What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-04 · 287 added, 230 removed, 1049 unchanged (33% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30,

2022 December 31,

48 unchanged sentences

(In thousands, except per share data)

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

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

2022 2021 2022 2021

11 unchanged sentences

Goodwill and asset impairment — — — 4,675

Expansion and pre-opening 717 937 717 1,540

Pre-opening — 232 717 1,772

Acquisition, integration and restructuring 9,282 6,797 24,674 37,457

10 unchanged sentences

Gain (adjustment) on bargain purchases — ( 1,039 ) ( 107 ) 23,075

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

Foreign exchange gain (loss) 253 ( 42,896 ) 2,248 ( 43,353 )

Other, net 1,350 ( 3,084 ) 10,974 ( 6,450 )

Total other income (expense), net ( 51,932 ) ( 90,779 ) ( 98,522 ) ( 120,397 )

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

Income (loss) before income taxes 1,730 ( 63,045 ) 62,979 17,343

Provision (benefit) for income taxes 1,137 ( 5,400 ) 996 16,751

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

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

Net income (loss) $ 593 $ ( 57,645 ) $ 61,983 $ 592

Basic earnings (loss) per share $ 0.01 $ ( 1.16 ) $ 1.05 $ 0.01

Weighted average common shares outstanding - basic 57,020 49,506 59,170 45,573

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

Diluted earnings (loss) per share $ 0.01 $ ( 1.16 ) $ 1.05 $ 0.01

Weighted average common shares outstanding - diluted 57,062 49,506 59,238 45,876

1 unchanged sentence

BALLY’S CORPORATION

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)

(In thousands)

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

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

2022 2021 2022 2021

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

Net income (loss) $ 593 $ ( 57,645 ) $ 61,983 $ 592

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 ( 213,193 ) ( 740 ) ( 483,548 ) ( 1,292 )

Total comprehensive loss $ ( 212,600 ) $ ( 58,385 ) $ ( 421,565 ) $ ( 700 )

__________________________________

10 unchanged sentences

Balance as of December 31, 2021

52,254,477 $ 530 $ 1,849,068 $ ( 29,166 ) $ ( 181,581 ) $ ( 26,809 ) $ 3,760 $ 1,615,802

Release of restricted stock 122,849 1 ( 2,534 ) — — — — ( 2,533 )

14 unchanged sentences

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

Release of restricted stock 14,239 — ( 41 ) — — — — ( 41 )

Share-based compensation — — 6,715 — — — — 6,715

Retirement of treasury shares — ( 54 ) ( 187,677 ) 119,254 68,477 — — —

Share repurchases (including tender offer) ( 5,368,334 ) — — ( 119,254 ) — — — ( 119,254 )

Conversion of non-controlling interest - Telescope 64,145 1 3,187 — — — ( 3,188 ) —

Other comprehensive loss — — — — — ( 213,193 ) — ( 213,193 )

Net income — — — — 593 — — 593

Balance as of September 30, 2022 47,287,301 $ 472 $ 1,660,422 $ — $ ( 58,364 ) $ ( 510,357 ) $ 572 $ 1,092,745

BALLY’S CORPORATION

26 unchanged sentences

Other comprehensive income — — — — — 460 — 460

Net loss — — — — 68,942 — — 68,942

Net income — — — — 68,942 — — 68,942

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

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

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

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

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

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

Other comprehensive loss — — — — — ( 740 ) — ( 740 )

Net loss — — — — ( 57,645 ) — — ( 57,645 )

Balance as of September 30, 2021 44,581,568 $ 445 $ 1,368,908 $ — $ ( 51,226 ) $ ( 4,436 ) $ 3,760 $ 1,317,451

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2022 2021

7 unchanged sentences

Amortization of debt discount and debt issuance costs 8,122 4,890

Loss on extinguishment of debt — 19,419

Gain from insurance recoveries ( 1,263 ) ( 18,660 )

1 unchanged sentence

Deferred income taxes ( 42,848 ) ( 1,296 )

Loss on assets and liabilities measured at fair value 567 15,069

(Gain) loss on assets and liabilities measured at fair value ( 437 ) 21,280

Change in value of naming rights liabilities ( 33,448 ) 1,371

1 unchanged sentence

Adjustment (gain) on bargain purchase 107 ( 23,075 )

Foreign exchange (gain) loss ( 2,227 ) 43,353

Other operating activities 5,309 4,260

4 unchanged sentences

Proceeds from sale-leaseback 150,000 144,000

Advance deposit in connection with sale-leaseback transactions 200,000 —

Foreign exchange forward contract premiums — ( 22,592 )

Capital expenditures ( 167,363 ) ( 65,132 )

Insurance proceeds from hurricane damage — 11,160

Insurance proceeds 1,265 18,660

Cash paid for internally developed software ( 45,785 ) ( 2,026 )

8 unchanged sentences

Payment of financing fees — ( 9,968 )

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

Payment of deferred consideration ( 30,025 ) —

17 unchanged sentences

Deposit applied to acquisition purchase price — 4,000

Non-controlling interest ( 3,188 ) 3,760

See accompanying notes to condensed consolidated financial statements.

6 unchanged sentences

Casinos and Resorts Location Type Built/Acquired

Bally’s Twin River Lincoln Casino Resort (“Bally’s Twin River”) Lincoln, Rhode Island Casino and Resort 2004

Bally’s Arapahoe Park Aurora, Colorado Racetrack/OTB Site 2004

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

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

Bally’s Twin River Lincoln Casino Resort (“Bally’s Twin River”)

Lincoln, Rhode Island Casino and Resort 2004

Bally’s Arapahoe Park

Aurora, Colorado Racetrack/OTB Site 2004

Hard Rock Hotel & Casino Biloxi (“Hard Rock Biloxi”)

Biloxi, Mississippi Casino and Resort 2014

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

Tiverton, Rhode Island Casino and Hotel 2018

Bally’s Dover Casino Resort (“Bally’s Dover”) (1)

2 unchanged sentences

Black Hawk, Colorado Three Casinos 2020

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

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

Bally’s Atlantic City Casino Resort (“Bally’s Atlantic City”) Atlantic City, New Jersey Casino and Hotel 2020

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

Bally’s Lake Tahoe Casino Resort (“Bally’s Lake Tahoe”) Lake Tahoe, Nevada Casino and Resort 2021

Bally’s Kansas City Casino (“Bally’s Kansas City”)

Kansas City, Missouri Casino 2020

Bally’s Vicksburg Casino (“Bally’s Vicksburg”)

Vicksburg, Mississippi Casino and Hotel 2020

Bally’s Atlantic City Casino Resort (“Bally’s Atlantic City”)

Atlantic City, New Jersey Casino and Resort 2020

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

Shreveport, Louisiana Casino and Hotel 2020

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

Lake Tahoe, Nevada Casino and Resort 2021

Bally’s Evansville Casino & Hotel (“Bally’s Evansville”) (1)

2 unchanged sentences

Rock Island, Illinois Casino and Hotel 2021

Tropicana Las Vegas Casino and Resort (“Tropicana Las Vegas”) (1)

Las Vegas, Nevada Casino and Resort 2022

__________________________________

(1) Properties leased from Gaming and Leisure Properties, Inc.

(“GLPI”) under the Master Lease agreement.

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.

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

13 unchanged sentences

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

Basis of Presentation

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Basis of Presentation

The accompanying condensed consolidated financial statements of the Company include the accounts of the Company, its majority-owned subsidiaries and entities the Company identifies as variable interest entities (“VIEs”), of which the Company is determined to be the primary beneficiary.

The accompanying unaudited condensed consolidated financial statements of the Company include the accounts of the Company, its majority-owned subsidiaries and entities the Company identifies as variable interest entities (“VIEs”), of which the Company is determined to be the primary beneficiary.

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

6 unchanged sentences

In the Company’s opinion, these condensed consolidated financial statements include all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

There were no material changes in significant accounting policies from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

1 unchanged sentence

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 September 30, 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.

2 unchanged sentences

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 September 30, 2022 and December 31, 2021, restricted cash of $ 55.7 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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

June 30, December 31,

September 30, December 31,

(in thousands) 2022 2021

2 unchanged sentences

Total cash and cash equivalents and restricted cash $ 220,131 $ 274,840

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Accounts Receivable, Net

Accounts receivable, net consists of the following:

June 30, December 31,

September 30, December 31,

(in thousands) 2022 2021

9 unchanged sentences

Gain from insurance recoveries, net of losses

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

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.

Gain from insurance recoveries, net of losses, relate to losses incurred resulting from events impacting the Company, net of insurance recovery proceeds.

For the three and nine months ended September 30, 2022, the Company recorded a gain from insurance recoveries, net of losses of $ 1.3 million and $ 1.4 million, respectively, primarily attributable to insurance recoveries related to prior litigation matters.

For the three and nine months ended September 30, 2021, the Company recorded a gain from insurance recoveries, net of losses of $ 7.9 million and $ 19.2 million, respectively, primarily attributable to insurance proceeds received due to the effects of Hurricane Zeta which made landfall in Louisiana during the fourth quarter of 2020.

Gaming Expenses

1 unchanged sentence

Gaming expenses also includes racing expenses comprised of payroll costs, off track betting (“OTB”) commissions and other expenses associated with the operation of live racing and simulcasting.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Advertising Expense

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 September 30, 2022 and 2021, advertising expense was $ 46.0 million and $ 2.1 million, respectively.

For the nine months ended September 30, 2022 and 2021, advertising expense was $ 163.3 million and $ 5.1 million, respectively.

Advertising expense attributable to the Company’s interactive business included within Gaming expenses for the three and nine months ended September 30, 2022 was $ 26.7 million and $ 139.4 million, respectively.

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

Strategic Partnership - Sinclair Broadcast Group

2 unchanged sentences

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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

1 unchanged sentence

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 $ 280.2 million and $ 311.7 million as of September 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 $ 8.2 million and $ 8.6 million for the three months ended September 30, 2022 and 2021, respectively, and $ 25.0 million and $ 17.2 million for the nine months ended September 30, 2022 and 2021, respectively.

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 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.

The total value of the liability as of September 30, 2022 and December 31, 2021 was $ 59.2 million and $ 58.9 million, respectively.

The short-term portion of the liability, which was $ 2.0 million as of September 30, 2022 and December 31, 2021, is recorded within “Accrued liabilities” and the long-term portion of the liability, which was $ 57.2 million and $ 56.9 million as of September 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 for the three months ended September 30, 2022 and 2021, and $ 3.3 million and $ 3.2 million for the nine months ended September 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”).

1 unchanged sentence

The issuance pursuant to the warrants and options of shares in excess of 19.9 % of the Company’s currently outstanding shares was subject to the approval of the Company’s stockholders in accordance with the rules of the NYSE, which was obtained on January 27, 2021.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Penny Warrants & Options .

7 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 $ 35.8 million and $ 42.2 million as of September 30, 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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Variable Interest Entities

13 unchanged sentences

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 of September 30, 2022 and December 31, 2021 Breckenridge had total assets of $ 85.0 million and $ 85.4 million, respectively, and total liabilities of $ 70.9 million and $ 75.2 million, respectively.

Breckenridge had revenues of $ 68.9 million and $ 229.7 million for the three and nine months ended September 30, 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.

9 unchanged sentences

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.

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.

During the three months ended September 30, 2022 and 2021, the Company recorded a provision for income tax of $ 1.1 million, and a benefit for income tax of $ 5.4 million, respectively.

During the nine months ended September 30, 2022 and 2021, the Company recorded a provision for income tax of $ 1.0 million, at an effective year to date tax rate of 1.6 % and a provision for income tax of $ 16.8 million, at an effective year to date tax rate of 96.6 %, respectively.

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

The 2021 year to date effective tax rate was higher than the US federal statutory rate of 21%, largely due to discrete items related to the gain on sale leaseback in Delaware and foreign currency translation.

In the second quarter of 2022, the Company changed its assertion and will 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 September 30, 2022.

RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

6 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

12 unchanged sentences

The amount of revenue recognized by the Company is measured at the transaction price or the amount of consideration that the Company expects to receive through satisfaction of the identified performance obligations.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

18 unchanged sentences

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.

8 unchanged sentences

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 September 30, 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.

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Gaming revenue also includes Bally’s Dover’s share of revenue as determined under the Delaware State Lottery Code from the date of its acquisition.

1 unchanged sentence

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 September 30, 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.

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

Gaming revenue also includes the casino revenue of Hard Rock Biloxi, Bally’s Black Hawk, beginning January 23, 2020, Bally’s Kansas City and 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.

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, Bally’s Quad Cities, beginning June 14, 2021 and Tropicana Las Vegas, beginning September 26, 2022, 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.

7 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 and nine months ended September 30, 2022 and 2021.

Deferred revenue associated with third-party operators for online sports betting and iGaming market access was $ 6.5 million and $ 6.8 million as of September 30, 2022 and December 31, 2021, respectively, 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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

9 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.

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 September 30, Nine Months Ended September 30,

(in thousands) 2022 2021 2022 2021

10 unchanged sentences

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

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Gaming $ 237,951 $ 10,567 $ 217,215 $ 465,733

3 unchanged sentences

Total revenue $ 328,540 $ 22,130 $ 227,579 $ 578,249

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Gaming $ 229,034 $ 2,764 $ — $ 231,798

3 unchanged sentences

Total revenue $ 303,370 $ 11,409 $ — $ 314,779

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Gaming $ 681,472 $ 25,080 $ 677,971 $ 1,384,523

3 unchanged sentences

Total revenue $ 908,385 $ 55,407 $ 715,224 $ 1,679,016

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Gaming $ 590,162 $ 4,404 $ — $ 594,566

3 unchanged sentences

Total revenue $ 754,991 $ 19,787 $ — $ 774,778

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 its acquisition, April 6, 2021, Bally’s Evansville from the date of its acquisition, June 3, 2021, Bally’s Quad Cities from the date of its acquisition, June 14, 2021 and Tropicana Las Vegas from the date of its acquisition, September 26, 2022, 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 $ 43.2 million and $ 35.5 million as of September 30, 2022 and December 31, 2021, respectively.

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

11 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,

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

September 30, December 31,

(in thousands) 2022 2021

3 unchanged sentences

Total $ 62,585 $ 63,873

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.

The Company recognized $ 7.1 million and $ 5.8 million of revenue related to loyalty program redemptions for the three months ended September 30, 2022 and 2021, respectively, and $ 23.0 million and $ 18.0 million for the nine months ended September 30, 2022 and 2021, respectively.

Recent Acquisitions

6 unchanged sentences

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 $ 9.3 million and $ 24.7 million during the three and nine months ended September 30, 2022, respectively, and $ 6.8 million and $ 37.5 million during the three and nine months ended September 30, 2021, respectively.

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

Refer to Note 11 “ Acquisition, Integration and Restructuring ” for further information.

Bally’s Lake Tahoe Casino Resort

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Bally’s Lake Tahoe

On April 6, 2021, the Company acquired Bally’s Lake Tahoe in Lake Tahoe, Nevada from Eldorado Resorts, Inc.

1 unchanged sentence

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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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 .

14 unchanged sentences

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.

During the nine months ended September 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.

10 unchanged sentences

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.

There were no purchase accounting adjustments recorded during the nine months ended September 30, 2022.

As of June 3, 2021

16 unchanged sentences

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 Quad Cities Casino & Hotel

Bally’s Quad Cities

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

18 unchanged sentences

Total purchase price $ 118,928 $ — $ 118,928

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Tropicana Las Vegas

On September 26, 2022, the Company completed its acquisition of the non-land assets of Tropicana Las Vegas from Penn Entertainment, Inc.

(“PENN”) and GLPI.

The total purchase price was $ 148.3 million.

Cash paid by the Company at closing net of $ 1.8 million cash acquired, was $ 146.5 million, excluding transaction costs.

In connection with the acquisition of Tropicana Las Vegas, the Company entered into a lease arrangement with GLPI to lease the land underlying the Tropicana Las Vegas property for an initial term of 50 years at annual rent of $ 10.5 million.

The identifiable intangible assets recorded in connection with the closing of the Tropicana Las Vegas acquisition are based on preliminary valuations and include rated player relationships, a trade name and pre-bookings of $ 2.6 million, $ 1.7 million and $ 0.8 million, respectively, which are being amortized on a straight-line basis over their estimated useful lives of approximately 9 years, 3 years and 2 years, 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 preliminary fair values of the assets acquired and liabilities assumed in connection with the Tropicana Las Vegas acquisition on September 26, 2022.

(in thousands) Preliminary as of September 30, 2022

Cash and cash equivalents $ 1,775

Accounts receivable, net 4,384

Inventory and prepaid expenses and other current assets 4,622

Property and equipment, net 136,116

Right of use assets, net 164,347

Intangible assets, net 5,140

Goodwill 4,402

Other assets 766

Total current liabilities ( 8,725 )

Lease liabilities ( 164,173 )

Other long-term liabilities ( 395 )

Total purchase price $ 148,259

North America Interactive Acquisitions

2 unchanged sentences

The contingency relates to MKF’s continued operations in jurisdictions in which it operates at closing at future dates.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Company paid cash of $ 22.4 million, net of cash acquired, for SportCaller and MKF.

7 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.

During the three and nine months ended September 30, 2022, certain selling shareholders exercised their right to convert to Bally’s common stock reducing the non-controlling interest.

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

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 trade names 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 $ 250.7 million.

Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill, which consist primarily of benefits from acquiring a talented technology workforce and management team experienced in the online gaming industry, and securing buyer-specific synergies expected to contribute to the Company’s omni-channel strategy which are expected to increase revenue and profits within the Company’s North America Interactive reportable segment.

Goodwill of the Bally’s Interactive Acquisitions has been assigned as of the acquisition date to the Company’s North America Interactive reportable segment.

The goodwill of the North America Interactive Acquisitions has been assigned, as of the acquisition date, to the Company’s North America Interactive reportable segment.

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 North America Interactive Acquisitions.

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

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

Cash and cash equivalents $ 8,689

3 unchanged sentences

Intangible assets, net 167,075

Goodwill 250,730

Total current liabilities ( 14,787 )

3 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.

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) As of September 30, 2022, the purchase price allocation of Degree 53 is preliminary and are final for Bally’s Interactive, AVP, Telescope, SportCaller and MKF.

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

Gamesys Acquisition

8 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 September 30, 2022

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

16 unchanged sentences

$ 2,599,117 $ — $ 2,599,117

Pending Acquisitions

Tropicana Las Vegas

On April 13, 2021, the Company agreed to purchase the Tropicana Las Vegas Hotel and Casino in Las Vegas, Nevada (“Tropicana Las Vegas”) from GLPI valued at approximately $ 300 million.

The purchase price for the Tropicana property’s non-land assets is $ 150.0 million.

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

The Company expects to complete the acquisition of Tropicana Las Vegas during the year ended December 31, 2022.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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 and nine months ended September 30, 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.

The pro forma consolidated financial information has been calculated after applying the Company’s accounting policies and includes adjustments related to the issuance of new debt and equity offerings as of January 1, 2020 as well as non-recurring adjustments for amortization of acquired intangible assets, compensation expense for share-based compensation arrangements that were cash settled in conjunction with the acquisitions, interest expense, transaction costs, together with the consequential tax effects.

The revenue, earnings and pro forma effects of other acquisitions completed during the year ended December 31, 2021, which include Bally’s Interactive Acquisitions and Bally’s Quad Cities, are not material to results of operations, individually or in the aggregate.

The revenue, earnings and pro forma effects of the Bally’s Interactive Acquisitions and Bally’s Quad Cities completed during the year ended December 31, 2021 and Tropicana Las Vegas in the third quarter of 2022 are not material to results of operations, individually or in the aggregate.

These unaudited pro forma financial results are presented for informational purposes only and do not purport to be indicative of the operating results of the Company that would have been achieved had the acquisitions actually taken place on January 1, 2020.

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 Nine Months Ended

(in thousands) September 30, 2021 September 30, 2021

Revenue $ 595,051 $ 1,676,782

Net loss $ ( 27,092 ) $ ( 53,411 )

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

September 30,

(in thousands) 2022 2021

10 unchanged sentences

Total prepaid expenses and other current assets $ 100,734 $ 104,463

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

PROPERTY AND EQUIPMENT

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

June 30, December 31,

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

September 30, December 31,

(in thousands) 2022 2021

8 unchanged sentences

Property and equipment, net $ 970,600 $ 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 September 30, 2022 and 2021 was $ 17.0 million and $ 13.5 million, respectively.

Depreciation expense relating to property and equipment for the nine months ended September 30, 2022 and 2021 was $ 49.9 million and $ 37.4 million, respectively.

During the three and nine months ended September 30, 2022 there was $ 0.5 million and $ 1.2 million of capitalized interest, respectively.

There was no capitalized interest during the three and nine months ended September 30, 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 nine months ended September 30, 2022 is as follows (in thousands):

Casinos & Resorts North America Interactive International Interactive Total

1 unchanged sentence

$ 201,952 $ 283,358 $ 1,637,343 $ 2,122,653

Goodwill from current year business acquisitions 4,402 — — 4,402

Effect of foreign exchange — ( 3,001 ) ( 266,363 ) ( 269,364 )

Purchase accounting adjustments on prior year business acquisitions ( 1,285 ) 239 277 ( 769 )

Goodwill as of June 30, 2022 (1)

Goodwill as of September 30, 2022 (1)

$ 205,069 $ 280,596 $ 1,371,257 $ 1,856,922

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 nine months ended September 30, 2022 is as follows (in thousands):

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

Additions in current period 106,354

Change in TRA ( 6,403 )

Change in TRA with Sinclair (1)

Effect of foreign exchange ( 223,931 )

1 unchanged sentence

Amortization ( 177,626 )

Intangible assets, net as of June 30, 2022

Intangible assets, net as of September 30, 2022

__________________________________

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

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

remaining life

(in years) June 30, 2022

(in years) September 30, 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 $ 56.8 million and $ 15.5 million for the three months ended September 30, 2022 and 2021, respectively, and approximately $ 177.6 million and $ 30.1 million for the nine months ended September 30, 2022 and 2021, respectively.

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

(in thousands)

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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

September 30, 2022

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

Cash and cash equivalents Cash and cash equivalents $ 164,462 $ — $ —

Restricted cash Cash and cash equivalents 55,669 — —

Other current assets Prepaid expenses and other current assets 7 — —

9 unchanged sentences

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

Cash and cash equivalents Cash and cash equivalents $ 206,193 $ — $ —

Restricted cash Cash and cash equivalents 68,647 — —

Other current assets Prepaid expenses and other current assets 176 — —

10 unchanged sentences

Change in fair value ( 33,448 ) ( 10,633 ) ( 617 ) ( 44,698 )

Ending as of June 30, 2022

Ending as of September 30, 2022

$ 36,116 $ 8,436 $ 4,685 $ 49,237

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands) Sinclair Performance Warrants Contingent Consideration Total

2 unchanged sentences

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

Ending as of June 30, 2021

Ending as of September 30, 2021

$ 87,964 $ 43,691 $ 131,655

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 and nine months ended September 30, 2022 and 2021 are as follows:

Condensed Consolidated Statements of Operations Location Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2022 2021 2022 2021

13 unchanged sentences

Upon stockholder approval on January 27, 2021, the Options met the criteria to be classified as equity.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Contingent consideration

8 unchanged sentences

The Company recorded these securities as a stock receivable at their fair value based on quoted prices in active markets and classified within Level 1 of the hierarchy with changes to fair value included within “Other, net” of the condensed consolidated statements of operations.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Convertible loans

2 unchanged sentences

The Company recorded the short-term portion of the instruments within “Prepaid expenses and other current assets” and the long-term portion of the instruments within “Other assets” at their fair value.

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, both with changes to fair value included within “Other, net” of the condensed consolidated statements of operations.

Investments in equity securities

8 unchanged sentences

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

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

4 unchanged sentences

732,607 503,458 731,537 754,223

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

ACCRUED LIABILITIES

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

(in thousands) June 30,

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

(in thousands) September 30,

2022 December 31,

GLPI advance deposit (1)

$ 200,000 $ —

Gaming liabilities 156,504 170,508

3 unchanged sentences

Total accrued liabilities $ 552,946 $ 401,428

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

__________________________________

(1) Refer to Note 13 “ Leases ” for further information.

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 and nine months ended September 30, 2022 and 2021:

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

(in thousands) 2022 2021 2022 2021

9 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 and integration 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, Bally’s Shreveport, 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 and nine months ended September 30, 2022, the Company incurred restructuring expense of $ 0.9 million and $ 3.3 million, respectively, attributable to severance costs incurred.

There was no restructuring expense in the three and nine months ended September 30, 2021.

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

(in thousands) North America Interactive International Interactive Total

3 unchanged sentences

Payments ( 354 ) ( 3,364 ) ( 3,718 )

Restructuring liability as of June 30, 2022

Restructuring liability as of September 30, 2022

BALLY’S CORPORATION

1 unchanged sentence

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

(in thousands) September 30,

2022 December 31,

35 unchanged sentences

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.

GLPI Master Lease

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

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”).

6 unchanged sentences

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.

On September 26, 2022, the Company completed its acquisition of the non-land assets of Tropicana Las Vegas from PENN and GLPI for $ 148.3 million, subsequently leasing the land underlying the Tropicana Las Vegas property from GLPI, for an initial term of 50 years (with a maximum term of 99 years with renewal options) at annual rent of $ 10.5 million.

During the third quarter of 2022, the Company recognized a lease liability and corresponding right of use asset of $ 164.2 million and $ 164.3 million, respectively.

All GLPI leases 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)

During the third quarter of 2022, the Company received an advance deposit of $ 200.0 million in connection with an agreement entered into with GLP Capital, L.P., the operating partnership of GLPI (“GLP”), on June 28, 2022 to acquire the real property assets of Hard Rock Biloxi along with Bally’s Tiverton.

Pursuant to the terms of the transaction, the Company will immediately lease back both properties under the above-mentioned Master Lease with GLPI.

The deposit will be credited or repaid to GLP at the earlier of closing or December 31, 2023 and is recorded within “Accrued liabilities” in the condensed consolidated balance sheets.

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 $ 823.3 million and $ 531.0 million as of September 30, 2022 and December 31, 2021, respectively, and right of use assets of approximately $ 798.0 million and $ 507.8 million as of September 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 nine months ended September 30, 2022 and 2021 was as follows:

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

(in thousands) 2022 2021 2022 2021

7 unchanged sentences

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 and nine months ended September 30, 2022 and 2021, related to operating leases was as follows:

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

(in thousands) 2022 2021 2022 2021

1 unchanged sentence

Right of use assets obtained in exchange for operating lease liabilities $ 166,607 $ 1,106 $ 316,729 $ 127,729

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Weighted average remaining lease term 26.7 years 15.3 years

Weighted average discount rate 8.2 % 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 September 30, 2022, future minimum rental commitments under noncancelable operating leases are as follows:

(in thousands) September 30, 2022

Remaining 2022 $ 21,615

5 unchanged sentences

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

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

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

Equity Incentive Plans

7 unchanged sentences

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.

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

BALLY’S CORPORATION

5 unchanged sentences

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

During the six months ended June 30, 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 nine months ended September 30, 2022, the Company granted 427,484 restricted awards with an aggregate intrinsic value of $ 13.5 million under the 2021 Incentive Plan.

As of September 30, 2022, 3,121,976 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 1,057,052 restricted awards outstanding as of September 30, 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 $ 6.7 million and $ 18.1 million for the three and nine months ended September 30, 2022, respectively, and $ 5.4 million and $ 13.8 million for the three and nine months ended September 30, 2021, respectively.

The total income tax benefit for share-based compensation arrangements was $ 1.8 million and $ 1.5 million for the three months ended September 30, 2022 and 2021, respectively, and $ 4.7 million and $ 4.0 million for the nine months ended September 30, 2022 and 2021, respectively.

BENEFIT PLANS

2 unchanged sentences

Dover Downs Defined Benefit Pension Plan

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

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

(in thousands) 2022 2021 2022 2021

6 unchanged sentences

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.

There were no contributions made to the Dover Downs Pension Plan during the three and nine months ended September 30, 2022, and $ 0.2 million and $ 0.4 million in contributions made to the Dover Downs Pension Plan during the three and nine months ended September 30, 2021, respectively.

BALLY’S CORPORATION

5 unchanged sentences

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 was $ 1.6 million and $ 0.9 million for the three months ended September 30, 2022 and 2021, respectively, and $ 5.4 million and $ 2.2 million for the nine months ended September 30, 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.

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

On July 27, 2022, the Company completed a modified Dutch auction tender offer (the “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.

Total share repurchase activity during the nine months ended September 30, 2022 was as follows:

(in thousands, except share and per share data) Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

Number of common shares repurchased 5,368,334 5,718,950

2 unchanged sentences

__________________________________

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 and nine months ended September 30, 2021.

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.

The Company retired 5,368,334 and 6,514,528 shares of its common stock held in treasury during the three and nine months ended September 30, 2022, respectively.

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

The 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 September 30, 2022, there were no shares remaining in treasury.

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

As of September 30, 2022 and December 31, 2021, $ 215.4 million and $ 347.9 million, respectively, remained available for use under the above-mentioned capital return program, subject to regulatory and debt agreements limitations.

Common Stock Offering

11 unchanged sentences

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 September 30, 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 September 30, 2022, the Company had 47,287,301 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 September 30, 2022 are summarized below:

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

8 unchanged sentences

(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 September 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 0.9706 as of September 30, 2022 and the closing share price of Company common shares of $ 19.76 per share to calculate the shares expected to be issued if earn-out targets are met.

BALLY’S CORPORATION

1 unchanged sentence

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 nine months ended September 30, 2022 and 2021, respectively:

(in thousands) Foreign Currency Translation Adjustment Benefit Plans Total

1 unchanged sentence

Current period other comprehensive loss ( 483,548 ) — ( 483,548 )

Accumulated other comprehensive loss at June 30, 2022

Accumulated other comprehensive loss at September 30, 2022

$ ( 509,381 ) $ ( 976 ) $ ( 510,357 )

3 unchanged sentences

Reclassification adjustment to net earnings — 122 122

Accumulated other comprehensive loss at June 30, 2021

Accumulated other comprehensive loss at September 30, 2021

$ ( 1,414 ) $ ( 3,022 ) $ ( 4,436 )

7 unchanged sentences

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:

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.

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

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

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;

The Company is currently evaluating the impact of the development of casinos in Centre County, Pennsylvania and Chicago, Illinois on its operating and reportable segments;

however, it is expected that they will be included within the Casinos & Resorts segment.

1 unchanged sentence

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 September 30, 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.

4 unchanged sentences

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

September 30, Nine Months Ended

September 30,

(in thousands) 2022 2021 2022 2021

20 unchanged sentences

Total other income (expense), net ( 51,932 ) ( 90,779 ) ( 98,522 ) ( 120,397 )

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

Income (loss) before income taxes 1,730 ( 63,045 ) 62,979 17,343

(Provision) benefit for income taxes ( 1,137 ) 5,400 ( 996 ) ( 16,751 )

Net income (loss)

$ 593 $ ( 57,645 ) $ 61,983 $ 592

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

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

(in thousands) 2022 2021 2022 2021

5 unchanged sentences

Total $ 51,282 $ 29,347 $ 167,363 $ 65,132

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

Casinos & Resorts $ 2,615,281 $ 2,437,249

North America Interactive 576,256 528,634

International Interactive 3,209,863 3,429,725

Other ( 165,407 ) 157,609

Total $ 6,235,993 $ 6,553,217

Total assets are not regularly reviewed for each operating segment when assessing segment performance or allocating resources and, accordingly, are not presented.

EARNINGS (LOSS) PER SHARE

3 unchanged sentences

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

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

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

(in thousands, except per share data) 2022 2021 2022 2021

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

Net income (loss) $ 593 $ ( 57,645 ) $ 61,983 $ 592

Weighted average shares outstanding - basic 57,020 49,506 59,170 45,573

1 unchanged sentence

Weighted average shares outstanding - diluted 57,062 49,506 59,238 45,876

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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Basic earnings (loss) per share $ 0.01 $ ( 1.16 ) $ 1.05 $ 0.01

Diluted earnings (loss) per share $ 0.01 $ ( 1.16 ) $ 1.05 $ 0.01

There were 5,299,749 and 5,105,113 share-based awards that were considered anti-dilutive for the three and nine months ended September 30, 2022, respectively.

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

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.

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.

The warrants and Options do not participate in net losses.

The Performance Warrants and Options do not participate in net losses.

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.

For the three and nine months ended September 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.

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.

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

What changed 10-Q

Item 1. Financial Statements