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Item 7. Management’s Discussion and Analysis

2022-03-01 compared with 2021-03-10 · 328 added, 390 removed, 125 unchanged (85% of the section changed)

5 unchanged sentences

Executive Overview

Our objective is to be one of the leading omni-channel gaming and interactive entertainment companies in the U.S.

During 2020, we made great progress in our long-term growth and diversification strategy.

Among other transactions, we acquired the rights to the name “Bally’s” in 2020 as part of our strategy to become the leading U.S.

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

We took other key steps to build our iGaming and sports betting business in the past year, including entering into a strategic partnership with Sinclair Broadcast Group to leverage the Bally’s brand and combine our sports betting technology with Sinclair’s expansive natural footprint, which includes 188 local TV stations, 19 regional sports networks, the STIRR streaming service, the Tennis Channel and five stadium digital TV and internet sports networks.

We also signed definitive agreements to acquire Bet.Works, a sports betting platform provider to operators in Colorado, New Jersey, Indiana and Iowa, and Monkey Knife Fight, the third-largest fantasy sports platform in North America.

Earlier this year, we acquired SportsCaller, a leading B2B free-to-play game provider.

See “Our Strategy - Recent and Pending Acquisitions, Development Projects and Other” for a description of our recent and pending business acquisitions.

We are a global gaming, hospitality and entertainment company with a portfolio of casinos and resorts and online gaming businesses.

We provide our customers with physical and interactive entertainment and gaming experiences, including traditional casino offerings, iCasino, online bingo games, sportsbook, DFS and F2P.

As of December 31, 2021, we own and manage 14 land-based casinos and one horse racetrack in ten states across the US operating under Bally’s brand.

Our land-based casino operations include approximately 14,900 slot machines, 500 table games and 3,900 hotel rooms, along with various restaurants, entertainment venues and other amenities.

Certain of our properties are leased under a master lease agreement with GLPI, a publicly traded gaming-focused REIT.

With our acquisition of London-based Gamesys on October 1, 2021, we expanded our geographical and product footprints to include an iGaming business with well-known brands providing iCasino and online bingo experiences to our global online customer base with concentrations in Europe and Asia and a growing presence in North America.

Our iCasino and online bingo platforms and games content, sportsbook and F2P games are provided on a B2B as well as a B2C basis.

Our revenues are primarily generated by these gaming and entertainment offerings.

We own and operate our proprietary software and technology stack designed to allow us to provide consumers differentiated offerings and exclusive content.

In late 2020, we changed our name to Bally’s Corporation.

We believe that the “Bally’s” trade name brand has a rich history of gaming, hospitality and entertainment providing immediate and enhanced nationwide brand recognition.

In 2021, we took significant steps forward in our strategy.

We acquired multiple casino and resort properties, including Bally’s Lake Tahoe, Bally’s Evansville and Bally’s Quad Cities.

We also agreed to purchase Tropicana Las Vegas in Las Vegas, Nevada and announced plans to construct a land-based casino in Centre County, Pennsylvania, adding to our land-based casino presence.

With the pending acquisition of Tropicana Las Vegas and the completion of construction in Centre County, Pennsylvania, we will own and manage 16 land-based casinos across 12 states.

In addition, we also expanded our interactive business by:

• launching our Bally Sports Network through our partnership with Sinclair, which combines our sports betting technology with Sinclair’s expansive footprint.

With Bally’s brand, the media partnership and the unencumbered skins (gaming licenses) that we have acquired and reserved in our portfolio, we can now provide our customers omni-channel gaming and entertainment across our various physical properties while having a singular online and mobile presence with a brand that is synonymous with gaming, hospitality and entertainment;

• acquiring Gamesys, a leading international online gaming operator that provides gaming entertainment to a global customer base;

• acquiring Bally’s Interactive, formerly Bet.Works, and its proprietary technology stack and turnkey solutions, which include marketing, operations, customer service, risk management and compliance.

We believe that the Bet.Works acquisition provides us with a suite of advanced omni-channel products, platforms, software and content solutions positioning us to deliver competitive sports betting and iCasino offerings to customers on a national scale.

These steps have positioned us to become a leading, full-service, vertically integrated sports betting and iGaming company in the US with physical casinos and online gaming solutions united under a single, leading brand.

COVID-19 Pandemic

We also experienced unprecedented challenges resulting from the COVID-19 pandemic.

In an effort to mitigate the spread of the virus, during the first quarter of 2020, our regulators temporarily closed all of our properties by March 16, 2020.

By June 17, 2020, all of our properties, including the newly acquired Casino KC and Casino Vicksburg, had reopened.

Our Rhode Island properties were closed again from November 29 through December 20, 2020.

The following is an update of re-openings and current operations by property:

• Twi n River Casino Hotel and Tiverton Casino Hotel - The Rhode Island properties pre-opened on June 8, 2020 with very limited invitation - only guests allowed.

Beginning June 30, 2020, we were able to open to the general public, at approximately 65% capacity, with half of VLTs and a limited number of table games (with a three - player limit).

The properties were closed again from November 29 through December 20, 2020 due to a state - mandated pause to slow the spread of COVID-19.

Currently, the properties are open to the general public and are operating at 65% capacity with about half of VLTs, and all table games (with a three - player limit) available.

The hotels at the Rhode Island properties remain closed.

• Hard Rock Biloxi - The Biloxi property re-opened to the general public on May 21, 2020 at 50% capacity with 41% of VLTs, all table games (with a three - player limit) available and 75% of the hotel rooms available to guests.

Currently, Hard Rock Biloxi is operating at 50% capacity with over 63% of VLTs and all table games (with a three - player limit) available, and the hotel is operating with all rooms available to guests.

• Dover Downs Casino Hotel - The Delaware property re-opened on June 1, 2020 at 30% capacity with 45% of VLTs.

Table games (with a two - player limit) became available on June 17, 2020 and the hotel, at 60% room capacity, became available on June 18, 2020.

Currently, the property is operating at approximately 60% capacity with 52% of VLTs and 89% of table games (with a four - player limit) available, and all hotel rooms available to guests.

• Casino KC - Casino KC re-opened on June 1, 2020 at 50% capacity with 70% of VLTs and 30% of table games (with a three - player limit) available.

Casino KC is currently operating at 50% capacity with all VLTs and table games (with a three - player limit) available.

• Casino Vicksburg - Casino Vicksburg re-opened on May 21, 2020 at 50% capacity with 48% of VLTs and 50% of hotel rooms available to guests.

Currently, Casino Vicksburg is still operating at 50% capacity;

however, 70% of VLTs are available and all table games (with a three - player limit) are available, and the hotel is currently operating with all rooms available to guests.

• Black Hawk Casinos - The Black Hawk Casinos re-opened on June 17, 2020 at 50% capacity with 55% of VLTs available to guests.

Currently, the properties are still operating at 50% capacity;

however, 83% of VLTs are now available to guests.

As of November 11, 2020, table games remain closed.

• Bally’s Atlantic City - Bally’s Atlantic City is operating at 25% capacity with 58% of VLTs and all table games (with a four - player limit) available, and the hotel is currently operating with all rooms available to guests.

• Shreveport - Shreveport is operating at 50% capacity with 56% of VLTs and about half of table games (with a four - player limit) available, and the hotel is currently operating with all rooms available to guests.

While we are working closely with government officials on operational aspects of our re-opened properties and our desire to get additional amenities online, we cannot predict the duration of any limitations the government or we may impose on our operations.

Though our operations are partially open in each of our markets, continuing restrictions on our operations, the economic uncertainty that COVID-19 continues to cause and the personal risk tolerances of our customers have caused, and may continue to cause, our business to be negatively impacted.

In light of the foregoing, we are unable to determine when, or if, our properties will return to pre-pandemic demand.

As a result of the current restrictions on our properties related to the COVID-19 pandemic and the uncertainty regarding when we will return to pre-pandemic demand, we have established a multi-faceted plan to slow the usage of our available liquidity, foc us on employee and community matters and prepare our facilities for full re-opening.

We are proactively managing expenses carefully in an effort to retain sufficient liquidity to last through these uncertain times and to fund the purchase prices for acquisitions.

On May 11, 2020, we increased our term loan facility by $275 million, a portion of the proceeds of which was utilized to repay the outstanding borrowings under our revolving credit facility.

On October 9, 2020, we issued an additional $125 million aggregate principal amount of 6.75% Senior Notes for a total of $525 million of Senior Notes due 2027.

Though the timing of when or if we will be able to return to pre-pandemic demand is uncertain, we believe we are prepared for sustained restriction on cash flow from operations and believe that our current available cash balances and availability under our revolving credit facility are sufficient to provide necessary liquidity to meet all of our obligations including debt service and required capital expenditures for the foreseeable future.

Throughout 2020, we carefully managed expenses in an effort to minimize variable costs and fixed property level costs and corporate expenses to protect our financial position.

These efforts included the following:

• the suspension of all major capital projects and significant reduction of our expected capital expenditure spend, excluding our cash outlay for acquisitions during the year;

• renegotiation of certain service and vendor agreements to reduce or eliminate certain recurring fees and/or defer payments;

• reduction of employee costs through measured levels of re-hiring aimed at matching demand based on our properties’ operating status and offerings;

• the suspension of employer 401(k) matching contributions;

• suspension of dividend payments on our common stock as well as share repurchases under our Capital Return Program, each of which was a condition of the amendment we signed to our credit facility on April 24, 2020.

Employee and Community Matters We have taken a series of employee-and community-focused actions.

Among other things, we continued health coverage at no cost to employees who were furloughed.

We have also established a fund to provide financial assistance to employees who experience severe hardship during the shutdown period and are working diligently to bring employees back to work at levels that correspond to demand for our offerings.

Our Twin River Casino property also served as a host site for a drive through rapid COVID-19 testing during the second quarter.

We continue to collaborate with community and employee leaders, health officials and regulatory authorities.

Health and Safety Efforts at Re-opened Facilities As we have reopened our facilities we have actively engaged in a comprehensive sanitization of all properties with an emphasis on public spaces and 'touchpoints' such as handrails, VLTs, countertops and elevator buttons along with a chip sanitizing program.

Additionally, we established a multi-phased approach to re-open each of our facilities.

The plans include, among other things, screening of team members and guests upon arrival at our properties, thermal imaging cameras, enforcement of social distancing guidelines, including spacing between VLTs and limited or no table games to start, frequent cleaning and sanitizing protocols for all areas, mask protection, and public awareness signage.

We expect that the current restrictions on operations and amenities as a result of the COVID-19 pandemic will continue to negatively impact our results of operations.

We do not expect to see a return to pre-pandemic levels until our properties are allowed to fully re-open with all amenities to the public, which is indeterminable at this time and is dependent on the length and severity of the pandemic, the duration of the restrictions in our markets and the speed and depth of vaccinations.

The COVID-19 pandemic has caused, and is continuing to cause, significant disruption in the financial markets both globally and in the U.S., and will continue to impact, possibly materially, our business, financial condition and results of operations.

We cannot predict the degree or duration to which our operations will be affected by the COVID-19 pandemic, and the effects could be material.

While we believe that strong liquidity position, valuable unencumbered assets and aggressive cost reduction initiatives will enable us to fund our current obligations, the COVID-19 pandemic has resulted in significant disruption of global financial markets, which could have a negative impact on our ability to access capital in the future.

We continue to monitor the rapidly evolving situation and guidance from authorities, including federal, state and local public health authorities and may take additional actions based on their recommendations.

In these circumstances, there may be developments outside our control requiring us to further adjust our operating plan, including ongoing restrictions to operations and potential future closings of our properties.

The COVID-19 pandemic has significantly impacted, and is likely to continue to impact, our business in a material manner.

In mid-March of 2020, all of our properties at the time were temporarily closed as a result of the COVID-19 pandemic.

Our 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 which closed again for a period from November to December 2020.

As of December 31, 2021, all of our properties are open and operating with minimal restrictions.

The pandemic and its consequences dramatically reduced travel and demand for hotel rooms and other casino resort amenities, which had a negative impact on our results in 2020 and 2021.

While many restrictions have been relaxed at this point, there are no assurances that a resurgence of future COVID-19 variants will not cause similar disruptions that existed in 2020 and 2021.

In addition, future demand for gaming activities may be negatively impacted by the adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth or reduced business spending due to the impact of the COVID-19 pandemic.

Our business could also be impacted if the disruptions from the COVID-19 pandemic impact construction projects, including our project in Centre County, Pennsylvania, described below.

While we are working closely with government officials on operational aspects of our properties, we cannot predict the duration of any limitations the government or we may impose on our operations.

Continuing restrictions on our operations, the economic uncertainty that COVID-19 continues to cause and the personal risk tolerances of our customers have caused, and may continue to cause, our business to be negatively impacted.

Because the situation is ongoing, and because the duration and severity of the pandemic remain unclear, it is difficult to forecast any impacts on our future results.

We currently expect the COVID-19 pandemic to continue to impact our operations negatively throughout 2021.

We currently expect the COVID-19 pandemic to continue to impact our operations negatively in 2022.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law.

The CARES Act provides opportunities for additional liquidity, loan guarantees and other government programs to support companies affected by the COVID-19 pandemic and their employees, including those like us that operate in the gaming area.

Based on our analysis of the CARES Act, the benefits we believe will be available to us include:

• refund of federal income taxes due to five-year carryback of net operating loss incurred in 2020 when our 2020 tax return is filed;

The benefits of the CARES Act that were available to us included:

• refund of federal income taxes due to five-year carryback of net operating loss incurred in 2020 when our 2020 tax return was filed in 2021;

• relaxation of interest expense deduction limitation for income tax purposes;

• the employee retention credit, providing a refundable federal tax credit equal to 50% of the first $10,000 of qualified wages and benefits, including qualified medical plan contributions, paid to employees while they are not performing services after March 12, 2020 and before January 1, 2021.

• deferral of all employer Federal Insurance Contributions Act (“FICA”) taxes for the remainder of 2020, 50% payable by December 2021 and the remainder payable by December 2022.

Recent and Pending Acquisitions, Development Projects and Other

We seek to continue to grow our business by actively pursuing the acquisition and development of new gaming opportunities and reinvesting in our existing operations.

We believe that interactive gaming, including mobile sports betting and iGaming represent a significant strategic opportunity for our future growth.

In addition, we seek to increase revenues at our brick and mortar casinos through enhancing the guest experience by providing popular games, restaurants, hotel accommodations, entertainment and other amenities in attractive surroundings with high-quality guest service.

Our recent and pending business acquisitions are summarized above in “Our Strategy-Recent and Pending Acquisitions, Development Projects and Other.”

Acquisition of Bally’s Atlantic City

Details of Transaction

On November 18, 2020 we completed our acquisition of Bally’s Atlantic City from Caesars Entertainment, Inc.

and Vici Properties Inc.

Total cash consideration at closing was approximately $27 million, subject to customary adjustments.

As part of the regulatory approval process with the State of New Jersey, we committed to capital improvements to the property of $90 million over a five-year period, which was a condition for approval for our temporary operating license.

Refer to Note 5 “Acquisitions” for further information.

Historical and Current Performance

Prior to our acquisition of Bally’s Atlantic City, its operations were run by Caesars as a single entity inclusive of the operations of Wild Wild West Casino, which we did not acquire.

Historically, the results of Bally’s Atlantic City and Wild Wild West Casino were reported on a combined basis and the ability to accurately produce historical financials on a carved out basis was determined to be difficult to produce without undue effort.

Based on diligence procedures performed, it is believed that prior to COVID-19 related shut downs experienced in 2020, the Bally’s Atlantic City property, excluding the operations of Wild Wild West Casino, generated approximately $170 million of annual revenues and adjusted EBITDA of approximately $12 million in 2019.

As a result of COVID-19 restrictions, Bally’s Atlantic City closed its operations from March 2020 through July 2020.

Since July 2020, the property has continued to operate at limited capacity and under restricted hours based on local state-mandated restrictions.

Bally’s Atlantic City has historically generated a majority of its profit in the summer, as it is located on the New Jersey boardwalk, and has generated losses during the winter.

Additionally, at the time of closing, our IT systems had not yet been converted and it was determined that we would operate the property under a transition services agreement (“TSA”) using Caesars IT systems and the player rewards programs tied to Caesars Total Rewards until we were able to convert to our own systems, which ultimately occurred in mid-February 2021.

The combination of COVID related restrictions, seasonality and increased overhead costs under the TSA and Caesars Total Rewards resulted in increased losses from the acquisition date through December 31, 2020.

We expect those losses to continue into February 2021, when these systems were converted.

Planned Capital Improvements

As noted above, we expect to invest capital into the property over an initial five - year period, which we believe will transform the property resulting in increased revenue and profitability.

Construction is expected to include a permanent Sportsbook facility, on which we have partnered with FanDuel, refurbished hotel rooms, new food and beverage offerings, a new boardwalk facade, and other cosmetic upgrades to the property.

Sports and iGaming Licenses

In connection with the transaction, we acquired three sports betting and five iGaming licenses in New Jersey.

We have announced strategic partnerships with Points Bet, Esports Entertainment, SportTrade and the Score Bet for use of these licenses.

We expect all of these agreements to be accretive and bring something unique to the expansive and cutting-edge New Jersey mobile gaming market.

We also have kept one sports betting and i-gaming skin in New Jersey for our own future use as we roll our Bally’s Interactive division in 2021.

Key Performance Indicator

The main key performance indicator used in managing our business is adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), a non-GAAP measure.

Adjusted EBITDA is defined as earnings for the Company, or where noted our reporting segments, before, in each case, interest expense, net of interest income, provision (benefit) for income taxes, depreciation and amortization, non-operating income, acquisition, integration and restructuring expense, goodwill and asset impairment, expansion and pre-opening expenses, share-based compensation, rebranding, change in fair value of naming rights liabilities, gain on bargain purchases, professional and advisory fees associated with the capital return program, CARES Act credit, credit agreement amendment expenses, storm related losses, net of insurance recoveries, Bet.Works and Sinclair, sports and iGaming licensing, and certain other gains or losses as well as, when presented for our reporting segments, an adjustment related to the allocation of corporate cost among segments.

Recent and Pending Acquisitions

Gamesys Acquisition

On October 1, 2021, we acquired Gamesys, a leading UK-based global online gaming operator.

In connection with the acquisition, Gamesys shareholders received, in the aggregate, 9,773,537 shares of our common stock and $2.08 billion in cash.

We believe that Gamesys’ proven technology platform will foster our continued buildout of our interactive offerings in North America, including real-money gaming options in online sports betting and iGaming.

Additionally, unifying Bally’s and Gamesys’ player databases and technologies provides us with one of the largest portfolios of omni-channel cross-selling opportunities, consisting of land-based gaming, online sports betting, iCasino, online bingo, daily fantasy sports and free-to-play games.

We believe that these offerings, coupled with our media partnership with Sinclair, position the Company to capitalize on significant growth opportunities in the rapidly expanding US online entertainment and sports betting markets.

Other 2021 Acquisitions

In addition to the Gamesys acquisition, we completed or signed definitive agreements for multiple transactions within our Casinos & Resorts and North America Interactive reportable segments.

The pending acquisition of Tropicana Las Vegas is expected to close during the second half of 2022.

Refer to “ Our Strategy and Business Developments ” section above and Note 5 “ Acquisitions ” to our consolidated financial statements presented in Part II, Item 8 for further information.

Key Performance Indicators

The key performance indicators used in managing our business is adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), a non-GAAP measure.

Adjusted EBITDA is defined as earnings for the Company, or where noted our reportable segments, before, in each case, interest expense, net of interest income, provision (benefit) for income taxes, depreciation and amortization, non-operating income, acquisition, integration and restructuring expense, share-based compensation and certain other gains or losses as well as, when presented for our reportable segments, an adjustment related to the allocation of corporate cost among segments.

We use Adjusted EBITDA to analyze the performance of our business and it is used as a determining factor for performance based compensation for members of our management team.

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Total revenue $ 1,322.4 $ 372.8 $ 523.6

(Loss) income from operations (18.4) 114.6 120.6

Income (loss) from operations 93.4 (18.4) 114.6

Net (loss) income (71.8) (5.5) 55.1

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Total revenue 100.0 % 100.0 % 100.0 %

Gaming, racing, hotel, food and beverage, retail, entertainment and other expenses 37.2 % 35.4 % 30.9 %

Gaming, hotel, food and beverage, retail, entertainment and other expenses 40.5 % 37.2 % 35.4 %

Advertising, general and administrative 38.7 % 47.5 % 34.5 %

Goodwill and asset impairment 0.4 % 2.3 % — %

Gain on sale-leaseback (4.0) % — % — %

Contract termination 2.3 % — % — %

Other operating costs and expenses 4.3 % 7.8 % 2.1 %

1 unchanged sentence

Total operating costs and expenses 92.9 % 104.9 % 78.1 %

(Loss) income from operations (4.9) % 21.9 % 27.6 %

Income (loss) from operations 7.1 % (4.9) % 21.9 %

Other income (expense):

Interest income 0.2 % 0.2 % 0.4 %

Interest expense (17.0) % (7.6) % (5.3) %

Interest expense, net of amounts capitalized (9.1) % (17.0) % (7.6) %

Change in value of naming rights liabilities 1.3 % (15.5) % — %

Gain on bargain purchases 1.7 % 17.1 % — %

Loss on extinguishment and modification of debt — % (0.3) % — %

Loss on extinguishment of debt (7.8) % — % (0.3) %

Other, net 0.9 % — % — %

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Segment Information

During the fourth quarter of 2021, the Company updated its reportable segments to better align with its strategic growth initiatives in light of recent acquisitions.

As a result of this realignment, the Company determined it had three reportable segments:

Casinos & Resorts, North America Interactive and International Interactive.

Prior year amounts have been reclassified to conform to this new presentation.

Refer to “Our Operating Structure” in Item 1 “ Business ” for a listing of entities by segment and Note 19 “ Segment Reporting ” for further information.

The following table sets forth certain financial information associated with results of operations for the years ended December 31, 2021, 2020 and 2019.

Non-gaming revenue includes hotel, food and beverage and other revenue.

Non-gaming revenue includes hotel, food and beverage and retail, entertainment and other revenue.

Non-gaming expenses include hotel, food and beverage and retail, entertainment and other expenses.

(In thousands, except percentages) Years Ended December 31, 2020 over 2019 2019 over 2018

2020 2019 2018 $ Change % Change $ Change % Change

Gaming and Racing revenue

Rhode Island $ 111,103 $ 243,372 $ 249,922 $ (132,269) (54.3) % $ (6,550) (2.6) %

Mid-Atlantic 51,776 44,796 — 6,980 15.6 % 44,796 100.0 %

Southeast 86,851 84,247 81,614 2,604 3.1 % 2,633 3.2 %

West 43,611 — — 43,611 100.0 % — — %

Other 4,729 8,647 9,362 (3,918) (45.3) % (715) (7.6) %

Total Gaming and Racing revenue 298,070 381,062 340,898 (82,992) (21.8) % 40,164 11.8 %

Non-gaming revenue

Rhode Island 20,925 62,934 52,730 (42,009) (66.8) % 10,204 19.4 %

Mid-Atlantic 21,900 36,010 — (14,110) (39.2) % 36,010 100.0 %

Southeast 27,981 43,185 43,523 (15,204) (35.2) % (338) (0.8) %

West 3,721 — — 3,721 100.0 % — — %

Other 195 386 386 (191) (49.5) % — — %

Years Ended December 31, 2021 over 2020 2020 over 2019

(In thousands, except percentages) 2021 2020 2019 $ Change % Change $ Change % Change

Casinos & Resorts $ 803,940 $ 298,070 $ 381,062 $ 505,870 169.7 % $ (82,992) (21.8) %

North America Interactive 10,442 — — 10,442 100.0 % — — %

International Interactive 239,110 — — 239,110 100.0 % — — %

Total Gaming revenue 1,053,492 298,070 381,062 755,422 253.4 % (82,992) (21.8) %

Casinos & Resorts 228,888 74,722 142,515 154,166 206.3 % (67,793) (47.6) %

North America Interactive 27,910 — — 27,910 100.0 % — — %

International Interactive 12,153 — — 12,153 100.0 % — — %

Total Non-gaming revenue 268,951 74,722 142,515 194,229 259.9 % (67,793) (47.6) %

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Operating costs and expenses:

Gaming and Racing expenses

Rhode Island $ 29,270 $ 53,431 $ 47,567 $ (24,161) (45.2) % $ 5,864 12.3 %

Mid-Atlantic 17,416 16,139 — 1,277 7.9 % 16,139 100.0 %

Southeast 27,421 28,159 27,325 (738) (2.6) % 834 3.1 %

West 17,766 — — 17,766 100.0 % — — %

Other 4,028 5,828 5,937 (1,800) (30.9) % (109) (1.8) %

Total Gaming and Racing expenses 95,901 103,557 80,829 (7,656) (7.4) % 22,728 28.1 %

Non-gaming expenses

Rhode Island 12,797 35,625 31,323 (22,828) (64.1) % 4,302 13.7 %

Mid-Atlantic 14,418 22,426 — (8,008) (35.7) % 22,426 100.0 %

Southeast 13,078 23,487 23,002 (10,409) (44.3) % 485 2.1 %

West 2,436 — — 2,436 100.0 % — — %

Other 39 77 88 (38) (49.4) % (11) (12.5) %

Casinos & Resorts $ 263,751 $ 95,901 $ 103,557 $ 167,850 175.0 % $ (7,656) (7.4) %

North America Interactive 10,721 — — 10,721 100.0 % — — %

International Interactive 132,560 — — 132,560 100.0 % — — %

Total Gaming expenses 407,032 95,901 103,557 311,131 324.4 % (7,656) (7.4) %

Casinos & Resorts 110,090 42,768 81,615 67,322 157.4 % (38,847) (47.6) %

North America Interactive 9,299 — — 9,299 100.0 % — — %

International Interactive 8,658 — — 8,658 100.0 % — — %

Total Non-gaming expenses 128,047 42,768 81,615 85,279 199.4 % (38,847) (47.6) %

Advertising, general and administrative

Rhode Island 54,331 86,148 85,650 (31,817) (36.9) % 498 0.6 %

Mid-Atlantic 33,003 25,584 — 7,419 29.0 % 25,584 100.0 %

Southeast 33,167 38,654 37,955 (5,487) (14.2) % 699 1.8 %

West 16,437 — — 16,437 100.0 % — — %

Casinos & Resorts 342,489 139,537 153,953 202,952 145.4 % (14,416) (9.4) %

North America Interactive 43,245 — — 43,245 100.0 % — — %

International Interactive 41,571 — — 41,571 100.0 % — — %

Other 84,364 37,406 26,447 46,958 125.5 % 10,959 41.4 %

Total Advertising, general and administrative $ 511,669 $ 176,943 $ 180,400 $ 334,726 189.2 % $ (3,457) (1.9) %

Gaming and Racing expenses as a percentage of Gaming and Racing revenue 32 % 27 % 24 % 5 % 3 %

Gaming expenses as a percentage of Gaming revenue 39 % 32 % 27 % 7 % 5 %

Non-gaming expenses as a percentage of Non-gaming revenue 48 % 57 % 57 % (9) % — %

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Total revenue

Total revenue for the year ended December 31, 2020 decreased $150.8 million, or 28.8%, to $372.8 million, from $523.6 million in 2019.

Gaming and racing revenue for the year ended December 31, 2020 decreased $83.0 million, or 21.8%, food and beverage revenue decreased $37.8 million, or 54.0%, and hotel revenue decreased $14.2 million, or 36.5%, each compared to the prior year.

The decreases in total revenue, gaming and racing revenue, food and beverage revenue and hotel revenue were driven by the mandated shut-down of our operations at all properties from mid-March of 2020 into June 2020 and the continued limitations on our operations in response to the COVID-19 pandemic, including a second shut down of our properties in Rhode Island from November 29 through December 20, 2020.

Decreases in revenue resulting from the pandemic were partially offset by revenue from current year acquisitions of Casino KC and Casino Vicksburg on July 1, 2020 which contributed $40.1 million, the Black Hawk Casinos on January 23, 2020 which contributed $17.8 million, Bally’s Atlantic City on November 18, 2020 which contributed $8.7 million, and Shreveport on December 23, 2020 which contributed $2.5 million.

Our Total revenue for the years ended December 31, 2021 and 2020 consisted of the following (in thousands):

2021 2020 $ Change % Change

Gaming $ 1,053,492 $ 298,070 $ 755,422 253.4 %

Hotel 95,356 24,742 70,614 285.4 %

Food and beverage 92,906 32,132 60,774 189.1 %

Retail, entertainment and other 80,689 17,848 62,841 352.1 %

Total revenue 1,322,443 372,792 949,651 254.7 %

Total revenue for the year ended December 31, 2021 increased $949.7 million, or 254.7%, to $1.32 billion, from $372.8 million in 2020.

We saw gaming, hotel, food and beverage and retail, entertainment and other revenues grow and exceed, in some cases, pre-pandemic levels, as we were able to operate with less restrictions across our properties in 2021, in addition to fewer days closed year-over-year, resulting from developments in the COVID-19 pandemic and an increase in consumer confidence and visitation.

In addition to the above, incremental revenues from acquisitions completed in 2021, including Gamesys, Bally’s Evansville, Bally’s Lake Tahoe, Bally’s Quad Cities and our North America Interactive acquisitions (collectively the “2021 Acquisitions”), and from our acquisitions completed in 2020, including Bally’s Atlantic City, Bally’s Shreveport, Bally’s Kansas City, Bally’s Vicksburg and Bally’s Black Hawk (collectively, the “2020 Acquisitions”), contributed, in the aggregate, $704.9 million.

Operating costs and expenses

For 2020, we recorded total operating costs and expenses of $391.2 million, down 4.3% compared to the $409.0 million in 2019.

Gaming and racing expenses for the year ended December 31, 2020 decreased $7.7 million, or 7.4%, to $95.9 million from $103.6 million in 2019.

The decrease for the year ended December 31, 2020 year-over-year was primarily attributable to the mandated shut-down of our facilities in mid-March of 2020 into June 2020 as of result of the COVID-19 pandemic and the operational restrictions and limitations on our properties throughout the remainder of the 2020 year.

Non-gaming expenses for the year ended December 31, 2020 decreased $38.8 million, or 47.6%, to $42.8 million from $81.6 million in 2019.

This decrease was primarily due to the minimization of variable costs of non-gaming amenities during the mandated shut-down of our properties and during the year and the continued restrictions on operations.

We expect our total operating costs and expenses to increase in 2021 as compared to 2020 as a result of the inclusion of our recent acquisitions of Casino KC, Casino Vicksburg, Bally’s Atlantic City and Shreveport operations as well as the operations of pending acquisitions of MontBleu, Jumer’s and Tropicana Evansville that we expect to close in the first half of 2021.

For 2021, we recorded total operating costs and expenses of $1.23 billion, up $837.9 million, or 214.2%, from $391.2 million in 2020.

The change in total operating costs and expenses was driven by fluctuations in our gaming and non-gaming expenses, advertising general and administrative costs, acquisition, integration and restructuring expenses and other operating costs and expenses, each described below.

We expect our total operating costs and expenses to increase in 2022 as compared to 2021 as a result of the inclusion of our recent acquisitions, most notably, Gamesys.

Gaming and non-gaming expenses

Gaming expenses for the year ended December 31, 2021 increased $311.1 million, or 324.4%, to $407.0 million from $95.9 million in 2020.

The increase in gaming expenses primarily attributable to the inclusion of expenses from our 2021 Acquisitions and incremental gaming expenses from our 2020 Acquisitions which contributed, in the aggregate, $269.4 million.

Non-gaming expenses for the year ended December 31, 2021 increased $85.3 million, or 199.4%, to $128.0 million from $42.8 million in 2020.

This increase was primarily due to the inclusion of our 2021 Acquisitions and incremental expense from our 2020 Acquisitions which contributed, in the aggregate, $69.8 million.

Advertising, general and administrative

Advertising, general and administrative expenses for the year ended December 31, 2020 decreased $3.5 million, or 1.9%, to $176.9 million from $180.4 million, in 2019.

The decrease in advertising, general and administrative expenses year-over-year is primarily due to the shut down of operations at all of our facilities as a result of the COVID-19 pandemic from mid-March 2020 into June 2020 and the continued operational restrictions and limitations on our properties in the second half of 2020.

The decrease was partially offset by an increase in share-based compensation expense for the year ended December 31, 2020, which increased $13.9 million compared to last year.

The increase in share-based compensation expense was directly attributable to our annual grant of restricted stock awards to eligible employees and executive management which occurred during the first quarter of 2020 with one-third of the restricted stock award vesting during the first quarter of 2020 and one-third vesting at the end of the 2020 year, In addition, in light of the pandemic and cash flow considerations for 2020, we elected to pay annual bonuses to eligible recipients in the form of immediately vested stock awards which were paid on December 30, 2020.

In the prior year, we only granted equity awards to members of our Board and executive team with the grant occurring during the second quarter of 2019.

Acquisition, integration and restructuring expense

We incurred $13.3 million of acquisition, integration and restructuring expense during the year ended December 31, 2020 compared to $12.2 million in 2019 driven by acquisition and integration costs in each year of $13.2 million and $10.9 million, respectively.

During 2020, we recorded total acquisition costs of $10.3 million for acquisitions closed during the year including Shreveport, Bally’s Atlantic City, Casino KC and Casino Vicksburg and the Black Hawk Casinos, and $2.7 million of acquisition costs related to the proposed acquisitions of MontBleu, Jumer’s and Tropicana Evansville.

During 2020, we also incurred approximately $0.1 million of costs relating to the proposed build of a casino in Centre County, Pennsylvania.

During the year ended December 31, 2019, we incurred $7.9 million of costs attributable to Dover Downs merger and going public expenses and $3.0 million of acquisition costs related to the acquisitions of the Black Hawk Casinos and Casino KC and Casino Vicksburg.

Additionally, in 2019 we incurred restructuring expenses of $0.8 million related to severance costs incurred attributable to the acquisition of Dover Downs in the first quarter of 2019 as well as $0.4 million related to severance costs incurred at our Twin River Casino Hotel property as a result of a voluntary termination program put into place in response to softness in the market due to new competition.

Advertising, general and administrative expenses for the year ended December 31, 2021 increased $334.7 million, or 189.2%, to $511.7 million from $176.9 million, in 2020.

The increase year-over-year is primarily due to the impact of our 2021 Acquisitions and 2020 Acquisitions which, in the aggregate, contributed $245.9 million to advertising, general and administrative expenses for the year ended December 31, 2021.

Additionally, in connection with the Gamesys acquisition, the Company recognized post-combination expense related to the acceleration and cash settlement of unvested historical Gamesys’ employee stock awards of $10.3 million included within Advertising, general and administrative expense.

Acquisition, integration and restructuring

We incurred $71.3 million of acquisition, integration and restructuring expense during the year ended December 31, 2021 compared to $13.3 million in 2020 driven by $43.5 million of costs incurred in connection with our acquisition of Gamesys on October 1, 2021, as well as our other 2021 Acquisitions.

Refer to Note 11 “ Acquisition, integration and restructuring expense ” for further information.

Other operating costs and expenses

We recorded storm related losses, net of insurance recoveries of $14.1 million during 2020 primarily attributable to the effects of Hurricane Zeta which made landfall in Louisiana shutting down our Hard Rock Biloxi property for three days in the fourth quarter of 2020.

Additionally, we recorded an impairment charge of $8.7 million as a result of an impairment analysis performed on goodwill and intangible assets acquired in connection with our acquisition of the Black Hawk Casinos and $0.8 million of rebranding expense during the fourth quarter of 2020 as we changed our corporate name to Bally’s Corporation in November 2020.

During the fourth quarter of 2021, we recorded contract termination expense of $30.0 million related to the early termination of retail and online sportsbook operating agreements with William Hill at certain of our casino properties.

During the fourth quarter of 2020, Hurricane Zeta made landfall in Louisiana shutting down our Hard Rock Biloxi property for three days.

As a result, during the year ended December 31, 2021, we recorded gains from insurance recoveries, net of losses, of $19.3 million attributable to insurance proceeds received in the year compared to a loss of $14.1 million in 2020.

In connection with our corporate name change to Bally’s Corporation in November 2020 and the rebranding of our casino properties across our portfolio, we incurred rebranding expense of $2.5 million and $0.8 million during the years ended December 31, 2021 and 2020, respectively.

During the second quarter of 2021, we sold our Bally’s Dover property to GLPI and recorded a gain on sale-leaseback of $53.4 million.

During the year ended December 31, 2021, we recorded asset impairment charges of $4.7 million related to the former trade names at our Bally’s Dover and Bally’s Black Hawk in connection with our rebranding.

During the year ended December 31, 2020, we recorded an impairment charge of $8.7 million as a result of an impairment analysis performed on goodwill and intangible assets acquired in connection with our acquisition of Bally’s Black Hawk.

Depreciation and amortization

Depreciation and amortization of intangibles expense for the year ended December 31, 2020 was $37.8 million, an increase of $5.5 million, or 16.8%, compared to $32.4 million in 2019.

These increases in depreciation and amortization expenses were attributable to the additions of Casino KC and Casino Vicksburg and the Black Hawk Casinos which contributed $2.7 million and $2.3 million during the year ended December 31, 2020, respectively.

Depreciation and amortization of intangibles expense for the year ended December 31, 2021 was $144.8 million, an increase of $106.9 million, or 282.6%, compared to $37.8 million in 2020 driven by the inclusion of incremental expense from our 2021 Acquisitions and 2020 Acquisitions, which contributed, in the aggregate, $83.9 million year-over-year.

(Loss) income from operations

Loss from operations was $18.4 million for the year ended December 31, 2020 compared to income from operations of $114.6 million in 2019.

As a percentage of total revenue, income from operations decreased from 21.9% to a loss from operations of 4.9%, primarily impacted negatively by the COVID-19 pandemic with the shut-down of our properties from mid-March 2020 into June 2020 and the continued operational restrictions experienced in 2020, including the second shutdown of the Rhode Island properties in the fourth quarter of 2020.

Income from operations was $93.4 million for the year ended December 31, 2021 compared to loss from operations of $18.4 million in 2020.

This increase was driven by revenue growth resulting from a return in visitation to our properties as COVID-19 restrictions were lifted as well as more days open in 2021 compared to 2020 coupled with incremental revenues from our 2021 Acquisitions and 2020 Acquisitions, offset by operating expenses as noted above.

Other income (expense)

Total other expense increased $17.0 million, or 43.0%, to $56.4 million for the year ended December 31, 2020 from other expense of $39.4 million in 2019.

The increase in other expense was driven primarily by expense associated with the change in naming rights liability associated with our contracts with Sinclair Broadcast group of $57.7 million.

Refer to Note 9 “Sinclair Agreement” for further information.

Additionally, interest expense was $63.2 million for the year ended December 31, 2020, an increase of $23.4 million from $39.8 million in 2019, due to increased borrowings and higher interest rates year-over-year.

These increases in expense were offset by a total gain on bargain purchases of $63.9 million recorded during the fourth quarter of 2020 related to the acquisitions of Bally’s Atlantic City and Shreveport, which resulted in bargain purchase gains of $32.6 million and $31.3 million, respectively, as the preliminary fair values of the acquired assets and assumed liabilities for each of the acquisitions exceeded its purchase price.

Refer to Note 5 “Acquisitions” for further information.

The year ended December 31, 2019 also included a loss on extinguishment and modification of debt of 1.7 million as a result of the debt refinancing completed during the second quarter of 2019.

Total other expense increased $113.1 million, or 200.5%, to $169.6 million for the year ended December 31, 2021 from $56.4 million in 2020.

This increase was driven by a loss on extinguishment of debt of $103.0 million in connection with the termination of our obligations under our prior revolving credit facility and prior term loan facility and the redemption of our 6.75% senior notes due 2027 in connection with our credit facility entered into on October 1, 2021 and a $56.9 million increase in interest expense year-over-year due to higher borrowings and interest rates.

Refer to Note 12 “ Long-Term Debt ” for further information.

Offsetting these increases was $17.0 million of income recorded to adjust the naming rights liability associated with our contracts with Sinclair to fair value and a gain on bargain purchases of $22.8 million in connection with the acquisitions of Bally’s Evansville and Bally’s Lake Tahoe.

(Benefit) provision for income taxes

Provision for income taxes for the year ended December 31, 2020 decreased $89.4 million to a benefit of $69.3 million compared to 2019.

Benefit for income taxes for the years ended December 31, 2021 and 2020 was $4.4 million and $69.3 million, respectively.

The effective tax rate for the year ended December 31, 2021 was 5.7% compared to 92.7% in 2020.

The increase in the effective tax rate was due to the impact of the CARES Act on the federal rate applied during 2020 and the impact of the bargain purchase gain recorded related to the acquisitions of Bally’s Atlantic City and Shreveport in the fourth quarter of 2020, offset in part by the immediately exercisable penny warrants issued to Sinclair in the fourth quarter of 2020.

The bargain purchase gain and the penny warrants issued to Sinclair will not impact the future tax basis of the underlying assets acquired.

Net Income (Loss) and earnings (loss) per share

Net loss for the year ended December 31, 2020 was $5.5 million compared to net income of $55.1 million in 2019.

As a percentage of revenue, net income decreased from 10.5% for the year ended December 31, 2019 to a net loss of 1.5% for the year ended December 31, 2020.

Diluted loss per share for the year ended December 31, 2020 was $0.18, compared to earnings per share of $1.46 for the year ended December 31, 2019, and was impacted by the factors noted above and share repurchases under our capital return program during the year.

The decrease in the effective tax rate was due to an increase in state tax expense and an increase in nondeductible costs related to the acquisition of Gamesys during 2021, as well as a lower bargain purchase gain in 2021 as compared to 2020.

Further, the 2020 provision included a significant rate benefit as a result of the CARES Act, and we had a lesser benefit in the 2021 provision.

In addition, Gamesys entities are taxed at lower rates versus the US federal tax rate, which impacted 2021 beneficially due to the rate differential.

This benefit was offset by amounts related to share-based compensation, loss on derivative instruments and other permanent amounts.

Net loss and loss per share

Net loss for the year ended December 31, 2021 was $71.8 million compared to net loss of $5.5 million in 2020.

As a percentage of revenue, net loss increased from 1.5% for the year ended December 31, 2020 to a net loss of 5.4% for the year ended December 31, 2021.

Diluted loss per share for the year ended December 31, 2021 and December 31, 2020 was $1.45 and $0.18, respectively, and was impacted by the factors noted above.

Adjusted EBITDA by Segment

Consolidated Adjusted EBITDA was $70.4 million for the year ended December 31, 2020, a decrease of $96.7 million, or 58%, from $167.2 million in the same period last year.

Adjusted EBITDA for the Rhode Island segment decreased 74% to $33.6 million, driven by the negative impact of COVID related restrictions and the shut down of our Rhode Island properties in mid-March of 2020 into June 2020 and again for three weeks during the fourth quarter of 2020.

The Mid-Atlantic segment decreased 51% to $8.1 million from $16.7 million in the prior year and was negatively impacted by COVID related restrictions and the shut down of Dover Downs and the impact of Bally’s Atlantic City, which was acquired in November, as operations were impacted by a combination of COVID related restrictions, seasonality and increased overhead costs under the TSA and reliance on IT systems, as described above.

Adjusted EBITDA for the Southeast segment was $40.6 million, an increase of $3.4 million from the prior year, benefiting from the additions of Casino Vicksburg and Shreveport which were acquired on July 1, 2020 and December 23, 2020, respectively.

Consolidated Adjusted EBITDA also includes the addition of Adjusted EBITDA from the West segment of $10.3 million which includes our Casino KC and the Black Hawk Casinos properties which were acquired on July 1, 2020 and January 23, 2020, respectively.

Consolidated Adjusted EBITDA was $333.7 million for the year ended December 31, 2021, an increase of $263.2 million, or 373.9%, from $70.4 million in 2020.

Adjusted EBITDA for the Casinos & Resorts segment for the year ended December 31, 2021 increased $228.6 million, or 251.7%, to $319.5 million from $90.8 million in 2020.

This increase was driven by strong results across our portfolio due to higher visitation to our properties, particularly at Bally’s Twin River property, Hard Rock Biloxi and Bally’s Dover properties, a full year of 2021 results from properties which were acquired in 2020, including Bally’s Shreveport and Bally’s Kansas City, and the inclusion of Bally’s Evansville, which was acquired during the second quarter of 2021.

Adjusted EBITDA for the North America Interactive segment was $(12.4) million for the year ended December 31, 2021.

Adjusted EBITDA for our International Interactive segment was $69.9 million for the year ended December 31, 2021, directly attributable to our acquisition of Gamesys on October 1, 2021.

Year Ended December 31.

2021 (in thousands)

Rhode Island Mid-Atlantic Southeast West Other Total

Revenue $ 132,028 $ 73,676 $ 114,832 $ 47,332 $ 4,924 $ 372,792

Casinos & Resorts North America Interactive International Interactive Other Total

Net income (loss) $ 186,287 $ (36,879) $ 24,337 $ (245,544) $ (71,799)

Interest expense, net of interest income 37 (15) (27) 117,929 117,924

(Benefit) provision for income taxes (10,326) (1,232) (763) (3,697) (53,306) (69,324)

Provision (benefit) for income taxes 72,128 (8,281) (4,261) (63,963) (4,377)

Depreciation and amortization 54,120 18,096 46,341 26,229 144,786

Acquisition, integration and restructuring expense — 20 — — 13,237 13,257

Expansion and pre-opening expenses 921 — — — — 921

Goodwill and asset impairment — — — 8,659 — 8,659

Share-based compensation — — — — 17,706 17,706

Rebranding — — — — 792 792

Change in value of naming rights liability — — — — 57,660 57,660

Gain on bargain purchase — — — — (63,871) (63,871)

Professional and advisory fees associated with capital return program — — — — (17) (17)

CARES Act credit (1)

(2,215) (755) (548) (361) (49) (3,928)

Credit Agreement amendment expenses (2)

— — — — 810 810

Storm related losses, net of insurance recoveries (3)

— — 15,131 — (1,036) 14,095

Bet.Works and Sinclair (4)

— — — — 1,248 1,248

Sports and iGaming Licensing (5)

Non-operating (income) expense (1)

— 355 640 50,639 51,634

Acquisition, integration and restructuring — 182 1,444 69,662 71,288

Share-based compensation — — — 20,143 20,143

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

Contract termination — — — 30,000 30,000

Other, net (2)

(9,887) 12,500 1,470 23,394 27,477

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__________________________________

(1) Amount represents the Employee Retention Credit under the CARES Act which provides the Company with a refundable tax credit of 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

(2) Credit Agreement amendment expenses include costs associated with amendments made to the Company’s Credit Agreement.

(3) Represents losses incurred from damage resulting from Hurricane Zeta at Hard Rock Biloxi in the fourth quarter of 2020 offset by insurance recovery proceeds received for a damaged roof at the Company’s Arapahoe Park racetrack for the respective periods.

(4) Expenses incurred to establish the partn ership with Sinclair and acquisition costs attributable to the Bet.Works acquisition in the fourth quarter of 2020.

(5) Represents costs incurred to apply for and obtain sports and iGaming licenses in various jurisdictions.

(6) Other includes the following non-recurring items (i) expenses incurred associated with the Rhode Island State Police investigation into a former tenant in the Twin River Casino property and a former employee of the Company, (ii) expenses incurred associated with the campaign attempting to create an open bid process for the Rhode Island Lottery Contract, (iii) non-routine legal expenses incurred in connection with certain litigation matters (net of insurance reimbursements), and (iv) costs incurred in connection with the implementation of a new human resources information system.

(1) Non-operating income (expense) includes:

(i) change in value of naming rights liabilities and (ii) gain on bargain purchases, (iii) loss on extinguishment of debt, and (iv) other, net.

(2) Other includes the following non-recurring items:

(i) Post-combination expense related to the acceleration and cash settlement of unvested historical Gamesys’ employee stock awards, (ii) Goodwill and asset impairments, (ii) deal-related, rebranding, expansion and pre-opening expenses, (iii) Employee Retention Credits related to COVID-19, (iv) Credit Agreement amendment related expenses, (v) costs related to pursuing sports betting, iGaming and lottery access in various jurisdictions, (vi) non-routine legal expenses, and (vii) net gains related to insurance recoveries.

Year Ended December 31, 2020 (in thousands)

Rhode Island Mid-Atlantic Southeast Other Total

Revenue $ 306,306 $ 80,806 $ 127,432 $ 9,033 $ 523,577

Net income $ 71,124 $ 6,031 $ 18,165 $ (40,190) $ 55,130

Casinos & Resorts Other Total

Net income (loss) $ 28,555 $ (34,042) $ (5,487)

Interest expense, net of interest income 34 62,602 62,636

Provision for income taxes 26,653 2,903 5,108 (14,614) 20,050

Benefit for income taxes (16,018) (53,306) (69,324)

Depreciation and amortization 37,786 56 37,842

Non-operating (income) (1)

Acquisition, integration and restructuring expense 425 1,155 — 10,588 12,168

— (6,211) (6,211)

Acquisition, integration and restructuring 20 13,237 13,257

Share-based compensation — 17,706 17,706

Professional and advisory fees associated with capital return program — — — 3,510 3,510

Credit Agreement amendment expenses (1)

Other, net (2)

19,942 41 19,983

Storm related losses, net of insurance recoveries (2)

Allocation of corporate costs 20,515 (20,515) —

Adjusted EBITDA $ 90,834 $ (20,432) $ 70,402

__________________________________

(1) Non-operating income (expense) includes:

(i) change in value of naming rights liabilities and (ii) gain on bargain purchase.

(2) Other includes the following non-recurring items:

(i) Goodwill and asset impairments, (ii) deal-related, rebranding, expansion and pre-opening expenses, (iii) Employee Retention Credits related to COVID-19, (iv) Credit Agreement amendment related expenses, (v) costs related to pursuing sports betting, iGaming and lottery access in various jurisdictions, (vi) non-routine legal expenses and (vii) storm related losses.

Year Ended December 31, 2019 (in thousands)

Casinos & Resorts Other Total

Net income (loss) $ 95,575 $ (40,445) $ 55,130

Interest expense, net of interest income 3,380 34,546 37,926

Provision (benefit) for income taxes 34,664 (14,614) 20,050

Depreciation and amortization 32,367 25 32,392

Non-operating (income) expense (1)

(39) (144) (183)

Acquisition, integration and restructuring 1,617 10,551 12,168

Share-based compensation — 3,826 3,826

Other, net (2)

(439) 6,280 5,841

Allocation of corporate costs 17,032 (17,032) —

1 unchanged sentence

__________________________________

(1) Credit Agreement amendment expenses include costs associated with amendments made to the Company’s Credit Agreement.

(2) Gain related to insurance recovery proceeds received for a damaged roof at the Company’s Arapahoe Park racetrack and storm-related repair expenses, net of insurance recoveries, associated with damage from Hurricane Nate at Hard Rock Biloxi.

(3) Other includes the following non-recurring items for the applicable periods (i) expenses incurred associated with the Rhode Island State Police investigation into a former tenant in the Twin River Casino property and a former employee of the Company, (ii) a pension audit payment representing an adjustment to a charge for out-of-period unpaid contributions, inclusive of estimated interest and penalties, to one of the Company’s multi-employer pension plans, (iii) expenses incurred associated with the campaign attempting to create an open bid process for the Rhode Island Lottery Contract, and (iv) non-routine legal expenses incurred in connection with certain litigation matters (net of insurance reimbursements).

(1) Non-operating income (expense) includes:

(i) loss on extinguishment of debt, and (ii) other, net.

(2) Other includes the following non-recurring items:

(i) deal-related, rebranding, expansion and pre-opening expenses, (ii) Credit Agreement amendment related expenses, (iii) costs related to pursuing sports betting, iGaming and lottery access in various jurisdictions, (iv) non-routine legal expenses, (v) net gains from insurance recoveries, and (vi) pension payment for out-of-period unpaid contributions.

Year ended December 31, 2020 compared to year ended December 31, 2019

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Liquidity and Capital Resources

We are a holding company.

Our ability to fund our obligations depends on existing cash on hand, cash flow from our subsidiaries and our ability to raise capital.

Our primary sources of liquidity and capital resources have been cash on hand, cash flow from operations, borrowings under our Revolving Credit Facility (as defined herein) and proceeds from the issuance of debt and equity securities.

We assess liquidity in terms of the ability to generate cash or obtain financing in order to fund operating, investing and debt service requirements.

Our primary ongoing cash requirements include the funding of operations, capital expenditures, acquisitions and other investments in line with our business strategy and debt repayment obligations and interest payments.

Over the next twelve months, we believe that operating cash flows will be sufficient to meet funding needs for operating, capital expenditure and debt service purposes.

Furthermore, existing cash balances and availability of additional borrowings under the Credit Facility provide additional sources of liquidity.

While we may seek other funding alternatives, we believe existing cash balances, cash flow from operations and availability under our Credit Facility will provide the cash necessary to fund our proposed acquisitions of MontBleu, Jumer’s, Tropicana Evansville, and Bet.Works, all of which are currently expected to close in the first half of 2021.

Our strategy has been to maintain moderate leverage and substantial capital resources in order to take advantage of opportunities, to invest in our businesses and acquire properties at what we believe to be attractive valuations.

As such, throughout 2021, we continued to invest in our land-based casino business and began to build on our interactive/iGaming gaming business despite the COVID-19 pandemic.

We believe that existing cash balances, operating cash flows and availability under our Revolving Credit Facility, as explained below, will be sufficient to meet funding needs for operating, capital expenditure and debt service purposes.

Additionally, while we may seek other funding alternatives, we believe existing sources will provide the cash necessary to fund our proposed acquisition of Tropicana Las Vegas.

Cash Flows Summary

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Net cash used in investing activities (2,296,904) (444,846) (38,925)

Net cash provided by (used in) financing activities 366,397 48,896 (3,429)

Net cash provided by financing activities 2,404,598 366,397 48,896

Effect of foreign currency on cash and cash equivalents (42,163) — —

Net change in cash and cash equivalents and restricted cash 148,285 (58,947) 104,071

1 unchanged sentence

Cash and cash equivalents and restricted cash, end of period $ 274,840 $ 126,555 $ 185,502

A discussion of changes in cash flows comparing the years ended December 31, 2020 and 2019 has been omitted from this Form 10-K and can be found in Part II.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” of our Annual Report on Form 10-K for the year ended December 31, 2020 .

Operating Activities

Net cash provided by operating activities for the year ended December 31, 2020 was $19.5 million, a decrease of $74.6 million from $94.1 million in 2019.

This decrease was attributable to a net loss of $5.5 million in 2020 compared to net income of $55.1 million in 2019 primarily due to the mid-March 2020 shut-down of our facilities in response to the COVID-19 pandemic and operating restrictions on our properties following their reopening and a gain on bargain purchases of $63.9 million relating to the current year acquisitions of Bally’s Atlantic City and Shreveport, partially offset by a loss of $57.7 million relating to a change in value of naming rights liabilities associated with the Sinclair Agreement.

Prepaid expenses and other assets as of December 31, 2020 included the contingent consideration asset of $27.7 million in connection with our arrangement with Caesars to reimburse us for capital spending to refurbish, upgrade and expand the amenities at our Bally’s Atlantic City property.

Net cash provided by operating activities for the year ended December 31, 2021 was $82.8 million, an increase of $63.3 million from $19.5 million in 2020.

This increase was primarily attributable to increased net loss resulting from higher interest expense due to increased borrowings, amortization expense related to Gamesys’ intangible assets and loss on extinguishment of debt, as noted above.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2020 was $444.8 million, an increase of $405.9 million compared to $38.9 million used in investing activities for 2019.

This increase was primarily driven by the $425.1 million aggregate cash outlay for the acquisitions of the Black Hawk Casinos, Casino KC and Casino Vicksburg, Bally’s Atlantic City, and Shreveport in 2020 compared to $9.6 million paid in 2019 for the acquisition of Dover Downs, partially offset by a decrease in capital expenditures of $13.0 million when compared to the prior year as we limited spending on capital projects to conserve cash in response to COVID related shutdowns.

The 2020 year also includes a $4.0 million deposit paid in connection with our acquisition of Jumer’s in September 2020, $2.0 million of which is nonrefundable.

Net cash used in investing activities for the year ended December 31, 2021 was $2.30 billion, an increase of $1.85 billion compared to $444.8 million used in investing activities for 2020.

The increase was primarily driven by an additional $1.85 billion of cash paid for acquisitions year-over-year, $2.27 billion in 2021 compared to $425.1 million in 2020, most notably cash paid for Gamesys of $1.90 billion, coupled with a $82.2 million increase in capital expenditures in connection with our expansion and renovation projects at Bally’s Atlantic City, Hard Rock Biloxi, Bally’s Kansas City and Bally’s Twin River.

These increases were offset by $144.0 million of proceeds related to the sale-leaseback transaction for Bally’s Dover with GLPI.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2020 was $366.4 million compared to net cash provided by financing activities of $48.9 million for 2019.

Cash provided by financing activities in 2020 was driven by $261.2 million of borrowings, net of fees, on our additional term loan, $122.5 million of Senior Notes proceeds and borrowings under our revolver, all of which were used to fund current year acquisitions.

We also spent $33.3 million on share repurchases and paid cash dividends of $3.2 million under our capital return program.

During 2019, cash provided by financing activities was driven by proceeds received from the Term Loan Facility and Senior Notes (defined below), net of fees incurred, of $683.2 million, partially offset by debt repayments of $343.9 million on our previous term loan and the required quarterly payments on our new Term Loan Facility.

We also paid $223.1 million for share repurchases, including shares repurchased in connection with our Dutch auction tender offer in July 2019 under our capital return program.

Working Capital

At December 31, 2020, net working capital balance was $145.8 million, compared to $155.2 million at December 31, 2019 a decrease of $9.5 million.

This decrease is primarily attributable to a decrease in our cash and cash equivalents balance to $123.4 million as of December 31, 2020 compared to $182.6 million as a result of the timing of transactions in each respective period, as noted above.

Capital Return Program and Quarterly Cash Dividend

During the second quarter of 2019, we announced that our Board approved a capital return program under which we may expend a total of up to $250 million for a share repurchase program and payment of dividends.

On July 26, 2019, we completed a modified Dutch auction tender offer, purchasing 2,504,971 common shares at an aggregate purchase price of $73.9 million and repurchased an additional 6,558,379 common shares under the capital return program.

During the year ended December 31, 2019, we paid cash dividends of $0.10 per common share in each of the third and fourth quarters, for a total of $0.20 per common share and a total cost of approximately $7.6 million.

On February 10, 2020, the Board approved an increase in the capital return program of $100.0 million.

During the first quarter of 2020, we repurchased 1,581,813 common shares for an aggregate price of $29.7 million under the capital return program and paid a cash dividend of $0.10 per common share for approximately $3.2 million.

As of December 31, 2020, $84.9 million remained available for use under the aforementioned program.

As noted below, as a result of the amendment to our Credit Facility, we are not permitted to declare or pay dividends on our common stock (or repurchase shares of our common stock) until the end of the Leverage Ratio Covenant Relief Period.

Senior Secured Credit Facility

On May 10, 2019, we 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”).

Our obligations under the Revolving Credit Facility will mature on May 10, 2024.

Our 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, we are 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 with the fiscal year beginning January 1, 2020, we are required to apply a portion of its excess cash flow to repay amounts outstanding under the Credit Facility.

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

Upon closing of the additional $275 million term loan noted below, we repaid the full $250 million we had outstanding under our Revolving Credit Facility and currently have the full amount of the Revolving Credit Facility available for borrowing.

Pursuant to the Revolving Credit Facility, we may utilize this availability for working capital, general corporate and other purposes as permitted under the terms of the Revolving Credit Facility.

We believe that we have sufficient liquidity to meet our obligations, including those under our Term Loan Facilities, the Senior Notes and pending acquisitions.

On April 24, 2020, we and our lenders amended the financial covenants and certain other terms of our Credit Facility to provide financial covenant relief from the effects of the COVID-19 pandemic.

Until the period on which we are required to deliver our compliance statement and financial statements for the three months ending March 31, 2021 (the “Leverage Ratio Covenant Relief Period”), we will not be required to comply with the maximum total net leverage ratio covenant.

Instead the Company 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, we 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.

We will not be permitted to declare or pay dividends on our common stock or make other restricted payments, complete investments or acquisitions (other than those previously announced or to which the lenders consent) during the Leverage Ratio Covenant Relief Period, and the interest rates on the Revolving Credit Facility borrowings are 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%.

On March 5, 2021, we and our lenders amended the financial covenants and certain other terms of our Credit Facility to provide deemed consolidated EBITDA numbers for certain fiscal quarters of 2021 and to permit the annualization of consolidated EBITDA for the 2021 fiscal year for purposes of calculating compliance with the consolidated total net leverage ratio, to the extent we are required to comply with it.

On May 11, 2020, we closed on an amendment to our Credit Facility to increase our Term Loan Facility by $275.0 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, we repaid the full $250.0 million outstanding under our Revolving Credit Facility.

This new term loan satisfied the financing contingency in the purchase agreement to acquire Shreveport and MontBleu from affiliates of Eldorado.

On March 9, 2021, we amended our Credit Agreement to increase the aggregate principal amount of the Revolving Credit Facility to $325 million, an increase of $75 million pursuant to an incremental revolving facility.

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

Net cash provided by financing activities for the year ended December 31, 2021 was $2.40 billion compared to $366.4 million for 2020, an increase of $2.04 billion year-over-year.

Cash provided by financing activities in 2021 was driven by our debt borrowings, offset by repayments, as follows:

Years Ended December 31,

Revolver proceeds $ 375,000 $ 285,000

Term loan proceeds 1,925,550 261,180

Senior note proceeds 1,487,003 122,500

Issuance of long-term debt $ 3,787,553 $ 668,680

Revolver repayments $ (325,000) $ (250,000)

Term loan repayments (569,125) (4,375)

Senior note repayments (525,000) —

Repayment of Gamesys’ debt (458,450) —

Repayments of long-term debt $ (1,877,575) $ (254,375)

In addition, we received proceeds from equity issuances from our public offering and the issuance of Sinclair penny warrants, offset in part, by increased spending on share repurchases under our capital return program, explained below.

Capital Return Program

On June 14, 2019, we announced that our Board approved a capital return program allowing for a total of up to $250.0 million for a share repurchase program and payment of dividends.

This was subsequently increased by $100.0 million on February 10, 2020 and another $350.0 million on October 4, 2021.

On July 26, 2019, we completed a modified Dutch auction tender offer, purchasing 2,504,971 common shares at an aggregate purchase price of $73.9 million.

In addition, during 2019 we repurchased 6,558,379 common shares at an aggregate purchase price of $148.8 million.

During the year ended December 31, 2021, we repurchased 2,188,532 common shares for an aggregate price of $87.0 million.

During the year ended December 31, 2020, we repurchased 1,812,393 common shares for an aggregate price of $33.3 million.

During the years ended December 31, 2020 and 2019, the Company paid cash dividends of $0.10 and $0.20 per common share for a total cost of approximately $3.2 million and $7.6 million, respectively.

In connection with the COVID-19 pandemic, we ceased paying dividends.

We do not currently intend to pay any dividends on our common stock in the foreseeable future.

Any future determinations relating to our dividend policies will be made at the discretion of our Board and will depend on conditions then existing, including our financial condition, results of operations, contractual restrictions, capital and regulatory requirements and other factors our Board may deem relevant.

As of December 31, 2021, there was $347.9 million available for use under the capital return program.

Common Stock and Warrant Offerings

On April 20, 2021, we completed a public offering of 12,650,000 common shares at a price to the public of $55.00 per share and issued to affiliates of Sinclair warrants to purchase 909,090 common shares at the same offering price.

The net proceeds from the public offering and the private warrant sale, after deducting underwriting discounts, were $671.4 million and $50.0 million, respectively, and were used to finance a portion of the purchase price of Gamesys and to retire certain of our existing indebtedness.

Debt and Lease Obligations

May 2019 Senior Secured Credit Facility

On May 10, 2019, the Company entered into a credit agreement with Citizens Bank, N.A., as administrative agent, and the lenders party thereto, consisting of a $300 million term loan B facility and a $250 million 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.

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 Credit Facility on October 1, 2021 as described below.

6.75% Senior Notes due 2027

On May 10, 2019, we issued $400.0 million aggregate principal amount of 6.75% unsecured senior notes due June 1, 2027 (the “Senior Notes”).

On October 9, 2020, we issued an additional $125.0 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, we had $525.0 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.

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

On February 4, 2021, we announced we 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.

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 “2027 Notes”).

On September 7, 2021, the Company redeemed $210 million aggregate principal amount of the 2027 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.

On October 5, 2021, the Company redeemed the remaining $315 million aggregate principal amount of the 2027 Notes at a redemption price of 109.074% of the principal amount using a portion of the proceeds of its Term Loan Facility (as defined herein).

As of December 31, 2021, no amounts pertaining to these 2027 Notes remained outstanding.

In connection with the termination of the prior credit agreement and the 2027 Notes, the Company recorded a loss on extinguishment of debt of $103.0 million in the year ended December 31, 2021.

On August 20, 2021, we issued $750.0 million aggregate principal amount of 5.625% senior notes due 2029 and $750.0 million aggregate principal amount of 5.875% Senior Notes due 2031 (together, the “Senior Notes”).

On October 1, 2021, upon the closing of the Gamesys acquisition, we assumed the issuer obligation under the Senior Notes.

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.

Credit Facility

On October 1, 2021, we entered into the Credit Agreement providing for a senior secured term loan facility in an aggregate principal amount of $1.945 billion (the “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 “Revolving Credit Facility”), which will mature in 2026.

The credit facilities allow us to increase the size of the Term Loan Facility or request one or more incremental term loan facilities or increase commitments under the 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 Credit Agreement, including an unlimited amount subject to compliance with a consolidated total secured 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 Credit Agreement.

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

Refer to Note 12 “ Long-Term Debt ” in Item 8 of this Annual Report on Form 10-K.

GLPI Master Lease

Our Master Lease is accounted for as an operating lease and was $384.8 million as of December 31, 2021.

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 us under a master lease agreement (the “Master Lease”).

GLPI has also agreed to acquire the real estate associated with Dover Downs Gaming & Entertainment, Inc.

(“Dover Downs”) for $144.0 million and lease it back to the us under the Master Lease.

The Master Lease with GLPI has an initial term of 15 years and includes four, five-year options to renew and requires combined minimum annual payments of $40.0 million, subject to escalation.

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

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 de-recognition of assets.

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

We also expect to finance our proposed agreement to acquire the Tropicana Las Vegas for $150 million through sale-leaseback transactions with GLPI.

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, Bally’s Shreveport and Bally’s Lake Tahoe.

Additionally, certain of the Company’s subsidiaries lease office space, data centers, parking space, memorabilia and equipment under agreements classified as operating leases that expire on various dates through 2030.

Minimum rent payable under operating leases was $834.8 million as of December 31, 2021.

Refer to Note 13 “ Leases ” in Item 8 of this Annual Report on Form 10-K for further information.

Capital Expenditures

Capital expenditures are accounted for as either project or maintenance (replacement) capital expenditures.

Capital expenditures are accounted for as either project, maintenance or capitalized software expenditures.

Project capital expenditures are for fixed asset additions that expand an existing facility or create a new facility.

Maintenance and small project capital expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out or no longer cost effective to repair.

For the year ended December 31, 2020, capital expenditures were $15.3 million compared to $28.2 million in 2019, a decrease directly attributable spending restrictions resulting from the COVID-19 pandemic coupled with the completion of projects in the prior year relating to the Tiverton Casino Hotel and the new hotel at Twin River Casino.

As a result of the COVID-19 pandemic, all major projects were suspended in 2020.

We expect capital expenditures in 2021 to exceed 2020 amounts as we intend to move forward with several proposed projects.

At our Casino KC property, we have planned a redevelopment project for approximately $40 million as we believe it will enhance the property and guest experience, and drive growth and our return on investment.

We plan to invest approximately $90 million in our Bally’s Atlantic City property over a span of five years to refurbish and upgrade our facilities and expand its amenities.

Additionally, as noted above, we signed a framework agreement with an established developer to jointly design, develop, construct and manage a casino in Centre County, Pennsylvania and construction is expected to begin the first half of 2021 and will take approximately one year to complete.

Maintenance capital expenditures are expenditures to replace existing fixed assets with a useful life greater than one year that are obsolete, worn out or no longer cost effective to repair, along with spending on other small projects that do not fit into the project category.

Capitalized software expenditures relate to the creation, production and preparation of software for use in our online gaming operations.

For the year ended December 31, 2021, capital expenditures were $97.5 million compared to $15.3 million in 2020.

In 2020, as a result of the COVID-19 pandemic and the Company’s efforts to proactively manage expenses and retain sufficient liquidity, all major projects were suspended.

In 2021 as our properties reopened and operations resumed, we commenced spending on maintenance and planned projects at our casino properties though our progress lagged due to nationwide supply chain shortages.

We expect that capital expenditures in 2022 will exceed 2021 amounts as we plan to make significant progress towards project goals, particularly at Bally’s Twin River, Bally’s Atlantic City and Bally’s Kansas City, and increase spending relating to the maintenance and improvements at our other casino properties.

In addition, during 2022 we plan to commence construction on the Centre County, Pennsylvania development project.

We expect to fund these expenditures from a combination of cash flow from operations and cash on hand.

Because the pandemic is ongoing and the duration and severity remains unclear, it is difficult to forecast any impacts on our future results and therefore, planned spending on these projects may be impacted as we continue in 2022.

Below is a summary of our planned projects:

Bally’s Twin River - In connection with our partnership with IGT, we have committed to invest $100 million in Bally’s Twin River over the term of our master contract with Rhode Island to expand the property and add additional amenities along with other capital improvements.

Plans include adding a 40,000-square-foot gaming area, an additional casino bar, and a 14,000-square-foot spa.

Construction began in September 2021 with a target completion in the fourth quarter of 2022.

Spending in 2022 is estimated at approximately $50 million.

Bally’s Atlantic City - Construction on our Bally’s Atlantic City property commenced in 2021.

We are committed to invest approximately $100 million over a span of five years to refurbish and upgrade Bally’s Atlantic City’s facilities and expand its amenities, including renovated hotel rooms and suites, outdoor beer hall and lobby bar.

Spending in 2022 is estimated at approximately $40 million.

Bally’s Kansas City - We began construction on the planned redevelopment project of Bally’s Kansas City in November 2021.

We believe the redevelopment of the property, which includes a 40,000 square foot land-based building, restaurant, bar and retail space, will improve the property and guest experience and drive growth and our return on investment.

Spend on the project is estimated to be approximately $50 million, largely in 2022, with a target completion date in the first half of 2023.

Centre County, PA - On December 31, 2020, we signed a framework agreement with entities affiliated with an established developer to design, develop, construct and manage a Category 4 licensed casino in Centre County, Pennsylvania.

Construction of the casino is expected to begin in the first half of 2022 and will take approximately one year to complete.

Subject to receipt of regulatory approvals, it will house up to 750 slot machines and 30 table games.

The casino will also provide, subject to receipt of separate licenses and certificates, retail sports betting, online sports betting and online gaming.

We estimate the total cost of the project, including construction, licensing and sports betting/iGaming operations, to be approximately $120 million.

We may also commence our expansion and other capital improvements at our Twin River Casino Hotel location related to our proposed partnership with IGT and are optimistic that this legislation will be addressed and approved as soon as the second quarter of 2021.

We expect to fund the expenditures from a combination of cash flow from operations, cash on hand and available borrowings under our Credit Facility.

Contractual Obligations

The following summarizes our undiscounted contractual obligations as of December 31, 2020:

(In thousands) Total Less than

1 year 1-3 years 4-5 years More than

Current and long-term obligations, at par $ 569,125 $ 5,750 $ 11,500 $ 11,500 $ 540,375

Revolver 35,000 — — 35,000 —

Senior notes, at par 525,000 — — — 525,000

407,091 68,814 204,415 116,143 17,719

Operating leases (b)

139,293 6,204 11,877 11,499 109,713

Naming rights fees (c)

88,019 2,000 10,000 18,000 58,019

Acquisition commitments (d)

33,050 33,050 — — —

Capital expenditures (e)

90,000 25,000 50,000 15,000 —

Bally’s trade name 20,000 10,000 10,000 — —

6,227 5,499 728 — —

Total contractual obligations $ 1,912,805 $ 156,317 $ 298,520 $ 207,142 $ 1,250,826

___________________________________________

(a) Interest for the term loan with obligations at par of $569,125 is calculated at the December 31, 2020 interest rate of 3.00% and interest for senior notes with obligations at par of $525,000 is calculated at the stated rate of 6.75%.

(b) Represents the minimum rent payable under operating leases.

(c) Represents fees under the terms of the Sinclair Agreement for naming rights of the regional sports networks which escalate annually over the ten year term of the agreement.

Refer to Note 9 “Sinclair Agreement” in our consolidated financial statements.

(d) Represents termination fees related to the pending acquisitions of MontBleu, Jumer’s, Tropicana Evansville, and Bet.Works as well as non-cancelable fees owed to our advisors on select of these transactions.

Refer to Note 17 “Commitments and Contingencies ” in our consolidated financial statements.

(e) We anticipate spending approximately $250 million for planned projects at Casino KC, Bally’s Atlantic City and Centre County, PA of which we are contractually committed to spend $90 million in connection with our Bally’s Atlantic City property .

(f) Includes various non-cancellable contractual obligations, including advertising and facilities maintenance agreements.

Off-Balance Sheet Arrangements

Except for obligations disclosed above under “Contractual Obligations” and performance obligations incurred in the ordinary course of business, we are not party to any off-balance sheet arrangements involving guarantee, contingency or similar obligations to entities whose financial statements are not consolidated with our results, and that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to investors in our securities.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities.

The SEC has defined critical accounting policies as those that are both most important to the portrayal of our financial condition and results and require our most difficult, complex or subjective judgments or estimates.

Based on this definition, we believe our critical accounting policies are:

(i) valuing intangible assets, (ii) valuing goodwill, (iii) income taxes, (iv) business combinations and (v) pension plans.

For all financial statement periods presented, there have been no material modifications to the application of these critical accounting policies and estimates.

Valuation of Intangible Assets

As a result of “fresh start accounting”, we adjusted the Twin River Casino Hotel intangible assets to reflect their fair values on November 5, 2010 (the “Emergence Date”).

Intangible assets consist of a Rhode Island VLT license, the Master Video Lottery Terminal Contract (the “Contract”) with the Division of Lotteries for the State of Rhode Island and the State of Rhode Island Department of Transportation, as amended, the Twin River trade name and the Twin River Casino Hotel rated player relationships.

The Rhode Island VLT license has an indefinite life and therefore is not being amortized.

The Contract for the VLTs, the Twin River Casino Hotel rated player relationships and the Twin River trade name are being amortized using the straight-line method based on their estimated useful lives from the Emergence Date.

Our other intangible assets primarily consist of gaming licenses, trademarks, rated player relationships, and hotel and conference pre-bookings, which have all been obtained through acquisition, as well as a Naming Rights intangible asset obtained through the Sinclair Agreement.

We consider our gaming licenses, VLT licenses and the Bally’s trademark to be indefinite lived based on future expectations of operating our gaming properties indefinitely and continuing to brand our corporate name and certain properties under the Bally’s trademark indefinitely.

If completed, we will acquire a majority equity interest in the partnership, including 100% of the economic interests of all retail sports betting, online sports betting and iGaming activities associated with the project.

Other Contractual Obligations

Bally’s Trade Name - We acquired Bally’s brand from Caesars Entertainment, Inc.

on October 13, 2020 for $20.0 million payable in cash in two equal installments of $10.0 million on the first and second anniversary of the purchase date.

The Company made the first installment payment during 2021 and will pay the second installment in 2022.

Deferred Consideration - In September of 2019, prior to our acquisition of Gamesys, Gamesys (Holdings) Limited (“GHL”) was acquired by JPJ Group plc (“JPJ”) and subsequently renamed Gamesys.

In connection with the JPJ acquisition, £11.2 million of the cash consideration was deferred and payable (plus interest) to GHL’s majority shareholders 30 months after closing.

The Company has recorded $15.1 million representing the deferred consideration which is payable on March 26, 2022, and recorded within current liabilities of the consolidated balance sheet as of December 31, 2021.

Critical Accounting Estimates

The preparation of our consolidated financial statements in accordance with US GAAP requires us to make estimates and apply judgments that affect reported amounts.

These estimates and judgements are based on past events and/or expectations of future outcomes.

Actual results may differ from our estimates.

We discuss our significant accounting policies used in preparing the financial statements in Note 2 of our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

The following is a summary of our critical accounting estimates and how they are applied in preparation of our consolidated financial statements.

Valuation of Intangible Assets Acquired in Business Combinations

Intangible assets consist primarily of gaming licenses, trade names, developed technology and customer lists which have all been obtained through business combinations or asset acquisitions, as well as a Naming Rights intangible asset obtained through our agreement with Sinclair and internally developed software attributable to our interactive businesses.

Gaming licenses obtained through business combinations are generally recorded at their fair values through purchase accounting using the Greenfield Method under the income approach.

This method estimates isolated income that properly attributable to a license based on modeling a hypothetical start-up company going into business without any other assets than the gaming license being valued and building a new casino with similar utility to the existing casino.

Using this method, the valuation of the gaming license is dependent upon significant estimates such as projected revenues and cash flows, estimated construction costs, duration of that construction, pre-opening expenses and appropriate discounting.

Gaming licenses accounted for as asset acquisitions are valued at cost.

Trade names obtained through business combinations are valued using the relief-from-royalty method under the income approach.

This method estimates the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset.

As such, the value of a trade name acquired through a business combination is dependent upon estimates such as projected revenues, selection of an appropriate hypothetical royalty rate and appropriate discounting.

Trade names accounted for as asset acquisitions are valued at cost.

Developed technology is obtained through business combinations and is recorded at fair value through purchase accounting using the Multi-Period Excess Earnings Method under the income approach.

The principle behind this method is that the value of an intangible asset is equal to the present value of the incremental after tax cash flows attributable only to the subject intangible asset after deducting Contributory Asset Charges (“CACs”).

The principle behind a CAC is that an intangible asset ‘rents’ or ‘leases’ from a hypothetical third party all the assets it requires to produce the cash flows resulting from its development, that each project rents only those assets it needs and not the ones that it does not need, and that each project pays the owner of the assets a fair return on the value of the rented assets.

Under this method, the valuation of developed technology is dependent on estimates such as projected revenues and cash flows, CAC and appropriate discounting.

The Naming Rights intangible asset obtained through our agreement with Sinclair was accounted for as an asset acquisition and recorded at its cost at the acquisition date.

The cost consisted of 1) discounted cash payments due over a 10 year term, 2) the fair value of warrants and options issued to Sinclair, and 3) an estimate of tax receivable agreement payments due to Sinclair.

The cash payments were subject to estimation through the selection of an appropriate discount rate.

The warrants and options were estimated at their fair values using an option pricing model, which was dependent upon assumptions and key inputs such as our common stock price volatility, risk free rates, our common stock price, expected terms and our estimated probabilities of achievement of performance vesting conditions inherent in certain warrants.

Certain gaming licenses and trade names are considered to be indefinite lived based on future expectations of operating our gaming properties indefinitely, continuing to brand our corporate name and certain properties under the Bally’s trade name indefinitely and continuing to indefinitely brand our online casino offerings within the International Interactive segment with the trade names acquired through the Gamesys acquisition.

Intangible assets not subject to amortization are reviewed for impairment annually as of October 1 and between annual test dates whenever events or changes in circumstances may indicate that the carrying amount of the related asset may not be recoverable.

We establish a useful life upon initial recognition of our finite-lived intangible assets based on the period over which the asset is expected to contribute to our future cash flows, and periodically evaluate the remaining useful lives to determine whether events and circumstances warrant a revision to the remaining period of amortization.

Finite-lived intangible assets are amortized over their remaining useful lives on a straight-line basis.

Valuation of Goodwill

Goodwill represents the excess of reorganization value over the fair market value of Twin River Casino Hotel net assets on the Emergence Date and the excess of the Hard Rock Biloxi, Newport Grand, Dover Downs, Casino KC and Casino Vicksburg purchase prices over the respective fair values of tangible and identifiable assets acquired and liabilities assumed.

The Acquisitions of Bally’s Atlantic City and Shreveport resulted in a bargain purchase and therefore no goodwill was recorded associated with these transactions.

For its finite-lived intangible assets, we establish a useful life upon initial recognition based on the period over which the asset is expected to contribute to the future cash flows of the Company and periodically evaluates the remaining useful lives to determine whether events and circumstances warrant a revision to the remaining amortization period.

Finite-lived intangible assets are amortized over their remaining useful lives in a pattern in which the economic benefits of the intangible asset are consumed, which is generally on a straight-line basis.

Valuation and Subsequent Measurement of Goodwill

Goodwill represents the excess future economic benefits of a business combination and is measured as the excess of consideration transferred over the fair value of the assets acquired and liabilities assumed in a business combination.

Accounting for goodwill involves significant management judgment both in the initial measurement through purchase price allocations of business combinations and valuations of assets acquired within those business combinations and in the ongoing assessment of impairment.

We are required to test goodwill for impairment at least annually and between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

2 unchanged sentences

When assessing goodwill for impairment, first, qualitative factors are assessed to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

A qualitative impairment assessment involves analyzing relevant events and circumstances, with greater weight assigned to events and circumstances that most affect the fair value or the carrying amounts of a reporting unit’s assets.

Items that are generally considered include, but are not limited to, the following:

macroeconomic conditions, industry and market conditions and overall financial performance.

If the results of the qualitative assessment are not conclusive, a quantitative goodwill test is performed.

The quantitative goodwill test compares the estimated fair value of each reporting unit with its estimated net book value (including goodwill and identifiable intangible assets).

The quantitative goodwill test compares the estimated fair value of each reporting unit with its carrying value (including goodwill and identifiable intangible assets).

The fair value of a reporting unit is estimated using an income approach, whereby a discounted cash flow model is utilized and may also consider a market approach using guideline public company data.

There are significant management judgments involved in estimating fair value through the use of a discounted cash flow model, which include, but not limited to, (i) projected financial information for the reporting unit and (ii) selecting an appropriate discount rate.

If the reporting unit’s estimated fair value exceeds its estimated net book value, goodwill is not impaired.

An impairment is recognized if the estimated fair value of a reporting unit is less than its estimated net book value, in an amount not to exceed the carrying value of the reporting unit’s goodwill.

We prepare our income tax provision in accordance with ASC 740, Income Taxes.

Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

We prepare our income tax provision in accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes.

Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

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The consolidated financial statements reflect expected future tax consequences of uncertain tax positions presuming the taxing authorities’ full knowledge of the position and all relevant facts.

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No.

118 (“SAB 118”) to provide guidance on accounting for the tax effects of the TCJA.

SAB 118 provides a measurement period that begins in the reporting period that includes the TCJA’s enactment date and ends when an entity has obtained, prepared, and analyzed the information that was needed in order to complete the accounting requirements under ASC 740, however in no circumstance should the measurement period extend beyond one year from the enactment date.

In accordance with SAB 118, a company must reflect in its financial statements the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete.

SAB 118 provides that to the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete, but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements.

We recorded the impact of enactment of U.S.

tax reform subject to SAB 118, which provided for a twelve-month remeasurement period to complete the accounting required under Accounting Standards Codification (“ASC”) 740, Income Taxes.

During the fourth quarter of 2018, we completed our analysis to determine the deferred tax effect of the TCJA and recorded immaterial adjustments as of December 22, 2018.

Business Combinations

We account for acquired businesses using the acquisition method of accounting which requires that the assets acquired and liabilities assumed be recorded at the date of the acquisition at their respective estimated fair values.

Goodwill represents the excess of cost over the fair value of net assets acquired in a business combination.

The judgments made in determining the estimated fair value assigned to each class of assets acquired, as well as the estimated useful life of each asset, can materially impact the net income of the periods subsequent to the acquisition through depreciation and amortization, and in certain instances through impairment charges, if the asset becomes impaired in the future.

In determining the estimated fair value for intangible assets, we typically utilize the income approach, which discounts the projected future net cash flow using a discount rate deemed appropriate by management that reflects the risks associated with such projected future cash flow.

Determining the useful life of an intangible asset also requires judgment, as different types of intangible assets will have different useful lives and certain assets may even be considered to have indefinite useful lives.

Intangible assets determined to have an indefinite useful life are reassessed periodically based on the expected use of the asset by us, legal or contractual provisions that may affect the useful life or renewal or extension of the asset’s contractual life without substantial cost, and the effects of demand, competition and other economic factors.

We sponsor a defined benefit pension plan that covers certain employees who meet eligibility requirements.

On June 15, 2011, it was announced that the Dover Downs Pension Plan was frozen to participation and benefit accruals as of July 31, 2011.

The benefits provided by our defined benefit pension plan are based on years of service and employee’s remuneration through July 31, 2011.

While we believe the valuation methods used to determine the fair value of plan assets are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

The determination of our obligation and related expense for Company-sponsored pension benefits is dependent, in part, on management’s selection of certain actuarial assumptions used in calculating these amounts.

These assumptions include, among other things, the discount rate and the expected long-term rate of return on plan assets.

Refer to Note 15 “Employee Benefit Plans” in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for information related to the actuarial assumptions used in determining pension liabilities and expenses.

We review and select the discount rate to be used in connection with our pension obligation annually.

The discount rate reflects the current rate at which the associated liabilities could be effectively settled at the end of the year.

We set our rate to reflect the yield of a portfolio of high quality, fixed-income debt instruments that would produce cash flows sufficient in timing and amount to settle projected future benefits.

Our assumption regarding expected long-term rate of return on plan assets is determined based on the portfolio’s actual and target composition, current market conditions, forward-looking return and risk assumptions by asset class, and historical long-term investment performance.

In accordance with applicable accounting standards, actual results that differ from our assumptions are accumulated and amortized over future periods and, therefore, affect expense and obligations in future periods.

For 2020, each 25 basis point increase/decrease in the discount rate and expected return on plan assets would, collectively, increase/decrease pension expense by less than $0.1 million.

Although we believe our assumptions are appropriate, the actuarial assumptions may differ from actual results due to changing market and economic conditions, higher or lower withdrawal rates and longer or shorter life spans of participants.

Amortization of net actuarial loss or gain expense recognition

We recognize the amortization of net actuarial loss or gain on the Dover Downs Pension Plan over the remaining life expectancy of all plan participants.

This is based on the fact that the defined benefit pension plan is both closed to new entrants and all benefit accruals have been frozen.

Full yield curve expense recognition

We utilize the “full yield curve” approach for determining the interest and service cost components of net periodic benefit cost for defined benefit pension plans.

Under this method, the discount rate assumption used in the interest and service cost components of net periodic benefit cost is built through applying the specific spot rates along the yield curve used in the determination of the benefit obligation described above, to the relevant projected future cash flows of our pension plan.

We believe the “full yield curve” approach reflects a greater correlation between projected benefit cash flows and the corresponding yield curve spot rates and provides a more precise measurement of interest and service costs.

Recently Issued Accounting Pronouncements

For a discussion of recently issued financial accounting standards, refer to Note 3 “Recently Issued and Adopted Accounting Pronouncements”, “Item 8.

Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for further detail.

JOBS Act Transition Period

In April 2012, the JOBS Act was enacted.

Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards.

Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

We will rely on other exemptions and reduced reporting requirements under the JOBS Act.

Subject to certain conditions, as an emerging growth company, we will rely on certain of these exemptions, including without limitation, (1) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (2) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis.

We will be considered an emerging growth company until the earliest to occur of (1) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (2) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act which could occur if the market value of our shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, (3) the date on which we have issued more than $1.0 billion in non convertible debt during the preceding three-year period, and (4) the last day of our fiscal year containing the fifth anniversary of the date on which we first sold common equity securities pursuant to an effective registration statement, or December 31, 2024.

The allocation of shared costs and intangible assets among our subsidiaries in various U.S.

domestic, state and international jurisdictions is an estimate based on the principles of IRC Section 482, 1060 and 338 which is a critical estimate in the computation of U.S.

and international tax provisions.

The interpretation of the IRC regulations related to the Tax Cuts and Jobs Acts, as it pertains to Section 163(j), is a critical estimate in the computation of U.S.

federal taxes, and conforming states.

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What changed 10-K

Item 7. Management’s Discussion and Analysis