What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-05-09 · 249 added, 170 removed, 925 unchanged (31% of the section changed)

54 unchanged sentences

(In thousands, except per share data)

Three Months Ended March 31,

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

2023 2022 2023 2022

Gaming $ 493,296 $ 455,088 $ 980,191 $ 918,790

10 unchanged sentences

Other income (expense):

Interest expense, net of amounts capitalized ( 63,264 ) ( 45,685 )

Interest expense, net ( 67,093 ) ( 45,828 ) ( 130,357 ) ( 91,513 )

Other non-operating income, net 6,811 25,444 9,421 44,923

Total other income (expense), net ( 60,282 ) ( 20,384 ) ( 120,936 ) ( 46,590 )

Income (loss) before income taxes 316,078 ( 3,686 )

Provision (benefit) for income taxes 137,742 ( 5,575 )

Net income $ 178,336 $ 1,889

Basic earnings per share $ 3.28 $ 0.03

(Loss) income before income taxes ( 54,300 ) 64,935 261,778 61,249

(Benefit) provision for income taxes ( 28,649 ) 5,434 109,093 ( 141 )

Net (loss) income $ ( 25,651 ) $ 59,501 $ 152,685 $ 61,390

Basic (loss) earnings per share $ ( 0.48 ) $ 0.98 $ 2.82 $ 1.02

Weighted average common shares outstanding - basic 53,942 60,506 54,173 60,263

Diluted earnings per share $ 3.24 $ 0.03

Diluted (loss) earnings per share $ ( 0.48 ) $ 0.98 $ 2.80 $ 1.02

Weighted average common shares outstanding - diluted 53,942 60,541 54,582 60,332

3 unchanged sentences

(In thousands)

Three Months Ended March 31,

Net income $ 178,336 $ 1,889

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

2023 2022 2023 2022

Net (loss) income $ ( 25,651 ) $ 59,501 $ 152,685 $ 61,390

Other comprehensive income (loss):

12 unchanged sentences

Balance as of December 31, 2022 46,670,057 $ 466 $ 1,636,366 $ — $ ( 535,373 ) $ ( 295,640 ) $ 428 $ 806,247

Release of restricted stock and other stock awards 124,050 1 ( 1,332 ) — — — — ( 1,331 )

Issuance of restricted stock and other stock awards 124,050 1 ( 1,332 ) — — — — ( 1,331 )

Share-based compensation — — 6,040 — — — — 6,040

4 unchanged sentences

Balance as of March 31, 2023 45,767,764 $ 457 $ 1,605,087 $ — $ ( 340,793 ) $ ( 243,567 ) $ 428 $ 1,021,612

Issuance of restricted stock and other stock awards 125,842 1 ( 495 ) 529 — — — 35

Share-based compensation — — 6,290 — — — — 6,290

Retirement of treasury shares — ( 7 ) ( 25,279 ) 10,176 14,805 — — ( 305 )

Share repurchases ( 748,502 ) — — ( 10,705 ) — — — ( 10,705 )

Issuance of MKF penny warrants — — 7,371 — — — — 7,371

Penny warrants exercised 377,253 4 — — — — — 4

Settlement of consideration to SportCaller 103,656 1 1,883 — — — — 1,884

Other comprehensive income — — — — — 38,625 — 38,625

Net loss — — — — ( 25,651 ) — — ( 25,651 )

Balance as of June 30, 2023 45,626,013 $ 456 $ 1,594,857 $ — $ ( 351,639 ) $ ( 204,942 ) $ 428 $ 1,039,160

Common Stock Additional

4 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 and other stock awards 122,849 1 ( 2,534 ) — — — — ( 2,533 )

Issuance of restricted stock and other stock awards 122,849 1 ( 2,534 ) — — — — ( 2,533 )

Share-based compensation — — 5,095 — — — — 5,095

8 unchanged sentences

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

Issuance 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

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2023 2022

1 unchanged sentence

Net income $ 152,685 $ 61,390

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

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

Depreciation and amortization 153,748 153,654

1 unchanged sentence

Share-based compensation 12,330 11,417

Impairment charges 9,653 —

Amortization of debt discount and debt issuance costs 5,563 5,124

2 unchanged sentences

Deferred income taxes 48,870 ( 28,879 )

Loss on assets and liabilities measured at fair value ( 310 ) 139

(Gain) loss on assets and liabilities measured at fair value ( 293 ) 567

Gain on equity method investments ( 3,090 ) —

Change in value of naming rights liabilities ( 7,291 ) ( 33,411 )

4 unchanged sentences

Changes in current operating assets and liabilities 34,111 39,540

Net cash (used in) provided by operating activities ( 16,112 ) 20,810

Net cash provided by operating activities 64,050 164,544

Cash flows from investing activities:

4 unchanged sentences

Acquisition of gaming licenses ( 10,150 ) ( 51,560 )

Purchase of equity securities — ( 3,175 )

Other intangible asset acquisitions — ( 1,825 )

4 unchanged sentences

Repayments of long-term debt ( 177,345 ) ( 204,725 )

Payment of deferred consideration — ( 30,025 )

Share repurchases ( 30,458 ) ( 13,288 )

Other financing activities ( 1,716 ) ( 2,752 )

Net cash (used in) provided by financing activities ( 173,568 ) 4,405

Net cash used in financing activities ( 174,519 ) ( 140,790 )

Effect of foreign currency on cash and cash equivalents ( 4,195 ) ( 11,404 )

Change in cash and cash equivalents held for sale ( 1,097 ) —

Change in cash and cash equivalents and restricted cash held for sale ( 1,648 ) —

Net change in cash and cash equivalents and restricted cash 107,664 ( 43,484 )

1 unchanged sentence

Cash and cash equivalents and restricted cash, end of period $ 372,848 $ 231,356

BALLY’S CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months Ended June 30,

(in thousands) 2023 2022

Supplemental disclosure of cash flow information:

6 unchanged sentences

Investment in RI Joint Venture 17,832 —

BALLY’S CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

March 31, December 31,

Unpaid internally developed software 904 —

June 30, December 31,

Reconciliation of cash and cash equivalents and restricted cash:

1 unchanged sentence

Restricted cash 139,237 52,669

Restricted cash - Other assets 50,000 —

Total cash and cash equivalents and restricted cash $ 372,848 $ 265,184

50 unchanged sentences

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

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

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

BALLY’S CORPORATION

7 unchanged sentences

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

Rhode Island Joint Venture

Equity Method Investments

On January 1, 2023, the Company and International Game Technology PLC (“IGT”) contributed certain tangible assets and leases to Rhode Island VLT Company, LLC (“RIVLT”) in exchange for equity interests of RIVLT.

The Company contributed video lottery terminals (“VLTs”) and player tracking equipment to the joint venture for a 40 % equity interest of RIVLT.

The joint venture will be accounted for under the equity method of accounting whereby the Company will record its 40 % share of the total joint venture net income or loss each period within Other non-operating income, net” in the condensed consolidated statements of operations.

For the three months ended March 31, 2023, the Company recorded equity income of $ 2.1 million.

The 40 % ownership in the joint venture qualifies for equity method accounting.

In addition to this joint venture, the Company also has another investment in an unconsolidated subsidiary which is accounted for using equity method accounting.

The Company records its share of net income or loss within Other non-operating income, net” in the condensed consolidated statements of operations.

For the three and six months ended June 30, 2023, the Company recorded a gain on equity method investments of $ 1.0 million and $ 3.1 million, respectively.

Variable Interest Entities

11 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 condensed consolidated financial statements.

As of March 31, 2023 and December 31, 2022, Breckenridge had total assets of $ 147.3 million and $ 93.4 million, respectively, and total liabilities of $ 81.1 million and $ 77.1 million, respectively.

Breckenridge had revenues of $ 84.0 million and $ 86.9 million for the three months ended March 31, 2023 and 2022, respectively.

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.

The Company performs this analysis on an ongoing basis.

As of June 30, 2023 and December 31, 2022, Breckenridge had total assets of $ 155.3 million and $ 93.4 million, respectively, and total liabilities of $ 85.9 million and $ 77.1 million, respectively.

Breckenridge had revenues of $ 76.5 million and $ 160.5 million for the three and six months ended June 30, 2023, respectively, and $ 73.9 million and $ 160.8 million for the three and six months ended June 30, 2022, respectively.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Company performs this analysis on an ongoing basis.

Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents includes cash balances and highly liquid investments with an original maturity of three months or less.

Restricted cash includes player deposits, payment service provider deposits, and Video Lottery Terminal (“VLT”) and table games related cash payable to certain states where we operate, which are unavailable for the Company’s use.

Restricted cash includes cash collateral in connection with amounts due to the Chicago Tribune (refer to Note 9 “ Property and Equipment ”), player deposits, payment service provider deposits, and Video Lottery Terminal (“VLT”) and table games related cash payable to certain states where we operate, which are unavailable for the Company’s use.

Accounts Receivable, Net

Accounts receivable, net consists of the following:

March 31, December 31,

June 30, December 31,

(in thousands) 2023 2022

10 unchanged sentences

Gaming expenses include, among other things, payroll costs and expenses associated with the operation of VLTs, slots and table games, including gaming taxes payable to jurisdictions in which the Company operates outside of Rhode Island and Delaware, and marketing costs directly associated with the Company’s iGaming products and services.

These marketing expenses are included within Gaming expenses in the condensed consolidated statements of operations and were $ 45.9 million and $ 57.7 million for the three months ended March 31, 2023 and 2022, respectively.

These marketing expenses are included within Gaming expenses in the condensed consolidated statements of operations and were $ 47.8 million and $ 44.8 million for the three months ended June 30, 2023 and 2022, respectively, and $ 93.7 million and $ 102.5 million for the six months ended June 30, 2023 and 2022, respectively.

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

1 unchanged sentence

The Company expenses advertising costs as incurred.

For the three months ended March 31, 2023 and 2022, advertising expense was $ 5.4 million and $ 7.5 million, respectively, and are included in “Gaming and administrative” on the condensed consolidated statement of operations.

For the three and six months ended June 30, 2023, advertising expense was $ 3.2 million and $ 8.6 million, respectively.

For the three and six months ended June 30, 2022, advertising expense was $ 7.3 million and $ 14.8 million, respectively.

Advertising costs are included in “Gaming and administrative” on the condensed consolidated statement of operations.

Earnings (Loss) Per Share

2 unchanged sentences

To calculate basic earnings (loss) per share, the earnings allocated to common shares is divided by the weighted average number of common shares outstanding, contingently issuable warrants and RSUs, RSAs and PSUs for which no future service is required as a condition to the delivery of the underlying common stock (collectively, basic shares).

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Fair Value Measurements

2 unchanged sentences

The fair value hierarchy prioritizes and defines the inputs to valuation techniques as follows:

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Observable quoted prices (unadjusted) for identical assets or liabilities in active markets.

11 unchanged sentences

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, net of accumulated amortization, was $ 247.9 million and $ 255.6 million as of March 31, 2023 and December 31, 2022, respectively.

Amortization began on April 1, 2021, the commencement date of the re-branded Sinclair regional sports networks, and was $ 7.7 million and $ 8.4 million for the three months ended March 31, 2023 and 2022, respectively.

The naming rights intangible asset, net of accumulated amortization, was $ 239.4 million and $ 255.6 million as of June 30, 2023 and December 31, 2022, respectively.

Amortization began on April 1, 2021, the commencement date of the re-branded Sinclair regional sports networks, and was $ 7.7 million and $ 8.4 million for the three months ended June 30, 2023 and 2022, respectively, and $ 15.5 million and $ 16.8 million for the six months ended June 30, 2023 and 2022, respectively.

Refer to Note 10 “ 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, 2023 and December 31, 2022 was $ 58.9 million and $ 59.3 million, respectively.

The short-term portion of the liability, which was $ 6.5 million and $ 6.0 million as of March 31, 2023 and December 31, 2022, respectively, is recorded within “Accrued liabilities” and the long-term portion of the liability, which was $ 52.4 million and $ 53.3 million as of March 31, 2023 and December 31 2022, respectively, is recorded within “Naming rights liabilities” in the condensed consolidated balance sheets.

Accretion expense for the three months ended March 31, 2023 and 2022, was $ 1.1 million and was reported in “Interest expense, net of amounts capitalized” in the condensed consolidated statements of operations.

The total value of the liability as of June 30, 2023 and December 31, 2022 was $ 58.5 million and $ 59.3 million, respectively.

The short-term portion of the liability, which was $ 7.0 million and $ 6.0 million as of June 30, 2023 and December 31, 2022, respectively, is recorded within “Accrued liabilities” and the long-term portion of the liability, which was $ 51.5 million and $ 53.3 million as of June 30, 2023 and December 31 2022, 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 June 30, 2023 and 2022, and $ 2.2 million for the six months ended June 30, 2023 and 2022.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

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 .

1 unchanged sentence

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

The fair value of the Options was $ 59.7 million as of March 31, 2023 and December 31, 2022, and is recorded within “Additional paid-in-capital” in the condensed consolidated balance sheets.

The Company recorded $ 59.7 million as of June 30, 2023 and December 31, 2022, and is included within “Additional paid-in-capital” in the condensed consolidated balance sheets.

Performance Warrants .

3 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 $ 17.9 million and $ 19.4 million as of March 31, 2023 and December 31, 2022, respectively, and is included in “Naming rights liabilities” in the condensed consolidated balance sheets.

The TRA liability was $ 17.1 million and $ 19.4 million as of June 30, 2023 and December 31, 2022, 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 “Other non-operating expenses, net” in the condensed consolidated statements of operations.

Provision (Benefit) for Income Taxes

During the three months ended March 31, 2023 and 2022, the Company recorded a provision for income tax of $ 137.7 million, at an effective year to date tax rate of 43.6 % and a benefit for income tax of $ 5.6 million, at an effective year to date tax rate of 151.2 %, respectively.

During the six months ended June 30, 2023, the Company recorded a provision for income tax of $ 109.1 million, at an effective year to date tax rate of 41.7 % and a benefit for income tax of $ 0.1 million, at an effective year to date tax rate of ( 0.2 )%, respectively.

The 2023 year to date effective tax rate was higher than the US federal statutory tax rate of 21%, largely due to an increase in the valuation allowance and a tax liability for a discrete item related to the deferred gain on sale leaseback transactions in Mississippi and Rhode Island.

2 unchanged sentences

General and Administrative Expenses

Amounts included in General and administrative for the three months ended March 31, 2023 and 2022 were as follows:

Three Months Ended March 31,

Amounts included in General and administrative for the three and six months ended June 30, 2023 and 2022 were as follows:

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

(in thousands) 2023 2022 2023 2022

Advertising, general and administrative $ 223,760 $ 182,623 $ 444,765 $ 364,364

Acquisition and transaction related costs 13,781 5,280

Acquisition and integration costs 13,104 10,112 26,885 15,392

Restructuring 3,440 — 20,262 —

Impairment charges 9,653 — 9,653 —

Total general and administrative $ 249,957 $ 192,735 $ 501,565 $ 379,756

2 unchanged sentences

Other Non-Operating Income (Expense)

Amounts included in Other non-operating income (expenses), net for the three months ended March 31, 2023 and 2022 were as follows:

Three Months Ended March 31,

Amounts included in Other non-operating income (expenses), net for the three and six months ended June 30, 2023 and 2022 were as follows:

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

(in thousands) 2023 2022 2023 2022

5 unchanged sentences

Total other non-operating income (expenses), net $ 6,811 $ 25,444 $ 9,421 $ 44,923

RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Standards Implemented

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No.

3 unchanged sentences

The Company’s adoption of this ASU in the first quarter of 2023 did not have a material impact to its condensed consolidated financial statements.

Standards to Be Implemented

In December 2022, the Financial Accounting Standards Board issued ASU No.

2 unchanged sentences

The amendments in this update defer the sunset date of Topic 848, which applies to entities which have transactions that reference LIBOR or other reference rates which are expected to be discontinued due to reference rate reform, until December 31, 2024.

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

The Company’s adoption of this ASU in the second quarter of 2023 did not have a material impact to its condensed consolidated financial statements.

REVENUE RECOGNITION

42 unchanged sentences

Beginning on January 1, 2023, the Company contributed all of its VLT assets to the Rhode Island Joint Venture and the Rhode Island Joint Venture, as the sole Technology Provider, is now entitled to that additional 7% of VLT revenue.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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 March 31, 2023 and 2022.

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, 2023 and 2022.

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 March 31, 2023 and 2022, Bally’s Dover was entitled to an approximate 42 % share of VLT revenue and 80 % share of table games revenue.

As of June 30, 2023 and 2022, 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.

16 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 three months ended March 31, 2023 and 2022.

Deferred revenue associated with third-party operators for online sports betting and iGaming market access was $ 4.1 million as of March 31, 2023 and December 31, 2022, 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 six months ended June 30, 2023 and 2022.

Deferred revenue associated with third-party operators for online sports betting and iGaming market access was $ 3.9 million and $ 4.1 million as of June 30, 2023 and December 31, 2022, respectively, and is included in “Accrued liabilities” and “Other long-term liabilities” in the condensed consolidated balance sheets.

All other revenues, including market access 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.

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

Hotel revenue is recognized at the time of occupancy, which is when the customer obtains control through occupancy of the room.

Hotel revenue is recognized when the customer obtains control through occupancy of the room over the stay at the hotel.

Advance deposits for hotel rooms are recorded as liabilities until revenue recognition criteria are met.

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Cancellation fees for hotel and meeting space services are recognized upon cancellation by the customer and are included in Non-gaming revenue within our condensed 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 months ended March 31, 2023 and 2022:

Three Months Ended March 31,

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

(in thousands) 2023 2022 2023 2022

7 unchanged sentences

The following tables provide a disaggregation of revenue by segment (in thousands):

Three Months Ended March 31, 2023 Casinos & Resorts North America Interactive International Interactive Total

Three Months Ended June 30, 2023 Casinos & Resorts North America Interactive International Interactive Total

Gaming $ 231,018 $ 19,111 $ 243,167 $ 493,296

4 unchanged sentences

Total revenue $ 333,162 $ 25,270 $ 247,774 $ 606,206

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

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

4 unchanged sentences

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

Revenue included in operations from Casino Secret from the date of its acquisition, January 5, 2023, is reported in International Interactive and was $ 11.3 million in the three months ended March 31, 2023.

Six Months Ended June 30, 2023

Gaming $ 464,125 $ 35,718 $ 480,348 $ 980,191

Hotel 98,723 — — 98,723

Food and beverage 68,832 — — 68,832

Retail, entertainment and other 30,268 13,914 12,998 57,180

Total non-gaming revenue 197,823 13,914 12,998 224,735

Total revenue $ 661,948 $ 49,632 $ 493,346 $ 1,204,926

Six Months Ended June 30, 2022

Gaming $ 443,521 $ 14,513 $ 460,756 $ 918,790

Hotel 60,864 — — 60,864

Food and beverage 51,423 — — 51,423

Retail, entertainment and other 24,037 18,764 26,889 69,690

Total non-gaming revenue 136,324 18,764 26,889 181,977

Total revenue $ 579,845 $ 33,277 $ 487,645 $ 1,100,767

Revenue included in operations from Casino Secret from the date of its acquisition, January 5, 2023, is reported in International Interactive and was $ 10.0 million and $ 21.4 million for the three and six months ended June 30, 2023, respectively.

Refer to Note 6 “ Business Combinations ” for further information.

1 unchanged sentence

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 $ 43.3 million and $ 44.0 million as of March 31, 2023 and December 31, 2022, respectively.

The Company’s receivables related to contracts with customers were $ 39.9 million and $ 44.0 million as of June 30, 2023 and December 31, 2022, respectively.

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

1 unchanged sentence

All of the contract liabilities are short-term in nature and are included in “Accrued liabilities” in the condensed consolidated balance sheets.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Loyalty program incentives earned by customers are typically redeemed within one year from when they are earned and expire if a customer’s account is inactive for more than 12 months;

4 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Liabilities related to contracts with customers as of March 31, 2023 and December 31, 2022 were as follows:

March 31, December 31,

Liabilities related to contracts with customers as of June 30, 2023 and December 31, 2022 were as follows:

June 30, December 31,

(in thousands) 2023 2022

3 unchanged sentences

Total $ 64,009 $ 62,258

The Company recognized $ 5.9 million and $ 8.3 million of revenue related to loyalty program redemptions for the three months ended March 31, 2023 and 2022, respectively.

The Company recognized $ 9.9 million and $ 7.7 million of revenue related to loyalty program redemptions for the three months ended June 30, 2023 and 2022, respectively, and $ 17.6 million and $ 15.9 million for the six months ended June 30, 2023 and 2022, respectively.

BUSINESS COMBINATIONS

4 unchanged sentences

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 following table summarizes the consideration paid and the fair values of the assets acquired and liabilities assumed in connection with the Casinos & Resorts acquisition as of March 31, 2023:

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 Casinos & Resorts acquisition as of June 30, 2023:

(in thousands) Tropicana Las Vegas

12 unchanged sentences

(1) Intangible assets 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.

(2) The Company recorded adjustments to the preliminary purchase price allocation during the three months ended March 31, 2023 which increased goodwill by $ 0.1 million

(2) The Company recorded adjustments to the preliminary purchase price allocation during the six months ended June 30, 2023 which decreased total current assets by $ 0.2 million, increased goodwill by $ 0.2 million, decreased total current liabilities by $ 0.1 million and increased the total purchase price by $ 0.1 million.

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 Company incurred $ 0.8 million and $ 0.2 million of acquisition costs related to the above Casino & Resorts acquisition during the three months ended March 31, 2023 and 2022, respectively.

The Company incurred $ 0.8 million of acquisition costs related to the above Casino & Resorts acquisition during the three and six months ended June 30, 2023, and $ 0.3 million and $ 0.5 million during the three and six months ended June 30, 2022, respectively.

There were no acquisition costs related to the International Interactive acquisition during the three months ended June 30, 2023.

These costs are included within “General and administrative” of the condensed consolidated statement of operations.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

International Interactive Acquisition

1 unchanged sentence

Cash paid by the Company at closing net of $ 8.3 million cash acquired was $ 38.2 million, excluding transaction costs.

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 International Interactive acquisition:

(in thousands) Casino Secret

Preliminary (2)

Total current assets $ 8,862

8 unchanged sentences

(1) Casino Secret intangible assets include player relationships and trade names of $ 26.0 million and $ 3.5 million, respectively, which are both being amortized on a straight-line basis over their estimated useful lives of approximately 7 years.

(2) The Company did not record adjustments to the preliminary purchase price allocation during the six months ended June 30, 2023.

Total goodwill recorded in connection with the above International Interactive acquisition was $ 18.1 million, and is not deductible for local tax purposes.

1 unchanged sentence

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

The Company incurred $ 1.2 million of acquisition costs related to the International Interactive Acquisition during the three months ended March 31, 2023.

The Company incurred $ 1.2 million of acquisition costs related to the above International Interactive acquisition during the six months ended June 30, 2023.

There were no acquisition costs related to the International Interactive acquisition during the three months ended June 30, 2023.

These costs are included within “General and administrative” of the condensed consolidated statement of operations.

4 unchanged sentences

If the undiscounted cash flows do not exceed the carrying value, then an impairment charge may be recorded for any difference between fair value and the carrying value.

As of March 31, 2023 and December 31, 2022, one of the Company’s North America Interactive businesses met the criteria to be classified as assets held for sale but did not qualify as discontinued operations as it did not represent a strategic shift having a major effect on the Company’s operations and financial results.

The major classes of assets and liabilities classified as held for sale as of March 31, 2023 and December 31, 2022 are as follows:

Due to an evaluation of the expected fair value less costs to sell, during the three months ended June 30, 2023, the Company recognized impairment charges of $ 9.4 million and $ 0.3 million on goodwill and intangible assets held for sale, respectively.

These charges have been accounted for within “General and administrative” in the condensed consolidated statement of operations.

As of June 30, 2023 and December 31, 2022, one of the Company’s North America Interactive businesses met the criteria to be classified as assets held for sale but did not qualify as discontinued operations as it did not represent a strategic shift having a major effect on the Company’s operations and financial results.

The major classes of assets and liabilities classified as held for sale as of June 30, 2023 and December 31, 2022 are as follows:

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(in thousands) March 31, 2023 December 31, 2022

(in thousands) June 30, 2023 December 31, 2022

Restricted cash, prepaid expenses and other current assets $ 1,820 $ 3,756

8 unchanged sentences

(2) Liabilities related to assets held for sale were comprised of accounts payable and accrued liabilities.

The revenues and net loss attributable to the business classified as held for sale were not significant for the three months ended March 31, 2023 and 2022.

The revenues and net loss attributable to the business classified as held for sale were immaterial for the three and six months ended June 30, 2023 and 2022.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of March 31, 2023 and December 31, 2022, prepaid expenses and other current assets was comprised of the following:

As of June 30, 2023 and December 31, 2022, prepaid expenses and other current assets was comprised of the following:

(in thousands) 2023 2022

1 unchanged sentence

Due from payment service providers 29,009 30,621

Marketing 9,809 8,042

Deposits 8,845 2,016

Prepaid marketing 9,875 8,042

Sales tax 7,697 5,900

Prepaid insurance 2,800 6,374

Gaming taxes and licenses 6,362 4,644

Purse funds 4,863 8,093

Prepaid insurance 1,147 6,374

Other 5,208 3,631

1 unchanged sentence

PROPERTY AND EQUIPMENT

As of March 31, 2023 and December 31, 2022, property and equipment was comprised of the following:

March 31, December 31,

As of June 30, 2023 and December 31, 2022, property and equipment was comprised of the following:

June 30, December 31,

(in thousands) 2023 2022

10 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Depreciation expense relating to property and equipment for the three months ended March 31, 2023 and 2022 was $ 18.7 million and $ 16.7 million, respectively.

During the three months ended March 31, 2023 and 2022, there was $ 2.9 million and $ 0.3 million of capitalized interest, respectively.

Bally’s Chicago Permanent Facility

Depreciation expense relating to property and equipment was $ 19.0 million and $ 37.6 million for the three and six months ended June 30, 2023, respectively, and $ 16.1 million and $ 32.9 million for the three and six months ended June 30, 2022, respectively.

During the three and six months ended June 30, 2023, there was $ 2.1 million and $ 5.0 million of capitalized interest, respectively, and during the three and six months ended June 30, 2022, there was $ 0.4 million and $ 0.7 million of capitalized interest, respectively.

Bally’s Chicago

A wholly-owned indirect subsidiary of the Company, Bally’s Chicago Operating Company, LLC entered into a Lease Termination and Short Term License Agreement with Chicago Tribune Company, LLC (“Tribune”), effective March 31, 2023, which among other things provides that the Company will have possession of 777 West Chicago Avenue, Chicago Illinois 60610 (the “Permanent Chicago Site”) on or before July 5, 2024, subject to $ 150 million in payments by the Company to Tribune payable in full upon Tribune vacating the site on or prior to July 5, 2024 (the “Payment”).

$ 140 million of the Payment is secured by standby letters of credit, issued by Citizens Bank.

The Company recorded the short-term portion of the payments of $ 93.9 million within “Accrued liabilities” and the remaining $ 48.7 million within Other long-term liabilities, with an offsetting increase to “Property and equipment, net” within the condensed consolidated balance sheets as of March 31, 2023.

$ 140 million of the Payment is secured by cash-collateralized letters of credit, issued by Citizens Bank.

Cash collaterals are reported as restricted cash, with the long-term portion included within Other assets, as of June 30, 2023.

The Company recorded the short-term portion of the payments of $ 85.6 million within “Accrued liabilities” and the remaining $ 49.7 million within Other long-term liabilities, with an offsetting increase to “Property and equipment, net” within the condensed consolidated balance sheets as of June 30, 2023.

GOODWILL AND INTANGIBLE ASSETS

The change in carrying value of goodwill by reportable segment for the three months ended March 31, 2023 is as follows (in thousands):

The change in carrying value of goodwill by reportable segment for the six months ended June 30, 2023 is as follows (in thousands):

Casinos & Resorts North America Interactive International Interactive Total

4 unchanged sentences

Purchase accounting adjustments on prior year business acquisition 204 — — 204

Goodwill as of March 31, 2023 (1)

Goodwill as of June 30, 2023 (1)

$ 209,461 $ 39,900 $ 1,570,359 $ 1,819,720

1 unchanged sentence

(1) Amounts are shown net of accumulated goodwill impairment charges of $ 5.4 million and $ 140.4 million for Casinos and Resorts and North America Interactive, respectively.

The change in intangible assets, net for the three months ended March 31, 2023 is as follows (in thousands):

The change in intangible assets, net for the six months ended June 30, 2023 is as follows (in thousands):

Intangible assets, net as of December 31, 2022 $ 1,961,938

5 unchanged sentences

Amortization ( 116,107 )

Intangible assets, net as of March 31, 2023

Intangible assets, net as of June 30, 2023

__________________________________

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

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

remaining life

(in years) March 31, 2023

(in years) June 30, 2023

(in thousands, except years) Gross Carrying Amount Accumulated

46 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Amortization of intangible assets was approximately $ 55.9 million and $ 62.1 million for the three months ended March 31, 2023 and 2022, respectively.

The following table reflects the remaining amortization expense associated with the finite-lived intangible assets as of March 31, 2023:

Amortization of intangible assets was approximately $ 60.2 million and $ 58.7 million for the three months ended June 30, 2023 and 2022, respectively, and approximately $ 116.1 million and $ 120.8 million for the six months ended June 30, 2023 and 2022, respectively.

The following table reflects the remaining amortization expense associated with the finite-lived intangible assets as of June 30, 2023:

(in thousands)

3 unchanged sentences

FAIR VALUE MEASUREMENTS

Except for the assets and liabilities held for sale and the corresponding impairment described in Note 7, there were no assets and liabilities measured at fair value on a nonrecurring basis.

The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis.

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

March 31, 2023

June 30, 2023

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

1 unchanged sentence

Restricted cash Restricted cash 139,237 — —

Restricted cash Other assets 50,000 — —

Convertible loans Prepaid expenses and other current assets 876 — —

5 unchanged sentences

Naming rights liabilities $ — $ — $ 29,696

Contingent consideration Accrued liabilities — — 9,461

Total $ — $ — $ 29,696

12 unchanged sentences

Total $ — $ — $ 45,207

The following table summarizes the changes in fair value of the Company’s Level 3 assets and liabilities:

The following tables summarize the changes in fair value of the Company’s Level 3 assets and liabilities:

(in thousands) Sinclair Performance Warrants Contingent Consideration Convertible Loans Total

Beginning as of December 31, 2022

$ 36,987 $ 8,220 $ 10,212 $ 55,419

Additions in the period (acquisition fair value) — — 500 500

2 unchanged sentences

$ 37,254 $ 9,461 $ 10,838 $ 57,553

Additions in the period (acquisition fair value) — — 500 500

Reductions in the period — ( 9,292 ) — ( 9,292 )

Change in fair value ( 7,558 ) ( 169 ) 136 ( 7,591 )

Ending as of June 30, 2023

$ 29,696 $ — $ 11,474 $ 41,170

(in thousands) Sinclair Performance Warrants Contingent Consideration Convertible Loans Total

Beginning as of December 31, 2021

$ 69,564 $ 34,931 $ 2,025 $ 106,520

Additions in the period (acquisition fair value) — — 167 167

3 unchanged sentences

$ 56,185 $ 13,077 $ 2,138 $ 71,400

Additions in the period (acquisition fair value) — — 500 500

Change in fair value ( 20,032 ) ( 4,376 ) ( 152 ) ( 24,560 )

Ending as of June 30, 2022

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

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 months ended March 31, 2023 and 2022 are as follows:

Condensed Consolidated Statements of Operations Location Three Months Ended March 31,

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, 2023 and 2022 are as follows:

Condensed Consolidated Statements of Operations Location Three Months Ended

June 30, Six Months Ended

(in thousands) 2023 2022 2023 2022

8 unchanged sentences

The fair value of the options are based on a Black-Scholes model using Level 2 inputs, including volatility rates, risk free rates, the Company’s common stock price and expected term.

The fair value of the Options was $ 59.7 million as of March 31, 2023 and December 31, 2022 and is recorded within “Additional paid-in-capital” in the condensed consolidated balance sheets.

The fair value of the Options was $ 59.7 million as of June 30, 2023 and December 31, 2022 and is recorded within “Additional paid-in-capital” in the condensed consolidated balance sheets.

Contingent Consideration

1 unchanged sentence

In connection with the acquisitions of SportCaller and MKF on February 5, 2021 and March 23, 2021, respectively, the Company recorded contingent consideration at fair value of $ 58.7 million as of the acquisition dates.

After the acquisition dates and until the contingencies are resolved, the fair value of contingent consideration payable is adjusted each reporting period based primarily on the expected probability of achievement of the contingency targets which are subject to management’s estimate and the Company’s stock price.

After the acquisition dates and until the contingencies were resolved, the fair value of contingent consideration payable was adjusted each reporting period based primarily on the expected probability of achievement of the contingency targets which were subject to management’s estimate and the Company’s stock price.

These changes in fair value are recognized within “Other, non-operating expenses, net” of the condensed consolidated statements of operations.

During the first quarter of 2022, the Company settled contingent consideration of $ 15.9 million comprised of 393,778 immediately exercisable penny warrants and 107,832 shares of Bally’s Corporation common stock and $ 0.1 million in cash in satisfaction of contingencies related to the respective acquisition agreements.

During the first quarter of 2022, the Company settled contingent consideration of $ 15.9 million, comprised of 393,778 immediately exercisable penny warrants and 107,832 shares of Bally’s Corporation common stock and $ 0.1 million in cash.

During the second quarter of 2023, the Company settled the remaining contingent consideration of $ 9.3 million, comprised of 386,926 immediately exercisable penny warrants, 103,656 shares of Bally’s Corporation common stock and a de minimus payment in cash, all in satisfaction of contingencies related to the respective acquisition agreements.

Convertible Loans

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Investments in Equity Securities

3 unchanged sentences

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 non-operating expenses, net” of the condensed consolidated statements of operations.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Investment in GLPI Partnership

6 unchanged sentences

Refer to Note 14 “ Long-Term Debt ” for further information.

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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

5 unchanged sentences

ACCRUED LIABILITIES

As of March 31, 2023 and December 31, 2022, accrued liabilities consisted of the following:

(in thousands) March 31,

As of June 30, 2023 and December 31, 2022, accrued liabilities consisted of the following:

(in thousands) June 30,

2023 December 31,

13 unchanged sentences

The Plan included a reduction of the Company’s current Interactive workforce by up to 15 percent.

During the three months ended March 31, 2023, the Company incurred restructuring charges of $ 16.8 million, attributable to the workforce reduction representing employee transition costs and severance.

During the three and six months ended June 30, 2023, the Company incurred restructuring charges of $ 3.4 million and $ 20.3 million, respectively, attributable to the workforce reduction representing employee transition costs and severance.

These costs are included within “General and administrative” of the condensed consolidated statement of operations.

The restructuring charges by segment are summarized as follows:

(in thousands) Three Months Ended March 31, 2023

(in thousands) Three Months Ended

June 30, 2023 Six Months Ended

June 30, 2023

North America Interactive $ 1,789 $ 7,647

International Interactive 1,595 10,927

Other 56 1,688

Total restructuring charge $ 3,440 $ 20,262

The restructuring activity for the three months ended March 31, 2023 is as follows:

The restructuring activity for the six months ended June 30, 2023 is as follows:

(in thousands) Workforce Reduction

2 unchanged sentences

Payments ( 16,703 )

Balance as of March 31, 2023

The restructuring liability as of March 31, 2023 is included within “Accrued liabilities” on the condensed consolidated balance sheets.

Balance as of June 30, 2023

The restructuring liability as of June 30, 2023 is included within “Accrued liabilities” on the condensed consolidated balance sheets.

LONG-TERM DEBT

As of March 31, 2023 and December 31, 2022, long-term debt consisted of the following:

(in thousands) March 31,

As of June 30, 2023 and December 31, 2022, long-term debt consisted of the following:

(in thousands) June 30,

2023 December 31,

24 unchanged sentences

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

During the three months ended March 31, 2023, the Company repurchased and retired $ 15.0 million of the 2031 Notes at a weighted average price of 70.80 % of the principal.

During the six months ended June 30, 2023, the Company repurchased and retired $ 15.0 million of the 2031 Notes at a weighted average price of 70.80 % of the principal.

In connection with the repurchase of these 2031 Notes, the Company recorded a gain on extinguishment of debt of $ 4.0 million recorded within “Other non-operating income (expense), net” in the condensed consolidated statements of operations.

7 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

As of June 30, 2023, with the discontinuation of the LIBOR reference rate, borrowings under the credit facilities bear interest at a rate equal to, at the Company’s option, either (1) the term secured overnight financing rate (“SOFR”), adjusted for certain additional costs and subject to a floor of 0.50 % in the case of term loans and 0.00 % in the case of revolving loans or (2) a base rate determined by reference to the greatest of (a) the federal funds rate plus 0.50 %, (b) the prime rate, (c) the one-month SOFR rate plus 1.00 %, (d) solely in the case of term loans, 1.50 % and (e) solely in the case of revolving loans, 1.00 %, in each case of clauses (1) and (2), plus an applicable margin.

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

2 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 March 31, 2023, the Company’s borrowings under the Revolving Credit Facility did not exceed 30 % and therefore, financial covenants did not apply.

As of June 30, 2023, the Company’s borrowings under the Revolving Credit Facility did not exceed 30 % and therefore, financial covenants did not apply.

Operating Leases

4 unchanged sentences

Discount rates used to determine the present value of the lease payments are based on the Company’s incremental borrowing rate commensurate with the term of the lease.

The Company had total operating lease liabilities of $ 1.22 billion and $ 836.1 million as of March 31, 2023 and December 31, 2022, respectively, and right of use assets of $ 1.19 billion and $ 808.9 million as of March 31, 2023 and December 31, 2022, respectively, which were included in the condensed consolidated balance sheets.

As of March 31, 2023, the Company’s Bally’s Evansville, Bally’s Dover, Bally’s Quad Cities, Bally’s Black Hawk, Bally’s Tiverton and Hard Rock Biloxi properties are leased under the terms of a master lease agreement (the “Master Lease”) with GLPI.

The Company had total operating lease liabilities of $ 1.22 billion and $ 836.1 million as of June 30, 2023 and December 31, 2022, respectively, and right of use assets of $ 1.19 billion and $ 808.9 million as of June 30, 2023 and December 31, 2022, respectively, which were included in the condensed consolidated balance sheets.

As of June 30, 2023, the Company’s Bally’s Evansville, Bally’s Dover, Bally’s Quad Cities, Bally’s Black Hawk, Bally’s Tiverton and Hard Rock Biloxi properties are leased under the terms of a master lease agreement (the “Master Lease”) with GLPI.

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

The Master Lease has an initial term of 15 years and includes four , five-year options to renew and requires combined minimum annual payments of $ 100.5 million, subject to minimum 1% annual escalation or greater escalation dependent on CPI.

The renewal options are not reasonably certain of exercise as of March 31, 2023.

The renewal options are not reasonably certain of exercise as of June 30, 2023.

In connection with the sale of the real estate for Bally’s Quad Cities and Bally’s Black Hawk during the second quarter of 2022, the Company received proceeds of $ 150.0 million and recognized a gain of $ 50.8 million.

4 unchanged sentences

An advance deposit of $ 200.0 million was received in the third quarter of 2022 in connection with this agreement, which was recorded within “Accrued liabilities” in the condensed consolidated balance sheets as of December 31, 2022.

During the three months ended March 31, 2023, the Company recorded a gain of $ 374.2 million representing the difference in the transaction price and the de-recognition of assets.

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

During the six months ended June 30, 2023, the Company recorded a gain of $ 374.3 million representing the difference in the transaction price and the de-recognition of assets.

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

BALLY’S CORPORATION

2 unchanged sentences

This lease has an initial term of 50 years (with a maximum term of 99 years with renewal options) at annual rent of $ 10.5 million, subject to minimum 1% annual escalation or greater escalation dependent on CPI.

The renewal options are not reasonably certain of exercise as of March 31, 2023.

Components of lease expense included within “General and administrative” for operating leases during the three months ended March 31, 2023 and 2022 are as follows:

Three Months Ended March 31,

The renewal options are not reasonably certain of exercise as of June 30, 2023.

Components of lease expense included within “General and administrative” for operating leases during the three and six months ended June 30, 2023 and 2022 are as follows:

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

(in thousands) 2023 2022 2023 2022

5 unchanged sentences

Total lease expense $ 43,106 $ 24,232 $ 84,721 $ 45,085

Supplemental cash flow and other information related to operating leases for the three months ended March 31, 2023 and 2022 are as follows:

Three Months Ended March 31,

Supplemental cash flow and other information related to operating leases for the three and six months ended June 30, 2023 and 2022 are as follows:

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

(in thousands) 2023 2022 2023 2022

1 unchanged sentence

Right of use assets obtained in exchange for operating lease liabilities $ 7,094 $ 148,759 $ 403,659 $ 150,122

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Weighted average remaining lease term 18.0 years 20.7 years

Weighted average discount rate 7.5 % 6.7 %

As of March 31, 2023, future minimum lease payments under noncancelable operating leases are as follows:

(in thousands) March 31, 2023

As of June 30, 2023, future minimum lease payments under noncancelable operating leases are as follows:

(in thousands) June 30, 2023

Remaining 2023 $ 67,306

4 unchanged sentences

Future minimum lease payments disclosed in the table above include $ 87.7 million related to extension options that are reasonably certain of being exercised.

The table above does not include $ 18.1 million of payments for leases signed but not yet commenced as of March 31, 2023.

BALLY’S CORPORATION

5 unchanged sentences

All lease payments are recorded as interest expense and there is no reduction to the financing obligation over the lease term.

Bally’s Chicago made cash payments, and recorded corresponding interest expense, of $ 4.3 million during the three months ended March 31, 2023.

Bally’s Chicago made cash payments, and recorded corresponding interest expense of $ 4.5 million and $ 8.7 million during the three and six months ended June 30, 2023, respectively.

The Company leases its hotel rooms to patrons and records the corresponding lessor revenue in “ Non-gaming revenue ” within our condensed consolidated statements of operations.

For the three months ended March 31, 2023 and 2022, the Company recognized $ 47.3 million and $ 26.9 million of lessor revenues related to the rental of hotel rooms, respectively.

The Company had lessor revenues related to the rental of hotel rooms of $ 51.4 million and $ 98.7 million for the three and six months ended June 30, 2023, respectively, and $ 33.9 million and $ 60.9 million for the three and six months ended June 30, 2022, respectively.

Hotel leasing arrangements vary in duration, but are short-term in nature.

8 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 three months ended March 31, 2023, the Company granted 1,256,132 restricted awards with an aggregate intrinsic value of $ 24.1 million under the 2021 Incentive Plan.

As of March 31, 2023, 1,553,149 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 1,785,662 restricted awards outstanding as of March 31, 2023.

During the six months ended June 30, 2023, the Company granted 1,472,984 restricted awards with an aggregate intrinsic value of $ 27.5 million under the 2021 Incentive Plan.

As of June 30, 2023, 1,322,867 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 1,879,918 restricted awards outstanding as of June 30, 2023.

Share-Based Compensation

The Company recognized total share-based compensation expense of $ 6.0 million for the three months ended March 31, 2023 and $ 5.1 million for the three months ended March 31, 2022.

The total income tax benefit for share-based compensation arrangements was $ 1.6 million and $ 1.2 million for the three months ended March 31, 2023 and 2022, respectively.

The Company recognized total share-based compensation expense of $ 6.3 million and $ 12.3 million for the three and six months ended June 30, 2023, respectively, and $ 6.3 million and $ 11.4 million for the three and six months ended June 30, 2022, respectively.

The total income tax benefit for share-based compensation arrangements was $ 1.7 million for both the three months ended June 30, 2023 and 2022, and $ 3.2 million and $ 2.9 million for the six months ended June 30, 2023 and 2022, respectively.

BALLY’S CORPORATION

2 unchanged sentences

Capital Return Program

Total share repurchase activity during the three months ended March 31, 2023 and 2022 was as follows:

Three Months Ended March 31,

Total share repurchase activity during the three and six months ended June 30, 2023 and 2022 was as follows:

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

(in thousands, except share and per share data) 2023 2022 2023 2022

5 unchanged sentences

There is no fixed time period to complete share repurchases.

The Company retired 1,026,343 and 1,146,194 shares of its common stock held in treasury during the three months ended March 31, 2023 and 2022, respectively.

The Company retired 712,122 shares of its common stock held in treasury during the three months ended June 30, 2023.

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

The Company retired 1,738,465 and 1,146,194 shares of its common stock held in treasury during the six months ended June 30, 2023 and 2022, respectively.

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

As of March 31, 2023, there were no shares remaining in treasury.

As of March 31, 2023 and December 31, 2022, $ 174.8 million and $ 194.6 million, respectively, remained available for use under the above-mentioned capital return program, subject to regulatory and debt agreements limitations.

As of June 30, 2023, there were no shares remaining in treasury.

As of June 30, 2023 and December 31, 2022, $ 164.1 million and $ 194.6 million, respectively, remained available for use under the above-mentioned capital return program, subject to regulatory and debt agreements limitations.

Common Stock Offering

9 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 March 31, 2023 and December 31, 2022, no shares of preferred stock have been issued.

As of June 30, 2023 and December 31, 2022, no shares of preferred stock have been issued.

BALLY’S CORPORATION

1 unchanged sentence

Shares Outstanding

As of March 31, 2023, the Company had 45,767,764 common shares issued and outstanding.

As of June 30, 2023, the Company had 45,626,013 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.

4 unchanged sentences

MKF penny warrants (Note 11)

MKF contingent shares (Note 11)

Telescope contingent shares (Note 11)

SportCaller contingent shares (2) (Note 11)

Outstanding awards under Equity Incentive Plans (Note 16)

1 unchanged sentence

(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 March 31, 2023, 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 1.0875 as of March 31, 2023 and the closing share price of Company common shares of $ 19.52 per share to calculate the shares expected to be issued if earn-out targets are met.

Accumulated Other Comprehensive Income (Loss)

The following tables reflect the changes in accumulated other comprehensive loss by component, net of tax, for the three months ended March 31, 2023 and 2022, respectively:

The following tables reflect the changes in accumulated other comprehensive loss by component, net of tax, for the six months ended June 30, 2023 and 2022, respectively:

(in thousands) Foreign Currency Translation Adjustment Benefit Plans Total

1 unchanged sentence

Current period other comprehensive income 90,698 — 90,698

Accumulated other comprehensive loss at March 31, 2023

Accumulated other comprehensive loss at June 30, 2023

$ ( 205,286 ) $ 344 $ ( 204,942 )

2 unchanged sentences

Current period other comprehensive loss ( 270,355 ) — ( 270,355 )

Accumulated other comprehensive loss at March 31, 2022

Accumulated other comprehensive loss at June 30, 2022

$ ( 296,188 ) $ ( 976 ) $ ( 297,164 )

2 unchanged sentences

COMMITMENTS AND CONTINGENCIES

The Company is a party to various legal and administrative proceedings which have arisen in the ordinary course of its business.

Estimated losses are accrued for these proceedings when the loss is probable and can be estimated.

The current liability for the estimated losses associated with these proceedings is not material to the Company’s consolidated financial condition and those estimated losses are not expected to have a material impact on results of operations.

Although the Company maintains what it believes is adequate insurance coverage to mitigate the risk of loss pertaining to covered matters, legal and administrative proceedings can be costly, time-consuming and unpredictable.

Although no assurance can be given, the Company does not believe that the final outcome of these matters, including costs to defend itself in such matters, will have a material adverse effect on the company’s consolidated financial statements.

Further, no assurance can be given that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters.

Capital Expenditure Commitments

4 unchanged sentences

Bally’s Twin River - Per the terms of the Regulatory Agreement in Rhode Island, the Company is committed to invest $ 100 million in its Rhode Island properties over the term of the master contract through June 30, 2043, including an expansion and the addition of new amenities at Bally’s Twin River.

Bally’s Chicago - Per the host community agreement the Company is required to spend at least $ 1.34 billion on the design, construction and equipping of the temporary casino and the permanent resort and casino.

The actual cost of the development may exceed this minimum capital investment requirement.

In addition, land acquisition costs and financing costs, among other types of costs, are not counted toward meeting this requirement.

City of Chicago Guaranty

6 unchanged sentences

Sponsorship Commitments

The Company has entered into several sponsorship agreements, totaling $ 107.5 million over 15 years, with various professional sports leagues and teams, allowing the Company use of official league marks for branding and promotions, among other rights.

As of June 30, 2023, the Company has entered into multiple sponsorship agreements with various professional sports leagues and teams.

These agreements commit a total of $ 106.9 million through 2036 and grant the Company rights to use official league marks for branding and promotions, among other benefits.

BALLY’S CORPORATION

4 unchanged sentences

The “Other” category includes interest expense for the Company and certain unallocated corporate operating expenses and other adjustments, including eliminations of transactions among segments to reconcile to the Company’s consolidated results including, among other expenses, share-based compensation, acquisition and other transaction costs and certain non-recurring charges.

The Company’s three reportable segments as of March 31, 2023 are:

The Company’s three reportable segments as of June 30, 2023 are:

Casinos & Resorts - Includes the Company’s 15 casino and resort properties and one horse race track.

1 unchanged sentence

International Interactive - Gamesys’ European and Asian operations.

As of March 31, 2023, the Company’s operations were predominately in the US, Europe and Asia with a less substantive footprint in other countries world-wide.

As of June 30, 2023, 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.

Revenue generated from the UK and Japan represented approximately 24 % and 12 % of total revenue, respectively, for the three months ended March 31, 2023, and approximately 26 % and 15 %, respectively for the three months ended March 31, 2022.

Revenue generated from the UK and Japan represented approximately 26 % and 12 % of total revenue, respectively, for the three months ended June 30, 2023, and approximately 25 % and 12 %, respectively for the three months ended June 30, 2022.

Revenue generated from the UK and Japan represented approximately 25 % and 12 % of total revenue, respectively, for the six months ended June 30, 2023, and approximately 26 % and 13 %, respectively for the six months ended June 30, 2022.

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

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands) 2023 2022 2023 2022

15 unchanged sentences

Gain on sale-leaseback 135 50,766 374,321 50,766

Impairment charges ( 9,653 ) — ( 9,653 ) —

Other ( 9,187 ) ( 5,861 ) ( 13,555 ) ( 8,042 )

4 unchanged sentences

Total other income (expense), net ( 60,282 ) ( 20,384 ) ( 120,936 ) ( 46,590 )

Income (loss) before income taxes 316,078 ( 3,686 )

(Provision) benefit for income taxes ( 137,742 ) 5,575

$ 178,336 $ 1,889

(Loss) income before income taxes ( 54,300 ) 64,935 261,778 61,249

Benefit (provision) for income taxes 28,649 ( 5,434 ) ( 109,093 ) 141

Net (loss) income $ ( 25,651 ) $ 59,501 $ 152,685 $ 61,390

__________________________________

1 unchanged sentence

Adjusted EBITDA should not be construed as an alternative to GAAP net income, its most directly comparable GAAP measure, nor is it directly comparable to similarly titled measures presented by other companies.

Three Months Ended March 31,

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

(in thousands) 2023 2022 2023 2022

8 unchanged sentences

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

As of March 31, 2023, the Company’s long-lived assets located outside of the US, consisting primarily of goodwill and intangible assets, were aggregated into the International Interactive reporting segment as disclosed in Note 10 “ Goodwill and Intangible Assets .” Over 98 % of property and equipment is located within the US.

As of June 30, 2023, the Company’s long-lived assets located outside of the US, consisting primarily of goodwill and intangible assets, were aggregated into the International Interactive reporting segment as disclosed in Note 10 “ Goodwill and Intangible Assets .” Over 97 % of property and equipment is located within the US.

EARNINGS (LOSS) PER SHARE

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 March 31,

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share data) 2023 2022 2023 2022

Net income applicable to common stockholders $ 178,336 $ 1,889

Net (loss) income applicable to common stockholders $ ( 25,651 ) $ 59,501 $ 152,685 $ 61,390

Weighted average common shares outstanding, basic 53,942 60,506 54,173 60,263

3 unchanged sentences

Diluted earnings per share $ ( 0.48 ) $ 0.98 $ 2.80 $ 1.02

There were 5,094,394 and 4,801,394 share-based awards that were considered anti-dilutive for the three months ended March 31, 2023 and 2022, respectively.

There were 5,193,897 and 5,429,361 share-based awards that were considered anti-dilutive for the three months ended June 30, 2023 and 2022, respectively, and 5,091,986 and 5,247,131 share-based awards that were considered anti-dilutive for the six months ended June 30, 2023 and 2022, 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.

2 unchanged sentences

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 months ended March 31, 2023 and 2022, the shares underlying the Performance Warrants were anti-dilutive as certain contingencies were not met.

For the three and six months ended June 30, 2023 and 2022, 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.

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