What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-03 compared with 2023-05-09 · 157 added, 73 removed, 289 unchanged (44% of the section changed)

20 unchanged sentences

We provide our customers with physical and interactive entertainment and gaming experiences, including traditional casino offerings, iCasino, online bingo, sportsbook and free-to-play (“F2P”) games.

As of March 31, 2023, we own and manage 15 land-based casinos and one horse racetrack in ten states across the United States (“US”) operating under the Bally’s brand.

As of June 30, 2023, we own and manage 15 land-based casinos and one horse racetrack in ten states across the United States (“US”) operating under the Bally’s brand.

Our land-based casino operations include approximately 14,700 slot machines, 500 table games and 5,300 hotel rooms, along with various restaurants, entertainment venues and other amenities.

10 unchanged sentences

These steps have positioned us as a prominent, full-service, vertically integrated iGaming company, with physical casinos and online gaming solutions united under a single, leading brand.

On June 22, 2023, the Governor of Rhode Island signed into law a bill authorizing Bally’s to be the exclusive provider of iGaming to Rhode Island customers for 20 years.

The Company is expected to start offering iGaming services when the bill takes effect as of March 1, 2024.

Operating Structure

66 unchanged sentences

The tables below within “Adjusted EBITDA and Adjusted EBITDAR by Segment” have been revised to reflect this new presentation for applicable periods.

First Quarter 2023 Results

Second Quarter 2023 and First Six Months 2023 Results

The following table presents, for the periods indicated, certain revenue and income items:

Three Months Ended March 31,

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

(in millions) 2023 2022 2023 2022

1 unchanged sentence

Income from operations 6.0 85.3 382.7 107.8

Net income 178.3 1.9

Net (loss) income (25.7) 59.5 152.7 61.4

The following table presents, for the periods indicated, certain income and expense items expressed as a percentage of total revenue:

Three Months Ended March 31,

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

2023 2022 2023 2022

Total revenue 100.0 % 100.0 % 100.0 % 100.0 %

6 unchanged sentences

Other income (expense)

Interest expense, net of amounts capitalized (10.6) % (8.3) %

Interest expense, net (11.1) % (8.3) % (10.8) % (8.3) %

Other non-operating income, net 1.1 % 4.6 % 0.8 % 4.1 %

2 unchanged sentences

Provision (benefit) for income taxes (4.7) % 1.0 % 9.1 % 0.0 %

Net income 29.8 % 0.3 %

Net (loss) income (4.2) % 10.8 % 12.7 % 5.6 %

__________________________________

1 unchanged sentence

Segment Performance

The following table sets forth certain financial information associated with results of operations for the three months ended March 31, 2023 and 2022.

The following table sets forth certain financial information associated with results of operations for the three and six months ended June 30, 2023 and 2022.

Three Months Ended

(in thousands, except percentages) 2023 2022 $ Change

June 30, Six Months Ended

(in thousands, except percentages) 2023 2022 $ Change 2023 2022 $ Change

Casinos & Resorts $ 231,018 $ 225,716 $ 5,302 $ 464,125 $ 443,521 $ 20,604

25 unchanged sentences

General and administrative as a percentage of Total revenue 41 % 35 % 42 % 34 %

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022

Total Revenue

Total revenue for the three months ended March 31, 2023 and 2022 consisted of the following (in thousands):

Three Months Ended March 31,

2023 2022 $ Change % Change

Total revenue for the three and six months ended June 30, 2023 and 2022 consisted of the following (in thousands):

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

2023 2022 $ Change % Change 2023 2022 $ Change % Change

Gaming $ 493,296 $ 455,088 $ 38,208 8.4 % $ 980,191 $ 918,790 $ 61,401 6.7 %

3 unchanged sentences

Total revenue $ 606,206 $ 552,496 $ 53,710 9.7 % $ 1,204,926 $ 1,100,767 $ 104,159 9.5 %

Total revenue for the three months ended March 31, 2023 increased 9.2% to $598.7 million, from $548.3 million in the same period last year.

Revenue for the three months ended June 30, 2023 increased $53.7 million, to $606.2 million, from $552.5 million in the same period last year.

Revenue for the six months ended June 30, 2023 increased $104.2 million, to $1.20 billion, from $1.10 billion in the same period last year.

We saw gaming, hotel, and food and beverage increase, through organic growth at several of our casino properties.

Additionally, we saw incremental revenue from our recent acquisitions of Tropicana Las Vegas and Casino Secret (collectively “Recent Acquisitions”) of $35.1 million.

Additionally, we saw incremental revenue from our recent acquisitions of Tropicana Las Vegas and Casino Secret (collectively “Recent Acquisitions”) of $35.3 million and $70.5 million for the three and six months ended June 30, 2023, respectively.

Gaming and Non-gaming Expenses

Gaming expenses for the three months ended March 31, 2023 decreased $1.6 million, from $219.2 million in 2022.

This decrease was primarily attributable to the decrease in marketing costs directly associated with the Company’s iGaming products and services, included within gaming expenses, compared to prior year.

Non-gaming expenses for the three months ended March 31, 2023 increased $11.7 million to $52.3 million from the same period last year.

This increase was primarily attributable to the addition of our Tropicana Las Vegas casino property, which contributed incremental non-gaming expenses of $10.8 million during the first quarter of 2023.

Gaming expenses for the three months ended June 30, 2023 increased $14.9 million to $218.9 million from $204.1 million in the prior year comparable period and increased $13.3 million to $436.6 million for the six months ended June 30, 2023 from the prior year comparable period.

These increases were primarily attributable to the inclusion of expenses from our Recent Acquisitions which contributed, in the aggregate, $8.7 million and $17.5 million, during the three and six months ended June 30, 2023, respectively.

Non-gaming expenses for the three months ended June 30, 2023 increased $5.9 million from $46.4 million in the same period last year and for the six months ended June 30, 2023 increased $17.6 million from $87.0 million compared to the same period last year.

These increases were primarily attributable to the addition of our Tropicana Las Vegas casino property, which contributed incremental non-gaming expenses of $11.0 million and $21.7 million, during the three and six months ended June 30, 2023, respectively.

General and Administrative

General and administrative expense for the three months ended March 31, 2023 increased $64.6 million, or 34.5%, to $251.6 million from $187.0 million in the same period last year.

This increase was primarily attributable to an increase in operating lease expense of $20.8 million from prior year, $16.8 million of restructuring charges related to the Interactive business workforce reduction, increased acquisition and transaction related costs, and the inclusion of the Recent Acquisitions, which contributed incremental general and administrative expenses of $12.2 million.

General and administrative expenses for the three months ended June 30, 2023 increased $57.2 million to $250.0 million from $192.7 million in the same period last year.

General and administrative expenses for the six months ended June 30, 2023 increased $121.8 million from $379.8 million in the same period last year.

These increases were primarily attributable to higher operating lease expenses, restructuring charges related to the Interactive business workforce reduction in the current year, increased acquisition and transaction related costs, impairment charges related to the assets held for sale, and general and administrative expenses attributable to our Recent Acquisitions.

Depreciation and Amortization

Depreciation and amortization for the three months ended March 31, 2023 was $74.6 million, a decrease of $4.3 million, or 5.5%, compared to the same period last year.

We recorded impairment charges of $232.4 million in the fourth quarter of 2022, resulting in a decrease in depreciation and amortization expense during the first quarter of 2023.

Depreciation and amortization for the three months ended June 30, 2023 was $79.2 million, an increase of $4.4 million, and $153.7 million for the six months ended June 30, 2023, an increase of $0.1 million, each compared to the same period last year.

These increases were mainly attributable to the inclusion of expenses from our Recent Acquisitions.

Income From Operations

Income from operations was $376.7 million, or 62.9% as a percentage of total revenue, for the three months ended March 31, 2023 compared to $22.5 million, or 4.1%, in the same period last year.

The change year-over-year was driven by the gain on sale-leaseback recorded during the current period of $374.2 million related to our Hard Rock Biloxi and Bally’s Tiverton properties, coupled with organic revenue growth a benefit from our Recent Acquisitions, offset by increased general and administrative expenses.

Income from operations was $6.0 million for the three months ended June 30, 2023, compared to $85.3 million in the comparable period in 2022.

Income from operations was $382.7 million for the six months ended June 30, 2023, compared to $107.8 million in the corresponding period in 2022.

These changes year-over-year were driven by a gain on sale-leaseback recorded during the current year related to our Hard Rock Biloxi and Bally’s Tiverton properties, organic revenue growth, benefits from our Recent Acquisitions, and offset by increased general and administrative expenses and impairment charges on assets held for sale.

Other Income (Expense)

Total other expense increased $34.4 million to $60.7 million for the first quarter of 2023 from $26.2 million in the same period last year.

The increase in other expense was primarily attributable to an increase in interest expense, net of $17.6 million due to higher interest rates of our borrowings year-over-year, and an increase in the naming rights liability for performance warrants associated with our contracts with Sinclair in the first quarter of 2023, compared to a decrease in the liability in the first quarter of 2022.

These were partially offset by the gain on extinguishment of debt of $4.0 million recorded in the first quarter of 2023, related to the repurchase and retirement of $15.0 million of our 2031 Senior Notes.

Total other expense increased $39.9 million to $60.3 million for the three months ended June 30, 2023 and $74.3 million to $120.9 million for the six months ended June 30, 2023, each compared to the same periods last year.

These increases in other expenses were primarily attributable to increased interest expense on our borrowings year-over-year and a decrease in gains on our naming rights liability for performance warrants associated with our contracts with Sinclair.

Provision (Benefit) for Income Taxes

Provision for income taxes for the three months ended March 31, 2023 was $137.7 million compared to a benefit of $5.6 million in the prior year.

The effective tax rate for the first quarter of 2023 was 43.6% compared to 151.2% in the prior year.

Benefit for income taxes for the three months ended June 30, 2023 was $28.6 million compared to a provision of $5.4 million for the three months ended June 30, 2022.

The effective tax rate for the quarter was 52.8% compared to 8.4% for the three months ended June 30, 2022.

The provision for income taxes for the six months ended June 30, 2023 was $109.1 million compared to a benefit for income taxes of $0.1 million for the six months ended June 30, 2022.

The effective tax rate for the six months ended June 30, 2023 was 41.7% compared to (0.2)% for the six months ended June 30, 2022.

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.

Net Income and Earnings Per Share

Net income for the three months ended March 31, 2023 was $178.3 million, or $3.24 per diluted share, compared to $1.9 million, or $0.03 per diluted share, for the three months ended March 31, 2022.

On December 15, 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development Pillar Two Framework that was supported by over 130 countries worldwide.

The EU effective dates are January 1, 2024 and January 1, 2025, for different aspects of the directive.

A significant number of other countries are also implementing similar legislation.

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

Net Income (Loss) and Earnings (Loss) Per Share

Net loss for the three months ended June 30, 2023 was $25.7 million, or ($0.48) per diluted share, compared to net income of $59.5 million, or $0.98 per diluted share, in the same period last year.

Net income for the six months ended June 30, 2023 was $152.7 million, an increase of $91.3 million, or 148.7%, from $61.4 million, or $1.02 per diluted share, in the same period last year.

Adjusted EBITDA and Adjusted EBITDAR by Segment

Consolidated Adjusted EBITDA was $126.4 million for the three months ended March 31, 2023, an increase of $11.7 million, or 10.2%, from $114.7 million in the same period last year.

Adjusted EBITDA for the Casinos & Resorts segment for the three months ended March 31, 2023 increased $0.1 million to $73.9 million compared to the same prior year period.

Casinos & Resorts Adjusted EBITDAR was $105.1 million for the three months ended March 31, 2023, which further adjusts Adjusted EBITDA for rent expense associated with our operating leases, as defined below.

Adjusted EBITDA for the North America Interactive segment for the three months ended March 31, 2023 increased $8.8 million to $(10.6) million compared to the same prior year period, mainly due to cost-savings in connection with the execution of the restructuring plan of our interactive business.

Adjusted EBITDA for the International Interactive segment for the three months ended March 31, 2023 increased $7.0 million, or 9.5%, to $80.3 million compared to the same prior year period, mainly due to optimized marketing spend and cost-savings in connection with the execution of the restructuring plan of our interactive business.

Consolidated Adjusted EBITDA was $130.0 million for the three months ended June 30, 2023, a decrease of $7.0 million, or 5.1%, from $137.0 million in the same period last year.

Consolidated Adjusted EBITDA was $256.4 million for the six months ended June 30, 2023, an increase of $4.7 million, or 1.9%, from $251.7 million in the same period last year.

Adjusted EBITDA for the Casinos & Resorts segment for the three months ended June 30, 2023 decreased $8.3 million to $79.7 million and decreased $8.2 million to $153.6 million for the six months ended June 30, 2023, each compared to the same prior year period.

Casinos & Resorts Adjusted EBITDAR was $111.0 million and $216.1 million for the three and six months ended June 30, 2023, respectively, which further adjusts Adjusted EBITDA for rent expense associated with our operating leases, as defined below.

The decrease in adjusted EBITDA is a result of higher rent expenses due to the sale leaseback of the Company’s Biloxi and Tiverton properties, partially offset by organic growth.

Adjusted EBITDA for the International Interactive segment for the three months ended June 30, 2023 increased $2.0 million, or 2.4%, to $84.6 million and increased $8.9 million, or 5.7%, to $164.9 million for the six months ended June 30, 2023, each compared to the same prior year period.

These increases were mainly due to stronger performance in the United Kingdom during the current year.

Adjusted EBITDA loss for the North America Interactive segment for the three and six months ended June 30, 2023 was $(17.7) million and $(28.2) million, respectively, compared to adjusted EBITDA losses of $(20.9) million and $(40.2) million for the three and six months ended June 30, 2022, respectively.

These reductions in adjusted EBITDA losses are largely driven by stronger performance in New Jersey, coupled with cost-savings in connection with the execution of the restructuring plan of our interactive business.

The following tables reconcile Adjusted EBITDA and Casinos & Resorts Adjusted EBITDAR, non-GAAP measures, to net income, as derived from our financial statements (in thousands):

Three Months Ended March 31, 2023 (in thousands)

Casinos & Resorts North America Interactive International Interactive Other Total

Three Months Ended June 30, 2023 (in thousands)

Casinos & Resorts International Interactive North America Interactive Other Total

Net income (loss) $ 26,733 $ 35,497 $ (35,455) $ (52,426) $ (25,651)

9 unchanged sentences

— 1,595 1,789 56 3,440

Decommissioning costs (4)

— 927 1,416 — 2,343

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

2 unchanged sentences

— — 190 — 190

Impairment charges — — 9,653 — 9,653

Other, net (6)

5 unchanged sentences

__________________________________

(1) Non-operating (income) expense for the applicable periods include:

(i) change in value of naming rights liabilities, (ii) gain on extinguishment of debt and, (iii) other (income) expense, net.

(2) Includes financing costs incurred in connection with the Hard Rock Biloxi and Tiverton sale lease-back transactions and other acquisition and transaction related costs.

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

(i) change in value of naming rights liabilities, (ii) non-operating items of equity method investments including our share of net income or loss on an investment and depreciation expense related to our Rhode Island joint venture, and (iii) other (income) expense, net.

(2) Includes financing costs incurred in connection with the Hard Rock Biloxi and Tiverton sale lease-back transactions, and acquisition, integration and other transaction related costs.

(3) Restructuring costs related to the Interactive business workforce reduction, as described in Note 13.

(4) Losses related to a North America Interactive business that Bally’s is marketing as held-for-sale as of March 31, 2023.

(4) Costs related to the decommissioning of the Company's sports betting platform in favor of outsourcing the platform solution to third parties.

(5) Losses related to a North America Interactive business that Bally’s is marketing as held-for-sale as of June 30, 2023.

(6) Other includes the following items:

(i) non-routine legal expenses, net of recoveries for matters outside the normal course of business, (ii) depreciation expense and a gain on assets related to our Rhode Island joint venture, and (iii) other individually de minimis expenses.

(i) non-routine legal expenses and settlement charges for matters outside the normal course of business, (ii) demolition costs related to a failed parking garage structure at our Bally’s Atlantic City property, and (iii) other individually de minimis expenses.

(7) Consists of the operating lease components contained within our triple net master lease dated June 4, 2021 with GLPI for the real estate assets used in the operation of Bally’s Evansville, Bally’s Dover, Bally’s Quad Cities, Bally’s Black Hawk, Hard Rock Biloxi and Bally’s Tiverton, the individual triple net lease with GLPI for the land underlying the operations of Tropicana Las Vegas, and the triple net lease assumed in connection with the acquisition of Bally’s Lake Tahoe for real estate and land underlying the operations of the Bally’s Lake Tahoe facility.

Three Months Ended March 31, 2022 (in thousands)

Casinos & Resorts North America Interactive International Interactive Other Total

Three Months Ended June 30, 2022 (in thousands)

Casinos & Resorts International Interactive North America Interactive Other Total

Net income (loss) $ 70,775 $ 42,504 $ (24,766) $ (29,012) $ 59,501

8 unchanged sentences

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

Gain on sale-leaseback (50,766) — — — (50,766)

Other, net (3)

3 unchanged sentences

__________________________________

(1) Non-operating (income) expense for the applicable periods include:

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

(i) change in value of naming rights liabilities, (ii) adjustment on bargain purchases and, (iii) other (income) expense, net.

(2) Includes acquisition costs, integration costs related to our Interactive business and financing related expenses.

(2) Includes acquisition costs, integration costs related to our Interactive business and financing related expenses, including costs incurred to address the Standard General takeover bid, the tender offer process and rent expense related to Bally's Black Hawk and Quad Cities properties as the Company entered into sale lease-back transactions associated with these properties to finance the Tropicana Las Vegas property acquisition.

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

(i) non-routine legal expenses, net of recoveries for matters outside the normal course of business, (ii) rebranding expenses in connection with Bally’s corporate name change, and (iii) other individually de minimis expenses.

(i) non-routine legal expenses, net of recoveries for matters outside the normal course of business, (ii) other individually de minimis expenses.

Six Months Ended June 30, 2023 (in thousands)

Casinos & Resorts International Interactive North America Interactive Other Total

Net income (loss) $ 359,618 $ 51,077 $ (52,989) $ (205,021) $ 152,685

Interest expense, net of interest income 13 (529) — 130,873 130,357

Provision (benefit) for income taxes 85,753 825 (18,727) 41,242 109,093

Depreciation and amortization 34,638 90,453 12,992 15,665 153,748

Non-operating (income) expense (1)

1,962 (805) 769 (11,178) (9,252)

Foreign exchange (gain) loss (3) 2,540 3,646 (236) 5,947

Transaction costs (2)

— 8,914 1,383 28,155 38,452

Restructuring charges (3)

— 10,927 7,647 1,688 20,262

Decommissioning costs (4)

— 927 1,416 — 2,343

Share-based compensation — — — 12,330 12,330

Gain on sale-leaseback, net (374,321) — — — (374,321)

Planned business divestiture (5)

— — 2,054 — 2,054

Impairment charges — — 9,653 — 9,653

Other, net (6)

(1,599) 546 3,301 794 3,042

Allocation of corporate costs 47,509 — 607 (48,116) —

Adjusted EBITDA $ 153,570 $ 164,875 $ (28,248) $ (33,804) $ 256,393

Rent expense associated with triple net operating leases (7)

Adjusted EBITDAR $ 216,128

__________________________________

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

(i) change in value of naming rights liabilities, (ii) gain on extinguishment of debt, (iii) non-operating items of equity method investments including our share of net income or loss on an investment and depreciation expense related to our Rhode Island joint venture, and (iv) other (income) expense, net.

(2) Includes financing costs incurred in connection with the Hard Rock Biloxi and Tiverton sale lease-back transactions and acquisition, integration and other transaction related costs.

(3) Restructuring costs related to the Interactive business workforce reduction, as described in Note 13.

(4) Costs related to the decommissioning of the Company's sports betting platform in favor of outsourcing the platform solution to third parties.

(5) Losses related to a North America Interactive business that Bally’s is marketing as held-for-sale as of June 30, 2023.

(6) Other includes the following items:

Six Months Ended June 30, 2022 (in thousands)

Casinos & Resorts International Interactive North America Interactive Other Total

Net income (loss) $ 98,798 $ 71,312 $ (50,139) $ (58,581) $ 61,390

Interest expense, net of interest income (6) 36 (3) 91,486 91,513

Provision (benefit) for income taxes 36,457 (8,566) (8,642) (19,390) (141)

Depreciation and amortization 30,110 90,375 16,247 16,922 153,654

Non-operating (income) expense (1)

— 393 7 (43,328) (42,928)

Foreign exchange (gain) loss — 1,157 (3,143) (9) (1,995)

Transaction costs (2)

3,018 1,225 776 16,524 21,543

Share-based compensation — — — 11,417 11,417

Gain on sale-leaseback, net (50,766) — — — (50,766)

Other, net (3)

2,416 — 3,737 1,889 8,042

Allocation of corporate costs 41,764 7 961 (42,732) —

Adjusted EBITDA $ 161,791 $ 155,939 $ (40,199) $ (25,802) $ 251,729

__________________________________

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

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

(3) Other includes the following items:

(i) non-routine legal expenses, net of recoveries for matters outside the normal course of business, (ii) storm related gains related to insurance recoveries received due to the effects of Hurricane Zeta on the Company’s Hard Rock Biloxi property, (iii) rebranding expenses in connection with Bally’s corporate name change, and (iv) other individually de minimis expenses.

Critical Accounting Estimates

13 unchanged sentences

Cash Flows Summary

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2023 2022

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

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

Net cash provided by (used in) investing activities 223,976 (55,834)

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 and restricted cash classified as assets 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)

2 unchanged sentences

Operating Activities

Net cash used in operating activities for the three months ended March 31, 2023 was $16.1 million, compared to net cash provided by operating activities of $20.8 million for the three months ended March 31, 2022.

The increase in cash used in operating activities was primarily driven by the $374.2 million gain on sale-leaseback recorded during the first quarter of 2023 coupled with negative changes in working capital, offset by an increase in net income of $176.4 million from the prior year.

Net cash provided by operating activities for the six months ended June 30, 2023 was $64.1 million, compared to net cash provided by operating activities of $164.5 million for the six months ended June 30, 2022.

The increase in cash used in operating activities was primarily driven by the $323.6 million increase in gain on sale-leaseback, coupled with negative changes in working capital, offset by an increase in net income of $91.3 million from the prior year.

Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2023 was $319.6 million, an increase of $391.6 million compared to net cash used in investing activities of $72.0 million for the three months ended March 31, 2022.

The increase in cash provided by investing activities was driven by net proceeds of $411.0 million from the Bally’s Tiverton and Hard Rock Biloxi sale-leaseback transaction in the first quarter of 2023.

Net cash provided by investing activities for the six months ended June 30, 2023 was $224.0 million, an increase of $279.8 million compared to net cash used in investing activities of $55.8 million for the six months ended June 30, 2022.

The increase in cash provided by investing activities was driven by proceeds from sale-leaseback transactions year-over-year.

Financing Activities

Net cash used in financing activities for the three months ended March 31, 2023 was $173.6 million compared to net cash provided by financing activities of $4.4 million for the three months ended March 31, 2022.

This change was mainly attributable to the increase in repayments of long-term debt of $67.6 million, coupled with the issuance of long-term debt during the first quarter of 2022, as well as the increase in stock repurchases over the same period in prior year.

Net cash used in financing activities for the six months ended June 30, 2023 was $174.5 million compared to net cash used in financing activities of $140.8 million for the six months ended June 30, 2022.

This increase was mainly attributable to a decrease in the issuance of long-term debt compared to prior year, coupled with the increase in stock repurchases, and partially offset by the decrease in repayments of long-term debt year-over-year.

Capital Return Program

During the three months ended March 31, 2023, we repurchased 1,026,343 common shares for an aggregate price of $19.8 million under our previously announced capital return program.

As of March 31, 2023, there was $174.8 million available for use under the capital return program, subject to limitations in our regulatory and debt agreements.

We did not pay cash dividends during the three months ended March 31, 2023 or 2022, nor do we currently intend to pay any dividends on our common stock in the foreseeable future.

During the six months ended June 30, 2023, we repurchased 1,774,845 common shares for an aggregate price of $30.5 million under our previously announced capital return program.

As of June 30, 2023, there was $164.1 million available for use under the capital return program, subject to limitations in our regulatory and debt agreements.

We did not pay cash dividends during the six months ended June 30, 2023 or 2022, nor do we currently intend to pay any dividends on our common stock in the foreseeable future.

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

1 unchanged sentence

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

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

In connection with the repurchase of these Senior Notes due 2031, the Company recorded a gain on extinguishment of debt of $4.0 million.

10 unchanged sentences

The Company is committed under various operating lease agreements for real estate and property used in operations.

Minimum rent payable under operating leases was $2.37 billion as of March 31, 2023.

Minimum rent payable under operating leases was $2.36 billion as of June 30, 2023.

Refer to Note 15 “ Leases ” in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.

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 were leased under the terms of a master lease agreement (the “Master Lease”) with GLPI.

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 were leased under the terms of a master lease agreement (the “Master Lease”) with GLPI.

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 a minimum 1% annual escalation or greater escalation dependent on CPI.

7 unchanged sentences

The lease commenced November 18, 2022 and has a 99-year term followed by ten separate 20-year renewals at the Company’s option.

As of March 31, 2023, the Company has recorded this lease as a corresponding long-term financing obligation of $200.0 million.

As of June 30, 2023, the Company has recorded this lease as a corresponding long-term financing obligation of $200.0 million.

Capital Expenditures

3 unchanged sentences

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

For the three months ended March 31, 2023, capital expenditures were $43.7 million compared to $54.5 million in the same period last year.

In the first quarter of 2023, we continued our spending on maintenance and planned projects at our casino properties, making significant progress on our Bally’s Twin River and Bally’s Atlantic City properties.

For the six months ended June 30, 2023, capital expenditures were $119.5 million compared to $116.1 million in the same period last year.

In the first half of 2023, we continued our spending on maintenance and planned projects at our casino properties, making significant progress on our Bally’s Twin River and Bally’s Atlantic City properties.

Our 2023 capital expenditures are expected to continue to be less than those of 2022 as we focus on generating cash flows to invest in long-term growth opportunities for the entire Bally’s portfolio.

16 unchanged sentences

The temporary casino is expected to be situated in the location of the current Medinah Temple and will include approximately 1,000 gaming positions and 2 food and beverage venues.

The Company expects to incur approximately $70.0 million in costs in connection with the design and development of the temporary casino and to open by late summer 2023.

The Company currently estimates the permanent casino construction to be completed by the end of 2026.

The Company expects the temporary casino to open in the second half of 2023, and currently estimates the permanent casino construction to be completed by the end of 2026.

In connection with the entry into the host community agreement with the City of Chicago, the Company made a one-time up-front payment to the City of Chicago equal to $40.0 million.

2 unchanged sentences

In addition, upon notice from the City of Chicago that the Developer has failed to perform various obligations under the host community agreement, the Company has indemnified the City of Chicago against any and all liability, claim or reasonable and documented expense the City of Chicago may suffer or incur by reason of any nonperformance of any of the Developer’s obligations.

In furtherance of these obligations, the host community agreement requires us to spend at least $1.34 billion on the design, construction and equipping of our temporary casino and our 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.

Chicago Tribune Lease Termination - 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.

$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.

Bally’s Chicago Casino Fees - Under the Illinois Gambling Act, the Company will be responsible to pay various gaming license fees to the Illinois Gaming Board in connection with the Company’s casino operations.

1 unchanged sentence

(i) a $250,000 land based gaming fee to operate the casino on land prior to commencing operations, (ii) a $250,000 license fee prior to receiving an owners license and gambling operations commence, (iii) gaming position fees equal to the minimum initial fee of $30,000 per gaming position to be paid within 30 days of issuance of an owners license or Temporary Operating Permit (“TOP”), (iv) a $15 million reconciliation fee upon issuance of a TOP or an owners license, whichever is earlier, and (v) a reconciliation fee payment three years after the date operations commenced (in a temporary or permanent facility) in an amount equal to 75% of the adjusted gross receipt (“AGR”) for the most lucrative 12-month period of operations, minus the amount equal to the initial payment per gaming position paid.

Other Contractual Obligations

Other Commitments

Sponsorship Commitments - The Company has entered into several sponsorship agreements with various professional sports leagues and teams, allowing the Company use of official league marks for branding and promotions, among other rights.

As of March 31, 2023, obligations related to these agreements were $107.5 million, with contracts extending through June 2036.

As of June 30, 2023, obligations related to these agreements were $106.9 million, with contracts extending through June 2036.

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 2. Management’s Discussion and Analysis