the aforementioned $6 million of headwinds from natural disasters as well as Atlantic City which, while in positive territory, only delivered a 6.5% EBITDAR margin in the quarter. North American Interactive EBITDA was negative $5.5 million.

Adjusted corporate expense was $11.1 million and rent was $11.4 million, which leads to adjusted EBITDA in the quarter of $78 million. Going forward, we will report retail casinos as EBITDAR, that, of course, is EBITDA before rent. Again, our triple net rent in the quarter was $11.4 million.

Our North American Interactive business delivered approximately of net revenues in the quarter with $5.5 million of negative EBITDA. This was in line with our expectations, and we expect this to continue to grow quarter-over-quarter going forward as Lee has already mentioned.

On the CapEx front, we expect requirements to increase as a result of the properties acquired in the last 18 months. For the first nine months of this year, CapEx was approximately $66 million. We expect CapEx to continue to ramp into 4Q '21.

We expect the consolidated group to spend $40 million to $50 million of CapEx per quarter through the end of 2022. And moving forward, of course, our approach to maintenance and growth capital investment will continue to be focused and disciplined. We closed the Gamesys acquisition on October 1 that reset our balance sheet.

Our new capital structure includes a $1.945 billion term loan and $1.5 billion of unsecured notes split equally between 8- and 10-year tranches as well as a $620 million revolver, which revolver was undrawn at the transaction closing.

Our structure is covenant-light with minimal amortization, allowing us to focus on growth in the coming years and to utilize substantial free cash flow in an ongoing capital allocation methodology. As part of our Gamesys acquisition, we issued Gamesys shareholders 9.8 million shares of Bally's common stock.

Starting in 2022, we will calculate adjusted EPS assuming all warrants and options are converted to focus investors and management on adjusted cash EPS. We have added information to the press release and Form 10-Q which are or will be available on our Investor Relations site that should help analysts and shareholders model the business going forward.

Total shares outstanding for that purpose is 68.3 million, which includes warrants and shares issuable to Sinclair and other contingent investments. Thanks for tuning in this morning. We appreciate your time. And with that, I'll hand it back to Lee..

Thanks, Steve. So in summary, we're pleased to have achieved solid quarterly results while expanding and diversifying our collection of land-based and digital gaming assets. We continue to evolve as a company and position ourselves to capitalize on favorable industry trends.

We are confident that the closing of the Gamesys deal will drive a unique business proposition as we enter 2022. Please don't forget that the Gamesys founders, me and my management team, rolled our stock into the Company because we believe in the upside opportunity, and we'll be investing our free cash with a shareholders' mentality.

That concludes prepared remarks for this morning. I'll now ask the operator to open the line for questions..

[Operator Instructions] And we will take our first question from Jeff Stantial with Stifel..

I wanted to start on the North American Interactive division. As we look out to 2022, you're going to be looking at one to two quarters with value that 1.0, call it, two to three of 2.0.

And if you think about ground running with a full marketing program and app, just how are you thinking about the potential revenue contribution from that segment in 2022? And any thoughts around how market share plays into that relative to your previously stated 10% target would be helpful as well..

Sure. Jeff, thanks very much. We actually walked away from that 10% target some time ago, but we have been obviously looking and analyzing the market in terms of how we can enter Bally's Bet 1.0 is very much a b product.

The big focus on Bally's Bet 2.0 and getting out the door because I think that combines the best of all the technology that we've got. We've talked about the kinds of investments that we intend making through 2022. And I think that will continue with that 20% pretax free cash flow level into 2023 as well.

In revenue terms, we expect to be north of $125 million in North American Interactive in 2022..

Okay. That's really helpful. And then just my follow-up, I wanted to drill into the Gamesys tech stack to be integrated into Bally Bet next year.

We were just listening to PAM, we heard them talk about some internal investment into technology, really focusing on improving player level customization in the PAM and this didn't stand out of it, given I recall this being a key focus on the merger called back in April, since we now have the luxury of hearing from you directly on this call, I was hoping you might share some thoughts on how you see the Gamesys tech stack position here relative to some other players in the U.S.

that might be playing a bit of catch up in certain ways..

Well, I think the way that we've tried to uniquely position ourselves in other markets has always been about the full personalization of customer journeys.

So to ensure that we're putting either the right bets or the right games in front of the right player at the right time on the right device and to make sure that your experiences, Jeff, is different to my experience as Lee entering into any of those apps.

And it's that kind of managed choice and managed experience that we believe customers value, particularly over time. You obviously need to cover that with a good brand to put behind it, to build trust into it and to make sure that you deliver it with excellent customer service.

But the technology really is all about how we can action our data to deliver a very tailored customer journey..

We will take our next question from Barry Jonas with Truist..

Lee, notwithstanding walking back from the 10% target, I wanted to focus on iGaming. You had success there with the Tropicana app.

And as we think about the impending launch and ramp in the state, what are your expectations there for iGaming and maybe beyond Jersey over time?.

Barry, thanks for the question. I think we've actually probably discussed before that in New Jersey, I've used the phrase that we've been operating with kind of one hand side behind the back. We didn't have the luxury and the opportunity of a casino database to leverage and that casino footprint to help us along the way, if you like.

We've had six-point share, albeit one of those brands over time will go away from us in Tropicana, but we will have Virgin and we will have the Bally iCasino app to launch. I would be disappointed if over time, we weren't beating the share that we had previously based on the fact that I said we had one arm behind our back in delivering that.

So how quickly we can get there I wouldn't like to comment on right now, Barry, but I would expect to be above 6.5 share..

Great. And then just wanted to touch on Gamesys a little bit. Definitely helpful color. But can you talk about sort of your expectations around growth in the various segments? I know we've got a U.K. regulatory review coming up, but curious to get your overall thoughts there..

Sure. I mean, listen, the U.K. regulatory review is a gambling act review, but there's been regulations over the last six years dropping into the U.K. market. What we've seen is that every time there have been additional regulations dropping into the U.K. market, we've actually managed to increase share.

We see regulation as opportunity, right? I think the -- really about the way that you execute new regulations at least bring a level playing field for many of the dynamics. And every single time we've seen that in the U.K. over the last six years, we've inched forward over time.

The Asia market, I will keep saying has been one of our most stable regulatory environment for the last six to eight years, with not much happening there at all. Obviously, in Japan, there's a focus on integrated casino resorts, any regulation for online gaming, I think, is probably many years down the line. So we don't see anything changing there.

On the gambling app specifically, it looks like the white paper has now kicked into 2022. But as I said on the prepared remarks, we think that our broad base of customers low -- relatively low-staking customers and our activity around RG, which has been in place for many years, will leave us well positioned..

And we will take our next question from Lance Vitanza with Cowen..

My first question is on the North American interactive side. I heard you mentioned a moment ago, Lee, $125 million revenue target for 2022. But what about on the cost side? I mean, I would think you could spend twice that much in 2022 as you invest for growth.

And I may have missed this, so I apologize, but did you say at what point you would expect NA Interactive to become EBITDA positive on its own?.

No, I didn't. But thanks for the question. No, we haven't said that now. What I said is we will expect to invest against North American interactive 20% of our pretax free cash flow. And I see that in 2022, and I see that continuing into 2023.

I think let us get the apps out the door, let us build into a little bit of market share, understand what our marketing dynamics are like and then we'll be in a much better position, probably towards the end of 2022, to give you a point of view on when we see this turning positive..

Fair enough. And then my other question is with respect to the New York gaming opportunity and the partnership strategy that you've chosen there.

I'm wondering if you could talk -- I know maybe it's a little premature, but how do you feel about your prospects there in terms of whether you are selected profitability if you are selected and timing of a decision from the state?.

So we're hopeful that we'll get timing. We'll get the decision this side of the year. We're hopeful that that will come in December. I've seen some reports that that might come earlier, but let's see. We're comfortable with our position and with the group that we've been working with to ensure that we have access. No one is happy with a 51% tax rate.

I think that would be true for all of the partners that we've been working with as well. But it's a huge state. And therefore, the scale of it means that you can have opportunities. We also have some opportunities with some of the Sinclair programming that we can leverage in the outskirts of the state as well.

So obviously, I think it will change the cost dynamics of all operators that enter that market in terms of how they might address and attack that market. But clearly, New York is not a market that you want to miss out on..

We will take our next question from Dan Politzer with Wells Fargo..

So the first one, just on sports betting and iGaming, is it reasonable to expect that your share of iGaming would exceed that of sports betting just given the Gamesys' core competency is kind of backbone for the iGaming component?.

I don't think that's a given, to be honest, Dan. We're working extremely hard on the sport betting products that will come to market in the first half of 2022. We've got some incredible talent in that Bet.Works, which will provide the betting engine. Gamesys have actually doubled in the sports betting market previously in the U.K.

And we've got some incredible new talent as well on the product side, which we think will give us an excellent step into the market with the Bally Bet 2.0 app. So I'm definitely not giving that as a given that iGaming is naturally going to be ahead.

Obviously, we would love more states to have both sports betting and iGaming because that enhances the opportunity for everybody, and we think we would be extraordinarily well positioned where the two products are both offered.

So I'm very optimistic about our 2.0 app and having seen a lot of the work that's been going on, I would hope that it can perform as well as our iGaming app..

Got it. And then just for my follow-up, to what extent, if any, do you anticipate Bally Bet could be impacted by the Sinclair RSN uncertainty. I know that the deep bonds are trading at distressed levels.

So is there any impact or read-through there in the event that there is a credit event with Diamond?.

Well, I think we -- I don't want to comment on the Diamond situation specifically, but we think we bring a lot of value to Bally Sports today, and that value is only going to continue to build over time. We've got a great relationship with Sinclair today.

But if those RSN assets end up under other ownership in the future, we still believe that we'll bring a great deal of value from to whoever has that in the future, if that was to be the way it went. Remember also, the Tennis Channel, local TV stations and Stadium app are all kind of outside of that Diamond structure.

So it wouldn't all go away as well. But we value the partnership we have there. If it were to change hands, we'd look at whether or not we can find a valued partnership under a new owner..

We will take our next question from David Katz with Jefferies..

I wanted to go back to -- I know you touched earlier on the Chicago bid. If you could elaborate just a bit on how management thought about its pursuit, what success would look like? And more broadly speaking, how you're thinking about investing capital in the land-based portfolio next year or 2..

David, thanks for the question. The Company has been following with interest Chicago for some time, and that obviously predates me. But our interest became very serious when the city moved to rationalize the tax structure.

I think we've got a very comprehensive plan that we're proud of the George has been dealing with much of that plan over a much longer period.

So maybe, George, can you comment to Chicago and the future CapEx investments?.

Sure. So thanks for the question, David. So we felt Chicago would be a perfect location for us to position this property as really a centerpiece of our national portfolio. We view this as a tremendous cross marketing opportunity that will be very attractive to our large and growing regional database customers.

And we've taken a very measured approach to development. I don't -- the city hasn't put out anything related to our RFP yet, but we're taking a phased approach to that property. So we understand really what the levels of visitation would be in that market.

So as far as -- you'll see a highlight number of $1.6 billion, but that's after the first phase, which is a temporary casino as well as the phase one of the project, which would include hotel room product and the substantial gaming space.

So when we factor in both of the sites that we've identified, we feel that it sits with [indiscernible] as density of population.

And then when you add Chicago to what really is one of the top international destinations for tourism, conventions, trade shows, we believe this could be again, a center piece of our portfolio and where we have a high level of confidence that it will produce an appropriate return on our investment..

Okay. And the second part of my question was really around the land-based portfolio and how you're thinking about CapEx and investment there..

So the three CapEx programs, which are running at the moment in Lincoln, Kansas City and Atlantic City, will all roll out over the course of 2022.

So you can start to see us get the full benefit from those in 2023, but they're progressing at a pCE which we are comfortable with, I'd say that Atlantic City is a little bit behind where we expected it to be. But the vast majority of the impactful deployment of CapEx will be deployed by May of this year, in time for the seasonality in that market..

Okay. And nothing -- no thoughts on or any of the other properties or markets at this time..

George, is there anything you'd like to add on any of the [indiscernible].

We're underway with our CapEx in Kansas City. And we're hoping to have that fully online for full year 2020 -- 2023. And we're focused on the rebrand right now. I think Lee touched on that recently.

Initially, we started that in the early second quarter of this year, really focused on marketing as well as kind of operational aspects related to rebranding and a lot of that lead time which is relying on regulatory approval.

But now we're underway with the physical rebrand of signage and will be completed that by the end of the first quarter of 2022, we should have an entire portfolio rebranded to then be aligned with what we're trying to do from an omnichannel perspective..

And we will take our next question from Stephen Grambling with Goldman Sachs..

Lee, I'd love to start off with maybe a broader question on just how you're thinking about the North America digital market, both from a competitive standpoint and consumer behavior standpoint, relative to the experience in the U.K.

And perhaps how that frames your view of the margin structure and market evolution over the long term?.

Thanks, Steven. Thanks for the question. If I look back at the U.K., I guess few lessons for us from the U.K. I'm conscious not to just think everything is the same. Because I think there's quite a few different dynamics in the U.S. But first thing to say is that the winners are not decided in the first few years.

But if you look back at the history and the evolution of the U.K. market, that's rather over the first 10 years which tend to bring that to the floor and decide who the winners are. Your use of data and how you leverage that is key.

We think that unique content and unique acquisition funnels will be kind of critical to avoid the kind of massive overspend with just throwing money above the line and hoping that it sticks.

So you've seen us with the acquisitions that we've already made and the partnerships that we've already struck starting to craft together a different way to approach the market.

And Gamesys has always been different in the way that it approaches the market in the U.K., very scientific in terms of the way that it acquires players, very focused on digital marketing.

But in the U.S., of course, we'll have a number of different opportunities, one through the media partnerships that we have to through some of the great acquisitions we've made on free-to-play and like SportCaller and telescope as super interesting parts of the business for us to really give us a better funnel.

And then, of course, the retail casino database, which we intend to leverage in a more integrated way than we've seen done today. And that's not a dynamic, of course, that really exists other than the, let's call it, the betting shops in the U.K. So I mean, I think we're somewhat at the start of the beginning.

I think it's way too early to call the winners. And I think that us looking at differentiated funnels, differentiated content and ways to unlock that is kind of really critical for us over the next 12 to 24 months..

That's all super helpful. And one unrelated follow-up, this may be more for Steve. The capital allocation -- on the capital allocation front, I think I saw a buyback authorization.

I guess how are you thinking about redistribution of capital back to shareholders, even if that's over the longer term versus maybe further M&A? And what the right leverage level is for the business in a steady state?.

Steve, good question. Yes, look, capital allocation is a frequent topic for our senior team and Board, and we go through it many times per year. And of course, it's variable, right? What's the stock price? What are the ROIC expectations on capital investment opportunities facing us? What's our leverage through recent LTM cash flows, et cetera.

And so that kind of frames the discussion for capital allocation. That said, look, over time, we've said it many times, we have kind of a longer-term steady-state view of leverage in the kind of the mid-4s range. But let me couch that as mid-4s on our two operating cash flow businesses, that being international Interactive and the retail casinos.

We have in our capital structure, kind of parsed away North American Interactive and that as a separate investment opportunity. But let me also say that we do not have any issues with strong ROIC investment opportunities today. We have -- George just talked about the three retail investments we have going on.

We've got opportunities potentially in New York and Chicago and elsewhere. So look, it's nice to have these problems to consider capital allocation. The good news is, as the press release talks about, we've got an abundance of free cash flow between the two operating divisions. And so there's plenty to work with there..

Stephen, if I can also add to that maybe a little more directly, that if our stock remains as low as it is, we will be buying it. So the quantum of that will depend on other opportunities that we're facing. We will continue to be opportunistic on retail casinos.

You've seen our ability to move fast to add things to the portfolio that we think make great sense. And I think our track record there is excellent. On digital, we'll continue to be interested in unique content and unique distribution models. But beyond that, I'd say we're happy with the asset set that we put together today..

And we will take our next question from Jordan Bender with Macquarie..

You called out the media relationship is driving your brand awareness and you kind of touched on the Sinclair RSNs earlier in the call.

Could you and would you look to expand your media presence through other RSNs or media partnerships outside of Sinclair?.

Yes, Jordan, I don't think anything is off the table. We'll always look but obviously, that depends on the economics of that deal and whether or not we think that's going to add to us in the right places? And does it sync with the road map of rollout that we're considering and looking at. So yes is the answer.

We do think that the right media partnership, the right economics in the right places can work very effectively for us. So we're not limited to just the leverage of the Sinclair relationship..

And then understanding it's early days.

Can you talk about the app downloads and kind of your first-time depositors coming from your casino database?.

Well, the app today is the Bally Bet 1.0 app. We really haven't pushed it, Jordan, is the truth because what's out there today is not the product that we want to put in front of our customers. It's been a great learning experience to the team. It was put together by the B2B team Bet.Works.

And I think that would be the first to say that they're not the B2C experts in our group. They're specialists delivering the betting engine. And I think that we want to keep our powder dry to really push the 2.0 app when it's brought together all of the expertise that works with the expertise of Gamesys and that's something that we'll look to push.

And of course, post the 2.0 launches, we should have a lot more metrics to share with you..

We will take our final question from Adam Seessel with Gravity..

Congratulations on telling a very complicated story with a lot of moving parts as simply as you can. But just to be clear, the 20% free cash flow reinvestment into North American Interactive for 2022 and 2023.

That's largely going to come through the P&L as marketing expense, right?.

Yes. I think the majority of that will come through the P&L and marketing expense..

Yes. And I know from having read something about what you did at Gamesys, you do, as you mentioned, in passing, take a very scientific approach to cash LTV and so forth. I think there's a fair amount of concern on the street that people that you're going to waste money or throw money at this problem as a lot of people are.

Can you just spend a couple of minutes explaining how you did it at Gamesys? And how you think that will be -- carry that over to OSB?.

Sure. Throwing money at the wall just simply isn't in our DNA. I would say that there's no doubt we are going to have to do a level of awareness build, if you like.

But we think that the media partnerships we have from Sinclair and the retail casino footprint and database that we have will limit the amount of, let's say, ATL, brand awareness that we need to do. Our focus has always been on digital channels. and ensuring that when a customer arrives at us that we can understand their LTV quickly.

So we have PLV, which is our projected LTV algo, which effectively gives us a -- or you can project it over whatever time frame you like. We take two years just to be conservative. Most players stay a lot longer. But we project the LPV plus or minus 10% for two years within the first 48 hours the customer experience in the site.

That gives us a huge latitude in terms of either opening the hose or closing the hose on marketing because we can buy on the ratio of CAC-LTV rather than buy a CPA. So absolutely, the deployment that we will do into North American Interactive. And so the vast majority of our marketing spend will be done with that consideration.

Obviously, you can still then vary the ratio and look at what you do. And typically, when you enter a new market, you might have a CAC-LTV ratio of more at 50% than 30% in a mature market. But that's exactly the approach we will take..

And then just as a quick follow-up. If I take 20% of the $400 million of free cash flow that you put out, that's $80 million of spend in the P&L for North American Interactive against $125 million of revenues.

So am I missing something to say that it sounds like North American Interactive could be free cash flow positive as early as next year?.

I'm not expecting it to be free cash flow positive in 2022. I think we'll be continuing to reinvest some of that revenue that is coming in. And -- but we'll -- I think I've said earlier in the call, Adam, that I think that towards the second half of 2022, we'll be in a much better position to give some idea or forecast on that date..

And there are no further questions on the line at this time. I will turn the program back over to our presenters for any additional or closing remarks. And that does conclude today's program. You may disconnect your line at any time, and have a wonderful day..