What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-09 compared with 2021-08-09 · 446 added, 376 removed, 889 unchanged (48% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30,

2021 December 31,

36 unchanged sentences

Treasury stock, at cost — —

Retained earnings 6,696 34,792

Retained (deficit) earnings ( 8,328 ) 34,792

Accumulated other comprehensive loss ( 47,334 ) ( 3,144 )

Total Bally’s Corporation stockholders’ equity 1,313,691 326,598

Non-controlling interest 3,760 —

Total stockholders’ equity 1,317,451 326,598

4 unchanged sentences

(In thousands, except per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

25 unchanged sentences

Change in value of naming rights liabilities 6,965 — ( 1,371 ) —

Gain on bargain purchases 24,114 — 24,114 —

Gain (adjustment) on bargain purchases ( 1,039 ) — 23,075 —

Loss on extinguishment of debt ( 19,419 ) — ( 19,419 ) —

Other, net ( 3,082 ) — ( 6,905 ) —

Total other income (expense), net 15,391 ( 15,110 ) ( 29,618 ) ( 26,483 )

Income (loss) before provision for income taxes 95,923 ( 36,073 ) 80,388 ( 50,615 )

Provision (benefit) for income taxes 26,981 ( 12,518 ) 22,151 ( 18,182 )

Net income (loss) $ 68,942 $ ( 23,555 ) $ 58,237 $ ( 32,433 )

Total other expense, net ( 47,881 ) ( 16,908 ) ( 77,499 ) ( 43,391 )

(Loss) income before provision for income taxes ( 20,147 ) 6,475 60,241 ( 44,140 )

(Benefit) provision for income taxes ( 5,400 ) ( 248 ) 16,751 ( 18,430 )

Net (loss) income $ ( 14,747 ) $ 6,723 $ 43,490 $ ( 25,710 )

Basic earnings (loss) per share $ ( 0.30 ) $ 0.22 $ 0.95 $ ( 0.83 )

4 unchanged sentences

BALLY’S CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS (unaudited)

(In thousands)

Three Months Ended Six Months Ended

June 30, 2021 June 30, 2021

Net income $ 68,942 $ 58,237

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2021

Net (loss) income $ ( 14,747 ) $ 43,490

Other comprehensive income (loss):

1 unchanged sentence

Defined benefit pension plan reclassification adjustment (1)

Other comprehensive income (loss) 460 ( 552 )

Total comprehensive income $ 69,402 $ 57,685

Other comprehensive loss ( 43,638 ) ( 44,190 )

Total comprehensive loss $ ( 58,385 ) $ ( 700 )

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(1) Tax effect of reclassification adjustment was de minimis.

Net loss equals comprehensive loss for the three and six months ended June 30, 2020.

Net loss income equals comprehensive loss for the three and nine months ended September 30, 2020.

See accompanying notes to condensed consolidated financial statements.

5 unchanged sentences

Stock Retained

Earnings Accumulated Other Comprehensive Loss Total Stockholders’

(Deficit) Earnings Accumulated Other Comprehensive Loss Non-controlling Interest Total Stockholders’

Shares Outstanding Amount

16 unchanged sentences

Sinclair issuance of penny warrants — — 50,000 — — — 50,000

Bally’s Interactive equity issuance 2,084,765 21 121,479 — — — 121,500

Bally Interactive equity issuance 2,084,765 21 121,479 — — — 121,500

Stock options exercised 40,000 — 172 — — — 172

2 unchanged sentences

Balance as of June 30, 2021 44,591,127 $ 445 $ 1,363,779 $ — $ 6,696 $ ( 3,696 ) $ — $ 1,367,224

Release of restricted stock 483 — ( 12 ) — — — ( 12 )

Share-based compensation — — 5,449 — — — 5,449

Retirement of treasury shares — — ( 308 ) 585 ( 277 ) — — —

Bally Interactive equity issuance ( 10,042 ) — — ( 585 ) — — ( 585 )

Acquired non-controlling interest — — — — — — 3,760 3,760

Other comprehensive loss — — — — — ( 43,638 ) ( 43,638 )

Net loss — — — — ( 14,747 ) — ( 14,747 )

Balance as of September 30, 2021 44,581,568 $ 445 $ 1,368,908 $ — $ ( 8,328 ) $ ( 47,334 ) $ 3,760 $ 1,317,451

BALLY’S CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

(In thousands, except share data)

Common Stock Additional

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Balance as of June 30, 2020 30,456,493 $ 304 $ 141,297 $ — $ 7,846 $ ( 1,888 ) $ 147,559

Share-based compensation - equity awards — — 1,799 — — — 1,799

Stock options exercised 19,564 — 84 — — — 84

Net income — — — — 6,723 — 6,723

Balance as of September 30, 2020 30,476,057 $ 304 $ 143,180 $ — $ 14,569 $ ( 1,888 ) $ 156,165

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2021 2020

10 unchanged sentences

Loss on assets and liabilities measured at fair value 21,280 —

Loss on extinguishment of debt 19,419 —

Deferred income taxes ( 1,296 ) ( 6,209 )

1 unchanged sentence

Change in contingent consideration payable ( 14,830 ) —

Gain on bargain purchases ( 24,114 ) —

Gain on bargain purchases, net of adjustments ( 23,075 ) —

Other operating activities 4,715 162

Changes in current operating assets and liabilities ( 6,544 ) ( 16,739 )

Net cash provided by (used in) operating activities 34,225 ( 16,381 )

Net cash provided by operating activities 70,843 1,711

Cash flows from investing activities:

Cash paid for acquisitions, net of cash acquired ( 371,655 ) ( 275,947 )

Proceeds from sale-leaseback 144,000 —

Deposit for pending acquisition of Bally’s Quad Cities Casino & Hotel

Foreign exchange forward contract premiums ( 22,592 ) —

5 unchanged sentences

Issuance of common stock, net 667,872 —

Proceeds from sale-leaseback 144,000 —

Revolver borrowings 275,000 250,000

2 unchanged sentences

Term loan repayments ( 4,313 ) ( 2,938 )

Senior note proceeds, net of fees of $ 12,998

Senior note repayments ( 210,000 ) —

Payment of redemption premium on debt extinguishment ( 14,175 ) —

Payment of financing fees ( 9,968 ) ( 1,117 )

21 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Bally’s Corporation (the “Company”, “Bally’s”) is a U.S.

GENERAL INFORMATION

Bally’s Corporation (the “Company” or “Bally’s”) is a U.S.

full-service sports betting/iGaming company with physical casinos and online gaming solutions united under a single, prominent brand.

The Company, through its wholly owned subsidiary Twin River Management Group, Inc.

(“TRMG”), owns and manages the following properties:

Property by Segment Location Type Built/Acquired

Twin River Casino Hotel

Lincoln, Rhode Island Casino and Hotel 2007

Tiverton Casino Hotel Tiverton, Rhode Island Casino and Hotel 2018

(“TRMG”), owns or manages the following properties:

Property by Segment (1)

Location Type Built/Acquired

Bally’s Twin River Lincoln Casino Resort (“Bally’s Twin River”) Lincoln, Rhode Island Casino and Resort 2007

Bally’s Tiverton Casino & Hotel (“Bally’s Tiverton”) Tiverton, Rhode Island Casino and Hotel 2018

Dover Downs Hotel & Casino (“Dover Downs”)

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Atlantic City, New Jersey Casino and Hotel 2020

Tropicana Evansville

Bally’s Evansville Casino & Hotel (“Bally’s Evansville”)

Evansville, Indiana Casino and Hotel 2021

Hard Rock Hotel & Casino (“Hard Rock Biloxi”) Biloxi, Mississippi Casino and Resort 2014

Casino Vicksburg

Vicksburg, Mississippi Casino and Hotel 2020

Bally’s Vicksburg Casino (“Bally’s Vicksburg”) Vicksburg, Mississippi Casino and Hotel 2020

Bally’s Kansas City Casino (“Bally’s Kansas City”) Kansas City, Missouri Casino 2020

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Black Hawk, Colorado Three Casinos 2020

Eldorado Resort Casino Shreveport (“Shreveport”) Shreveport, Louisiana Casino and Hotel 2020

Bally’s Shreveport Casino & Hotel (“Bally’s Shreveport”) Shreveport, Louisiana Casino and Hotel 2020

Bally’s Lake Tahoe Casino Resort (“Bally’s Lake Tahoe”)

1 unchanged sentence

Casino and Resort 2021

Jumer’s Casino & Hotel (“Jumer’s”)

Bally’s Quad Cities Casino & Hotel (“Bally’s Quad Cities”)

Rock Island, Illinois Casino and Hotel 2021

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Note - During the second quarter of 2021, the Company updated its reportable segments to better align with its strategic growth initiatives in light of recent and pending acquisitions.

(1) During the second quarter of 2021, the Company updated its reportable segments to better align with its strategic growth initiatives in light of recent and pending acquisitions.

Refer to Note 17 “Segment Reporting” for further information.

(1) Includes the recently rebranded Bally’s Black Hawk North Casino (previously Mardi Gras Casino), Bally’s Black Hawk West Casino (previously Golden Gates Casino) and Bally’s Black Hawk East Casino (previously Golden Gulch Casino).

In addition to the properties noted above, the Company also owns the Arapahoe Park racetrack and 13 off-track betting licenses (“Mile High USA”) in Aurora, Colorado.

Under Bally’s Interactive division, the Company owns and manages Bally’s Interactive, formerly Bet.Works, a U.S.

based sports betting platform provider, Horses Mouth Limited (“SportCaller”), a leading Business-to-Business (“B2B”) free-to-play game provider for sports betting and media companies across North America, the UK, Europe, Asia, Australia, LATAM and Africa, Monkey Knife Fight (“MKF”), a North American gaming platform and daily fantasy sports operator, and the Association of Volleyball Professionals (“AVP”), a premier professional beach volleyball organization and host of the longest-running domestic beach volleyball tour in the United States which was acquired July 12, 2021.

(2) Includes the recently rebranded Bally’s Black Hawk North Casino, Bally’s Black Hawk West Casino and Bally’s Black Hawk East Casino (previously Golden Gulch Casino).

In addition to the properties noted above, the Company also owns the Bally’s Arapahoe Park racetrack and 13 off-track betting licenses (“Bally’s Arapahoe Park”) in Aurora, Colorado.

Under the Bally Interactive division, the Company owns and manages Bally Interactive, formerly Bet.Works, a U.S.

based sports betting platform provider, Horses Mouth Limited (“SportCaller”), a leading Business-to-Business (“B2B”) free-to-play game provider for sports betting and media companies across North America, the UK, Europe, Asia, Australia, LATAM and Africa, Monkey Knife Fight (“MKF”), a North American gaming platform and daily fantasy sports operator, the Association of Volleyball Professionals (“AVP”), a premier professional beach volleyball organization and host of the longest-running domestic beach volleyball tour in the United States, and Telescope Inc.

(“Telescope”), a leading provider of real-time audience engagement solutions for live events, gamified second screen experiences and interactive livestreams.

On October 1, 2021, the Company completed the acquisition of Gamesys Group, Plc.

(“Gamesys”), a leading international online gaming operator that provides entertainment to a global consumer base.

The Company’s common stock is listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “BALY.”

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Acquisition of Gamesys Group, Plc.

On April 13, 2021, the Company announced the terms of a recommended offer to acquire all of the issued and to be issued ordinary share capital of Gamesys for a mixture of cash and shares of Bally’s common stock (the “Acquisition”).

Gamesys is a leading international online gaming operator that provides entertainment to a global consumer base.

Gamesys currently offers bingo and casino games to its players using brands that include Jackpotjoy, Virgin Games, Botemania, Vera&John, Heart Bingo, Megaways, Rainbow Riches Casino and Monopoly Casino, and focuses on building its diverse portfolio of distinctive and recognizable brands that deliver best-in-class player experience and gaming content.

Under the terms of the Acquisition, Gamesys shareholders would have the option to receive, for each share of Gamesys, 1,850 pence in cash or shares of Bally’s common stock (at an exchange ratio of 0.343 for each Gamesys share) or a combination of both.

Certain of Gamesys’ current shareholders holding 25.6 % of Gamesys’ shares have agreed to receive shares of Bally’s common stock in the Acquisition.

The maximum cash consideration payable to Gamesys shareholders, if only the former Gamesys founders and Gamesys executives elect to receive shares of Bally’s common stock, would be £ 1.6 billion.

It is intended that the Acquisition will be effected by means of a scheme of arrangement between Gamesys and its shareholders and was subject to approval by both the shareholders of Gamesys and Bally’s which was received in separate meetings held on June 30, 2021.

The Acquisition is conditioned upon regulatory approvals and other customary closing conditions and is expected to close in the fourth quarter of 2021.

In order to manage the risk of appreciation of the GBP denominated purchase price and Gamesys debt, and additional debt held by Gamesys in Euros, the Company has entered into foreign exchange forward contracts.

See Note 6 “Derivative Instruments” for further information.

The Company currently expects to finance the Acquisition and to refinance its and Gamesys’ debt through a combination of cash on hand, net proceeds from Bally’s April 2021 common stock offering, the proceeds of borrowings under new bank credit facilities, as well as the issuance of new bonds.

The proceeds of the bond issuance, as well as a portion of the proceeds of the common stock offering will be escrowed to satisfy U.K.

legal requirements relating to the Acquisition.

Upon closing of the Acquisition, the escrowed amounts will be released and the Company will assume the role of issuer under the newly issued bonds and certain of the Company’s subsidiaries will guarantee the newly issued bonds.

If the Acquisition is not completed, the escrowed amounts will be released from escrow and applied to redeem the bonds and the remaining amounts will be returned to the Company.

COVID-19 Pandemic

The COVID-19 pandemic has significantly impacted the Company’s business in a material manner.

As of March 16, 2020, all of the Company’s properties at the time were temporarily closed as a result of the COVID-19 pandemic.

The Company’s properties began to reopen in mid-2020 in some capacity and remained open for the rest of 2020, with the exception of Twin River Casino Hotel and Tiverton Casino Hotel, each of which closed again from November 29, 2020 through December 20, 2020.

As of June 30, 2021, the Company’s properties have returned to full capacity with minimal restrictions.

Although the Company is experiencing positive trends as a result of the reopening of its properties, the COVID-19 pandemic is ongoing and future developments, which are uncertain and cannot be predicted at this time, could have a material negative impact on operations.

Principles of Consolidation

The accompanying condensed consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiaries.

Basis of Presentation

The accompanying condensed consolidated financial statements of the Company include the accounts of the Company and its subsidiaries.

All intercompany transactions and balances have been eliminated in the consolidation.

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Foreign currency transaction gains and losses are included in net income (loss).

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (the “SEC”) for interim financial information, including the instructions to Form 10-Q and Rule 10-01 of the SEC’s Regulation S-X.

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The actual results that we experience may differ materially from our estimates.

Correction of Cash Flow Classification

Subsequent to the issuance of the Company’s Form 10-Q for the quarterly period ended June 30, 2021, the Company concluded that the $144.0 million in proceeds from the sale-leaseback of the Company’s Dover property were incorrectly classified as cash provided by financing activities rather than cash provided by investing activities within the Company’s unaudited condensed consolidated statement of cash flows for the six months ended June 30, 2021.

The accompanying unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2021 correctly reflects such amount as cash provided by investing activities.

The Company will correct the unaudited condensed consolidated statement of cash flows for the six months ended June 30, 2021 when it files its Form 10-Q for the quarterly period ended June 30, 2022 with the SEC.

The correction of this error had no effect on the Company’s net cash provided by operating activities or the accompanying unaudited condensed consolidated balance sheet, unaudited condensed consolidated statement of operations, unaudited condensed consolidated statement of comprehensive income, or unaudited condensed consolidated statement of Stockholders’ equity as of and for the three and nine months ended September 30, 2021.

Acquisition of Gamesys Group, Plc.

On October 1, 2021, the Company completed its acquisition of Gamesys for 9,773,537 shares of Bally’s common stock and approximately £ 1.554 billion in cash (the “Acquisition”).

Based on the October 1, 2021 closing price of $ 53.08 per share of the Company’s common stock, and a foreign exchange rate of 1.354 , the aggregate consideration paid to former Gamesys shareholders in connection with the Acquisition was approximately $ 2.62 billion.

Consideration paid includes $ 518.8 million in shares and $ 2.10 billion in cash.

In connection with the Acquisition, the Company refinanced its and Gamesys’ debt with, among other sources, the proceeds of the senior notes offering completed in August 2021, a new bank credit facility entered into on October 1, 2021 and the Company’s common stock offering completed in April 2021.

See Note 11 “Long-Term Debt” for further information.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Given the short period of time from the completion of the Acquisition, the date of these condensed consolidated financial statements and the size and complexity of the transaction, the initial accounting for the business combination is incomplete at this time.

The Company is not able to provide the valuation of certain components of consideration transferred or provide the allocation of consideration paid to the assets acquired or liabilities assumed.

The Company will reflect the preliminary purchase price allocation in its consolidated financial statements for the year ending December 31, 2021.

Gamesys' Chief Executive Officer, Lee Fenton, became Bally’s Chief Executive Officer and joined Bally’s Board of Directors in the class of directors with a term that expires at Bally’s 2023 annual shareholders meeting.

George Papanier became President, Retail, the head of Bally’s on-land business, and remains a member of Bally’s Board of Directors.

COVID-19 Pandemic

The COVID-19 pandemic significantly impacted the Company’s business.

As of March 16, 2020, all of the Company’s properties at the time were closed as a result of the COVID-19 pandemic.

The Company’s properties began to reopen in mid-2020 in some capacity and remained open for the rest of 2020, with the exception of Bally’s Twin River and Bally’s Tiverton, each of which closed again from November 29, 2020 through December 20, 2020.

As of September 30, 2021, the Company’s properties have returned to full capacity with minimal restrictions.

SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents and Restricted Cash

The Company considers all cash balances and highly liquid investments with an original maturity of three months or less to be cash and cash equivalents.

As of June 30, 2021 and December 31, 2020, restricted cash was $ 677.8 million and $ 3.1 million, respectively.

The balance at June 30, 2021 includes $ 667.9 million of cash proceeds from the equity issuances, noted above, and was classified as restricted for use in the Acquisition.

As of September 30, 2021 and December 31, 2020, restricted cash was $ 1.84 billion and $ 3.1 million, respectively.

The balance at September 30, 2021 includes $ 1.49 billion of proceeds from the senior notes offering, explained in Note 11 “Long-Term Debt,” and $ 667.9 million of cash proceeds from the Company’s April 2021 common stock offering, which were classified as restricted for use in the Acquisition.

These amounts were held in escrow in GBP and were translated to USD using the foreign exchange rate as of September 30, 2021, resulting in a foreign exchange translation loss reflected within other comprehensive loss for the three months ended September 30, 2021.

In addition, restricted cash was comprised of video lottery terminal (“VLT”) and table games cash payable to the State of Rhode Island and certain cash accounts at other properties, which is unavailable for the Company’s use.

The following table reconciles cash and restricted cash in the condensed consolidated balance sheets to the total shown on the condensed consolidated statements of cash flows.

June 30, December 31,

September 30, December 31,

(in thousands) 2021 2020

2 unchanged sentences

Total cash and cash equivalents and restricted cash $ 2,009,017 $ 126,555

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Accounts Receivable, Net

Accounts receivable, net consists of the following:

June 30, December 31,

September 30, December 31,

(in thousands) 2021 2020

6 unchanged sentences

Accounts receivable, net $ 39,770 $ 14,798

(1) Represents the Company’s share of VLT and table games revenue for Twin River Casino Hotel and Tiverton Casino Hotel due from the State of Rhode Island and from the State of Delaware for Dover Downs.

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(1) Represents the Company’s share of VLT and table games revenue for Bally’s Twin River and Bally’s Tiverton due from the State of Rhode Island and from the State of Delaware for Dover Downs.

Property and Equipment

Property and equipment are recorded at cost.

Property and equipment obtained in connection with acquisitions is valued at its estimated fair value as of the date of acquisition.

Additions subsequent to the acquisition date are recorded at cost.

Property and equipment are depreciated over the estimated useful lives of the assets using the straight-line method.

Expenditures for renewals and betterments that extend the life or value of an asset are capitalized and expenditures for repairs and maintenance are charged to expense as incurred.

The costs and related accumulated depreciation applicable to assets sold or disposed are removed from the balance sheet accounts and the resulting gains or losses are reflected in the condensed consolidated statements of operations.

Development costs directly associated with the acquisition, development and construction of a project are capitalized as a cost of the project during the periods in which activities necessary to prepare the property for its intended use are in progress.

Interest costs associated with major construction projects are capitalized as part of the cost of the constructed assets.

When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using the weighted-average cost of borrowing.

Capitalization of interest ceases when the project (or discernible portions of the project) is substantially complete.

If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

During the three and nine months ended September 30, 2021 and 2020, there was no capitalized interest.

As of September 30, 2021 and December 31, 2020, property and equipment was comprised of the following:

(in thousands) Estimated

(in years) September 30, 2021 December 31, 2020

Land $ 75,328 $ 78,506

Land improvements 3 - 20

34,054 29,965

Building and improvements 5 - 40

633,086 635,145

Equipment 1 - 10

169,483 125,667

Furniture and fixtures 3 - 10

41,030 30,277

Construction in process 22,574 8,799

Total property, plant and equipment 975,555 908,359

Accumulated depreciation ( 194,899 ) ( 159,330 )

Property and equipment, net $ 780,656 $ 749,029

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Construction in process relates to costs capitalized in conjunction with major improvements that have not yet been placed in service, and accordingly are not currently being depreciated.

The construction in process balance at September 30, 2021 includes $ 10.5 million of costs associated with the various capital projects at Bally’s Atlantic City, Bally Interactive, Bally’s Kansas City, the Rhode Island properties, and Hard Rock Biloxi, as well as $ 5.3 million of costs associated with software development within our Interactive division.

The construction in process balance at December 31, 2021 included costs associated with various capital projects in process, primarily at Hard Rock Biloxi and Dover Downs.

Depreciation expense relating to property and equipment for the three months ended September 30, 2021 and 2020 was $ 13.5 million and $ 8.9 million, respectively.

Depreciation expense relating to property and equipment for the nine months ended September 30, 2021 and 2020 was $ 37.4 million and $ 23.9 million, respectively.

Gain from insurance recoveries, net of losses

Gain from insurance recoveries, net of losses relate to losses incurred resulting from storms impacting the Company’s properties, net of insurance recovery proceeds.

During the three and six months ended June 30, 2021, the Company recorded gain from insurance recoveries, net of losses of $ 0.6 million and $ 11.3 million, respectively, primarily attributable to insurance proceeds received due to the effects of Hurricane Zeta, which made landfall in Louisiana shutting down the Company’s Hard Rock Biloxi property for three days during the fourth quarter of 2020.

During the three and six months ended June 30, 2020, we recorded a gain on insurance recoveries of $ 0.1 million and $ 1.0 million, respectively, related to proceeds received for a damaged roof at the Company’s Arapahoe Park racetrack.

During the three and nine months ended September 30, 2021, the Company recorded gain from insurance recoveries, net of losses, of $ 7.9 million and $ 19.2 million, respectively, primarily attributable to insurance proceeds received due to the effects of Hurricane Zeta, which made landfall in Louisiana shutting down the Company’s Hard Rock Biloxi property for three days during the fourth quarter of 2020.

During the three and nine months ended September 30, 2020, we recorded a gain on insurance recoveries of $ 10,000 and $ 1.0 million, respectively, related to proceeds received for a damaged roof at the Bally’s Arapahoe Park racetrack.

Long-lived Assets

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In connection with its rebranding initiatives, as decisions are made, it is possible that the Company could be required to record impairment charges which could be material.

During the three months ended June 30, 2021, the Company recorded an impairment charge on certain of its intangible assets as a result of the Company’s rebranding.

During the second quarter of 2021, the Company recorded an impairment charge on certain of its intangible assets as a result of the Company’s rebranding.

Refer to Note 6 “Goodwill and Intangible Assets” for further information.

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On November 18, 2020, the Company and Sinclair Broadcast Group, Inc.

(“Sinclair”) entered into a Framework Agreement (the “Sinclair Agreement”), which provides for a long-term strategic relationship between the Company and Sinclair combining Bally’s integrated, proprietary sports betting technology with Sinclair’s portfolio of local broadcast stations and live regional sports networks and its Tennis Channel, Stadium sports network and STIRR streaming service, whereby the Company received naming rights to the regional sports networks and certain integrations to network programming in exchange for annual fees paid in cash, the issuance of warrants and options, and an agreement to share in certain tax benefits resulting from the Sinclair Agreement with Sinclair (the “Tax Receivable Agreement”).

The initial term of the Sinclair Agreement is ten years from April 1, 2021, which was the commencement date of the re-branded Sinclair regional sports networks, and can be renewed for one additional five-year term unless either the Company or Sinclair elect not to renew.

(“Sinclair”) entered into a Framework Agreement (the “Sinclair Agreement”), which provides for a long-term strategic relationship between the Company and Sinclair combining Bally’s integrated, proprietary sports betting technology with Sinclair’s portfolio of local broadcast stations and live regional sports networks and its Tennis Channel, Stadium sports network and STIRR streaming service, whereby the Company will receive naming rights to the regional sports networks and certain integrations to network programming in exchange for annual fees paid in cash, the issuance of warrants and options, and an agreement to share in certain tax benefits resulting from the Transaction with Sinclair (the “TRA”).

The initial term of the agreement is ten years from the commencement date of the re-branded Sinclair regional sports networks and can be renewed for one additional 5-year term unless either the Company or Sinclair elect not to renew.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Naming Rights Intangible Asset - Under the terms of the Sinclair Agreement, the Company is required to pay annual naming rights fees to Sinclair for naming rights of the regional sports networks which escalate annually and total $ 88.0 million over the 10-year term of the agreement beginning April 1, 2021.

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The naming rights intangible asset represents the consideration transferred on the acquisition date comprised of the present value of annual naming rights fees, the fair value of the warrants and options and an estimate of the Tax Receivable Agreement payments, each explained below.

The naming rights intangible asset was $ 333.6 million and $ 338.2 million as of June 30, 2021 and December 31, 2020, respectively.

Amortization began on April 1, 2021, the commencement date of the re-branded Sinclair regional sports networks, and was $ 8.6 million for the three and six months ended June 30, 2021.

The naming rights intangible asset was $ 323.7 million and $ 338.2 million as of September 30, 2021 and December 31, 2020, respectively.

Amortization began on April 1, 2021, the commencement date of the re-branded Sinclair regional sports networks, and was $ 8.6 million and $ 17.2 million for the three and nine months ended September 30, 2021, respectively.

Refer to Note 6 “Goodwill and Intangible Assets” for further information.

Naming Rights Fees - The present value of the annual naming rights fees was recorded as part of the cost of the naming rights intangible asset with a corresponding liability which will be accreted through interest expense over the life of the agreement.

The total value of the liability as of June 30, 2021 and December 31, 2020 was $ 57.7 million and $ 56.6 million, respectively.

The short-term portion of the liability, which was $ 2.0 million as of June 30, 2021 and December 31, 2020, is recorded within “Accrued liabilities” and the long-term portion of the liability, which was $ 55.7 million and $ 54.6 million as of June 30, 2021 and December 31 2010, respectively, is recorded within “Naming rights liabilities” in the condensed consolidated balance sheets.

Accretion expense for the three and six months ended June 30, 2021 was $ 1.1 million and $ 2.1 million respectively, and was reported in “Interest expense, net of amounts capitalized” in the condensed consolidated statements of operations.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The total value of the liability as of September 30, 2021 and December 31, 2020 was $ 58.3 million and $ 56.6 million, respectively.

The short-term portion of the liability, which was $ 2.0 million as of September 30, 2021 and December 31, 2020, is recorded within “Accrued liabilities” and the long-term portion of the liability, which was $ 56.3 million and $ 54.6 million as of September 30, 2021 and December 31 2020, respectively, is recorded within “Naming rights liabilities” in the condensed consolidated balance sheets.

Accretion expense for the three and nine months ended September 30, 2021 was $ 1.1 million and $ 3.2 million respectively, and was reported in “Interest expense, net of amounts capitalized” in the condensed consolidated statements of operations.

Warrants and Options - The Company issued to Sinclair (i) an immediately exercisable warrant to purchase up to 4,915,726 shares of the Company at an exercise price of $ 0.01 per share (“the Penny Warrants”), (ii) a warrant to purchase up to a maximum of 3,279,337 additional shares of the Company at a price of $ 0.01 per share subject to the achievement of various performance metrics (the “Performance Warrants”), and (iii) an option to purchase up to 1,639,669 additional shares in four tranches with purchase prices ranging from $ 30.00 to $ 45.00 per share, exercisable over a seven-year period beginning on the fourth anniversary of the November 18, 2020 closing (the “Options”).

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Penny Warrants .

The Penny Warrants were determined to be an equity classified instrument because they are indexed to the Company’s own stock and met the conditions to be classified in equity under ASC 815, Derivatives and Hedging , including sufficient available shares for the Company to settle the exercise of the warrants in shares.

The Penny Warrants were determined to be an equity classified instrument because they are indexed to the Company’s own stock and met the conditions to be classified as equity under ASC 815, Derivatives and Hedging , including sufficient available shares for the Company to settle the exercise of the warrants in shares.

The fair value of the Penny Warrants approximates the fair value of the underlying shares and was $ 150.4 million on November 18, 2020 at issuance, and was recorded to “Additional paid-in-capital” in the condensed consolidated balance sheets, with an offset to the naming rights intangible asset.

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The Performance Warrants are accounted for as a derivative liability because the underlying performance metrics represent an adjustment to the settlement amount that is not indexed to the Company’s own stock and thus equity classification is precluded under ASC 815.

The fair value as of June 30, 2020 and December 31, 2020 was $ 94.9 million and $ 88.1 million, respectively, and is recorded within “Naming Rights liabilities” of the condensed consolidated balance sheets.

The fair value as of September 30, 2021 and December 31, 2020 was $ 88.0 million and $ 88.1 million, respectively, and is recorded within “Naming Rights liabilities” of the condensed consolidated balance sheets.

Refer to Note 7 “Derivative Instruments” for further information.

As of December 31, 2020, the Options were accounted for as a derivative liability because the Options could have been required to be settled in cash, outside the Company’s control, prior to formal stockholder approval.

Upon stockholder approval on January 27, 2021, the Options met the criteria to be classified as equity, at which point, the Options were adjusted to fair value and reclassified from “Naming rights liabilities” to “Additional paid-in-capital” in the condensed consolidated balance sheet.

Refer to Note 6 “Derivative Instruments” for further information.

The fair value of the Options as of December 31, 2020 was $ 58.2 million.

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The increase in fair value of the Options from December 31, 2020 through January 27, 2021 was $ 1.5 million and resulted in a mark to market loss in the first quarter of 2021, reported in “Change in value of naming rights liabilities” in the condensed consolidated statements of operations.

Tax Receivable Agreement - The Company is required to share 60 % of the tax benefit the Company receives from the Penny Warrants, Options, Performance Warrants and payments under the Tax Receivable Agreement with Sinclair over the term of the agreement as tax benefit amounts are determined through the filing of the Company’s annual tax returns.

Changes in estimate of the tax benefit to be realized and tax rates in effect at the time, among other changes, are treated as an adjustment to the naming rights intangible asset.

As of June 30, 2021, the estimate of the Tax Receivable Agreement liability was $ 47.0 million, reflecting an increase of $ 4.0 million from the December 31, 2020 value of $ 43.0 million, and is included in “Naming rights liabilities” in the condensed consolidated balance sheets.

Refer to Note 7 “Derivative Instruments” for further information

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Tax Receivable Agreement - The Company is required to share 60 % of the tax benefit the Company receives from the Penny Warrants, Options, Performance Warrants and payments under the TRA with Sinclair over the term of the agreement as tax benefit amounts are determined through the filing of the Company’s annual tax returns.

Changes in estimate of the tax benefit to be realized and tax rates in effect at the time, among other changes, are treated as an adjustment to the naming rights intangible asset.

As of September 30, 2021, the estimate of the TRA liability was $ 45.7 million, reflecting an increase of $ 2.7 million from the December 31, 2020 value of $ 43.0 million, and is included in “Naming rights liabilities” in the condensed consolidated balance sheets.

The change in value of the TRA liability is included in “Change in value of naming rights liabilities” in the condensed consolidated statements of operations.

RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

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Standards implemented

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments–Credit Losses (Topic 326)–Measurement of Credit Losses on Financial Instruments (“ASC 326”).

This standard amends several aspects of the measurement of credit losses on financial instruments, including trade receivables.

The standard replaces the existing incurred credit loss model with the Current Expected Credit Losses (“CECL”) model and amends certain aspects of accounting for purchased financial assets with deterioration in credit quality since origination.

Under CECL, the allowance for losses for financial assets that are measured at amortized cost reflects management’s estimate of credit losses over the remaining expected life of the financial assets, based on historical experience, current conditions and forecasts that affect the collectability of the reported amount.

In November 2018, the FASB issued ASU No.

2018-19, Codification Improvements to Topic 326, Financial Instruments–Credit Losses , to clarify that receivables arising from operating leases are not within the scope of ASC 326 and should instead, be accounted for in accordance with ASC 842, Leases .

The standard is effective for annual and interim periods beginning after December 15, 2019.

Adoption is through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (a modified-retrospective approach).

The Company adopted this ASU in the first quarter of 2020 and recorded a $ 58,000 adjustment to retained earnings as of January 1, 2020.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820)–Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement , which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements.

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The Company adopted this ASU in the first quarter of 2020, with no impact to its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-14, Compensation–Retirement Benefits–Defined Benefit Plans–General .

This amendment improves disclosures over defined benefit plans and is effective for interim and annual periods ending after December 15, 2020, with early adoption permitted.

The Company’s adoption of this ASU in the first quarter of 2021 did not have a material impact to its condensed consolidated financial statements.

In December 2019, the FASB issued ASU No.

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The Company’s adoption of this ASU in the first quarter of 2021, did not have a material impact to its condensed consolidated financial statements.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

REVENUE RECOGNITION

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gaming services, hotel, racing, food and beverage and other.

Gaming revenue includes the share of VLT revenue for Twin River Casino Hotel and Tiverton Casino Hotel, in each case, as determined by each property’s respective master VLT contracts with the State of Rhode Island.

Twin River Casino Hotel is entitled to a 28.85 % share of VLT revenue on the initial 3,002 units and a 26.00 % share of VLT revenue generated from units in excess of 3,002 units.

Tiverton Casino Hotel is entitled to receive a percentage of VLT revenue that is equivalent to the percentage received by Twin River Casino Hotel.

Gaming revenue also includes Twin River Casino Hotel’s and Tiverton Casino Hotel’s share of table games revenue.

Twin River Casino Hotel and Tiverton Casino Hotel each were entitled to an 83.5 % share of table games revenue generated as of June 30, 2021 and 2020.

Gaming revenue includes the share of VLT revenue for Bally’s Twin River and Bally’s Tiverton, in each case, as determined by each property’s respective master VLT contracts with the State of Rhode Island.

Bally’s Twin River is entitled to a 28.85 % share of VLT revenue on the initial 3,002 units and a 26.00 % share of VLT revenue generated from units in excess of 3,002 units.

Beginning July 1, 2021, Bally’s Twin River is entitled to an additional 7.00 % share of revenue on VLTs owned by the Company.

Bally’s Tiverton is entitled to receive a percentage of VLT revenue that is equivalent to the percentage received by Bally’s Twin River.

Gaming revenue also includes Bally’s Twin River’s and Bally’s Tiverton’s share of table games revenue.

Bally’s Twin River and Bally’s Tiverton each were entitled to an 83.5 % share of table games revenue generated as of September 30, 2021 and 2020.

Revenue is recognized when the wager is complete, which is when the customer has received the benefits of the Company’s gaming services and the Company has a present right to payment.

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Licensing, administration and control of gaming operations in Delaware is under the Delaware State Lottery Office and Delaware’s Department of Safety and Homeland Security, Division of Gaming Enforcement.

As of June 30, 2021 and 2020, Dover Downs was entitled to an approximately 42 % share of VLT revenue and an 80 % share of table games revenue.

As of September 30, 2021 and 2020, Dover Downs was entitled to an approximately 42 % share of VLT revenue and an 80 % share of table games revenue.

Revenue is recognized when the wager is complete, which is when the customer has received the benefits of the Company’s gaming services and the Company has a present right to payment.

The Company records revenue from its Delaware operations on a net basis, which is the percentage share of VLT and table games revenue received, as the Company acts as an agent in operating the gaming services on behalf of the State of Delaware.

Gaming revenue also includes the casino revenue of Hard Rock Biloxi, Bally’s Black Hawk, beginning January 23, 2020, Bally’s Kansas City and Casino Vicksburg, beginning July 1, 2020, Bally’s Atlantic City, beginning November 18, 2020, Shreveport, beginning December 23, 2020, Bally’s Lake Tahoe, beginning April 6, 2021, Tropicana Evansville, beginning June 3, 2021, and Jumer’s, beginning June 14, 2021, which is the aggregate net difference between gaming wins and losses, with liabilities recognized for funds deposited by customers before gaming play occurs, for chips outstanding and “ticket-in, ticket-out” coupons in the customers’ possession, and for accruals related to the anticipated payout of progressive jackpots.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Gaming revenue also includes the casino revenue of Hard Rock Biloxi, Bally’s Black Hawk, beginning January 23, 2020, Bally’s Kansas City and Bally’s Vicksburg, beginning July 1, 2020, Bally’s Atlantic City, beginning November 18, 2020, Bally’s Shreveport, beginning December 23, 2020, Bally’s Lake Tahoe, beginning April 6, 2021, Bally’s Evansville, beginning June 3, 2021, and Bally’s Quad Cities, beginning June 14, 2021, which is the aggregate net difference between gaming wins and losses, with liabilities recognized for funds deposited by customers before gaming play occurs, for chips outstanding and “ticket-in, ticket-out” coupons in the customers’ possession, and for accruals related to the anticipated payout of progressive jackpots.

Progressive slot machines, which contain base jackpots that increase at a progressive rate based on the number of credits played, are charged to revenue as the amount of the progressive jackpots increase.

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The allocated revenue for gaming wagers is recognized when the wagers occur as all such wagers settle immediately.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The estimated retail value related to goods and services provided to guests without charge or upon redemption under the Company’s player loyalty programs included in departmental revenues, and therefore reducing gaming revenues, are as follows for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2021 2020 2021 2020

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The one-time market access fees received have been recorded as deferred revenue and will be recognized as gaming revenue ratably over the respective contract terms, beginning with the commencement of operations of each respective agreement.

The Company recognized commissions in certain states from online sports betting and iGaming which are included in gaming revenue for the six months ended June 30, 2021.

Deferred revenue associated with third-party operators for online sports betting and iGaming market access was $ 5.7 million as of June 30, 2021 and is included in “Accrued liabilities” and “Other long-term liabilities” in the condensed consolidated balance sheets.

Racing revenue includes Twin River Casino Hotel’s, Tiverton Casino Hotel’s, Mile High USA’s and Dover Downs’ share of wagering from live racing and the import of simulcast signals.

The Company recognized commissions in certain states from online sports betting and iGaming which are included in gaming revenue for the nine months ended September 30, 2021.

Deferred revenue associated with third-party operators for online sports betting and iGaming market access was $ 8.7 million as of September 30, 2021 and is included in “Accrued liabilities” and “Other long-term liabilities” in the condensed consolidated balance sheets.

Racing revenue includes Bally’s Twin River’s, Bally’s Tiverton’s, Bally’s Arapahoe Park’s and Dover Downs’ share of wagering from live racing and the import of simulcast signals.

Racing revenue is recognized when the wager is complete based on an established take-out percentage.

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Food and beverage revenue are recognized at the time the goods are sold from Company-operated outlets.

All other revenues, including B2B service revenue generated by the Bally’s Interactive operating segment, are recognized at the time the goods are sold or the service is provided.

Sales tax and other taxes collected on behalf of governmental authorities are accounted for on a net basis and are not included in revenue or operating expenses.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All other revenues, including market access, daily fantasy sports and B2B service revenue generated by the Bally Interactive operating segment, are recognized at the time the goods are sold or the service is provided.

Sales tax and other taxes collected on behalf of governmental authorities are accounted for on a net basis and are not included in revenue or operating expenses.

In the second quarter of 2021, the Company changed its reportable segments to better align with its strategic growth initiatives in light of recent and pending acquisitions.

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(in thousands) East West Other Total

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Gaming $ 131,338 $ 95,674 $ 582 $ 227,594

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Total revenue $ 176,975 $ 124,603 $ 13,201 $ 314,779

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Gaming $ 50,250 $ 46,338 $ — $ 96,588

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Total revenue $ 59,065 $ 55,900 $ 1,659 $ 116,624

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Gaming $ 308,490 $ 275,928 $ 1,373 $ 585,791

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Total revenue $ 408,458 $ 343,190 $ 23,130 $ 774,778

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Gaming $ 114,779 $ 81,412 $ — $ 196,191

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Total revenue $ 146,848 $ 104,039 $ 3,809 $ 254,696

Revenue included in operations from SportCaller from the date of its acquisition, February 5, 2021, MKF from the date of its acquisition, March 23, 2021, and Bally’s Interactive from the date of its acquisition, May 28, 2021, each through June 30, 2021 are reported in “Other.” Revenue included in operations from Bally’s Lake Tahoe from the date of acquisition, April 6, 2021, and Jumer’s from the date of its acquisition, June 14, 2021, through June 30, 2021, are reported in “West.” Revenue included in operations from Tropicana Evansville from the date of its acquisition, June 3, 2021, through June 30, 2021, is reported in “East.” Refer to Note 4.

Revenue included in operations from SportCaller from the date of its acquisition, February 5, 2021, MKF from the date of its acquisition, March 23, 2021, Bally Interactive from the date of its acquisition, May 28, 2021, AVP from the date of its acquisition, July 12, 2021, and Telescope from the date of its acquisition, August 12, 2021, each through September 30, 2021 are reported in “Other.” Revenue included in operations from Bally’s Lake Tahoe from the date of acquisition, April 6, 2021, and Bally’s Quad Cities from the date of its acquisition, June 14, 2021, through September 30, 2021, are reported in “West.” Revenue included in operations from Bally’s Evansville from the date of its acquisition, June 3, 2021, through September 30, 2021, is reported in “East.” Refer to Note 5.

“Acquisitions” for further information.

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The Company’s receivables related to contracts with customers are primarily comprised of marker balances and other amounts due from gaming activities, amounts due for hotel stays, and amounts due from tracks and off track betting (“OTB”) locations.

The Company’s receivables related to contracts with customers were $ 21.1 million and $ 12.0 million as of June 30, 2021 and December 31, 2020, respectively.

The Company’s receivables related to contracts with customers were $ 27.0 million and $ 12.0 million as of September 30, 2021 and December 31, 2020, respectively.

Contract and Contract Related Liabilities

The Company has the following liabilities related to contracts with customers:

liabilities for loyalty programs, deposits made in advance for goods and services yet to be provided, and unpaid wagers.

liabilities for loyalty programs, advance deposits made for goods and services yet to be provided, and unpaid wagers.

All of the contract liabilities are short-term in nature.

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therefore, the majority of these incentives outstanding at the end of a period will either be redeemed or expire within the next 12 months.

Certain properties extended pre-COVID-19 tier statuses and/or extended earnings dates for tiered status programs.

Additionally, certain properties temporarily suspended periodic purges of unused loyalty points.

The Company’s contract liabilities related to loyalty programs were $ 22.0 million and $ 15.5 million as of June 30, 2021 and December 31, 2020, respectively, and are included as “Accrued liabilities” in the condensed consolidated balance sheets.

The Company recognized $ 9.4 million and $ 0.3 million of revenue related to loyalty program redemptions for the three months ended June 30, 2021 and 2020, respectively, and $ 12.2 million and $ 2.4 million for the six months ended June 30, 2021 and 2020.

Advance deposits are typically for future banquet events and to reserve hotel rooms.

These deposits are usually received weeks or months in advance of the event or hotel stay.

The Company’s contract liabilities related to deposits from customers were $ 2.3 million and $ 1.0 million as of June 30, 2021 and December 31, 2020, respectively, and are included as “Accrued liabilities” in the condensed consolidated balance sheets.

While properties were operating at limited capacity, many extended the expiration dates for tiered status programs or temporarily suspended periodic purges of unused loyalty points.

As properties have resumed operations at full capacity, many have reinstated their pre-COVID-19 practices or put new loyalty programs into place.

The Company’s contract liabilities related to loyalty programs were $ 17.7 million and $ 15.5 million as of September 30, 2021 and December 31, 2020, respectively, and are included as “Accrued liabilities” in the condensed consolidated balance sheets.

The Company recognized $ 5.8 million and $ 1.4 million of revenue related to loyalty program redemptions for the three months ended September 30, 2021 and 2020, respectively, and $ 18.0 million and $ 3.7 million for the nine months ended September 30, 2021 and 2020.

Advance deposits are typically for future banquet events, hotel room reservations and interactive player deposits.

The banquet and hotel reservation deposits are usually received weeks or months in advance of the event or hotel stay.

The Company holds restricted cash for interactive player deposits, and records a corresponding withdrawal liability.

The Company’s contract liabilities related to advance deposits from customers were $ 3.9 million and $ 1.0 million as of September 30, 2021 and December 31, 2020, respectively, and are included as “Accrued liabilities” in the condensed consolidated balance sheets.

Unpaid wagers include unpaid pari-mutuel tickets and unpaid sports bet tickets.

Unpaid pari-mutuel tickets not claimed within 12 months by the customer who earned them are escheated to the state.

The Company’s contract liabilities related to unpaid wagers were $ 4.4 million and $ 0.9 million as of June 30, 2021 and December 31, 2020, respectively, and are included as “Accrued liabilities” in the condensed consolidated balance sheets.

The Company’s contract liabilities related to unpaid wagers were $ 1.9 million and $ 0.9 million as of September 30, 2021 and December 31, 2020, respectively, and are included as “Accrued liabilities” in the condensed consolidated balance sheets.

Recent Acquisitions

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Significant assumptions utilized in the income approach are based on company-specific information and projections, which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance.

The purchase price allocation for the acquisitions of Bally’s Atlantic City, Shreveport, Bally’s Lake Tahoe, Tropicana Evansville, Jumer’s, SportCaller, Monkey Knife Fight and Bally’s Interactive, are preliminary and will be finalized when valuations are complete and final assessments of the fair value of other acquired assets and assumed liabilities are completed.

The purchase price allocation for the acquisitions of Bally’s Atlantic City, Bally’s Shreveport, Bally’s Lake Tahoe, Bally’s Evansville, Bally’s Quad Cities, SportCaller, Monkey Knife Fight, Bally Interactive, AVP and Telescope, are preliminary and will be finalized when valuations are complete and final assessments of the fair value of other acquired assets and assumed liabilities are completed.

There can be no assurance that such finalizations will not result in material changes from the preliminary purchase price allocations.

The Company’s estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date), as the Company finalizes the valuations of certain tangible and intangible assets acquired and liabilities assumed.

The Company recorded transaction costs related to its recent and pending acquisitions of $ 18.4 million and $ 30.7 million during the three and six months ended June 30, 2021, respectively, and $ 2.5 million and $ 4.2 million during the three and six months ended June 30, 2020, respectively.

These costs are included in “Acquisition, integration and restructuring” in the condensed consolidated statements of operations.

Refer to Note 9 “Acquisition, Integration and Restructuring” for further information.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Bally’s Kansas City and Casino Vicksburg

On July 1, 2020, the Company completed its acquisition of the operations and real estate of Bally’s Kansas City and Casino Vicksburg from affiliates of Caesars Entertainment, Inc.

The Company recorded transaction costs related to its recent and pending acquisitions of $ 6.8 million and $ 37.5 million during the three and nine months ended September 30, 2021, respectively, and $ 2.7 million and $ 7.0 million during the three and nine months ended September 30, 2020, respectively.

These costs are included in “Acquisition, integration and restructuring” in the condensed consolidated statements of operations.

Refer to Note 10 “Acquisition, Integration and Restructuring” for further information.

Bally’s Kansas City and Bally’s Vicksburg

On July 1, 2020, the Company completed its acquisition of the operations and real estate of Bally’s Kansas City and Bally’s Vicksburg from affiliates of Caesars Entertainment, Inc.

The total consideration paid by the Company in connection with the acquisition was approximately $ 229.9 million, or $ 225.5 million net of cash acquired, excluding transaction costs.

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As of July 1, 2020

(in thousands) Preliminary as of December 31, 2020 Year to Date Adjustments Final as of June 30, 2021

(in thousands) Preliminary as of December 31, 2020 Year to Date Adjustments Final as of September 30, 2021

Cash and cash equivalents $ 4,362 $ — $ 4,362

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Total purchase price $ 229,863 $ — $ 229,863

Revenue included in operations from Bally’s Kansas City and Casino Vicksburg for the three and six months ended June 30, 2021 was $ 33.1 million and $ 60.5 million, respectively.

Net income included in operations from Bally’s Kansas City and Casino Vicksburg for the three and six months ended June 30, 2021 was $ 7.1 million and $ 12.6 million, respectively.

Revenue included in operations from Bally’s Kansas City and Bally’s Vicksburg for the three and nine months ended September 30, 2021 was $ 30.9 million and $ 91.4 million, respectively.

Net income included in operations from Bally’s Kansas City and Bally’s Vicksburg for the three and nine months ended September 30, 2021 was $ 4.3 million and $ 16.9 million, respectively.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Bally’s Atlantic City

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This contingent consideration asset resulted in an adjusted purchase price of $( 0.9 ) million.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition of Bally’s Atlantic City on November 18, 2020.

(in thousands) Preliminary as of June 30, 2021

There were no purchase accounting adjustments recorded during the nine months ended September 30, 2021.

(in thousands) Preliminary as of September 30, 2021

Cash and cash equivalents $ 8,651

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The Company determined that the value of the intangible asset related to gaming licenses was de minimis, primarily due to the previously mentioned capital expenditure commitment required to obtain the licenses.

The preliminary fair value of the identifiable intangible assets acquired was determined by using a cost approach and an income approach for the rater player relationships and pre-bookings, respectively.

The preliminary fair value of the identifiable intangible assets acquired was determined by using a cost approach and an income approach for the rated player relationships and pre-bookings, respectively.

Based on the preliminary purchase price allocation, the fair value of the assets acquired and liabilities assumed exceed the purchase price consideration and therefore, a bargain purchase gain of $ 32.6 million was recorded during the fourth quarter ended December 31, 2020.

The Company believes that it was able to acquire the net assets of Bally’s Atlantic City for less than fair value as a result of a capital expenditure requirement imposed on the Company by the New Jersey Casino Control Commission, which would have been imposed on the seller had they not divested the property.

Revenue included in operations from Bally’s Atlantic City for the three and six months ended June 30, 2021 was $ 35.9 million and $ 61.6 million, respectively.

Eldorado Resort Casino Shreveport

On December 23, 2020, the Company completed its acquisition of Eldorado Resort Casino Shreveport in Shreveport, Louisiana (“Shreveport”) for a total purchase price of approximately $ 137.2 million.

Cash paid by the Company at closing, net of $ 5.0 million of cash acquired and offset by a receivable of $ 0.8 million resulting from a networking capital adjustment, was $ 133.1 million, excluding transaction costs.

The identifiable intangible assets recorded in connection with the closing of the Shreveport acquisition based on preliminary valuations include gaming licenses of $ 57.7 million with an indefinite life and rated player relationships of $ 0.4 million, which is being amortized on a straight-line basis over estimated useful lives of approximately eight years .

The preliminary fair value of the identifiable intangible assets acquired was determined by using an income approach.

Revenue included in operations from Bally’s Atlantic City for the three and nine months ended September 30, 2021 was $ 46.8 million and $ 108.4 million, respectively.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition of Shreveport on December 23, 2020.

There were no purchase accounting adjustments recorded during the six months ended June 30, 2021.

(in thousands) Preliminary as of June 30, 2021

Bally’s Shreveport Casino & Hotel

On December 23, 2020, the Company completed its acquisition of Bally’s Shreveport for a total purchase price of approximately $ 137.2 million.

Cash paid by the Company at closing, net of $ 5.0 million of cash acquired and offset by a receivable of $ 0.8 million resulting from a net working capital adjustment, was $ 133.1 million, excluding transaction costs.

The identifiable intangible assets recorded in connection with the closing of the Bally’s Shreveport acquisition based on preliminary valuations include gaming licenses of $ 57.7 million with an indefinite life and rated player relationships of $ 0.4 million, which are being amortized on a straight-line basis over estimated useful lives of approximately eight years .

The preliminary fair value of the identifiable intangible assets acquired was determined by using an income approach.

There were no purchase accounting adjustments recorded during the nine months ended September 30, 2021.

(in thousands) Preliminary as of September 30, 2021

Cash and cash equivalents $ 4,980

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Based on the preliminary purchase price allocation, the fair value of the assets acquired and liabilities assumed exceed the purchase price consideration and therefore, a bargain purchase gain of $ 31.3 million was recorded during the fourth quarter of 2020.

The Company believes that it was able to acquire the net assets of Shreveport for less than fair value as a result of a distressed sale whereby Eldorado was required by the Federal Trade Commission to divest the Shreveport property prior to its merger with Caesars coupled with the timing of the agreement to purchase which was in the middle of COVID-19 related shutdowns of casinos in the United States.

Revenue included in operations from Shreveport for the three and six months ended June 30, 2021 was $ 36.4 million and $ 61.9 million, respectively.

Net income included in operations from Shreveport for the three and six months ended June 30, 2021 was $ 7.6 million and $ 12.5 million, respectively.

The Company believes that it was able to acquire the net assets of Bally’s Shreveport for less than fair value as a result of a distressed sale whereby Eldorado was required by the Federal Trade Commission to divest the Bally’s Shreveport property prior to its merger with Caesars coupled with the timing of the agreement to purchase which was in the middle of COVID-19 related shutdowns of casinos in the United States.

Revenue included in operations from Bally’s Shreveport for the three and nine months ended September 30, 2021 was $ 28.7 million and $ 90.6 million, respectively.

Net income included in operations from Bally’s Shreveport for the three and nine months ended September 30, 2021 was $ 4.0 million and $ 16.5 million, respectively.

Bally’s Lake Tahoe Casino Resort

On April 6, 2021, the Company acquired Bally’s Lake Tahoe Casino Resort (“Bally’s Lake Tahoe”), formally MontBleu Resort Casino & Spa, in Lake Tahoe, Nevada from Eldorado and certain of its affiliates for $ 14.2 million, payable one year from the closing date and subject to customary post-closing adjustments.

On April 6, 2021, the Company acquired Bally’s Lake Tahoe, formerly MontBleu Resort Casino & Spa, in Lake Tahoe, Nevada from Eldorado and certain of its affiliates for $ 14.2 million, payable one year from the closing date and subject to customary post-closing adjustments.

The deferred purchase price is included within “Accrued liabilities” of the condensed consolidated balance sheet.

The identifiable intangible assets recorded in connection with the closing of the Bally’s Lake Tahoe acquisition based on preliminary valuations include gaming licenses of $ 5.2 million with an indefinite life and a tradename of $ 0.2 million, which is being amortized on a straight-line basis over its estimated useful life of approximately six months .

The preliminary fair value of the identifiable intangible assets acquired was determined by using an income approach.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The preliminary fair value of the identifiable intangible assets acquired was determined by using an income approach.

(in thousands) Preliminary as of June 30, 2021

As of April 6, 2021

(in thousands) Preliminary as of June 30, 2021 Year to Date Adjustments Preliminary as of September 30, 2021

Total current assets $ 5,089 $ — $ 5,089

9 unchanged sentences

Based on the preliminary purchase price allocation, the fair value of the assets acquired and liabilities assumed exceed the purchase price consideration and therefore, a bargain purchase gain of $ 2.6 million was recorded during the second quarter ended June 30, 2021.

The original agreement to acquire Bally’s Lake Tahoe from Eldorado was made concurrently with the agreement of Shreveport and the Company believes that it was able to acquire Bally’s Lake Tahoe for less than fair value as a result of a distressed sale prior to Eldorado’s merger by Caesars, as noted above.

Revenue and net income included in operations from Bally’s Lake Tahoe for the three and six months ended June 30, 2021 was $ 9.7 million and $ 0.5 million, respectively.

Tropicana Evansville

On June 3, 2021, the Company completed the acquisition of the Tropicana Evansville casino operations from Caesars.

An adjustment of $ 0.3 million, reducing the bargain purchase gain to $ 2.3 million, was recorded in the third quarter ended September 30, 2021.

The original agreement to acquire Bally’s Lake Tahoe from Eldorado was made concurrently with the agreement of Bally’s Shreveport and the Company believes that it was able to acquire Bally’s Lake Tahoe for less than fair value as a result of a distressed sale prior to Eldorado’s merger by Caesars, as noted above.

Revenue included in operations from Bally’s Lake Tahoe for the three and nine months ended September 30, 2021 was $ 11.3 million and $ 21.0 million, respectively.

Net income included in operations from Bally’s Lake Tahoe for the three and nine months ended September 30, 2021 was $ 0.5 million and $ 1.0 million, respectively.

Bally’s Evansville

On June 3, 2021, the Company completed the acquisition of the Bally’s Evansville casino operations from Caesars.

The total purchase price was $ 139.7 million, subject to customary adjustments.

Cash paid by the Company at closing, net of $ 9.4 million cash acquired and offset by a payable of $ 1.7 million resulting from a net working capital adjustment, was $ 128.1 million, excluding transaction costs.

In connection with the acquisition of the Tropicana Evansville casino operations, the Company entered into a sale-leaseback arrangement with an affiliate of Gaming & Leisure Properties, Inc.

In connection with the acquisition of the Bally’s Evansville casino operations, the Company entered into a sale-leaseback arrangement with an affiliate of Gaming & Leisure Properties, Inc.

(“GLPI”) for the Dover Downs property.

Refer to Note 12 “Leases” for further information.

The identifiable intangible assets recorded in connection with the closing of the Tropicana Evansville acquisition based on preliminary valuations include gaming licenses of $ 153.6 million with an indefinite life and rated player relationships of $ 0.6 million which is being amortized on a straight-line basis over an estimated useful life of approximately eight years .

The identifiable intangible assets recorded in connection with the closing of the Bally’s Evansville acquisition based on preliminary valuations include gaming licenses of $ 153.6 million with an indefinite life and rated player relationships of $ 0.6 million which are being amortized on a straight-line basis over an estimated useful life of approximately eight years .

The preliminary fair value of the identifiable intangible assets acquired was determined by using an income approach.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition of Tropicana Evansville on June 3, 2021:

(in thousands) Preliminary as of June 30, 2021

As of June 3, 2021

(in thousands) Preliminary as of June 30, 2021 Year to Date Adjustments Preliminary as of September 30, 2021

Cash and cash equivalents $ 9,355 $ — $ 9,355

13 unchanged sentences

Based on the preliminary purchase price allocation, the fair value of the assets acquired and liabilities assumed exceed the purchase price consideration and therefore, a bargain purchase gain of $ 21.5 million was recorded during the second quarter ended June 30, 2021.

The Company believes it was able to acquire Tropicana Evansville for less than fair value as a result of a distressed sale prior to Eldorado’s merger with Caesars, as noted above.

Revenue and net income included in operations from Tropicana Evansville for the three and six months ended June 30, 2021 was $ 11.7 million and $ 0.8 million, respectively.

Jumer’s Casino & Hotel

On June 14, 2021, the Company completed its acquisition of Jumer’s in Rock Island, Illinois.

An adjustment of $ 0.6 million, reducing the bargain purchase gain to $ 20.9 million, was recorded in the third quarter ended September 30, 2021.

The Company believes it was able to acquire Bally’s Evansville for less than fair value as a result of a distressed sale prior to Eldorado’s merger with Caesars, as noted above.

Revenue included in operations from Bally’s Evansville for the three and nine months ended September 30, 2021 was $ 40.1 million and $ 51.8 million, respectively.

Net income included in operations from Bally’s Evansville for the three and nine months ended September 30, 2021 was $ 4.3 million and $ 5.1 million, respectively.

Bally’s Quad Cities Casino & Hotel

On June 14, 2021, the Company completed its acquisition of Bally’s Quad Cities in Rock Island, Illinois.

Pursuant to the terms of the Equity Purchase Agreement, the Company has acquired all of the outstanding equity securities of The Rock Island Boatworks, Inc., for a purchase price of $ 118.9 million in cash, subject to customary post-closing adjustments.

Cash paid by the Company at closing, net of $ 3.2 million cash acquired, the $ 4.0 million deposit paid in the third quarter of 2020 and offset by a receivable of $ 0.3 million resulting from a networking capital adjustment, was $ 112.3 million, excluding transaction costs.

The identifiable intangible assets recorded in connection with the closing of the Jumer’s acquisition based on preliminary valuations include gaming licenses of $ 30.3 million with an indefinite life and rated player relationships and a tradename of $ 0.7 million and $ 0.2 million, which are being amortized on a straight-line basis over their respective estimated useful lives of approximately 9 years and 4 months.

The identifiable intangible assets recorded in connection with the closing of the Bally’s Quad Cities acquisition based on preliminary valuations include gaming licenses of $ 30.3 million with an indefinite life, as well as, rated player relationships and a tradename of $ 0.7 million and $ 0.2 million, respectively, which are being amortized on a straight-line basis over their estimated useful lives of approximately 9 years and 4 months, respectively.

The preliminary fair value of the identifiable intangible assets acquired was determined by using an income approach.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the Jumer’s acquisition on June 14, 2021:

(in thousands) Preliminary as of June 30, 2021

The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the Bally’s Quad Cities acquisition on June 14, 2021:

As of June 14, 2021

(in thousands) Preliminary as of June 30, 2021 Year to Date Adjustments Preliminary as of September 30, 2021

Cash and cash equivalents $ 3,241 $ ( 308 ) $ 2,933

6 unchanged sentences

Total purchase price $ 119,202 $ ( 274 ) $ 118,928

Revenue included in operations from Jumer’s for the three and six months ended June 30, 2021 was $ 2.3 million.

Revenue included in operations from Bally’s Quad Cities for the three and nine months ended September 30, 2021 was $ 12.3 million and $ 14.6 million, respectively.

Interactive Acquisitions

5 unchanged sentences

Refer to Note 8 “Fair Value Measurements” for further information.

Bally’s Interactive - On May 28, 2021, the Company acquired Bally’s Interactive, formerly Bet.Works Corp., for approximately $ 71.6 million in cash and 2,084,765 of the Company’s common shares, subject in each case to customary adjustments.

The shareholders of Bally’s Interactive will not transfer any shares of Company common stock received prior to June 1, 2022 and, for the following 12 months, may transfer only up to 1% of the Company’s common stock per every 90 days.

The identifiable intangible assets recorded in connection with the closing of SportCaller, MKF and Bally’s Interactive (collectively the “Bally’s Interactive Acquisitions”) are based on preliminary valuations and include customer relationships of $ 36.3 million, which are being amortized over their estimated useful lives of approximately three , five and ten years for Bally’s Interactive, SportCaller and MKF, respectively, developed software of $ 104.8 million, which is being amortized over their estimated useful lives of approximately ten , six and three years for Bally’s Interactive, SportCaller and MKF, respectively, and tradenames of $ 2.6 million, which are being amortized over their estimated useful lives of approximately ten and 15 years for SportCaller and MKF, respectively.

Total goodwill recorded in connection with the Bally’s Interactive Acquisitions was $ 223.4 million.

Bally Interactive - On May 28, 2021, the Company acquired Bally Interactive, formerly Bet.Works Corp., for approximately $ 71.6 million in cash and 2,084,765 of the Company’s common shares, subject in each case to customary adjustments.

The shareholders of Bally Interactive will not transfer any shares of Company common stock received prior to June 1, 2022 and, for the following 12 months, may transfer only up to 1% of the Company’s common stock per every 90 days.

AVP - On July 12, 2021, the Company acquired AVP, a premier professional beach volleyball organization and host of the longest-running domestic beach volleyball tour in the United States, for $ 10.0 million in cash, subject to customary post-closing adjustments.

Telescope - On August 12, 2021, the Company acquired an 84.16 % controlling interest in Telescope, a leading provider of real-time audience engagement solutions for live events, gamified second screen experiences and interactive livestreams, for $ 27.7 million, subject to customary post-closing adjustments.

The remaining 15.84 % of Telescope is owned by certain selling shareholders and is reported as a non-controlling interest.

The non-controlling interest is convertible into shares of Bally’s common stock based on a fixed exchange ratio share-settlement feature, valued using the Company’s common stock price, and is classified as permanent equity.

Earnings attributable to the non-controlling interest are not material for the quarter ended September 30, 2021.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the Bally’s Interactive Acquisitions:

(in thousands) Preliminary as of June 30, 2021

The identifiable intangible assets recorded in connection with the closing of SportCaller, MKF, Bally Interactive, AVP, and Telescope (collectively the “Bally Interactive Acquisitions”) are based on preliminary valuations and include customer relationships of $ 41.5 million, which are being amortized over estimated useful lives between three and ten years , developed software of $ 122.4 million, which is being amortized over its estimated useful lives between three and ten years , and tradenames of $ 3.1 million, which are being amortized over their estimated useful lives between ten and 15 years.

Total goodwill recorded in connection with the Bally Interactive Acquisitions was $ 243.1 million.

These Bally Interactive transactions have been accounted for as business combinations using the acquisition method with Bally’s as the accounting acquirer in accordance with ASC 805.

The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the Bally Interactive Acquisitions:

(in thousands) Preliminary as of September 30, 2021

Cash and cash equivalents $ 7,435

5 unchanged sentences

Deferred tax liability ( 15,805 )

Total combined purchase price $ 354,257

During the three months ended June 30, 2021, the Company recorded purchase accounting adjustments for MKF and SportCaller reducing intangible assets by $ 1.5 million and increasing goodwill by $ 1.4 million.

Revenue included in operations from the Bally’s Interactive Acquisitions from their respective dates of acquisition, each noted above, for the three and six months ended June 30, 2021 was $ 5.5 million and $ 6.6 million, respectively.

Other Interactive Acquisitions

On July 12, 2021, the Company acquired AVP, a premier professional beach volleyball organization and host of the longest-running domestic beach volleyball tour in the United States.

This transaction will be accounted for as business combinations using the acquisition method with Bally’s as the accounting acquirer in accordance with ASC 805.

Supplemental Proforma Consolidated Information

The following table represents unaudited supplemental proforma consolidated revenue and net (loss) income based on Bally’s Lake Tahoe and Tropicana Evansville’s historical reporting periods as if the acquisitions had occurred as of January 1, 2020.

The revenue, earnings and proforma effects of other acquisitions completed in 2021, which include Jumer’s and the Bally’s Interactive Acquisitions, are not material to results of operations, individually or in the aggregate:

Three Months Ended Six Months Ended

(in thousands, except per share data) June 30, 2020 June 30, 2021 June 30, 2020

Acquired non-controlling interest ( 3,760 )

Net investment in the Bally Interactive Acquisitions $ 391,035

During the nine months ended September 30, 2021, the Company recorded purchase accounting adjustments for MKF, SportCaller and Bally Interactive, increasing intangible assets by $ 0.5 million and reducing goodwill and current liabilities by $ 0.5 million and $ 1.1 million, respectively.

Revenue included in operations from the Bally Interactive Acquisitions from their respective dates of acquisition, each noted above, for the three and nine months ended September 30, 2021 was $ 11.4 million and $ 18.0 million, respectively.

Supplemental Pro Forma Consolidated Information

The following table represents unaudited supplemental pro forma consolidated revenue and net (loss) income based on Bally’s Lake Tahoe and Bally’s Evansville’s historical reporting periods as if the acquisitions had occurred as of January 1, 2020.

The revenue, earnings and proforma effects of other acquisitions completed during the nine months ended September 30, 2021, which include Bally’s Quad Cities and the Bally Interactive Acquisitions, are not material to results of operations, individually or in the aggregate:

Three Months Ended Nine Months Ended

(in thousands, except per share data) September 30, 2020 September 30, 2021 September 30, 2020

Revenue $ 159,708 $ 844,356 $ 349,100

5 unchanged sentences

Pending Acquisitions

Gamesys Acquisition

Refer to Note 1 “General Information” for further information of the Gamesys transaction.

Tropicana Las Vegas

2 unchanged sentences

In addition, the Company agreed to lease the land underlying the Tropicana property from GLPI for an initial term of 50 years at an annual rent of $ 10.5 million, subject to increases over time.

The Company and GLPI will also enter into a sale-and-leaseback transaction relating to the Company’s Black Hawk Casinos properties and the Jumer’s property for a cash purchase price of $ 150.0 million payable by GLPI.

The Company and GLPI will also enter into a sale-and-leaseback transaction relating to the Company’s Black Hawk Casinos properties and the Bally’s Quad Cities property for a cash purchase price of $ 150.0 million payable by GLPI.

The lease will have initial annual fixed rent of $ 12.0 million, subject to increase over time.

GOODWILL AND INTANGIBLE ASSETS

The change in carrying value of goodwill by reportable segment for the six months ended June 30, 2021 and 2020 is as follows (in thousands):

The change in carrying value of goodwill by reportable segment for the nine months ended September 30, 2021 and 2020 is as follows (in thousands):

East West Other Total

3 unchanged sentences

Purchase accounting adjustments on prior year business acquisitions — 380 — 380

Goodwill as of June 30, 2021 $ 84,148 $ 117,402 $ 223,321 $ 424,871

Goodwill as of September 30, 2021

$ 84,148 $ 117,804 $ 242,956 $ 444,908

East West Total

2 unchanged sentences

Impairment charges — ( 5,254 ) ( 5,254 )

Goodwill as of June 30, 2020 $ 84,148 $ 48,934 $ 133,082

The change in intangible assets, net for the six months ended June 30, 2021 is as follows (in thousands):

Goodwill as of September 30, 2020 $ 84,148 $ 102,423 $ 186,571

The change in intangible assets, net for the nine months ended September 30, 2021 is as follows (in thousands):

Intangible assets, net as of December 31, 2020 $ 663,395

Intangible assets from current year business combinations 357,895

Change in Tax Receivable Agreement 4,024

Change in TRA 2,689

Effect of foreign exchange ( 1,172 )

1 unchanged sentence

Accumulated amortization ( 30,123 )

Intangible assets, net as of June 30, 2021

Intangible assets, net as of September 30, 2021

BALLY’S CORPORATION

2 unchanged sentences

remaining life

(in years) June 30, 2021

(in years) September 30, 2021

(in thousands, except years) Gross Carrying Amount Accumulated

5 unchanged sentences

Hard Rock license 25.8 8,000 ( 1,758 ) 6,242

Player relationships 6.3 47,931 ( 7,721 ) 40,210

Customer relationships 6.1 54,909 ( 9,876 ) 45,033

Developed technology 8.7 121,697 ( 6,273 ) 115,424

8 unchanged sentences

(1) Naming rights intangible asset in connection with Sinclair Agreement.

Refer to Note 1 “General information” for further information.

Refer to Note 2 “Significant Accounting Policies” for further information.

Amortization began on April 1, 2021, the commencement date of the re-branded Sinclair regional sports networks.

29 unchanged sentences

Based on this analysis, the Company determined that only the carrying value of its Black Hawk Casinos reporting unit exceeded its fair value by an amount that exceeded the assigned goodwill and indefinite lived intangibles as of the acquisition date.

As a result, the Company recorded a total impairment charge of $ 8.6 million for the six months ended June 30, 2020, which is included in the “West” reportable segment, and was allocated between goodwill and intangible assets with charges of $ 5.3 million and $ 3.3 million, respectively.

As a result, the Company recorded a total impairment charge of $ 8.6 million for the nine months ended September 30, 2020, which is included in the “West” reportable segment, and was allocated between goodwill and intangible assets with charges of $ 5.3 million and $ 3.3 million, respectively.

Refer to Note 5 “Acquisitions” for further information about the preliminary purchase price allocation and goodwill and intangible balance estimated as of the acquisition date.

4 unchanged sentences

To enter into these foreign exchange forward contracts, the Company paid total premiums to the contract counterparties of $ 22.6 million.

On August 20, 2021, two of the above mentioned foreign exchange forward contracts were modified, decreasing the notional amount of the GBP-denominated forward purchase commitments by £ 746 million to £ 354 million, collectively.

The Company received $ 1.7 million upon settlement of the modification, which decreased the remaining fair value of the contracts.

The Company’s foreign exchange forward contracts are not designated as hedging instruments under ASC 815.

2 unchanged sentences

Sinclair Agreement

As noted in Note 1 “General Information,” on November 18, 2020, Bally’s entered into a long-term strategic relationship with Sinclair.

As noted in Note 2 “Significant Accounting Policies,” on November 18, 2020, Bally’s entered into a long-term strategic relationship with Sinclair.

The Sinclair Agreement provides for Performance Warrants and Options, the accounting for which is explained below.

Performance Warrants - The Performance Warrants are accounted for as a derivative liability because the underlying performance metrics represent an adjustment to the settlement amount that is not indexed to the Company’s own stock and thus equity classification is precluded under ASC 815.

The Performance Warrants are expected to continue to be classified as liability awards with changes in fair value reported within “Change in value of naming rights liabilities” in the condensed consolidated statements of operations.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Options - As of December 31, 2020, the Options were accounted for as a derivative liability because the Options could have been required to be settled in cash, outside the Company’s control, prior to formal stockholder approval.

1 unchanged sentence

The increase in fair value of the Options from $ 58.2 million as of December 31, 2020, through January 27, 2021 was $ 1.5 million and resulted in a mark to market loss in the first quarter of 2021, reported within “Change in value of naming rights liabilities” in the condensed consolidated statements of operations.

The fair values of derivative assets and liabilities not designated as hedging instruments as of June 30, 2021 and December 31, 2020 are as follows:

(in thousands) Balance Sheet Location June 30,

The fair values of derivative assets and liabilities not designated as hedging instruments as of September 30, 2021 and December 31, 2020 are as follows:

(in thousands) Balance Sheet Location September 30,

2021 December 31,

4 unchanged sentences

Total Liabilities $ 87,964 $ 146,317

The gains (losses) recognized in the condensed consolidated statement of operations for derivatives not designated as hedging instruments during the three and six months ended June 30, 2021 are as follows:

Condensed Consolidated Statements of Operations Location June 30, 2021

(in thousands) Three months ended Six months ended

The gains (losses) recognized in the condensed consolidated statement of operations for derivatives not designated as hedging instruments during the three and nine months ended September 30, 2021 are as follows:

Condensed Consolidated Statements of Operations Location September 30, 2021

(in thousands) Three months ended Nine months ended

Foreign exchange forward contracts Other, net $ ( 6,003 ) $ ( 20,776 )

1 unchanged sentence

Sinclair Options Change in value of naming rights liabilities — ( 1,526 )

There was no gain (loss) recognized in the condensed consolidated statement of operations for the three and six months ended June 30, 2020.

There was no gain (loss) recognized in the condensed consolidated statement of operations for the three and nine months ended September 30, 2020.

FAIR VALUE MEASUREMENTS

7 unchanged sentences

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

June 30, 2021

September 30, 2021

(in thousands) Level 1 Level 2 Level 3

16 unchanged sentences

Change in fair value ( 155 ) ( 14,932 ) ( 15,087 )

Ending as of June 30, 2021 $ 94,929 $ 46,920 $ 141,849

Ending as of September 30, 2021 $ 87,964 $ 43,691 $ 131,655

Foreign exchange forward contracts

22 unchanged sentences

ACCRUED LIABILITIES

As of June 30, 2021 and December 31, 2020, accrued liabilities consisted of the following:

(in thousands) June 30,

As of September 30, 2021 and December 31, 2020, accrued liabilities consisted of the following:

(in thousands) September 30,

2021 December 31,

16 unchanged sentences

ACQUISITION, INTEGRATION AND RESTRUCTURING

The following table reflects acquisition, integration and restructuring expenses the Company recorded during the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30, Six Months Ended June 30,

The following table reflects acquisition, integration and restructuring expenses the Company recorded during the three and nine months ended September 30, 2021 and 2020:

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2021 2020 2021 2020

1 unchanged sentence

Gamesys $ 3,749 $ — $ 17,320 $ —

Tropicana Evansville 6,059 — 6,092 —

SportCaller and MKF 834 — 3,674 —

Jumer’s Hotel & Casino 1,603 — 1,628 —

Richmond, Virginia (1)

Bally’s Evansville

329 — 6,421 —

Bally Interactive acquisitions (1)

842 — 4,833 —

Bally’s Quad Cities

162 658 1,790 658

Richmond, Virginia (2)

Bally’s Atlantic City 2 683 1,144 2,203

Eldorado Resort Casino Shreveport 225 917 927 1,031

Bally’s Shreveport 37 727 964 1,758

Bally’s Lake Tahoe 82 — 947 —

Bally’s Kansas City and Casino Vicksburg 140 424 107 862

Bally’s Kansas City and Bally’s Vicksburg — 497 107 1,359

1,581 175 2,041 986

2 unchanged sentences

Total acquisition, integration and restructuring $ 6,797 $ 2,740 $ 37,457 $ 6,984

(1) Costs associated with the acquisition of SportCaller, MKF, AVP and Telescope, which are included within the Bally Interactive division.

(2) Costs associated with a proposal to develop a casino in the City of Richmond, Virginia, which the Company is no longer pursuing.

(2) Includes costs in connection with the development of a casino in Centre County, Pennsylvania in addition to the acquisitions of Tropicana Las Vegas, Bally’s Black Hawk, Dover Downs and other immaterial (pending and closed) acquisitions.

(3) Includes costs in connection with the development of a casino in Centre County, Pennsylvania in addition to the acquisitions of Tropicana Las Vegas, Bally’s Black Hawk, Dover Downs and other pending and closed acquisitions.

LONG-TERM DEBT

As of June 30, 2021 and December 31, 2020, long-term debt consisted of the following:

(in thousands) June 30,

As of September 30, 2021 and December 31, 2020, long-term debt consisted of the following:

(in thousands) September 30,

2021 December 31,

3 unchanged sentences

315,000 525,000

5.625 % Senior notes due 2029

5.875 % Senior notes due 2031

Unamortized original issue discount ( 22,467 ) ( 11,771 )

6 unchanged sentences

May 2019 Senior Secured Credit Facility

On May 10, 2019, the Company entered into a credit agreement (“the “Credit Agreement”) with Citizens Bank, N.A., as administrative agent, (the “Agent”), and the lenders party thereto (the “Credit Facility”), consisting of a $300 million Term B Loan facility (the “Term Loan Facility”) and a $250 million revolving credit facility (the “Revolving Credit Facility”).

The Company’s obligations under the Revolving Credit Facility will mature on May 10, 2024.

The Company’s obligations under the Term Loan Facility will mature on May 10, 2026.

Beginning September 30, 2019, the Company is required to make quarterly principal payments of $750,000 on the Term Loan Facility on the last business day of each fiscal quarter.

In addition, the Company is required to make mandatory payments of amounts outstanding under the Credit Facility with the proceeds of certain casualty events, debt issuances, and asset sales and, commencing in 2020, the Company is required to apply a portion of its excess cash flow to repay amounts outstanding under the Credit Facility.

Borrowings under the Credit Facility bear interest at a rate equal to, at the Company’s option, either (1) LIBOR determined by reference to the costs of funds for U.S.

dollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs and subject to a floor of 0.00 % and 0.75% for the Term Loan and Revolving Credit Facility, respectively, or (2) a base rate determined by reference to the greatest of the federal funds rate plus 0.50 %, the prime rate as determined by the Agent, the one-month LIBOR rate plus 1.00 %, and subject to a floor for borrowings under (x) the Term Loan Facility (other than the increased portion of the Term Loan Facility mentioned below), 1.00%, (y) the Revolving Credit Facility, 1.75% and (z) the increased portion of the Term Loan Facility, 2.00%, in each case plus an applicable margin.

In the event that the LIBOR rate is no longer available or no longer used to determine the interest rate of loans, the Company and the Agent will amend the Credit Agreement to replace LIBOR with an alternate benchmark rate that has been broadly accepted by the syndicated loan market in the United States in lieu of LIBOR and until such amendment has become effective, loans will be based on the base rate.

In addition, on a quarterly basis, the Company is required to pay each lender under the Revolving Credit Facility a 0.50 % commitment fee, in respect of commitments under the Revolving Credit Facility, which may be subject to one or more step-downs based on the Company’s total net leverage ratio.

As of June 30, 2021, the interest rate for the Term Loan Facility was 2.90 %.

The Credit Facility allows the Company to (1) establish additional Term B Loans and/or establish one or more new tranches of term loans and/or (2) increase commitments under the Revolving Credit Facility and/or add one or more new tranches of revolving facilities, in an aggregate amount not to exceed the greater of (x) $ 195 million and (y) 100 % of consolidated EBITDA for the most recent four-quarter period plus or minus certain amounts as specified in the Credit Agreement, including an unlimited amount subject to compliance with a consolidated total secured net leverage ratio as set out in the Credit Agreement.

The Company’s obligations under the Credit Facility are guaranteed by each of the Company’s existing and future wholly owned domestic restricted subsidiaries, subject to certain exceptions, and are secured by a first priority lien on substantially all of the Company’s and each of the guarantors’ existing and future property and assets, subject to certain exceptions.

On March 16, 2020, the Company borrowed under its Revolving Credit Facility the full available amount of $ 250 million to increase its cash position and liquidity to facilitate financial flexibility in light of the then uncertainty in the global markets and the Company’s business resulting from the COVID-19 pandemic.

These borrowings were repaid as part of the increase in the Term Loan Facility mentioned below.

On March 9, 2021, the Company amended its Credit Agreement to increase the borrowing limit under the Revolving Credit Facility to $ 325 million.

Borrowings under the new incremental revolving facility are subject to the same terms and conditions of the existing Revolving Credit Facility under the Credit Agreement.

As of June 30, 2021, there were $ 275.0 million of outstanding borrowings under the Revolving Credit Facility at an interest rate of 3.50 %.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

May 2020 Term Loan

On May 11, 2020, the Company amended the Credit Facility to increase its Term Loan Facility by $ 275 million to $ 525 million.

Borrowings under the increased portion of the Term Loan Facility will bear interest at LIBOR + 8.00 % per annum with a 1.00 % LIBOR floor through the May 10, 2026 maturity date.

Following the amendment, the Company repaid the full $ 250 million outstanding under its Revolving Credit Facility.

This new term loan satisfied the financing contingency in the purchase agreement to acquire Shreveport and Bally’s Lake Tahoe from affiliates of Eldorado Resorts, Inc.

As of June 30, 2021, the interest rate for the increased portion of the Term Loan Facility was 9.00 %.

On May 10, 2019, the Company entered into a credit agreement (the “Credit Agreement”) with Citizens Bank, N.A., as administrative agent, and the lenders party thereto, consisting of a $ 300 million Term Loan B facility (the “Term Loan Facility”) and a $ 250 million revolving credit facility (the “Revolving Credit Facility”).

On May 11, 2020, the Company amended the Credit Agreement to increase the Term Loan Facility by $ 275 million to $ 525 million.

On March 9, 2021, the Company amended the Credit Agreement to increase the borrowing limit under the Revolving Credit Facility to $ 325 million.

As of September 30, 2021, there were $ 225.0 million of outstanding borrowings under the Revolving Credit Facility at a weighted average interest rate of 4.73 %.

As of September 30, 2021, the interest rate for the increased portion of the Term Loan Facility was 10.25 %.

The Company’s obligations under the Revolving Credit Facility and the Term Loan Facility were terminated and amounts outstanding were repaid in connection with the Company’s entry into the New Credit Facility on October 1, 2021 as described below under “Subsequent Events.”

6.75 % Senior Notes due 2027

On May 10, 2019, the Company issued $ 400 million aggregate principal amount of 6.75 % unsecured senior notes due June 1, 2027 (the “Initial Notes”).

On October 9, 2020, the Company issued an additional $ 125 million aggregate principal amount of 6.75 % unsecured senior notes due June 1, 2027 (the “Additional Notes” and, together with the Initial Notes, the “Senior Notes”).

The Additional Notes, other than with respect to the date of issuance and issue price, are identical to the Initial Notes, and are treated as a single class with the Initial Notes for all purposes under the indenture governing the Senior Notes (the “Indenture”).

Immediately after giving effect to the issuance and sale of the Additional Notes, the Company had $ 525 million in aggregate principal amount of Senior Notes outstanding.

Interest on the Senior Notes is paid semi-annually in arrears on June 1 and December 1.

The Company used a portion of the net proceeds from the Initial Notes, together with a portion of the proceeds from its Term Loan Facility, to repay borrowings under the Company’s prior credit agreement (the “Former Credit Facility”).

The Credit Facility and the Indenture each contain covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional indebtedness, pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, enter into certain transactions with affiliates, sell or otherwise dispose of assets, create or incur liens, and merge, consolidate or sell all or substantially all of the Company’s assets, in each case, subject to certain exceptions and qualifications.

In addition, if more than 30 % of the capacity of the Revolving Credit Facility is utilized, as was the case at March 31, 2020 (but not at any quarter subsequent), the Company must comply with a maximum total net leverage ratio, which is currently set at 5.50 :1.00.

These covenants are subject to exceptions and qualifications set forth in the Credit Facility and the Indenture, and as described below under “Financial Covenant Relief”, were modified as of April 24, 2020.

On February 4, 2021, the Company announced that it had obtained the consent of the Senior Notes holders to amend the indenture governing the Senior Notes.

The amendment to the Indenture amended the “Incurrence of Indebtedness and Issuance of Subsidiary Preferred Stock” covenant contained in Section 4.09 of the Indenture to increase the fixed dollar prong of the credit facility basket from “$ 745.0 million” to “$ 975.0 million.” Except for this amendment, all the existing terms of the Senior Notes remain unchanged.

The Company may redeem some or all of the Senior Notes at any time prior to June 1, 2022 at a redemption price equal to 100 % of the aggregate principal amount of the Senior Notes to be redeemed plus a “make-whole” premium and accrued and unpaid interest.

In addition, prior to June 1, 2022, the Company may redeem up to 40 % of the original principal amount of the Senior Notes with proceeds of certain equity offerings at a redemption price equal to 106.75 % of the aggregate principal amount of such Senior Notes plus accrued and unpaid interest.

On or after June 1, 2022, the Company may redeem some or all of the Senior Notes at the redemption prices set forth in the Indenture plus accrued and unpaid interest.

The Senior Notes are subject to disposition and redemption requirements imposed by gaming laws and regulations of applicable gaming regulatory authorities.

The Senior Notes are guaranteed, jointly and severally, by each of the Company’s restricted subsidiaries that guarantees the Company’s obligations under our Credit Facility.

On May 10, 2019, the Company issued $ 400 million aggregate principal amount of 6.75 % unsecured senior notes due June 1, 2027, and, on October 9, 2020, the Company issued an additional $ 125 million aggregate principal amount of 6.75 % unsecured senior notes due June 1, 2027 (together, the “Senior Notes”).

On September 7, 2021, the Company redeemed $ 210 million aggregate principal amount of the Senior Notes at a redemption price of 106.750 % of the principal amount using a portion of the proceeds of the Company’s April 2021 public offering of common stock.

Accordingly, as of September 30, 2021, $ 315 million aggregate principal amount of the Senor Notes remained outstanding.

On October 5, 2021, the Company redeemed the remaining $ 315 million aggregate principal amount of the Senior Notes at a redemption price of 109.074 % of the principal amount using a portion of the proceeds of its New Term Loan Facility described below under “Subsequent Events.” As of October 5, 2021, no amounts pertaining to these Senior Notes remained outstanding.

In connection with the redemption of $ 210 million aggregate principal amount of Senior Notes on September 7, 2021, as noted above, the Company recorded a loss on extinguishment of debt of $ 19.4 million during the three months ended September 30, 2021.

The Company was in compliance with all debt covenants as of September 30, 2021.

New Senior Notes

On August 20, 2021, two unrestricted subsidiaries (together, the “Escrow Issuers”) of the Company issued $ 750.0 million aggregate principal amount of 5.625 % senior notes due 2029 (the “2029 Notes”) and $ 750.0 million aggregate principal amount of 5.875 % Senior Notes due 2031 (the “2031 Notes” and, together with the 2029 Notes, the “New Senior Notes”).

The New Senior Notes were issued pursuant to an indenture, dated as of August 20, 2021, among the Escrow Issuers and U.S.

Bank National Association, as trustee.

Certain of the net proceeds from the New Senior Notes offering were placed in escrow accounts for use in connection with the Gamesys Acquisition.

There are no operations at Bally’s Corporation.

Cash held as of June 30, 2021 was $ 0.1 million and was de minimis at December 31, 2020.

Cash held was de minimis at September 30, 2021 and December 31, 2020.

Subsequent Events

Company Assumption of New Senior Notes Issuer Obligation

On October 1, 2021, upon the closing of the Gamesys Acquisition, the Company assumed the issuer obligation under the New Senior Notes.

The New Senior Notes are guaranteed, jointly and severally, by each of the Company’s restricted subsidiaries that guarantees the Company’s obligations under its New Credit Facility.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Financial Covenant Relief

On April 24, 2020 (the “April 2020 Amendment”), the Company and its lenders amended the financial covenants and certain other terms of the Company’s Credit Facility to provide financial covenant relief from the effects of the COVID-19 pandemic.

Until May 15, 2021, which is the date on which the Company is required to deliver its compliance certificate and financial statements for the three months ending March 31, 2021 (the “Leverage Ratio Covenant Relief Period”) (unless the Company elects to terminate the covenant relief period earlier), the Company will not be required to comply with the maximum total net leverage ratio covenant applicable under the Credit Facility, but instead will be required to comply with a minimum liquidity covenant tested at the last day of each month during the Leverage Ratio Covenant Relief Period.

Under the minimum liquidity requirement, the Company will be required to have unrestricted cash on hand at the end of each month in the following amounts:

(1) $ 75.0 million at April 30, 2020 and May 31, 2020, (2) $ 65.0 million at June 30, 2020, (3) $ 55.0 million at July 31, 2020, and (4) $ 50.0 million at each month-end thereafter through March 31, 2021.

The Company is not permitted to declare or pay dividends on its common stock or make other restricted payments (including repurchases of shares of its common stock), complete investments or acquisitions (other than those made solely with equity consideration, certain acquisitions previously announced or to which the required revolving lenders consent) during the Leverage Ratio Covenant Relief Period, and the interest rate on the Revolving Credit Facility borrowings is LIBOR + 2.75 % during the Leverage Ratio Covenant Relief Period.

Additionally, the amendment permanently changed the minimum LIBOR on revolver borrowings from 0.00 % to 0.75 %.

The Company was in compliance with all debt covenants, as amended, as of June 30, 2021.

Effective as of April 1, 2021, the required revolving lenders agreed to terminate the Leverage Ratio Covenant Relief Period early so the Company is no longer required to comply with the foregoing restrictions.

In addition, as a result of the April 2020 Amendment, the maximum total net leverage ratio covenant the Company is required to comply with at any time that revolving loans, swing loans and letters of credit (excluding up to $ 2.5 million of letters of credit) exceed 30 % of the total revolving commitments, was increased as follows:

(i) for the fiscal quarter ending March 31, 2021, 6.25 :1.00;

(ii) for the fiscal quarter ending June 30, 2021, 6.00 :1.00;

(iii) for the fiscal quarter ending September 30, 2021, 5.75 :1.00;

(iv) for the fiscal quarter ending December 31, 2021, 5.50 :1.00 and (v) for the fiscal quarter ending March 31, 2022 and each fiscal quarter thereafter, 5.00 :1.00.

Subsequent Events

On August 6, 2021, the Company obtained commitments, subject to satisfaction of customary closing conditions, for proposed senior secured credit facilities, by and among the Company, as borrower, the subsidiaries of the Company party thereto, as guarantors, the lenders party thereto from time to time (the “Lenders”) and Deutsche Bank AG, New York Branch, acting through one or more of its branches or affiliates, as administrative agent and collateral agent thereunder, pursuant to which the Lenders have agreed to extend to the Company an aggregate principal amount of senior secured credit facilities of up to $ 2.57 billion, consisting of up to (i) a $ 1.95 billion senior secured first lien term loan facility and (ii) a $ 620.0 million senior secured first lien revolving credit facility (the “New Credit Facilities”).

The proceeds of the New Credit Facilities will be used to, among other things, refinance certain of the Company’s existing indebtedness, including the existing Credit Facility.

The New Credit Facilities will contain, and any definitive financing documentation for the New Credit Facilities will contain, customary representations and warranties, events of default and covenants for transactions of this type.

On August 6, 2021, the Company’s subsidiaries, Premier Entertainment Sub, LLC and Premier Entertainment Finance Corp., entered into an agreement for the private placement of $ 1.50 billion in aggregate principal amount of senior notes in two separate series:

$ 750.0 million in aggregate principal amount of senior notes due 2029 and $ 750.0 million in aggregate principal amount of senior notes due 2031.

The offering is expected to close on or about August 20, 2021, subject to customary closing conditions.

Certain of the net proceeds from the notes offering will be placed in escrow accounts with one of the banks that has committed to finance the Acquisition to retire a portion of the Bridge Commitment.

The 2029 Notes mature on September 1, 2029 and the 2031 Notes mature on September 1, 2031.

Interest is payable on the New Senior Notes in cash semi-annually on March 1 and September 1 of each year, beginning on March 1, 2022.

The Company may redeem some or all of the New Senior Notes at any time prior to September 1, 2024, in the case of the 2029 Notes, and September 1, 2026, in the case of the 2031 Notes, at prices equal to 100% of the principal amount of the New Senior Notes to be redeemed plus certain “make-whole” premiums, plus accrued and unpaid interest.

In addition, prior to September 1, 2024, the Company may redeem up to 40 % of the original principal amount of each series of the New Senior Notes with proceeds of certain equity offerings at a redemption price equal to 105.625 % of the principal amount, in the case of the 2029 Notes, and 105.875 %, in the case of the 2031 Notes, plus accrued and unpaid interest.

The Company may redeem some or all of the New Senior Notes at any time on or after September 1, 2024, in the case of the 2029 Notes, and September 1, 2026, in the case of the 2031 Notes, at certain redemption prices set forth in the indenture plus accrued and unpaid interest.

The indenture contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, (1) incur additional indebtedness, (2) pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, (3) enter into certain transactions with affiliates, (4) sell or otherwise dispose of assets, (5) create or incur liens and (6) merge, consolidate or sell all or substantially all of the Company’s assets.

These covenants are subject to exceptions and qualifications set forth in the indenture.

New Credit Facility

On October 1, 2021, the Company and certain of its subsidiaries entered into a credit agreement (the “New Credit Agreement”) with Deutsche Bank AG New York Branch, as administrative agent and collateral agent, and the other lenders party thereto, providing for senior secured financing of up to $ 2.565 billion, consisting of a senior secured term loan facility in an aggregate principal amount of $ 1.945 billion (the “New Term Loan Facility”), which will mature in 2028, and a senior secured revolving credit facility in an aggregate principal amount of $ 620.0 million (the “New Revolving Credit Facility”), which will mature in 2026.

The New Revolving Credit Facility was undrawn at closing.

The credit facilities allow the Company to increase the size of the New Term Loan Facility or request one or more incremental term loan facilities or increase commitments under the New Revolving Credit Facility or add one or more incremental revolving facilities in an aggregate amount not to exceed the greater of $ 650 million and 100 % of the Company’s consolidated EBITDA for the most recent four-quarter period plus or minus certain amounts as specified in the New Credit Agreement, including an unlimited amount subject to compliance with a consolidated total secured net leverage ratio as set out in the New Credit Agreement.

The credit facilities are guaranteed by the Company’s restricted subsidiaries, subject to certain exceptions, and secured by a first-priority lien on substantially all of the Company’s and each of the guarantors’ assets, subject to certain exceptions.

Borrowings under the credit facilities bear interest at a rate equal to, at the Company’s option, either (1) LIBOR determined by reference to the costs of funds for U.S.

dollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs and subject to a floor of 0.50 % in the case of term loans and 0.00 % in the case of revolving loans or (2) a base rate determined by reference to the greatest of (a) the federal funds rate plus 0.50 %, (b) the prime rate, (c) the one-month LIBOR rate plus 1.00 %, (d) solely in the case of term loans, 1.50 %, and (e) solely in the case of revolving loans, 1.00 %, in each case of clauses (1) and (2), plus an applicable margin.

In addition, on a quarterly basis, the Company is required to pay each lender under the New Revolving Credit Facility a 0.50 % or 0.375 % commitment fee in respect of commitments under the New Revolving Credit Facility, with the applicable commitment fee determined based on the Company’s total net leverage ratio.

The credit facilities contain covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional indebtedness, pay dividends or make certain other restricted payments, sell assets, make certain investments, and grant liens.

These covenants are subject to exceptions and qualifications set forth in the New Credit Agreement.

The New Revolving Credit Facility contains a financial covenant regarding a maximum first lien net leverage ratio that applies when borrowings under the New Revolving Credit Facility exceed 30% of the total revolving commitment.

BALLY’S CORPORATION

1 unchanged sentence

GLPI Master Lease

In connection with the acquisition of Tropicana Evansville, an affiliate of GLPI has agreed to acquire the real estate associated with the Evansville Casino from the Seller for $ 340.0 million and lease it to the Company under a master lease agreement (the “Master Lease”).

In connection with the acquisition of Bally’s Evansville, an affiliate of GLPI has agreed to acquire the real estate associated with the Evansville Casino from the Seller for $ 340.0 million and lease it to the Company under a master lease agreement (the “Master Lease”).

GLPI has also agreed to acquire the real estate associated with Dover Downs for $ 144.0 million and lease it back to the Company under the Master Lease.

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The acquisition of Evansville and commencement of the Master Lease was June 4, 2021.

During the second quarter of 2021, the Company sold Dover Downs to GLPI and recorded a gain of $ 53.4 million representing the difference in the transaction price and the derecognition of assets.

During the second quarter of 2021, the Company sold the real estate associated with Dover Downs to GLPI and recorded a gain of $ 53.4 million representing the difference in the transaction price and the derecognition of assets.

This gain is reflected as “Gain on sale-leaseback” in the condensed consolidated statements of operations.

As of June 30, 2021, the company recognized a lease liability and corresponding right of use asset of $ 117.3 million and $ 276.9 million related to Dover Downs and Tropicana Evansville, respectively.

The leases will be accounted for as operating leases within the provisions of ASC 842 over the lease term or until a re-assessment event occurs.

During the second quarter of 2021, the company recognized a lease liability and corresponding right of use asset of $ 117.3 million and $ 276.9 million related to Dover Downs and Bally’s Evansville, respectively.

These leases are accounted for as operating leases within the provisions of ASC 842 over the lease term or until a re-assessment event occurs.

Operating Leases

In addition to the operating lease components under the GLPI Master Lease, the Company is committed under various long-term operating lease agreements primarily related to submerged tidelands, property and equipment at Hard Rock Biloxi, Bally’s Kansas City, Shreveport, and Bally’s Lake Tahoe.

These leases include various renewal options which are included in the lease term when the Company has determined it is reasonably certain of exercising the options.

10 unchanged sentences

The Company does not have any leases classified as financing leases.

The Company had operating lease liabilities of approximately $ 528.0 million and $ 63.5 million as of June 30, 2021 and December 31, 2020, respectively, and right of use assets of approximately $ 503.1 million and $ 36.1 million as of June 30, 2021 and December 31, 2020, respectively, which were included in the condensed consolidated balance sheets.

The Company had operating lease liabilities of approximately $ 525.5 million and $ 63.5 million as of September 30, 2021 and December 31, 2020, respectively, and right of use assets of approximately $ 499.1 million and $ 36.1 million as of September 30, 2021 and December 31, 2020, respectively, which were included in the condensed consolidated balance sheets.

BALLY’S CORPORATION

1 unchanged sentence

The following summarizes quantitative information about the Company’s operating leases:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2021 2020 2021 2020

5 unchanged sentences

Total lease expense $ 19,004 $ 1,622 $ 30,440 $ 3,601

Supplemental cash flow and other information for the three and six months ended June 30, 2021 and 2020, related to operating leases was as follows:

Three Months Ended June 30, Six Months Ended June 30,

Supplemental cash flow and other information for the three and nine months ended September 30, 2021 and 2020, related to operating leases was as follows:

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2021 2020 2021 2020

1 unchanged sentence

Right of use assets obtained in exchange for operating lease liabilities $ 1,106 $ — $ 127,729 $ 116

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Weighted average remaining lease term 15.9 years 24.3 years

Weighted average discount rate 6.2 % 7.3 %

As of June 30, 2021, future minimum rental commitments under noncancelable operating leases are as follows:

(in thousands) June 30, 2021

As of September 30, 2021, future minimum rental commitments under noncancelable operating leases are as follows:

(in thousands) September 30, 2021

Remaining 2021 $ 14,934

5 unchanged sentences

The Company also has leasing arrangements with third-party lessees at its properties.

Leasing arrangements for which the Company acts as a lessor are not deemed material as of June 30, 2021 and December 31, 2020.

Leasing arrangements for which the Company acts as a lessor are not deemed material as of September 30, 2021 and December 31, 2020.

BALLY’S CORPORATION

3 unchanged sentences

the 2010 BLB Worldwide Holdings, Inc.

Stock Option Plan (the “2010 Option Plan”), the 2015 Stock Incentive Plan (“2015 Incentive Plan”) and the Bally’s Corporation 2021 Equity Incentive Plan (“2021 Incentive Plan”).

Stock Option Plan (the “2010 Option Plan”), the 2015 Stock Incentive Plan (“2015 Incentive Plan”) and the Bally’s Corporation 2021 Equity Incentive Plan (“2021 Incentive Plan”), collectively (the “Equity Incentive Plans”).

The 2010 Option Plan provided for options to acquire 2,455,368 shares of the Company’s common stock.

2 unchanged sentences

Effective December 9, 2015, it was determined that no new awards would be granted under the 2010 Option Plan.

During the three and six months ended June 30, 2021, there were 40,000 and 70,000 options exercised at a weighted average exercise price of $ 4.31 per share and an aggregate intrinsic value of $ 0.2 million and $ 0.3 million, respectively.

As of June 30, 2021, there were 20,000 unexercised options outstanding.

During the nine months ended September 30, 2021, there were 70,000 options exercised at a weighted average exercise price of $ 4.31 per share and an aggregate intrinsic value of $ 0.3 million.

As of September 30, 2021, there were 20,000 unexercised options outstanding.

The 2015 Incentive Plan provided for the grant of stock options, restricted stock award (“RSAs”), restricted share units (“RSUs”), performance share units (“PSUs”) and other stock-based awards (collectively, “restricted awards”) (including those with performance-based vesting criteria) to employees, directors or consultants of the Company.

3 unchanged sentences

The 4,250,000 shares of the Company’s common stock, decreased by the number of shares subject to awards granted under the 2015 Incentive Plan between December 31, 2020 and May 18, 2021, or 221,464 shares, plus any shares subject to awards granted under the 2021 Incentive Plan or the 2015 Incentive Plan that are added back to the share pool under the 2021 Incentive Plan pursuant to the plan’s share counting rules, are authorized for issuance under the 2021 Incentive Plan.

During the six months ended June 30, 2021, the Company granted 498,990 restricted awards with an aggregate intrinsic value of $ 28.3 million to eligible employees, executive management and directors, of which 221,667 were granted under the 2015 Incentive Plan and 277,323 were granted under the 2021 Incentive Plan.

As of June 30, 2021, 3,754,901 shares remain available for grant under the 2021 Incentive Plan, which includes shares added back to the share pool based on share counting rules.

During the nine months ended September 30, 2021, the Company granted 488,009 restricted awards with an aggregate intrinsic value of $ 27.5 million of which 221,667 were granted under the 2015 Incentive Plan and 266,342 were granted under the 2021 Incentive Plan.

As of September 30, 2021, 3,707,178 shares remain available for grant under the 2021 Incentive Plan, which includes shares added back to the share pool based on share counting rules.

There were 875,988 restricted awards outstanding as of September 30, 2021.

Share-Based Compensation

The Company recognized total share-based compensation expense of $ 3.9 million and $ 8.4 million for the three and six months ended June 30, 2021, respectively, and $ 5.5 million and $ 7.7 million for the three and six months ended June 30, 2020, respectively.

The total income tax benefit for share-based compensation arrangements was $ 1.1 million and $ 0.8 million for the three months ended June 30, 2021 and 2020, respectively, and $ 2.5 million and $ 2.9 million for the six months ended June 30, 2021 and 2020, respectively.

The Company recognized total share-based compensation expense of $ 5.4 million and $ 13.8 million for the three and nine months ended September 30, 2021, respectively, and $ 1.8 million and $ 9.5 million for the three and nine months ended September 30, 2020, respectively.

The total income tax benefit for share-based compensation arrangements was $ 1.5 million and $ 0.7 million for the three months ended September 30, 2021 and 2020, respectively, and $ 4.0 million and $ 3.6 million for the nine months ended September 30, 2021 and 2020, respectively.

BENEFIT PLANS

4 unchanged sentences

Dover Downs Defined Benefit Pension Plan

The net periodic benefit (income) cost and other changes in plan assets and benefit obligations, excluding service cost, is set forth in the table below for the three and six months ended June 30, 2021 and 2020.

Three Months Ended June 30, Six Months Ended June 30,

The net periodic benefit (income) cost and other changes in plan assets and benefit obligations, excluding service cost, is set forth in the table below for the three and nine months ended September 30, 2021 and 2020.

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2021 2020 2021 2020

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The Company expects to contribute approximately $ 0.7 million in 2021.

The Company contributed $ 0.2 million to the Dover Downs Pension Plan during the three and six months ended June 30, 2021.

The Company contributed $ 0.2 million and $ 0.4 million to the Dover Downs Pension Plan during the three and nine months ended September 30, 2021, respectively.

In 2020, under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), minimum required contributions for single-employer pension plans, including quarterly contributions, that were otherwise due during calendar year 2020 were instead due January 1, 2021.

As such, there were no contributions made during the three and six months ended June 30, 2020 as the Company elected not to make a contribution to the Dover Downs Pension Plan for the first quarter of 2020 and the second quarter payment of $ 0.3 million was made in July 2020.

The Company has a retirement savings plan under Section 401(k) of the Internal Revenue Code covering non-union employees and certain union employees.

During the three and nine months ended September 30, 2020, the Company contributed $ 0.5 million to the Dover Downs Pension Plan which included the minimum required contributions for first and second quarters of 2020, including all applicable interest after having elected not to make a contribution to the Dover Downs Pension Plan for the first quarter of 2020, as well as the final payment for the 2019 plan year.

The Company has a retirement savings plan under Section 401(k) of the Internal Revenue Code covering non-union employees and certain union employees that reside in the United States.

The plan allows employees to defer up to the lesser of the Internal Revenue Code prescribed maximum amount or 100 % of their income on a pre-tax basis through contributions to the plan.

Total employer contribution expense was $ 0.8 million and $ 0.1 million for the three months ended June 30, 2021 and 2020, respectively, and $ 1.3 million and $ 0.6 million for the six months ended June 30, 2021 and 2020, respectively.

Total employer contribution expense was $ 0.9 million and $ 0.1 million for the three months ended September 30, 2021 and 2020, respectively, and $ 2.2 million and $ 0.6 million for the nine months ended September 30, 2021 and 2020, respectively.

STOCKHOLDERS’ EQUITY

7 unchanged sentences

The Offer was funded with cash on hand.

On February 10, 2020, the Board of Directors approved an increase in the capital return program of $ 100 million.

On February 10, 2020 and October 4, 2021, the Board of Directors approved increases in the capital return program of $ 100 million and $ 350 million, respectively.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Total share repurchase activity, including a private repurchase transaction, during the three and six months ended June 30, 2020 was as follows:

(in thousands, except share data) Three Months Ended June 30, 2020 Six Months Ended June 30, 2020

Total share repurchase activity, including a private repurchase transaction, during the nine months ended September 30, 2020 was as follows:

(in thousands, except share data) Nine Months Ended September 30, 2020

Number of common shares repurchased 1,812,393

1 unchanged sentence

Average cost per share, including commissions $ 18.37

__________________________________

There was no share repurchase activity during the nine months ended September 30, 2021.

Common Stock Offering

3 unchanged sentences

On April 20, 2021, the Company issued to affiliates of Sinclair a warrant to purchase 909,090 common shares for an aggregate purchase price of $ 50.0 million, the same price per share as the public offering price in Bally’s common stock public offering ($ 55.00 per share).

The net proceeds are expected to be used to finance a portion of the purchase price of the Acquisition.

The net proceeds were used to finance a portion of the purchase price of the Gamesys acquisition.

The exercise price of the warrant is nominal, and its exercise is subject to, among other conditions, requisite gaming authority approvals.

1 unchanged sentence

In addition, in accordance with the agreements that Bally’s and Sinclair entered into in November 2020, Sinclair exchanged 2,086,908 common shares for substantially identical warrants.

The Company currently expects to finance the Acquisition through a combination of sources, including a portion of the net proceeds from these equity offerings.

If the Acquisition is not completed, Bally's expects to apply the net proceeds from the offering for general corporate purposes, which may include repayment of debt, repurchases of its common stock, capital expenditures, acquisitions and investments.

Treasury Stock

2 unchanged sentences

Treasury stock is included in authorized and issued shares but excluded from outstanding shares.

There was no share repurchase activity during the three and six months ended June 30, 2021.

There was no share repurchase activity during the three and nine months ended September 30, 2021.

As mentioned above, Sinclair exchanged 2,086,908 common shares for substantially identical warrants.

The common stock received by the Company was recorded as treasury stock and subsequently retired during the second quarter of 2021.

The Company retired 2,089,226 shares of its common stock held in treasury during the three and six months ended June 30, 2021.

The Company retired 162,625 and 10,892,083 shares of its common stock held in treasury during the three and six months ended June 30, 2020, respectively.

The Company retired 10,042 and 2,099,268 shares of its common stock held in treasury during the three and nine months ended September 30, 2021, respectively.

The Company retired 10,892,083 shares of its common stock held in treasury during the nine months ended September 30, 2020.

There were no shares retired during the three months ended September 30, 2020.

The shares were returned to the status of authorized but unissued shares.

As of June 30, 2021 there were no shares remaining in treasury.

During the six months ended June 30, 2020, the Company paid cash dividends of $ 0.10 per common share, for a total cost of approximately $ 3.2 million.

There were no cash dividends paid during the six months ended June 30, 2021.

As of June 30, 2021 and December 31, 2020, $ 84.9 million remained available for use under the above-mentioned $100 million capital return program.

Pursuant to the terms of the amendment to the Credit Facility entered into on April 24, 2020, as noted in Note 10 “Long-term Debt,” the Company could not declare or pay dividends on its common stock or make other restricted payments (including repurchases of shares of its common stock) during the Leverage Ratio Covenant Relief Period.

As of September 30, 2021, there were no shares remaining in treasury.

During the nine months ended September 30, 2020, the Company paid cash dividends of $ 0.10 per common share, for a total cost of approximately $ 3.2 million.

There were no cash dividends paid during the nine months ended September 30, 2021.

As of September 30, 2021 and December 31, 2020, $ 84.9 million remained available for use under the above-mentioned capital return program.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Shares Outstanding

As of September 30, 2021, the Company had 44,581,568 common shares issued and outstanding.

The Company issued warrants, options and other contingent consideration in acquisitions and strategic partnerships that are expected to result in the issuance of common shares in future periods resulting from the exercise of warrants and options or the achievement of certain performance targets.

These incremental shares and the shares issued by the consummation of the Gamesys acquisition on October 1, 2021 are summarized below:

Sinclair Penny Warrants (Note 2) 7,911,724

Sinclair Performance Warrants (Note 2) 3,279,337

Sinclair Options (1) (Note 2)

Monkey Knife Fight penny warrants (Note 5) 24,611

Monkey Knife Fight contingent shares (Note 5) 787,557

Telescope contingent shares (Note 5) 75,678

SportCaller contingent shares (2) (Note 5)

Gamesys acquisition (Note 1) 9,773,537

Outstanding awards under Equity Incentive Plans (Note 13) 895,988

__________________________________

(1) Consists of four equal tranches to purchase shares with exercise prices ranging from $ 30.00 to $ 45.00 per share, exercisable over a seven-year period beginning on the fourth anniversary of the November 18, 2020 closing of the Sinclair Agreement.

(2) The contingent consideration related to the SportCaller acquisition is 10 M EUR, payable in shares subject to certain post-acquisition earnout targets and based on share price at time of payment.

For purposes of this estimate, the Company used the EUR>USD conversion rate of 1.1574 as of September 30, 2021 and the closing share price of Company common shares of $ 50.14 per share to calculate the shares expected to be issued if all earn-out targets are met.

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table reflects the changes in accumulated other comprehensive loss by component, net of tax, for the six months ended June 30, 2021.

There was no change in accumulated other comprehensive loss for the six months ended June 30, 2020.

The following table reflects the changes in accumulated other comprehensive loss by component, net of tax, for the nine months ended September 30, 2021.

There was no change in accumulated other comprehensive loss for the nine months ended September 30, 2020.

(in thousands) Foreign Currency Translation Adjustment Benefit Plans Total

2 unchanged sentences

Reclassification adjustment to net earnings (1)

Accumulated other comprehensive loss at June 30, 2021 $ ( 633 ) $ ( 3,063 ) $ ( 3,696 )

Accumulated other comprehensive loss at September 30, 2021 $ ( 44,312 ) $ ( 3,022 ) $ ( 47,334 )

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(1) Approximately $ 40 thousand for each quarter ended March 31, 2021 and June 30, 2021.

(1) Approximately $ 40 thousand for each quarter ended March 31, June 30, and September 30, 2021.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

SEGMENT REPORTING

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The growth and diversification achieved through the Company’s recent and pending acquisitions has resulted in a change in the way the Company’s chief operating decision maker makes operating decisions, assesses the performance of the business and allocates resources.

As a result, as of June 30, 2021, the Company determined it had four operating segments:

East, West, Bally’s Interactive and Mile High USA.

Bally’s Interactive and Mile High USA were determined to be immaterial operating segments and are therefore, included in the “Other” category along with interest expense and certain corporate operating expenses that are not allocated to the other segments, including, among other expenses, share-based compensation, merger and acquisition costs and certain non-recurring charges.

As a result of this realignment, the Company determined it had four operating segments:

East, West, Bally Interactive and Bally’s Arapahoe Park.

Bally Interactive and Bally’s Arapahoe Park were determined to be immaterial operating segments and are therefore, included in the “Other” category along with interest expense and certain corporate operating expenses that are not allocated to the other segments, including, among other expenses, share-based compensation, merger and acquisition costs and certain non-recurring charges.

The properties included within the East and West reportable segments, along with the components of the Other category, are as follows:

East West Other

Twin River Casino Hotel (1)

Bally’s Twin River Lincoln Casino Resort (1)

Hard Rock Biloxi (3)

Bally’s Interactive (5)

Tiverton Casino Hotel (1)

Casino Vicksburg (3)

Mile High USA

Bally Interactive (5)

Bally’s Tiverton Casino & Hotel (1)

Bally’s Vicksburg (3)

Bally’s Arapahoe Park

Dover Downs (2)

Ballys’ Kansas City Casino (4)

Bally’s Kansas City Casino (4)

Twin River Management Group (6)

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Bally’s Black Hawk (4)

Tropicana Evansville Eldorado Resort Casino Shreveport (3)

Bally’s Evansville

Bally’s Shreveport Casino & Hotel (3)

Bally’s Lake Tahoe Casino Resort

Jumer’s Casino Hotel

Bally’s Quad Cities Casino Hotel

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(4) Previously reported within the “West” segment.

(5) Immaterial operating segment which includes SportCaller, MKF and Bally’s Interactive (formerly Bet.Works) as well as online and mobile sports betting operations.

(5) Immaterial operating segment which includes SportCaller, MKF and Bally Interactive (formerly Bet.Works) as well as online and mobile sports betting operations.

(6) Immaterial operating segment that includes interest expense and certain operating expenses that are not allocated to the other segments, which include, among other expenses, share-based compensation, merger and acquisition costs and certain non-recurring charges.

The Company is currently evaluating the pending acquisition of Gamesys for segment reporting purposes.

The Company is currently evaluating the acquisition of Gamesys for segment reporting purposes, but it is expected that it will be reported as International Interactive and the Company’s existing operating segment Bally Interactive, will be reported as North America Interactive.

It is expected that the pending acquisition of Tropicana Las Vegas will be reported in the West and the Pennsylvania development project will be included in the East.

The Company’s operations are predominately within the United States and has immaterial operations in other jurisdictions.

As of September 30, 2021, the Company’s operations are predominately within the United States and has immaterial operations in other jurisdictions.

The Company does not have any revenues from any individual customers that exceed 10% of total reported revenues.

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(in thousands) East West Other Total

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Total revenue $ 176,975 $ 124,603 $ 13,201 $ 314,779

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Interest expense, net of amounts capitalized 15 — 31,838 31,853

Gain on sale-leaseback ( 53,425 ) — — ( 53,425 )

Change in value of naming rights liabilities — — 6,965 6,965

Gain on bargain purchases — — 24,114 24,114

Gain (adjustment) on bargain purchases — — ( 1,039 ) ( 1,039 )

Capital expenditures 13,630 11,050 6,693 31,373

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Total assets 1,282,971 1,090,759 2,595,973 4,969,703

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Total revenue $ 59,065 $ 55,900 $ 1,659 $ 116,624

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Total assets 627,654 593,038 36,189 1,256,881

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Total revenue $ 408,458 $ 343,190 $ 23,130 $ 774,778

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Total assets 1,282,971 1,090,759 2,595,973 4,969,703

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Total revenue $ 146,848 $ 104,039 $ 3,809 $ 254,696

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Diluted earnings per share includes the determinants of basic earnings per share and, in addition, reflects the dilutive effect of the common stock deliverable for stock options, using the treasury stock method, and for RSUs, RSAs and PSUs for which future service is required as a condition to the delivery of the underlying common stock.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands, except per share data) 2021 2020 2021 2020

Net income (loss) $ 68,942 $ ( 23,555 ) $ 58,237 $ ( 32,433 )

Net (loss) income $ ( 14,747 ) $ 6,723 $ 43,490 $ ( 25,710 )

Weighted average common shares outstanding - basic 49,506 30,458 45,573 30,825

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Diluted earnings (loss) per share $ ( 0.30 ) $ 0.22 $ 0.95 $ ( 0.83 )

There were 3,288,603 and 71,796 share-based awards that were considered anti-dilutive for the three months ended June 30, 2021 and 2020, respectively.

There were 3,279,337 and 142,610 share-based awards that were considered anti-dilutive for the six months ended June 30, 2021 and 2020, respectively.

There were 4,953,791 and 4,922,577 share-based awards that were considered anti-dilutive for the three and nine months ended September 30, 2021, respectively.

There were 88,244 share-based awards that were considered anti-dilutive for the nine months ended September 30, 2020.

There were no share-based awards that were considered anti-dilutive for the three months ended September 30, 2020.

On November 18, 2020, the Company issued penny warrants, performance-based warrants, and options which participate in dividends with the Company’s common stock subject to certain contingencies.

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The penny warrants were considered exercisable for little to no consideration and are therefore, included in basic shares outstanding at their issuance date.

For the three and six months ended June 30, 2021, the shares underlying the performance warrants were anti-dilutive as certain contingencies were not met.

Refer to Note 1 “General Information” for further information regarding the Sinclair Transaction.

For the three and nine months ended September 30, 2021, the shares underlying the performance warrants were anti-dilutive as certain contingencies were not met.

Refer to Note 2 “Significant Accounting Policies” for further information regarding the Sinclair Transaction.

SUBSEQUENT EVENTS

On July 12, 2021, the Company acquired the Association of Volleyball Professionals (“AVP”), a premier professional beach volleyball organization and host of the longest-running domestic beach volleyball tour in the United States.

Long-term Debt

On August 6, 2021, the Company obtained commitments, subject to satisfaction of customary closing conditions, for proposed senior secured credit facilities, pursuant to which the Lenders have agreed to extend to the Company the New Credit Facilities.

On October 1, 2021, the Company completed its acquisition of Gamesys for approximately £ 1.554 billion in cash and 9,773,537 of the Company’s common shares, subject in each case to customary adjustments.

The Company financed the Acquisition and refinanced its and Gamesys’ debt, utilizing, among other sources, the net proceeds from Bally’s April 2021 common stock offering, the proceeds of borrowings under new bank credit facilities, as well as the issuance of new bonds.

Refer to Note 1 “General Information” for further information.

On October 25, 2021, the Company acquired Degree 53 Limited (“Degree 53”), a UK-based creative agency that specializes in multi-channel website and personalized mobile app and software development for the online gambling and sports industries.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

$ 750.0 million in aggregate principal amount of senior notes due 2029 and $ 750.0 million in aggregate principal amount of senior notes due 2031.

On October 1, 2021, Bally’s assumed the issuer obligation under two series of notes issued into escrow on August 20, 2021:

$ 750 million aggregate principal amount of 5.625 % senior notes due 2029 and $ 750 million aggregate principal amount of 5.875 % Senior Notes due 2031.

Refer to Note 11 “Long-Term Debt” for further information.

Credit Facility

On October 1, 2021, Bally’s entered into a credit agreement providing for senior secured credit facilities consisting of a $ 1.945 billion senior secured first lien term loan facility and an undrawn $ 620 million senior secured first lien revolving credit facility.

Refer to Note 11 “Long-Term Debt” for further information.

Capital Return Program

On October 4, 2021, the Board of Directors approved an increase in the capital return program of $ 350 million.

Refer to Note 15 “Stockholders’ Equity” for further information.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements