What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-11-09 · 240 added, 323 removed, 965 unchanged (37% of the section changed)

53 unchanged sentences

(In thousands, except per share data)

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

2022 2021 2022 2021

Three Months Ended March 31,

Gaming $ 463,702 $ 155,278

9 unchanged sentences

Advertising, general and administrative 181,616 80,499

Goodwill and asset impairment — 4,675 — 4,675

Expansion and pre-opening — 603

2 unchanged sentences

Rebranding 289 913

Gain on sale-leaseback, net ( 50,766 ) ( 53,425 ) ( 50,766 ) ( 53,425 )

Depreciation and amortization 78,881 12,786

5 unchanged sentences

Change in value of naming rights liabilities 13,379 ( 27,406 )

Gain (adjustment) on bargain purchases — 24,114 ( 107 ) 24,114

Adjustment on bargain purchase ( 107 ) —

Other, net 6,207 2,671

Total other income (expense), net ( 20,384 ) 15,391 ( 46,590 ) ( 29,618 )

Income before income taxes 64,935 95,923 61,249 80,388

Provision (benefit) for income taxes 5,434 26,981 ( 141 ) 22,151

Net income $ 59,501 $ 68,942 $ 61,390 $ 58,237

Basic earnings per share $ 0.98 $ 1.43 $ 1.02 $ 1.39

Total other expense, net ( 26,206 ) ( 45,009 )

Loss before provision for income taxes ( 3,686 ) ( 15,535 )

Benefit from income taxes ( 5,575 ) ( 4,830 )

Net income (loss) $ 1,889 $ ( 10,705 )

Basic earnings (loss) per share $ 0.03 $ ( 0.30 )

Weighted average common shares outstanding - basic 60,017 35,827

Diluted earnings per share $ 0.98 $ 1.40 $ 1.02 $ 1.37

Diluted earnings (loss) per share $ 0.03 $ ( 0.30 )

Weighted average common shares outstanding - diluted 60,120 35,827

1 unchanged sentence

BALLY’S CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS) (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS (unaudited)

(In thousands)

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

2022 2021 2022 2021

Net income $ 59,501 $ 68,942 $ 61,390 $ 58,237

Three Months Ended March 31,

Net income (loss) $ 1,889 $ ( 10,705 )

Other comprehensive income (loss):

1 unchanged sentence

Defined benefit pension plan reclassification adjustment (1)

Other comprehensive (loss) income ( 198,813 ) 460 ( 270,355 ) ( 552 )

Total comprehensive (loss) income $ ( 139,312 ) $ 69,402 $ ( 208,965 ) $ 57,685

Other comprehensive loss ( 71,542 ) ( 1,012 )

Total comprehensive loss $ ( 69,653 ) $ ( 11,717 )

__________________________________

21 unchanged sentences

Balance as of March 31, 2022 52,538,476 $ 525 $ 1,832,224 $ — $ ( 186,935 ) $ ( 98,351 ) $ 3,760 $ 1,551,223

Release of restricted stock 38,775 — ( 308 ) — — — — ( 308 )

Share-based compensation — — 6,322 — — — — 6,322

Other comprehensive loss — — — — — ( 198,813 ) — ( 198,813 )

Net income — — — — 59,501 — — 59,501

Balance as of June 30, 2022 52,577,251 $ 525 $ 1,838,238 $ — $ ( 127,434 ) $ ( 297,164 ) $ 3,760 $ 1,417,925

BALLY’S CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

(In thousands, except share data)

Common Stock Additional

14 unchanged sentences

Balance as of March 31, 2021 31,894,089 $ 318 $ 434,457 $ ( 9 ) $ 24,087 $ ( 4,156 ) $ — $ 454,697

Release of restricted stock 9,181 — ( 205 ) ( 116 ) — — — (321)

Share-based compensation — — 3,901 — — — — 3,901

Retirement of treasury shares — ( 21 ) ( 28,488 ) 114,842 ( 86,333 ) — — —

Common stock offering 12,650,000 127 667,746 — — — — 667,873

Sinclair shares exchanged for penny warrants ( 2,086,908 ) — 114,717 ( 114,717 ) — — — —

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

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

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

Other comprehensive income — — — — — 460 — 460

Net loss — — — — 68,942 — — 68,942

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

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months Ended June 30,

Three Months Ended March 31,

(in thousands) 2022 2021

Cash flows from operating activities:

Net income $ 61,390 $ 58,237

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss) $ 1,889 $ ( 10,705 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 78,881 12,786

1 unchanged sentence

Share-based compensation 5,095 4,483

Goodwill and asset impairment — 4,675

Amortization of debt discount and debt issuance costs 2,417 1,515

Gain from insurance recoveries — ( 10,513 )

Gain on sale-leaseback, net ( 50,766 ) ( 53,425 )

Deferred income taxes ( 18,594 ) ( 6,341 )

2 unchanged sentences

Change in contingent consideration payable ( 5,859 ) ( 3,142 )

Adjustment (gain) on bargain purchase 107 ( 24,114 )

Adjustment on bargain purchase 107 —

Other operating activities 1,750 2,111

3 unchanged sentences

Cash paid for acquisitions, net of cash acquired — ( 22,745 )

Proceeds from sale-leaseback 150,000 144,000

Foreign exchange forward contract premiums — ( 22,592 )

Capital expenditures ( 54,516 ) ( 15,327 )

2 unchanged sentences

Acquisition of gaming licenses ( 860 ) ( 250 )

Purchase of equity securities ( 3,175 ) —

Other intangible asset acquisitions ( 1,500 ) —

5 unchanged sentences

Payment of financing fees — ( 5,840 )

Payment of deferred consideration ( 30,025 ) —

Share repurchases ( 13,288 ) —

Issuance of common stock, net — 667,872

Issuance of Sinclair penny warrants — 50,000

Other financing activities ( 2,444 ) ( 861 )

Net cash (used in) provided by financing activities ( 140,790 ) 948,147

Net cash provided by financing activities 4,405 31,861

Effect of foreign currency on cash and cash equivalents ( 4,430 ) 69

4 unchanged sentences

Cash paid for interest, net of amounts capitalized $ 67,015 $ 9,128

Cash received from income tax refunds, net of cash paid ( 56,224 ) 17,396

Cash paid for income taxes, net of refunds 3,427 ( 607 )

Non-cash investing and financing activities:

2 unchanged sentences

Acquisitions in exchange for contingent liability — 58,685

Deferred purchase price payable — 14,071

Deposit applied to acquisition purchase price — 4,000

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

Description of Business

Bally’s Corporation (the “Company”, “Bally’s”, “we” or “us”) is a global gaming, hospitality and entertainment company with casinos and resorts and online gaming (“iGaming”) business-to-business-to-consumer (“B2B2C”) businesses.

Bally’s Corporation (the “Company” or “Bally’s”) is a global gaming, hospitality and entertainment company with casinos and resorts and online gaming (“iGaming”) business-to-business-to-consumer (“B2B2C”) businesses.

The Company owns and manages the following casino and resort properties:

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Refer to Note 13 “ Leases ” for further information.

The Company completed its sale-leaseback of Bally’s Quad Cities and Bally’s Black Hawk on April 1, 2022.

The Company completed its sale-leaseback transaction of Bally’s Quad Cities and Bally’s Black Hawk on April 1, 2022.

(2) Includes Bally’s Black Hawk North Casino, Bally’s Black Hawk West Casino and Bally’s Black Hawk East Casino.

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Certain prior year amounts have been reclassified to conform to the current year’s presentation.

The financial statements of our foreign subsidiaries are translated into US dollars using exchange rates in effect at period-end for assets and liabilities and average exchange rates during each reporting period for results of operations.

The financial statements of our foreign subsidiaries are translated into U.S.

dollars using exchange rates in effect at period-end for assets and liabilities and average exchange rates during each reporting period for results of operations.

Adjustments resulting from financial statement translations are reflected as a separate component of accumulated other comprehensive income (loss).

9 unchanged sentences

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

Correction of Cash Flow Classification

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

The accompanying unaudited condensed consolidated statement of cash flows for the six months ended June 30, 2022 correctly reflects such amount as cash provided by investing activities.

COVID-19 Pandemic

As of June 30, 2022, the Company’s properties are all operating with minimal restrictions.

As of March 31, 2022, the Company’s properties are all operating with minimal restrictions.

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

5 unchanged sentences

1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, the Company revised its 2021 financial statements to correct an immaterial accounting error that pertained to a foreign exchange translation loss of approximately $ 42.9 million that was incorrectly recognized as a component of accumulated other comprehensive income (loss) in the Company’s consolidated statement of comprehensive income (loss) rather than as other income (expense) in the Company’s consolidated statement of operations for the year ended December 31, 2021.

As a result, the accompanying consolidated balance sheets as of June 30, 2022 and December 31, 2021 and consolidated statement of stockholders’ equity for the three and six months ended June 30, 2022 have been revised to give effect to the correction of this error by decreasing previously reported accumulated other comprehensive loss and increasing previously reported accumulated deficit as of June 30, 2022 and December 31, 2021 by approximately $ 42.9 million, respectively.

As a result, the accompanying consolidated balance sheets as of March 31, 2022 and December 31, 2021 and consolidated statement of stockholders’ equity for the three months ended March 31, 2022 have been revised to give effect to the correction of this error by decreasing previously reported accumulated other comprehensive loss and increasing previously reported accumulated deficit as of March 31, 2022 and December 31, 2021 by approximately $ 42.9 million, respectively.

Cash and Cash Equivalents and Restricted Cash

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

As of June 30, 2022 and December 31, 2021, restricted cash of $ 55.2 million and $ 68.6 million, respectively, consisted primarily of player deposits and payment service provider deposits in connection with the Company’s iGaming operations.

As of March 31, 2022 and December 31, 2021, restricted cash of $ 62.9 million and $ 68.6 million, respectively, consisted primarily of player deposits and payment service provider deposits in connection with the Company’s iGaming operations.

Restricted cash also includes Video Lottery Terminal (“VLT”) and table games cash payable to the State of Rhode Island and certain cash accounts at other properties, which are unavailable for the Company’s use.

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

June 30, December 31,

March 31, December 31,

(in thousands) 2022 2021

4 unchanged sentences

Accounts receivable, net consists of the following:

June 30, December 31,

March 31, December 31,

(in thousands) 2022 2021

12 unchanged sentences

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

The Company recorded a gain from insurance recoveries, net of losses, of $ 0.6 million for the three months ended June 30, 2021 and $ 0.2 million and $ 11.3 million for the six months ended June 30, 2022 and 2021, respectively, primarily attributable to insurance proceeds received due to the effects of Hurricane Zeta which made landfall in Louisiana shutting down the Company’s Hard Rock Biloxi property for three days during the fourth quarter of 2020.

During the three months ended March 31, 2022 and 2021, the Company recorded a gain from insurance recoveries, net of losses, of $ 0.2 million and $ 10.7 million, respectively, primarily attributable to insurance proceeds received due to the effects of Hurricane Zeta, which made landfall in Louisiana shutting down the Company’s Hard Rock Biloxi property for three days during the fourth quarter of 2020.

Gaming Expenses

3 unchanged sentences

The Company expenses advertising costs as incurred.

For the three months ended June 30, 2022 and 2021, advertising expense was $ 52.1 million and $ 1.7 million, respectively.

For the six months ended June 30, 2022 and 2021, advertising expense was $ 117.4 million and $ 3.0 million, respectively.

Advertising expense attributable to the Company’s interactive business included within Gaming expenses for the three and six months ended June 30, 2022 was $ 49.7 million and $ 112.7 million, respectively.

There was no advertising expense attributable to the Company’s interactive business included within Gaming expenses for the three and six months ended June 30, 2021.

For the three months ended March 31, 2022 and 2021, advertising expense was $ 65.3 million and $ 1.4 million, respectively.

Advertising expense attributable to the Company’s interactive business included within Gaming expenses for the three months ended March 31, 2022 was $ 63.1 million.

There was no advertising expense attributable to the Company’s interactive business included within Gaming expenses for the three months ended March 31, 2021.

Strategic Partnership - Sinclair Broadcast Group

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

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

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

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

The Company accounted for this transaction as an asset acquisition in accordance with the “Acquisition of Assets Rather Than a Business” subsections of Accounting Standards Codification (“ASC”) 805-50, Business Combinations—Related Issues , using a cost accumulation model.

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

The naming rights intangible asset was $ 288.5 million and $ 311.7 million as of June 30, 2022 and December 31, 2021, respectively.

Amortization began on April 1, 2021, the commencement date of the re-branded Sinclair regional sports networks, and was $ 8.4 million and $ 8.6 million for the three months ended June 30, 2022 and 2021, respectively, and $ 16.8 million and $ 8.6 million for the six months ended June 30, 2022 and 2021, respectively.

The naming rights intangible asset was $ 300.7 million and $ 311.7 million as of March 31, 2022 and December 31, 2021, respectively.

Amortization began on April 1, 2021, the commencement date of the re-branded Sinclair regional sports networks, and was $ 8.4 million for the three months ended March 31, 2022.

Refer to Note 8 “ Goodwill and Intangible Assets ” for further information.

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

The total value of the liability as of March 31, 2022 and December 31, 2021 was $ 59.0 million and $ 58.9 million, respectively.

The short-term portion of the liability, which was $ 2.0 million as of March 31, 2022 and December 31, 2021, is recorded within “Accrued liabilities” and the long-term portion of the liability, which was $ 57.0 million and $ 56.9 million as of March 31, 2022 and December 31 2021, respectively, is recorded within “Naming rights liabilities” in the condensed consolidated balance sheets.

Accretion expense for the three months ended March 31, 2022 and 2021 was $ 1.1 million and $ 1.0 million respectively, and was reported in “Interest expense, net of amounts capitalized” in the condensed consolidated statements of operations.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The total value of the liability as of June 30, 2022 and December 31, 2021 was $ 59.1 million and $ 58.9 million, respectively.

The short-term portion of the liability, which was $ 2.0 million as of June 30, 2022 and December 31, 2021, is recorded within “Accrued liabilities” and the long-term portion of the liability, which was $ 57.1 million and $ 56.9 million as of June 30, 2022 and December 31 2021, respectively, is recorded within “Naming rights liabilities” in the condensed consolidated balance sheets.

Accretion expense reported in “Interest expense, net of amounts capitalized” in the condensed consolidated statements of operations was $ 1.1 million and $ 1.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 2.2 million and $ 2.1 million for the six months ended June 30, 2022 and 2021, respectively.

Warrants and Options - The Company issued to Sinclair (1) an immediately exercisable warrant to purchase up to 4,915,726 shares of the Company at an exercise price of $ 0.01 per share (“the Penny Warrants”), (2) a warrant to purchase up to a maximum of 3,279,337 additional shares of the Company at a price of $ 0.01 per share subject to the achievement of various performance metrics (the “Performance Warrants”), and (3) an option to purchase up to 1,639,669 additional shares in four tranches with purchase prices ranging from $ 30.00 to $ 45.00 per share, exercisable over a seven-year period beginning on the fourth anniversary of the November 18, 2020 closing (the “Options”).

10 unchanged sentences

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

The TRA liability was $ 35.8 million and $ 42.2 million as of June 30, 2022 and December 31, 2021, respectively, and is included in “Naming rights liabilities” in the condensed consolidated balance sheets.

The TRA liability was $ 39.6 million and $ 42.2 million as of March 31, 2022 and December 31, 2021, respectively, and is included in “Naming rights liabilities” in the condensed consolidated balance sheets.

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

3 unchanged sentences

The Company evaluates entities for which control is achieved through means other than voting rights to determine if it is the primary beneficiary of a VIE.

An entity is a VIE if it has any of the following characteristics :

(1) the entity has insufficient equity to permit it to finance its activities without additional subordinated financial support (2) equity holders, as a group, lack the characteristics of a controlling financial interest or (3) the entity is structured with non-substantive voting rights.

The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company consolidates its investment in a VIE when it determines that it is the primary beneficiary of such entity.

In determining whether it is the primary beneficiary of a VIE, the Company considers qualitative and quantitative factors, including, but not limited to:

An entity is a VIE if it has any of the following characteristics (1) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support, (2) equity holders, as a group, lack the characteristics of a controlling financial interest or (3) the entity is structured with non-substantive voting rights.

The primary beneficiary of the VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company consolidates its investment in a VIE when it determines that it is its primary beneficiary.

In determining whether it is the primary beneficiary of the VIE, the Company considers qualitative and quantitative factors, including, but not limited to:

which activities most significantly impact the VIE’s economic performance and which party controls such activities;

2 unchanged sentences

Management analyzed and concluded that Breckenridge Curacao B.V.

(“Breckenridge”) is a VIE because it does not have sufficient equity investment at risk.

The Company has determined that it is the primary beneficiary and consolidates the VIE because (a) although the Company does not control all decisions of Breckenridge, the Company has the power to direct the activities of Breckenridge that most significantly impact its economic performance through various contracts with the entity and (b) the nature of these agreements between Breckenridge and the Company provides the Company with the obligation to absorb losses and the right to receive benefits based on fees that are based upon off-market rates and commensurate to the level of services provided.

is a VIE because it does not have sufficient equity investment at risk.

The Company has determined that it is the primary beneficiary and consolidates the VIE because (a) although the Company does not control all decisions of the VIE, the Company has the power to direct the activities of the VIE that most significantly impact its economic performance through various contracts with the entity and (b) the nature of these agreements between the VIE and the Company provides the Company with the obligation to absorb losses and the right to receive benefits based on fees that are based upon off-market rates and commensurate to the level of services provided.

The Company receives significant benefits in the form of fees that are not at market and commensurate to the level of services provided.

As a result, the Company consolidates all of the assets, liabilities and results of operations of Breckenridge and its subsidiaries in the accompanying consolidated financial statements.

As of June 30, 2022 and December 31, 2021 Breckenridge had total assets of $ 73.1 million and $ 85.4 million, respectively, and total liabilities of $ 72.4 million and $ 75.2 million, respectively.

Breckenridge had revenues of $ 73.9 million and $ 160.8 million for the three and six months ended June 30, 2022.

As a result, the Company consolidates all of the assets, liabilities and results of operations of the VIE and its subsidiaries in the accompanying consolidated financial statements.

As of March 31, 2022 and December 31, 2021 Breckenridge Curacao B.V.

had total assets of $ 86.7 million and $ 85.4 million, respectively, and total liabilities of $ 76.5 million and $ 75.2 million, respectively.

Breckenridge Curacao B.V.

had revenues of $ 86.9 million for the three months ended March 31, 2022.

The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary.

3 unchanged sentences

In connection with the JPJ acquisition, £ 10.0 million of the cash consideration was deferred and payable (plus interest) to GHL’s majority shareholders 30 months after closing.

The Company recorded deferred consideration of $ 15.1 million within current liabilities of the condensed consolidated balance sheets as of December 31, 2021.

The Company recorded deferred consideration of $ 14.9 million and $ 15.1 million within current liabilities of the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021, respectively.

Of such amount, approximately $ 7.4 million was payable to related parties as former majority shareholders.

The Company paid the deferred consideration in April 2022.

Provision (Benefit) for Income Taxes

During the three months ended June 30, 2022 and 2021, the Company recorded a provision for income tax of $ 5.4 million, at an effective tax rate of 8.4 %, and a provision for income tax of $ 27.0 million, at an effective tax rate of 28.1 %, respectively.

The 2022 effective tax rate was lower than the US federal statutory rate of 21%, largely due to a tax benefit recorded in foreign jurisdictions during the quarter offset by discrete tax item related to gain on sale leaseback transactions in Colorado and Illinois.

The 2021 effective tax rate was higher than the US federal statutory rate of 21%, largely due to higher state income tax related to gain on sale leaseback in Delaware.

During the six months ended June 30, 2022 and 2021, the Company recorded a benefit for income tax of $ 0.1 million, at an effective tax rate of ( 0.2 )% and a provision for income tax of $ 22.2 million, at an effective tax rate of 27.6 %, respectively.

The 2021 effective tax rate was higher than the US federal statutory rate of 21%, largely due to higher state income tax related to gain on sale leaseback in Delaware.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

In the second quarter of 2022, the Company has changed its assertion and is no longer permanently reinvest in its undistributed foreign earnings and plans to remit cash back to the United States.

The Company has determined, based on certain tax planning strategies available, no deferred taxes were accrued related to unremitted earnings as of the period ending June 30, 2022.

RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

1 unchanged sentence

Standards to be implemented

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update No.

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

2 unchanged sentences

The Company is currently in the process of evaluating the impact of this amendment on its condensed consolidated financial statements.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

REVENUE RECOGNITION

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers , which requires companies to recognize revenue in a way that depicts the transfer of promised goods or services.

The Company recognizes revenue in accordance with ASC 606 which requires companies to recognize revenue in a way that depicts the transfer of promised goods or serves.

In addition, the standard requires more detailed disclosures to enable readers of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

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• Allocate the transaction price to performance obligations in the contract;

• Recognize revenue when or as the Company satisfies performance obligations by transferring the promised goods or services

• Recognize revenue when or as the Company satisfies performance obligations by transferring the promised good or services

The Company is currently engaged in gaming services, which include retail, online and racing.

2 unchanged sentences

Retail gaming, online gaming and sports betting revenue, each as described below, contain a single performance obligation.

Retail gaming transactions have an obligation to honor the outcome of a wager and to pay out an amount equal to the stated odds, including the return of the initial wager, if the customer receives a winning hand.

Retail gaming transactions have an obligation to honor the outcome of a wager and to payout an amount equal to the stated odds, including the return of the initial wager, if the customer receives a winning hand.

These elements of honoring the outcome of the hand of play and generating a payout are considered one performance obligation.

8 unchanged sentences

The transaction price for racing operations, inclusive of live racing events conducted at the Company’s racing facilities, is the commission received from the pari-mutuel pool less contractual fees and obligations primarily consisting of purse funding requirements, simulcasting fees, tote fees and certain pari-mutuel taxes that are directly related to the racing operations.

The transaction price for food and beverage and hotel is the net amount collected from the customer for such goods

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

and services.

The transaction price for food and beverage and hotel is the net amount collected from the customer for such goods and services.

Hotel, food and beverage services have been determined to be separate, stand-alone performance obligations and revenue is recognized as the good or service is transferred at the point in time of the transaction.

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Gaming revenues are recognized net of certain cash and free play incentives.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Gaming services contracts have two performance obligations for those customers earning incentives under the Company’s player loyalty programs and a single performance obligation for customers who do not participate in the programs.

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

Bally’s Twin River and Bally’s Tiverton each were entitled to an 83.5 % share of table games revenue generated as of June 30, 2022 and 2021.

Bally’s Twin River and Bally’s Tiverton each were entitled to an 83.5 % share of table games revenue generated as of March 31, 2022 and 2021.

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

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

As of June 30, 2022 and 2021, Bally’s Dover was entitled to an approximate 42 % share of VLT revenue and 80 % share of table games revenue.

As of March 31, 2022 and 2021, Bally’s Dover was entitled to an approximate 42 % share of VLT revenue and 80 % share of table games revenue.

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

1 unchanged sentence

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

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Online gaming

6 unchanged sentences

Bonuses, jackpot contributions and loyalty points are measured at fair value at each reporting date.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Sports betting

5 unchanged sentences

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

The Company recognized commissions in certain states from online sports betting and iGaming which are included in gaming revenue for the six months ended June 30, 2022 and 2021.

Deferred revenue associated with third-party operators for online sports betting and iGaming market access was $ 6.6 million and $ 6.8 million as of June 30, 2022 and December 31, 2021, respectively, and is included in “Accrued liabilities” and “Other long-term liabilities” in the condensed consolidated balance sheets.

The Company recognized commissions in certain states from online sports betting and iGaming which are included in gaming revenue for the three months ended March 31, 2022 and 2021.

Deferred revenue associated with third-party operators for online sports betting and iGaming market access was $ 6.8 million as of March 31, 2022 and December 31, 2021, and is included in “Accrued liabilities” and “Other long-term liabilities” in the condensed consolidated balance sheets.

All other revenues, including market access, daily fantasy sports and B2B service revenue generated by the North America Interactive and International Interactive reportable segments, are recognized at the time the goods are sold or the service is provided.

10 unchanged sentences

Cancellation fees for hotel and meeting space services are recognized upon cancellation by the customer and are included in hotel, food and beverage revenue within our consolidated statements of operations.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The estimated retail value related to goods and services provided to guests without charge or upon redemption under the Company’s player loyalty programs included in departmental revenues, and therefore reducing gaming revenues, are as follows for the three and six months ended June 30, 2022 and 2021:

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

Three Months Ended March 31,

(in thousands) 2022 2021

4 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

2 unchanged sentences

(in thousands) Casinos & Resorts North America Interactive International Interactive Total

Three Months Ended June 30, 2022

Gaming $ 225,716 $ 7,868 $ 221,504 $ 455,088

Hotel 33,929 — — 33,929

Food and beverage 27,435 — — 27,435

Retail, entertainment and other 12,795 10,182 13,067 36,044

Total revenue $ 299,875 $ 18,050 $ 234,571 $ 552,496

Three Months Ended June 30, 2021

Gaming $ 206,699 $ 791 $ — $ 207,490

Hotel 22,315 — — 22,315

Food and beverage 23,382 — — 23,382

Retail, entertainment and other 9,792 4,754 — 14,546

Total revenue $ 262,188 $ 5,545 $ — $ 267,733

Six Months Ended June 30, 2022

Three Months Ended March 31, 2022

Gaming $ 217,805 $ 6,645 $ 239,252 $ 463,702

3 unchanged sentences

Total revenue $ 279,970 $ 15,227 $ 253,074 $ 548,271

Six Months Ended June 30, 2021

Three Months Ended March 31, 2021

Gaming $ 154,429 $ 849 $ — $ 155,278

3 unchanged sentences

Total revenue $ 189,433 $ 2,833 $ — $ 192,266

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Revenue included in operations from Bally’s Lake Tahoe from the date of its acquisition, April 6, 2021, Bally’s Evansville from the date of its acquisition, June 3, 2021, and Bally’s Quad Cities from the date of its acquisition, June 14, 2021 are reported in Casinos & Resorts.

Revenue included in operations from Bally’s Lake Tahoe from the date of acquisition, April 6, 2021, Bally’s Evansville from the date of its acquisition, June 3, 2021, and Bally’s Quad Cities from the date of its acquisition, June 14, 2021 are reported in Casinos & Resorts.

Revenue included in operations from SportCaller from the date of its acquisition, February 5, 2021, MKF from the date of its acquisition, March 23, 2021, Bally’s Interactive from the date of its acquisition, May 28, 2021, AVP from the date of its acquisition, July 12, 2021, Telescope from the date of its acquisition, August 12, 2021, Degree 53 from the date of its acquisition, October 25, 2021, and the North American operations of Gamesys, from the date of its acquisition, October 1, 2021 are reported in North America Interactive.

3 unchanged sentences

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

The Company’s receivables related to contracts with customers were $ 40.7 million and $ 35.5 million as of June 30, 2022 and December 31, 2021, respectively.

The Company’s receivables related to contracts with customers were $ 37.2 million and $ 35.5 million as of March 31, 2022 and December 31, 2021, respectively.

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

9 unchanged sentences

Unpaid wagers include the Company’s outstanding chip liability, unpaid slot and pari-mutuel and sports betting tickets.

Liabilities related to contracts with customers as of June 30, 2022 and December 31, 2021 were as follows:

June 30, December 31,

(in thousands) 2022 2021

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Liabilities related to contracts with customers as of March 31, 2022 and December 31, 2021 were as follows:

(in thousands) March 31, 2022 December 31, 2021

Loyalty programs $ 19,759 $ 19,099

2 unchanged sentences

Total $ 56,657 $ 59,574

The Company recognized $ 7.7 million and $ 9.4 million of revenue related to loyalty program redemptions for the three months ended June 30, 2022 and 2021, respectively, and $ 15.9 million and $ 12.2 million for the six months ended June 30, 2022 and 2021, respectively.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Company recognized $ 8.3 million and $ 2.8 million of revenue related to loyalty program redemptions for the three months ended March 31, 2022 and 2021, respectively.

Recent Acquisitions

3 unchanged sentences

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

The purchase price allocation for Gamesys and certain of the Bally’s Interactive Acquisitions, as defined below, are preliminary and will be finalized when valuations are complete and final assessments of the fair value of other acquired assets and assumed liabilities are completed.

The purchase price allocation for the acquisitions of Bally’s Evansville, Bally’s Quad Cities, Gamesys and certain of the Bally’s Interactive Acquisitions, as defined below, are preliminary and will be finalized when valuations are complete and final assessments of the fair value of other acquired assets and assumed liabilities are completed.

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

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

The Company recorded transaction costs related to its recent and pending acquisitions of $ 8.5 million and $ 13.0 million during the three and six months ended June 30, 2022, respectively, and $ 18.4 million and $ 30.7 million during the three and six months ended June 30, 2021.

The Company recorded transaction costs related to its recent and pending acquisitions of $ 4.5 million and $ 12.3 million during the three months ended March 31, 2022 and 2021, respectively.

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

3 unchanged sentences

(“Eldorado”) and certain of its affiliates for $ 14.2 million, payable in cash one year from the closing date and subject to customary post-closing adjustments.

The deferred purchase price is included within “Accrued liabilities” of the condensed consolidated balance sheet as of December 31, 2021 and was paid in April 2022.

The deferred purchase price is included within “Accrued liabilities” of the condensed consolidated balance sheet as of March 31, 2022 and December 31, 2021.

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

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following table summarizes the consideration paid and the fair values of the assets acquired and liabilities assumed in connection with the acquisition of Bally’s Lake Tahoe on April 6, 2021:

As of April 6, 2021

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

(in thousands) Preliminary as of December 31, 2021 Year to Date Adjustments Final as of March 31, 2022

Total current assets $ 4,683 $ — $ 4,683

8 unchanged sentences

Total purchase price $ 14,172 $ — $ 14,172

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

During the year ended December 31, 2021, the Company recorded a bargain purchase gain of $ 2.0 million based on the preliminary purchase price allocation as the fair value of the assets acquired and liabilities assumed exceeded the purchase price consideration.

During the six months ended June 30, 2022, based on the final purchase price allocation, an adjustment of $ 0.1 million was recorded reducing the bargain purchase gain to $ 1.9 million.

The original agreement to acquire Bally’s Lake Tahoe from Eldorado was made concurrently with the agreement of Bally’s Shreveport and the Company believes that it was able to acquire Bally’s Lake Tahoe for less than fair value as a result of a distressed sale whereby Eldorado was required by the Federal Trade Commission to divest the properties prior to its merger with Caesars coupled with the timing of the agreement to purchase which was in the middle of COVID-19 related shutdowns of casinos in the US.

During the three months ended March 31, 2022, based on the final purchase price allocation, an adjustment of $ 0.1 million was recorded reducing the bargain purchase gain to $ 1.9 million.

Bally’s Evansville

4 unchanged sentences

Refer to Note 13 “ Leases ” for further information.

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

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

The following table summarizes the consideration paid and the fair values of the assets acquired and liabilities assumed in connection with the acquisition of Bally’s Evansville on June 3, 2021.

There were no purchase accounting adjustments recorded during the six months ended June 30, 2022.

As of June 3, 2021

(in thousands) Final

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

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

There were no purchase accounting adjustments recorded during the three months ended March 31, 2022.

(in thousands) Preliminary as of March 31, 2022

Cash and cash equivalents $ 9,355

12 unchanged sentences

Total purchase price $ 139,708

The fair value of the assets acquired and liabilities assumed exceeded the purchase price consideration and therefore, a bargain purchase gain of $ 20.9 million was recorded during the year ended December 31, 2021.

The Company believes it was able to acquire Bally’s Evansville for less than fair value as a result of a distressed sale prior to Eldorado’s merger with Caesars, as noted above, coupled with the timing of the agreement to purchase which was in the middle of COVID-19 related shutdowns of casinos in the US.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Based on the preliminary purchase price allocation, the fair value of the assets acquired and liabilities assumed exceeded the purchase price consideration and therefore, a bargain purchase gain of $ 20.9 million was recorded during the year ended December 31, 2021.

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

Bally’s Quad Cities Casino & Hotel

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

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

Cash paid by the Company, net of $ 2.9 million cash acquired and the $ 4.0 million deposit paid in the third quarter of 2020, was $ 112.0 million, excluding transaction costs.

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

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

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

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

Goodwill recognized is deductible for local tax purposes and has been assigned as of the acquisition date to the Company’s Casinos & Resorts reportable segment, which includes the reporting unit expected to benefit from the synergies of the acquisition.

Qualitative factors that contribute to the recognition of goodwill include an organized workforce and expected synergies from integrating the property into the Company’s casino portfolio and future development of its omni-channel strategy.

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

As of June 14, 2021

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

There were no purchase accounting adjustments recorded during the three months ended March 31, 2022.

(in thousands) Preliminary as of March 31, 2022

Cash and cash equivalents $ 2,933

7 unchanged sentences

North America Interactive Acquisitions

SportCaller - On February 5, 2021, the Company acquired SportCaller for total consideration of $ 42.6 million including $ 24.0 million in cash and 221,391 of the Company’s common shares at closing, pending adjustment, and up to $ 12.0 million in value of additional shares if SportCaller meets certain post-closing performance targets (calculated based on a US Dollar (“USD”) to Euro exchange ratio of 0.8334 ).

Monkey Knife Fight - On March 23, 2021, the Company acquired Fantasy Sports Shark, LLC d/b/a/ Monkey Knife Fight for total consideration of $ 118.6 million including (1) immediately exercisable penny warrants to purchase up to 984,446 of the Company’s common shares (subject to adjustment) at closing and (2) contingent penny warrants to purchase up to 787,557 additional Company common shares, half of which are issuable on each of the first and second anniversary of closing.

3 unchanged sentences

Refer to Note 9 “ Fair Value Measurements ” for further information.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Bally’s Interactive - On May 28, 2021, the Company acquired Bally’s Interactive, formerly Bet.Works Corp., for total consideration of $ 192.1 million, which consisted of $ 70.4 million in cash, net of cash acquired, and 2,084,765 of the Company’s common shares, subject in each case to customary adjustments.

4 unchanged sentences

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

Earnings attributable to the non-controlling interest are not material for the three and six months ended June 30, 2022.

Earnings attributable to the non-controlling interest are not material for the quarter ended March 31, 2022 and the year ended December 31, 2021.

Degree 53 - On October 25, 2021, the Company acquired Degree 53, a UK-based creative agency that specializes in multi-channel website and personalized mobile app and software development for the online gambling and sports industries, for $ 7.8 million in cash, net of cash acquired.

The identifiable intangible assets recorded in connection with the closing of SportCaller, MKF, Bally’s Interactive, AVP, Telescope and Degree 53 (collectively the “North America Interactive Acquisitions”) include customer relationships of $ 41.5 million, which are being amortized over estimated useful lives between three and ten years , developed software of $ 122.4 million, which is being amortized over estimated useful lives between three and ten years , and trade names of $ 3.1 million, which are being amortized over estimated useful lives between ten and 15 years.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The identifiable intangible assets recorded in connection with the closing of SportCaller, MKF, Bally’s Interactive, AVP, Telescope and Degree 53 (collectively the “North America Interactive Acquisitions”) include customer relationships of $ 41.5 million, which are being amortized over estimated useful lives between three and ten years , developed software of $ 122.4 million, which is being amortized over estimated useful lives between three and ten years , and tradenames of $ 3.1 million, which are being amortized over estimated useful lives between ten and 15 years.

Total goodwill recorded in connection with the North America Interactive Acquisitions was $ 250.5 million.

2 unchanged sentences

The following table summarizes the consideration paid and the fair values of the assets acquired and liabilities assumed in connection with the North America Interactive Acquisitions.

(in thousands) As of June 30, 2022 (1)

There were no purchase accounting adjustments recorded during the three months ended March 31, 2022.

(in thousands) As of March 31, 2022 (1)

Cash and cash equivalents $ 8,689

8 unchanged sentences

__________________________________

(1) As of June 30, 2022, the purchase price allocations of AVP, Telescope and Degree 53 are preliminary and are final for Bally’s Interactive, SportCaller and MKF.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

During the three and six months ended June 30, 2022, the Company recorded purchase accounting adjustments for the North America Interactive Acquisitions, increasing both goodwill and accrued liabilities by $ 0.2 million.

(1) The purchase price allocation of Bally’s Interactive, AVP, Telescope and Degree 53 are preliminary and final for SportCaller and MKF as of March 31, 2022.

Gamesys Acquisition

2 unchanged sentences

Cash paid by the Company at closing, net of cash received of $ 183.3 million and a $ 10.3 million post-acquisition expense, explained below, was $ 1.90 billion, excluding transaction costs.

The identifiable intangible assets recorded in connection with the closing of the Gamesys acquisition are based on preliminary valuations and primarily include customer relationships of $ 980.2 million and developed technology of $ 282.0 million, both of which are being amortized over seven years , and trade names of $ 249.8 million, which have indefinite lives.

The identifiable intangible assets recorded in connection with the closing of Gamesys are based on preliminary valuations and primarily include customer relationships of $ 980.2 million and developed technology of $ 282.0 million, both of which are being amortized over seven years , and trade names of $ 249.8 million, which have indefinite lives.

Total goodwill of $ 1.68 billion represents the excess purchase price over the preliminary fair value of the assets acquired and liabilities assumed.

3 unchanged sentences

Goodwill recognized is not deductible for local tax purposes.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

In connection with the acquisition of Gamesys, certain unvested and outstanding equity options held by Gamesys employees were discretionarily accelerated and vested by the Gamesys Board of Directors, requiring allocation of the fair value of post-acquisition service to purchase consideration, with the remainder allocated to non-recurring post-acquisition expense.

1 unchanged sentence

In the fourth quarter of 2021, the fair value of $ 10.3 million, attributable to post acquisition expense was recorded within “Advertising, general, and administrative” expense in the consolidated statements of operations.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition of Gamesys as of October 1, 2021.

(in thousands) Preliminary as of December 31, 2021 Year to Date Adjustments Preliminary as of June 30, 2022

(in thousands) Preliminary as of December 31, 2021 Year to Date Adjustments Preliminary as of March 31, 2022

Cash and cash equivalents and restricted cash $ 183,306 $ — $ 183,306

25 unchanged sentences

Supplemental Pro Forma Consolidated Information

The following unaudited pro forma consolidated financial information for the three and six months ended June 30, 2021 combines the Company’s historical results with pro forma amounts for Bally’s Lake Tahoe, Bally’s Evansville and Gamesys.

The following unaudited pro forma consolidated financial information for the three months ended March 31, 2021 combines the Company’s historical results with pro forma amounts for Bally’s Lake Tahoe, Bally’s Evansville and Gamesys.

The unaudited pro forma consolidated financial information assumes that the acquisitions of Bally’s Lake Tahoe, Bally’s Evansville and Gamesys had occurred as of January 1, 2020.

3 unchanged sentences

In addition, these results are not intended to be a projection of future results and do not reflect events that may occur, including but not limited to revenue enhancements, cost savings or operating synergies that the combined Company may achieve as a result of the acquisitions.

Three Months Ended Six Months Ended

(in thousands) June 30, 2021 June 30, 2021

Three Months Ended

(in thousands) March 31, 2021

Revenue $ 506,615

Net loss $ ( 40,989 ) $ ( 26,319 )

Net income $ 14,670

PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of June 30, 2022 and December 31, 2021, prepaid expenses and other current assets was comprised of the following:

As of March 31, 2022 and December 31, 2021, prepaid expenses and other current assets was comprised of the following:

March 31, December 31,

(in thousands) 2022 2021

1 unchanged sentence

Due from payment service providers 13,832 15,984

Sales tax 9,124 18,308

Deposits 8,028 8,748

Prepaid marketing 12,352 10,066

Convertible loans 5,205 —

Purse funds 4,921 8,286

Sales tax 11,075 18,308

Unbilled revenue 9,929 7,759

Convertible loans 5,774 —

Deposits 4,991 8,748

Prepaid insurance 4,744 9,637

Purse funds 1,482 8,286

Other 3,115 4,179

3 unchanged sentences

PROPERTY AND EQUIPMENT

As of June 30, 2022 and December 31, 2021, property and equipment was comprised of the following:

June 30, December 31,

(in thousands) 2022 2021

As of March 31, 2022 and December 31, 2021, property and equipment was comprised of the following:

(in thousands) March 31, 2022 December 31, 2021

Land $ 75,328 $ 75,328

7 unchanged sentences

Property and equipment, net $ 877,275 $ 838,651

Depreciation expense relating to property and equipment for the three months ended June 30, 2022 and 2021 was $ 16.1 million and $ 12.8 million, respectively.

Depreciation expense relating to property and equipment for the six months ended June 30, 2022 and 2021 was $ 32.9 million and $ 23.9 million, respectively.

During the three and six months ended June 30, 2022 there was $ 0.4 million and $ 0.7 million of capitalized interest, respectively.

There was no capitalized interest during the three and six months ended June 30, 2021.

Depreciation expense relating to property and equipment for the three months ended March 31, 2022 and 2021 was $ 16.7 million and $ 11.1 million, respectively.

During the three months ended March 31, 2022 there was $ 0.3 million of capitalized interest.

There was no capitalized interest during the three months ended March 31, 2021.

BALLY’S CORPORATION

1 unchanged sentence

GOODWILL AND INTANGIBLE ASSETS

The change in carrying value of goodwill by reportable segment for the six months ended June 30, 2022 is as follows (in thousands):

The change in carrying value of goodwill by reportable segment for the three months ended March 31, 2022 is as follows (in thousands):

Casinos & Resorts North America Interactive International Interactive Total

3 unchanged sentences

Purchase accounting adjustments on prior year business acquisitions — — ( 542 ) ( 542 )

Goodwill as of June 30, 2022 (1)

Goodwill as of March 31, 2022 (1)

$ 201,952 $ 283,086 $ 1,597,594 $ 2,082,632

1 unchanged sentence

(1) Casinos & Resorts amounts are net of accumulated goodwill impairment charges of $ 5.4 million.

The change in intangible assets, net for the six months ended June 30, 2022 is as follows (in thousands):

The change in intangible assets, net for the three months ended March 31, 2022 is as follows (in thousands):

Intangible assets, net as of December 31, 2021 $ 2,477,952

4 unchanged sentences

Amortization ( 62,138 )

Intangible assets, net as of June 30, 2022

Intangible assets, net as of March 31, 2022

The Company’s identifiable intangible assets consist of the following:

remaining life

(in years) June 30, 2022

(in years) March 31, 2022

(in thousands, except years) Gross Carrying Amount Accumulated

46 unchanged sentences

(2) See note (1) above.

Amortization of intangible assets was approximately $ 58.7 million and $ 13.0 million for the three months ended June 30, 2022 and 2021, respectively, and approximately $ 120.8 million and $ 14.7 million for the six months ended June 30, 2022 and 2021, respectively.

The following table reflects the remaining amortization expense associated with the finite-lived intangible assets as of June 30, 2022:

Amortization of intangible assets was approximately $ 62.1 million and $ 1.7 million for the three months ended March 31, 2022 and 2021.

The following table reflects the remaining amortization expense associated with the finite-lived intangible assets as of March 31, 2022:

(in thousands)

11 unchanged sentences

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

June 30, 2022

March 31, 2022

(in thousands) Balance Sheet Location Level 1 Level 2 Level 3

2 unchanged sentences

Convertible loans Other assets — — 2,138

Investments in equity securities Other assets 2,523 — —

Total $ 5,810 $ — $ 2,138

17 unchanged sentences

Change in fair value ( 13,379 ) ( 5,992 ) ( 54 ) ( 19,425 )

Ending as of June 30, 2022

$ 36,153 $ 8,701 $ 2,486 $ 47,340

Ending as of March 31, 2022 $ 56,185 $ 13,077 $ 2,138 $ 71,400

( in thousands) Sinclair Performance Warrants Contingent Consideration Total

2 unchanged sentences

Change in fair value 25,880 ( 3,142 ) 22,738

Ending as of June 30, 2021

$ 94,929 $ 46,920 $ 141,849

Ending as of March 31, 2021 $ 113,999 $ 55,481 $ 169,480

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The gains (losses) recognized in the condensed consolidated statement of operations for derivatives not designated as hedging instruments during the three and six months ended June 30, 2022 and 2021 are as follows:

Condensed Consolidated Statements of Operations Location Three Months Ended June 30, Six Months Ended June 30,

The gains (losses) recognized in the condensed consolidated statement of operations for derivatives not designated as hedging instruments during the three months ended March 31, 2022 and 2021 are as follows:

Condensed Consolidated Statements of Operations Location Three months ended March 31,

(in thousands) 2022 2021

Foreign exchange forward contracts Other, net $ — $ ( 14,773 ) $ — $ ( 14,773 )

Sinclair Performance Warrants Change in value of naming rights liabilities $ 13,379 $ ( 25,880 )

28 unchanged sentences

The fair value of the loans to vendors with share prices quoted on active markets are classified within Level 1 of the hierarchy and the fair value of the loans to vendors with share values based on unobservable inputs are classified within Level 3 of the hierarchy.

Investments in equity securities

The Company has a long term investment in an unconsolidated entity which it accounts for under the equity method of accounting.

The Company has elected the fair value option allowed by ASC 825, Financial Instruments , with respect to this investment.

Under the fair value option, the investment is remeasured at fair value at each reporting period through earnings.

The Company measures fair value using quoted prices in active markets that are classified within Level 1 of the hierarchy, with changes to fair value included within “Other, net” of the condensed consolidated statements of operations.

Long-term debt

3 unchanged sentences

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

June 30, 2022 December 31, 2021

March 31, 2022 December 31, 2021

(in thousands) Carrying Amount Fair Value Carrying Amount Fair Value

5 unchanged sentences

ACCRUED LIABILITIES

As of June 30, 2022 and December 31, 2021, accrued liabilities consisted of the following:

(in thousands) June 30,

As of March 31, 2022 and December 31, 2021, accrued liabilities consisted of the following:

(in thousands) March 31,

2022 December 31,

2 unchanged sentences

Interest payable 21,410 46,292

Transaction services and net working capital accrual 18,762 18,516

Other 96,044 116,348

3 unchanged sentences

ACQUISITION, INTEGRATION AND RESTRUCTURING

The following table reflects acquisition, integration and restructuring expenses the Company recorded during the three and six months ended June 30, 2022 and 2021:

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

The following table reflects acquisition, integration and restructuring expenses the Company recorded during the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

(in thousands) 2022 2021

2 unchanged sentences

North America Interactive acquisitions (1)

1,883 834 2,347 3,674

Chicago, Illinois 4,095 — 5,872 —

1,698 10,224 3,561 13,415

Total 4,482 12,258

2 unchanged sentences

__________________________________

(1) Includes costs associated with the acquisition of Bally’s Interactive, SportCaller, MKF, AVP and Telescope, which are included within the North America Interactive segment.

(2) Includes costs in connection with the development of a casino in Centre County, Pennsylvania, the completed acquisitions of Bally’s Atlantic City, Bally’s Black Hawk, Bally’s Dover, Bally’s Evansville, Bally’s Lake Tahoe, Bally’s Quad Cities and Bally’s Shreveport, the pending acquisition of Tropicana Las Vegas and other transactions.

(1) Includes costs associated with the acquisition of SportCaller, MKF, AVP and Telescope, which are included within the North America Interactive segment.

(2) Includes costs in connection with the development of a casino in Centre County, Pennsylvania, the completed acquisitions of Bally’s Shreveport, Bally’s Atlantic City, Bally’s Black Hawk and Bally’s Dover, the pending acquisition of Tropicana Las Vegas and other transactions.

Restructuring Expense

During the three and six months ended June 30, 2022, the Company incurred restructuring expense of $ 1.6 million and $ 2.4 million, respectively, attributable to severance costs incurred.

There was no restructuring expense in the three and six months ended June 30, 2021.

The following table summarizes the restructuring liability accrual activity by segment during the six months ended June 30, 2022:

During the three months ended March 31, 2022, the Company incurred restructuring expense of $ 0.8 million attributable to severance costs incurred.

There was no restructuring expense in the three months ended March 31, 2021.

The following table summarizes the restructuring liability accrual activity by segment during the three months ended March 31, 2022:

(in thousands) North America Interactive International Interactive Total

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Payments ( 339 ) ( 865 ) ( 1,204 )

Restructuring liability as of June 30, 2022

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Restructuring liability as of March 31, 2022

LONG-TERM DEBT

As of June 30, 2022 and December 31, 2021, long-term debt consisted of the following:

(in thousands) June 30,

As of March 31, 2022 and December 31, 2021, long-term debt consisted of the following:

(in thousands) March 31,

2022 December 31,

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excluding current portion $ 3,449,053 $ 3,426,777

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

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

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

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

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

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The credit facilities allow the Company 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 as set out in the Credit Agreement.

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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.

As of June 30, 2022, the Company’s borrowings under the Revolving Credit Facility did not exceed 30 % and therefore, financial covenants did not apply.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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.

As of March 31, 2022, the Company’s borrowings under the Revolving Credit Facility did not exceed 30 % and therefore, financial covenants did not apply.

GLPI Master Lease

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

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

GLPI also agreed to acquire the real estate associated with Bally’s Dover for $ 144.0 million and lease it back to the Company 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 Bally’s Evansville and commencement of the Master Lease occurred on June 3, 2021.

The acquisition of Bally’s 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 Bally’s Dover to GLPI and recorded a gain of $ 53.4 million representing the difference in the transaction price and the derecognition of assets.

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

On April 1, 2022, the Company completed the sale of its Bally’s Quad Cities and Bally’s Black Hawk properties to GLPI for $ 150.0 million, subsequently leasing the properties back under the above-mentioned Master Lease for combined minimum annual payments of $ 12.0 million, subject to escalation.

During the second quarter of 2022, the Company recorded a net gain of $ 50.8 million, representing the difference in the transaction price and the derecognition of assets, and recorded lease liabilities and corresponding right of use assets of $ 82.7 million and $ 21.8 million, respectively.

All leases under the Master Lease are accounted for as operating leases within the provisions of ASC 842, Leases (“ASC 842”), over the lease term or until a re-assessment event occurs.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

On April 1, 2022, the Company completed its sale-leaseback transaction relating to its Bally’s Quad Cities and Bally’s Black Hawk properties which was added to the Master Lease.

Operating Leases

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

The Company had operating lease liabilities of approximately $ 668.7 million and $ 531.0 million as of June 30, 2022 and December 31, 2021, respectively, and right of use assets of approximately $ 642.9 million and $ 507.8 million as of June 30, 2022 and December 31, 2021, respectively, which were included in the condensed consolidated balance sheets.

Total lease cost under ASC 842 for the three and six months ended June 30, 2022 and 2021 was as follows:

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

The Company had operating lease liabilities of approximately $ 526.8 million and $ 531.0 million as of March 31, 2022 and December 31, 2021, respectively, and right of use assets of approximately $ 502.2 million and $ 507.8 million as of March 31, 2022 and December 31, 2021, respectively, which were included in the condensed consolidated balance sheets.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Total lease cost under ASC 842 for the three months ended March 31, 2022 and 2021 was as follows:

Three Months Ended March 31,

(in thousands) 2022 2021

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Total lease expense $ 20,853 $ 2,524

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Supplemental cash flow and other information for the three and six months ended June 30, 2022 and 2021, related to operating leases was as follows:

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

Supplemental cash flow and other information for the three months ended March 31, 2022 and 2021, related to operating leases was as follows:

Three Months Ended March 31,

(in thousands) 2022 2021

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Right of use assets obtained in exchange for operating lease liabilities $ 1,363 $ 388

June 30, 2022 December 31, 2021

March 31, 2022 December 31, 2021

Weighted average remaining lease term 15.1 years 15.3 years

Weighted average discount rate 6.1 % 6.1 %

As of June 30, 2022, future minimum rental commitments under noncancelable operating leases are as follows:

(in thousands) June 30, 2022

As of March 31, 2022, future minimum rental commitments under noncancelable operating leases are as follows:

(in thousands) March 31, 2022

Remaining 2022 $ 42,725

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

Leasing arrangements for which the Company acts as a lessor are not deemed material as of June 30, 2022 and December 31, 2021.

Leasing arrangements for which the Company acts as a lessor are not deemed material as of March 31, 2022 and December 31, 2021.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Equity Incentive Plans

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During the three months ended March 31, 2022, there were 20,000 options exercised at a weighted average exercise price of $ 4.31 per share and an aggregate intrinsic value of $ 0.1 million.

As of June 30, 2022, there were no unexercised options outstanding.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

As of March 31, 2022, there were no unexercised options outstanding.

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

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

During the six months ended June 30, 2022, the Company granted 356,709 restricted awards with an aggregate intrinsic value of $ 12.0 million under the 2021 Incentive Plan.

As of June 30, 2022, 3,305,029 shares remain available for grant under the 2021 Incentive Plan, which includes shares added back to the share pool based on share counting rules.

There were 1,002,043 restricted awards outstanding as of June 30, 2022.

During the three months ended March 31, 2022, the Company granted 231,082 restricted awards with an aggregate intrinsic value of $ 8.2 million under the 2021 Incentive Plan.

As of March 31, 2022, 3,311,766 shares remain available for grant under the 2021 Incentive Plan, which includes shares added back to the share pool based on share counting rules.

There were 990,833 restricted awards outstanding as of March 31, 2022.

Share-Based Compensation

The Company recognized total share-based compensation expense of $ 6.3 million and $ 11.4 million for the three and six months ended June 30, 2022, respectively, and $ 3.9 million and $ 8.4 million for the three and six months ended June 30, 2021, respectively.

The total income tax benefit for share-based compensation arrangements was $ 1.7 million and $ 1.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 2.9 million and $ 2.5 million for the six months ended June 30, 2022 and 2021, respectively.

The Company recognized total share-based compensation expense of $ 5.1 million and $ 4.5 million for the three months ended March 31, 2022 and 2021, respectively.

The total income tax benefit for share-based compensation arrangements was $ 1.2 million and $ 1.4 million for the three months ended March 31, 2022 and 2021, respectively.

BENEFIT PLANS

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Dover Downs Defined Benefit Pension Plan

The net periodic benefit (income) cost and other changes in plan assets and benefit obligations, excluding service cost, is set forth in the table below for the three and six months ended June 30, 2022 and 2021.

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

The net periodic benefit (income) cost and other changes in plan assets and benefit obligations, excluding service cost, is set forth in the table below for the three months ended March 31, 2022 and 2021.

Three Months Ended March 31,

(in thousands) 2022 2021

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Net periodic benefit income $ ( 241 ) $ ( 133 )

Contributions

There is no minimum pension contribution required to be made to the Dover Downs Pension Plan under the Employee Retirement Income Security Act of 1974, as amended in 2021, for the year ended December 31, 2022.

The Company does no t expect to contribute in 2022.

There were no contributions made to the Dover Downs Pension Plan during the three and six months ended June 30, 2022, and $ 0.2 million in contributions made to the Dover Downs Pension Plan during the three and six months ended June 30, 2021.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Contributions

There is no minimum pension contribution required to be made to the Dover Downs Pension Plan under the Employee Retirement Income Security Act of 1974, as amended in 2021.

The Company does not expect to contribute in 2022.

There were no contributions made to the Dover Downs Pension Plan during the three months ended March 31, 2022 and 2021, respectively.

Defined Contribution Plans

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

Gamesys also operates defined contribution retirement benefit plans for their UK, US, Toronto, Isle of Man and Gibraltar offices.

Gamesys also operates defined contribution retirement benefit plans for their U.K., US, Toronto, Isle of Man and Gibraltar offices.

Eligible employees are allowed to contribute between 3-5% of their base salary to the various plans and the Company matches all employee contributions.

Total employer contribution expense was $ 1.9 million and $ 0.8 million for the three months ended June 30, 2022 and 2021, respectively, and $ 3.9 million and $ 1.3 million for the six months ended June 30, 2022 and 2021, respectively.

Total employer contribution expense attributable to defined contribution plans was $ 2.0 million and $ 0.5 million for the three months ended March 31, 2022 and 2021, respectively.

STOCKHOLDERS’ EQUITY

Capital Return Program and Quarterly Cash Dividend

The Company had $ 334.6 million available for use under its previously announced capital return program, as of June 30, 2022.

As described under Note 20 “ Subsequent Events ”, on July 27, 2022, the Company completed a modified Dutch auction tender offer (the “and repurchased 4.7 million shares of its common stock for cash at a price of $ 22.00 per share for an aggregate purchase price of $ 103.3 million.

Future share repurchases may be effected in various ways, which could include open-market or private repurchase transactions, accelerated stock repurchase programs, tender offers or other transactions.

On June 14, 2019, the Company announced that its Board of Directors approved a capital return program under which the Company may expend a total of up to $ 250 million for a share repurchase program and payment of dividends.

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

Share repurchases may be effected in various ways, which could include open-market or private repurchase transactions, accelerated stock repurchase programs, tender offers or other transactions.

The amount, timing and terms of any return of capital transaction will be determined based on prevailing market conditions and other factors.

There is no fixed time period to complete share repurchases.

Total share repurchase activity during the six months ended June 30, 2022 was as follows:

(in thousands, except share and per share data) Six Months Ended June 30, 2022

Total share repurchase activity during the three months ended March 31, 2022 was as follows:

(in thousands, except share and per share data) Three Months Ended March 31, 2022

Number of common shares repurchased 350,616

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__________________________________

There was no share repurchase activity during the three months ended June 30, 2022 and the three and six months ended June 30, 2021.

The Company retired 1,146,194 shares of its common stock held in treasury during the three months ended March 31, 2022.

There were no shares retired during the three months ended June 30, 2022.

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

There was no share repurchase activity during the three months ended March 31, 2021.

The Company retired 1,146,194 shares of its common stock held in treasury during the three months ended March 31, 2022 and no shares retired during the three months ended March 31, 2021.

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

As of June 30, 2022, there were no shares remaining in treasury.

There were no cash dividends paid during the six months ended June 30, 2022 and 2021.

As of June 30, 2022 and December 31, 2021, $ 334.6 million and $ 347.9 million, respectively, remained available for use under the above-mentioned capital return program.

As of March 31, 2022, there were no shares remaining in treasury.

There were no cash dividends paid during the three months ended March 31, 2022 and 2021.

As of March 31, 2022 and December 31, 2021, $ 334.6 million and $ 347.9 million, respectively, remained available for use under the above-mentioned capital return program.

Common Stock Offering

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The net proceeds from the offering were approximately $ 671.4 million, after deducting underwriting discounts, but before expenses.

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

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

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

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On May 18, 2021, following receipt of required shareholder approvals, the Company amended its Certificate of Incorporation to increase the number of authorized shares of common stock from 100 million to 200 million, and authorize the issuance of up to 10 million shares of preferred stock.

As of June 30, 2022 and December 31, 2021, no shares of preferred stock have been issued.

As of March 31, 2022 and December 31, 2021, no shares of preferred stock have been issued.

Shares Outstanding

As of June 30, 2022, the Company had 52,577,251 common shares issued and outstanding.

As of March 31, 2022, the Company had 52,538,476 common shares issued and outstanding.

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

These incremental shares as of June 30, 2022 are summarized below:

These incremental shares as of March 31, 2022 are summarized below:

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

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

(2) The contingent consideration related to the SportCaller acquisition is 6.5 M EUR as of June 30, 2022, payable in shares subject to certain post-acquisition earn-out targets and based on share price at time of payment.

For purposes of this estimate, the Company used the EUR>US Dollar conversion rate of 1.0487 as of June 30, 2022 and the closing share price of Company common shares of $ 19.78 per share to calculate the shares expected to be issued if earn-out targets are met.

(2) The contingent consideration related to the SportCaller acquisition is 6.5 M EUR as of March 31, 2022, payable in shares subject to certain post-acquisition earn-out targets and based on share price at time of payment.

For purposes of this estimate, the Company used the EUR>US Dollar conversion rate of 1.1126 as of March 31, 2022 and the closing share price of Company common shares of $ 30.74 per share to calculate the shares expected to be issued if earn-out targets are met.

BALLY’S CORPORATION

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ACCUMULATED OTHER COMPREHENSIVE LOSS

The following tables reflect the changes in accumulated other comprehensive loss by component, net of tax, for the six months ended June 30, 2022 and 2021, respectively:

The following tables reflect the changes in accumulated other comprehensive loss by component, net of tax, for the three months ended March 31, 2022 and 2021, respectively:

(in thousands) Foreign Currency Translation Adjustment Benefit Plans Total

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Current period other comprehensive loss ( 71,542 ) — ( 71,542 )

Accumulated other comprehensive loss at June 30, 2022

Accumulated other comprehensive loss at March 31, 2022

$ ( 97,375 ) $ ( 976 ) $ ( 98,351 )

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Reclassification adjustment to net earnings — 40 40

Accumulated other comprehensive loss at June 30, 2021

Accumulated other comprehensive loss at March 31, 2021

$ ( 1,052 ) $ ( 3,104 ) $ ( 4,156 )

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The prior year results presented below were reclassified to conform to the new segment presentation.

The Company’s three reportable segments as of June 30, 2022 are:

The Company’s three reportable segments as of March 31, 2022 are:

Casinos & Resorts - Bally’s Twin River, Bally’s Tiverton, Bally’s Dover, Bally’s Atlantic City, Bally’s Evansville, Hard Rock Biloxi, Bally’s Vicksburg, Bally’s Kansas City, Bally’s Black Hawk, Bally’s Shreveport, Bally’s Lake Tahoe, Bally’s Quad Cities and Bally’s Arapahoe Park.

North America Interactive - Bally’s Interactive, SportCaller, MKF, AVP, Telescope, Degree 53, Live at the Bike, Gamesys’ North American operations and online and mobile sports betting operations.

International Interactive - Gamesys’ European and Asian operations.

International Interactive - Gamesys’ Europe and Asia operations.

The Company is currently evaluating the impact of its pending acquisition of Tropicana Las Vegas and the development of a casino in Centre City, Pennsylvania on its operating and reportable segments;

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

As of June 30, 2022, the Company’s operations were predominately in the US, Europe and Asia with a less substantive footprint in other countries world-wide.

As of March 31, 2022, the Company’s operations were predominately in the US, Europe and Asia with a less substantive footprint in other countries world-wide.

For geographical reporting purposes, revenue generated outside of the US has been aggregated into the International Interactive reporting segment, and consists primarily of revenue from the UK and Japan.

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The Company utilizes Adjusted EBITDA (defined below) as a measure of its performance.

Management believes Adjusted EBITDA is representative of its ongoing business operations including its ability to service debt and to fund capital expenditures, acquisitions and operations, in addition to it being a commonly used measure of performance in the gaming industry and used by industry analysts to evaluate operations and operating performance.

Management believes Adjusted EBITDA is representative of its ongoing business operations including its ability to service debt and to fund capital expenditures, acquisitions and operations, in addition to it being a commonly used measure of performance in the gaming industry used by industry analysts to evaluate operations and operating performance.

The following tables set forth certain operating data for the Company’s three reportable segments.

The Other category is included in the following tables in order to reconcile the segment information to the Company’s condensed consolidated financial statements.

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

Three Months Ended March 31,

(in thousands) 2022 2021

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Share-based compensation ( 5,095 ) ( 4,483 )

Gain on sale-leaseback 50,766 53,425 50,766 53,425

Other ( 3,177 ) 6,526

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Other 19,479 ( 24,735 )

Total other income (expense), net ( 20,384 ) 15,391 ( 46,590 ) ( 29,618 )

Income before income taxes 64,935 95,923 61,249 80,388

(Provision) benefit for income taxes ( 5,434 ) ( 26,981 ) 141 ( 22,151 )

$ 59,501 $ 68,942 $ 61,390 $ 58,237

Total other expense, net ( 26,206 ) ( 45,009 )

Loss before provision for income taxes ( 3,686 ) ( 15,535 )

Benefit for income taxes 5,575 4,830

Net income (loss) $ 1,889 $ ( 10,705 )

__________________________________

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

Three Months Ended March 31,

(in thousands) 2022 2021

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International Interactive 5,682 —

Other 40 616 126 1,004

Total $ 54,516 $ 15,327

(in thousands) June 30, 2022 December 31, 2021

(in thousands) March 31, 2022 December 31, 2021

Casinos & Resorts $ 2,487,390 $ 2,437,249

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

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

Three Months Ended March 31,

(in thousands, except per share data) 2022 2021

Net income $ 59,501 $ 68,942 $ 61,390 $ 58,237

Net income (loss) $ 1,889 $ ( 10,705 )

Weighted average shares outstanding - basic 60,017 35,827

1 unchanged sentence

Weighted average shares outstanding - diluted 60,120 35,827

Basic earnings per share $ 0.98 $ 1.43 $ 1.02 $ 1.39

Diluted earnings per share $ 0.98 $ 1.40 $ 1.02 $ 1.37

There were 5,429,361 and 5,247,131 share-based awards that were considered anti-dilutive for the three and six months ended June 30, 2022, respectively.

There were 3,288,603 and 3,279,337 share-based awards that were considered anti-dilutive for the three and six months ended June 30, 2021, respectively.

Basic earnings (loss) per share $ 0.03 $ ( 0.30 )

Diluted earnings (loss) per share $ 0.03 $ ( 0.30 )

There were 4,801,394 and 4,919,006 share-based awards that were considered anti-dilutive for the three months ended March 31, 2022 and 2021, respectively.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

On November 18, 2020, the Company issued Penny Warrants, Performance Warrants, and Options which participate in dividends with the Company’s common stock subject to certain contingencies.

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

In the period in which the contingencies are met, those instruments are participating securities to which income will be allocated using the two-class method.

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

For the three and six months ended June 30, 2022 and 2021, the shares underlying the performance warrants were anti-dilutive as certain contingencies were not met.

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

For the three months ended March 31, 2022 and 2021, the shares underlying the performance warrants were anti-dilutive as certain contingencies were not met.

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

SUBSEQUENT EVENTS

On July 27, 2022, the Company completed a modified Dutch auction tender offer and repurchased 4.7 million shares of its common stock for cash at a price of $ 22.00 per share for an aggregate purchase price of $ 103.3 million.

The Offer was funded with cash on hand and through borrowings on the Company’s revolving credit facility.

Shares repurchased will be included in treasury stock.

On April 1, 2022, the Company completed its sale-leaseback transaction relating to the Bally’s Quad Cities and Bally’s Black Hawk properties for a cash purchase price of $ 150 million payable by GLPI.

These properties will be added to the Master Lease with GLPI and will have initial annual fixed rent of $ 12 million, subject to increases over time.

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

What changed 10-Q/A

Item 1. Financial Statements