What changed in this filing

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Item 1. Financial Statements

2023-11-03 compared with 2023-08-03 · 455 added, 270 removed, 904 unchanged (45% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30,

2023 December 31,

26 unchanged sentences

Deferred tax liability 217,330 138,017

Naming rights liabilities 98,515 109,807

Commercial rights liabilities 92,357 109,807

Other long-term liabilities 90,467 17,923

20 unchanged sentences

(In thousands, except per share data)

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

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

2023 2022 2023 2022

15 unchanged sentences

(Loss) income before income taxes ( 17,866 ) 1,730 243,912 62,979

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

Provision for income taxes 43,936 1,137 153,029 996

Net (loss) income $ ( 61,802 ) $ 593 $ 90,883 $ 61,983

7 unchanged sentences

(In thousands)

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

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

2023 2022 2023 2022

Net (loss) income $ ( 61,802 ) $ 593 $ 90,883 $ 61,983

Other comprehensive income (loss):

Foreign currency translation adjustment, net of tax 38,625 ( 198,813 ) 90,698 ( 270,355 )

Other comprehensive income (loss) 38,625 ( 198,813 ) 90,698 ( 270,355 )

Total comprehensive income (loss) $ 12,974 $ ( 139,312 ) $ 243,383 $ ( 208,965 )

Other comprehensive (loss) income:

Foreign currency translation adjustments ( 89,166 ) ( 213,193 ) 1,532 ( 483,548 )

Net unrealized derivative gain on cash flow hedges, net of tax 2,593 — 2,593 —

Net unrealized derivative gain on net investment hedges, net of tax 211 — 211 —

Other comprehensive (loss) income ( 86,362 ) ( 213,193 ) 4,336 ( 483,548 )

Total comprehensive (loss) income $ ( 148,164 ) $ ( 212,600 ) $ 95,219 $ ( 421,565 )

See accompanying notes to condensed consolidated financial statements.

25 unchanged sentences

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

Issuance of restricted stock and other stock awards 31,065 — ( 180 ) — — — — ( 180 )

Share-based compensation — — 6,257 — — — — 6,257

Retirement of treasury shares — — ( 1,420 ) 601 813 — — ( 6 )

Settlement of consideration - Bally’s Interactive ( 40,451 ) — 601 ( 601 ) — — — —

Other comprehensive loss — — — — — ( 86,362 ) — ( 86,362 )

Net loss — — — — ( 61,802 ) — — ( 61,802 )

Balance as of September 30, 2023 45,616,627 $ 456 $ 1,600,115 $ — $ ( 412,628 ) $ ( 291,304 ) $ 428 $ 897,067

BALLY’S CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

(In thousands, except share data)

Common Stock Additional

20 unchanged sentences

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

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

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

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

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

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

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

Net income — — — — 593 — — 593

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

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2023 2022

7 unchanged sentences

Amortization of debt discount and debt issuance costs 8,482 8,122

Gain from insurance recoveries — ( 1,263 )

Gain on sale-leaseback ( 374,321 ) ( 50,766 )

1 unchanged sentence

Deferred income taxes 59,774 ( 42,848 )

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

Loss (gain) on assets and liabilities measured at fair value 12 ( 437 )

Gain on equity method investments ( 5,344 ) —

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

Change in value of commercial rights liabilities ( 11,967 ) ( 33,448 )

Change in contingent consideration payable 1,024 ( 10,386 )

Adjustment on bargain purchase — 107

Foreign exchange loss (gain) 5,947 ( 1,987 )

Foreign exchange gain ( 2,512 ) ( 2,227 )

Other operating activities 8,021 5,309

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

Changes in operating assets and liabilities 46,041 22,593

Net cash provided by operating activities 118,359 225,316

2 unchanged sentences

Proceeds from sale-leaseback 411,000 150,000

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

Capital expenditures ( 266,231 ) ( 167,363 )

Insurance proceeds — 1,265

Cash paid for internally developed software ( 35,903 ) ( 45,785 )

3 unchanged sentences

Other investing activities ( 7,512 ) ( 3,058 )

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

Net cash used in investing activities ( 2,247 ) ( 69,455 )

Cash flows from financing activities:

12 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2023 2022

5 unchanged sentences

Bally’s Chicago - land development liability 46,802 —

Bally’s Chicago - gaming license payable 135,250 —

Investment in GLP Capital, L.P.

1 unchanged sentence

Unpaid internally developed software 1,769 —

June 30, December 31,

Net purchase consideration for acquisitions 55,933 —

Non-controlling interest — ( 3,188 )

September 30, December 31,

Reconciliation of cash and cash equivalents and restricted cash:

1 unchanged sentence

Restricted cash 119,311 52,669

Restricted cash - Other assets 50,000 —

Total cash and cash equivalents and restricted cash $ 297,837 $ 265,184

5 unchanged sentences

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

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

Casinos and Resorts Location Type Built/Acquired

The Company owns and manages the following properties within its Casinos & Resorts reportable segment:

Casinos & Resorts Location Type Built/Acquired

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

26 unchanged sentences

Las Vegas, Nevada Casino and Resort 2022

Bally’s Chicago Casino (“Bally’s Chicago”) (3)

Chicago, Illinois Casino 2023

Bally’s Golf Links at Ferry Point (“Bally’s Golf Links”) Bronx, New York Golf Course 2023

__________________________________

2 unchanged sentences

Refer to Note 16 “ Leases ” for further information.

The North America Interactive reportable segment includes a portfolio of sports betting, iGaming and free-to-play gaming brands and the North American operations of Gamesys Group Ltd.

(3) Temporary casino facility as permanent casino resort is constructed.

The Company’s International Interactive reportable segment primarily includes the interactive activities in Europe and Asia of Gamesys Group Ltd.

(“Gamesys”), an iCasino and online bingo platform provider and operator.

The Company’s International Interactive reportable segment includes the interactive activities in Europe and Asia of Gamesys.

The North America Interactive reportable segment includes a portfolio of sports betting, iGaming and free-to-play gaming brands and the North American operations of Gamesys.

Refer to Note 20 “ Segment Reportin g” for further information.

4 unchanged sentences

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

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

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

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

3 unchanged sentences

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (the “SEC”) for interim financial information, including the instructions to Form 10-Q and Rule 10-01 of the SEC’s Regulation S-X.

Accordingly, certain information and note disclosures normally required in complete financial statements prepared in conformity with accounting principles generally accepted in the United States have been condensed or omitted.

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

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

There were no material changes in significant accounting policies from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Except for the change in the segment profit and loss measure as disclosed in Note 20 “ Segment Reporting ,” there were no material changes in significant accounting policies from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

We have made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes.

4 unchanged sentences

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.

In addition to this joint venture, the Company also has other investments in unconsolidated subsidiaries, which are 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.

For the three and nine months ended September 30, 2023, the Company recorded a gain on equity method investments of $ 2.3 million and $ 5.3 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 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.

As of September 30, 2023 and December 31, 2022, Breckenridge had total assets of $ 148.7 million and $ 93.4 million, respectively, and total liabilities of $ 81.1 million and $ 77.1 million, respectively.

Breckenridge had revenues of $ 71.5 million and $ 232.0 million for the three and nine months ended September 30, 2023, respectively, and $ 68.9 million and $ 229.7 million for the three and nine months ended September 30, 2022, respectively.

BALLY’S CORPORATION

7 unchanged sentences

Accounts receivable, net consists of the following:

June 30, December 31,

September 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 $ 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.

These marketing expenses are included within Gaming expenses in the condensed consolidated statements of operations and were $ 43.6 million and $ 36.9 million for the three months ended September 30, 2023 and 2022, respectively, and $ 137.3 million and $ 139.4 million for the nine months ended September 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 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.

For the three and nine months ended September 30, 2023, advertising expense was $ 5.6 million and $ 14.2 million, respectively.

For the three and nine months ended September 30, 2022, advertising expense was $ 9.1 million and $ 24.0 million, respectively.

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

Earnings (Loss) Per Share

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Comprehensive (Loss) Income

Comprehensive (loss) income includes changes in equity that result from transactions and economic events from non-owner sources.

Comprehensive (loss) income consists of net (loss) income, changes in defined benefit pension plan, net of tax, foreign currency translation adjustments and unrealized gains (losses) relating to cash flow and net investment hedges.

Fair Value Measurements

7 unchanged sentences

The fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the measurement.

Derivative Instruments Designated as Hedging Instruments

Cross Currency Swaps - The Company uses fixed-to-fixed cross-currency swap agreements to hedge its exposure to adverse foreign currency exchange rate movements for its foreign operations.

The Company has elected the spot method for designating these contracts as net investment hedges.

These derivative arrangements qualify as net investment hedges under ASC 815, Derivatives and Hedging (“ASC 815”), with the gain or loss resulting from changes in the spot value of the derivative reported in other comprehensive income with amounts reclassified out of other comprehensive income into earnings when the hedged net investment is either sold or substantially liquidated.

Refer to Note 11 “ Derivative Instruments ” for further information.

Interest Rate Swaps - The Company uses interest rate derivatives to hedge its exposure to variability in cash flows on its floating-rate debt to add stability to interest expense and manage its exposure to interest rate movements.

The Company’s interest rate swaps are designated as cash flow hedges under ASC 815, with changes in the fair value reported in other comprehensive income and reclassified into “Interest expense, net” in the condensed consolidated statements of operations in the same period in which the hedged interest payments associated with the Company’s borrowings are recorded.

Refer to Note 11 “ Derivative Instruments ” for further information.

Strategic Partnership - Sinclair Broadcast Group

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

(“Sinclair”) entered into a Framework Agreement (the “Sinclair Agreement”), which provides for a long-term strategic relationship between the Company and Sinclair combining Bally’s integrated, proprietary sports betting technology with Sinclair’s portfolio of local broadcast stations and its Tennis Channel, Stadium sports network and STIRR streaming service.

The Company received naming rights to the regional sports networks and certain integrations to network programming in exchange for annual fees paid in cash, the issuance of warrants and options and an agreement to share in certain tax benefits resulting from the Tax Receivable Agreement (“TRA”) with Sinclair.

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

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

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

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

The naming rights intangible asset, 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.

In 2020, the Company and Sinclair Broadcast Group, Inc.

(“Sinclair”) entered into a Framework Agreement (the “Framework Agreement”), which provides for a long-term strategic relationship between Sinclair and the Company.

Under the Framework Agreement, the Company pays annual fees in cash, issued warrants and options and agreed to share tax benefits and received naming, integration and other rights, including access to Sinclair’s Tennis Channel, Stadium Sports Network and STIRR streaming service.

Under a Commercial Agreement (the “Commercial Agreement”) contemplated by the Framework Agreement, the Company is required to pay annual fees to Diamond Sports Group (“Diamond”), a Sinclair subsidiary, for naming rights over Diamond’s regional sports networks and other consideration which escalate annually and total $ 88.0 million over a 10-year term.

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

The total intangible asset (“Commercial rights intangible asset”) represents the present value of the naming rights fees and other consideration, including the fair value of the warrants and options, and an estimate of the tax-sharing payments, each explained below.

The Commercial rights intangible asset, net of accumulated amortization, was $ 231.2 million and $ 255.6 million as of September 30, 2023 and December 31, 2022, respectively.

Amortization was $ 7.7 million and $ 8.2 million for the three months ended September 30, 2023 and 2022, respectively, and $ 23.2 million and $ 25.0 million for the nine months ended September 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 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”).

The present value of the naming rights fees was recorded as part of intangible assets, with a corresponding liability, which will be accreted through interest expense over the life of the naming arrangement.

The total value of the liability as of September 30, 2023 and December 31, 2022 was $ 58.1 million and $ 59.3 million, respectively.

The short-term portion of the liability, which was $ 7.5 million and $ 6.0 million as of September 30, 2023 and December 31, 2022, respectively, is recorded within “Accrued liabilities” and the long-term portion of the liability, which was $ 50.6 million and $ 53.3 million as of September 30, 2023 and December 31 2022, respectively, is reflected as “Commercial rights liability” in our condensed consolidated balance sheets.

Accretion expense reported in “Interest expense, net” in our condensed consolidated statements of operations was $ 1.1 million for the three months ended September 30, 2023 and 2022, and $ 3.3 million for the nine months ended September 30, 2023 and 2022.

Under the Framework Agreement, 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”).

The exercise and purchase prices and the number of shares issuable upon exercise of the warrants and options are subject to customary anti-dilution adjustments.

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.

Penny Warrants & Options .

The Penny Warrants and Options are equity classified instruments under ASC 815, Derivatives and Hedging , (“ASC 815”).

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 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 .

The Penny Warrants and Options are equity classified instruments under ASC 815.

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

The Performance Warrants are accounted for as a derivative liability because the underlying performance metrics represent an adjustment to the settlement amount that is not indexed to the Company’s own stock and thus equity classification is precluded under ASC 815.

Refer to Note 12 “ Fair Value Measurements ” for further information.

Tax Receivable Agreement - The Company is required to share 60 % of the tax benefit the Company receives from the Penny Warrants, Options, Performance Warrants and payments under the TRA with Sinclair over the term of the agreement as tax benefit amounts are determined through the filing of the Company’s annual tax returns.

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 $ 17.1 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 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.

Under the Framework Agreement, the Company agreed to share 60 % of the tax benefits it realizes from the Penny Warrants, Options, Performance Warrants and other related payments.

Changes in the 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 intangible asset.

The liability for these obligations was $ 16.6 million and $ 19.4 million as of September 30, 2023 and December 31, 2022, respectively, and is reflected in our condensed consolidated balance sheets.

The change in value of the liability is included in “Other non-operating expenses, net” in our condensed consolidated statements of operations.

Provision for Income Taxes

During the nine months ended September 30, 2023 and 2022, the Company recorded a provision for income tax of $ 153.0 million, at an effective year to date tax rate of 62.7 % and a provision for income tax of $ 1.0 million, at an effective year to date tax rate of 1.6 %, 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.

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

CONSOLIDATED FINANCIAL INFORMATION

General and Administrative Expenses

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,

General and Administrative Expense

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

4 unchanged sentences

Total general and administrative $ 230,582 $ 200,044 $ 732,147 $ 579,800

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Other Non-Operating Income (Expense)

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,

Amounts included in Other non-operating income, net for the three and nine months ended September 30, 2023 and 2022 were as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

Change in value of naming rights liabilities $ 7,558 $ 20,032 $ 7,291 $ 33,411

Change in value of commercial rights liabilities $ 4,676 $ 37 $ 11,967 $ 33,448

Gain on equity method investments 2,254 — 5,344 —

Gain on extinguishment of debt — — 4,044 —

Foreign exchange (loss) gain ( 1,639 ) 1,813 ( 5,947 ) 1,995

Foreign exchange gain 8,459 253 2,512 2,248

Other, net 139 1,350 1,082 10,867

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

Total other non-operating income, net $ 15,528 $ 1,640 $ 24,949 $ 46,563

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

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

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

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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.

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

In December 2022, the FASB issued ASU No.

2022-06, Reference Rate Reform (Topic 848):

2 unchanged sentences

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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

REVENUE RECOGNITION

10 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Retail gaming, online gaming and sports betting revenue, each as described below, contain two performance obligations.

18 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

9 unchanged sentences

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

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

As of September 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.

9 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Sports Betting

5 unchanged sentences

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

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

The Company recognized commissions in certain states from online sports betting and iGaming which are included in gaming revenue for the nine months ended September 30, 2023 and 2022.

Deferred revenue associated with third-party operators for online sports betting and iGaming market access was $ 3.8 million and $ 4.1 million as of September 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 International Interactive and North America Interactive reportable segments, are recognized at the time the goods are sold or the service is provided.

Racing revenue includes several of our casinos and resorts’ share of wagering from live racing and the import of simulcast signals.

Racing revenue is recognized upon completion of the wager based upon an established take-out percentage.

9 unchanged sentences

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 and six months ended June 30, 2023 and 2022:

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

Non-gaming revenue also includes revenues from the operations of Bally’s Golf Links.

Three Months Ended

September 30, Nine Months Ended

September 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 June 30, 2023 Casinos & Resorts North America Interactive International Interactive Total

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

Gaming $ 245,687 $ 240,577 $ 22,631 $ 508,895

4 unchanged sentences

Total revenue $ 359,026 $ 243,884 $ 29,567 $ 632,477

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

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

4 unchanged sentences

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

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Gaming $ 709,812 $ 720,925 $ 58,349 $ 1,489,086

4 unchanged sentences

Total revenue $ 1,020,974 $ 737,230 $ 79,199 $ 1,837,403

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

4 unchanged sentences

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

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.

Revenue included in operations from Bally’s Golf Links from the date of its acquisition, September 12, 2023, is reported in Casinos & Resorts and was $ 0.4 million for the three and nine months ended September 30, 2023.

Revenue included in operations from Casino Secret from the date of its acquisition, January 5, 2023, is reported in International Interactive and was $ 8.0 million and $ 29.4 million for the three and nine months ended September 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 $ 39.9 million and $ 44.0 million as of June 30, 2023 and December 31, 2022, respectively.

The Company’s receivables related to contracts with customers were $ 37.7 million and $ 44.0 million as of September 30, 2023 and December 31, 2022, respectively.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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.

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

June 30, December 31,

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

September 30, December 31,

(in thousands) 2023 2022

3 unchanged sentences

Total $ 69,133 $ 62,258

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.

The Company recognized $ 10.0 million and $ 7.1 million of revenue related to loyalty program redemptions for the three months ended September 30, 2023 and 2022, respectively, and $ 27.7 million and $ 23.0 million for the nine months ended September 30, 2023 and 2022, respectively.

BUSINESS COMBINATIONS

Casinos & Resorts Acquisition

Casinos & Resorts Acquisitions

Tropicana Las Vegas - On September 26, 2022, the Company completed its acquisition of Tropicana Las Vegas.

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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.

Bally’s Golf Links - On September 12, 2023, the Company completed the acquisition of Trump Golf Links at Ferry Point, subsequently renamed to Bally’s Golf Links at Ferry Point, which includes the assignment of a license agreement to operate an 18-hole links-style golf course located in the Bronx, New York.

Purchase consideration included cash paid, net of cash acquired and net working capital adjustments, of $ 52.6 million.

This acquisition continues the Company’s strategic objective of developing a diversified portfolio in its Casinos & Resorts segment.

Total purchase consideration also includes contingent consideration valued at $ 58.6 million, which is the fair value, under GAAP, of expected cash payments totaling up to $ 125 million to the seller, based upon future events, which are uncertain.

The contingent consideration was recorded at fair value, using discounted cash flow analyses, and will be remeasured quarterly, with fair value adjustments recognized in earnings, until the contingencies are resolved.

The settlement of the contingent consideration liabilities will be due to the seller in the event the license agreement is extended or if the Company is successful in its bid for a casino license.

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

Preliminary (2)

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 September 30, 2023:

(in thousands) Bally’s Golf Links Tropicana Las Vegas

Preliminary Final (3)

Total current assets $ 1,108 $ 7,924

1 unchanged sentence

Right of use assets, net — 164,884

Intangible assets, net (1)

Intangible assets, net (1) to (2)

Other assets 2,000 766

5 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 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 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.

(1) Bally’s Golf Links’ intangible assets include a concessionaire license of $ 6.5 million, which is being amortized over its estimated useful life of approximately 12 years.

(2) Tropicana Las Vegas’ 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.

(3) The Company recorded adjustments to the preliminary purchase price allocation during the nine months ended September 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.

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

The Company incurred $ 1.0 million and $ 1.8 million of acquisition costs related to the above Casino & Resorts acquisitions during the three and nine months ended September 30, 2023, respectively, and $ 1.4 million and $ 1.9 million during the three and nine months ended September 30, 2022, respectively.

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

International Interactive Acquisition

16 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.

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

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

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

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 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.

The goodwill of the 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 above International Interactive acquisition during the nine months ended September 30, 2023.

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

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

ASSETS AND LIABILITIES HELD FOR SALE

3 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.

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:

Due to an evaluation of the expected fair value less costs to sell during the nine months ended September 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 statements of operations.

As of September 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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

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

(in thousands) September 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 immaterial for the three and six months ended June 30, 2023 and 2022.

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

PREPAID EXPENSES AND OTHER CURRENT ASSETS

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

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

September 30, December 31,

(in thousands) 2023 2022

1 unchanged sentence

Due from payment service providers 26,023 30,621

Marketing 9,809 8,042

Deposits 16,290 2,016

Sales tax 7,697 5,900

Gaming taxes and licenses 6,362 4,644

Purse funds 4,863 8,093

Prepaid insurance 16,009 6,374

Marketing 9,684 8,042

Short term derivative assets 9,428 —

Purse funds 9,399 8,093

Gaming taxes and licenses 8,122 4,644

Sales tax 6,985 5,900

Other 5,687 3,631

Total prepaid expenses and other current assets $ 142,492 $ 100,717

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

PROPERTY AND EQUIPMENT

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

June 30, December 31,

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

September 30, December 31,

(in thousands) 2023 2022

8 unchanged sentences

Property and equipment, net $ 1,191,756 $ 1,202,102

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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.

Depreciation expense relating to property and equipment was $ 20.2 million and $ 57.8 million for the three and nine months ended September 30, 2023, respectively, and $ 17.0 million and $ 49.9 million for the three and nine months ended September 30, 2022, respectively.

During the three and nine months ended September 30, 2023, there was $ 2.9 million and $ 7.9 million of capitalized interest, respectively, and during the three and nine months ended September 30, 2022, there was $ 0.5 million and $ 1.2 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 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.

$ 10 million of the Payment was paid upon execution of the agreement and $ 90 million of the Payment was paid during the three months ended September 30, 2023.

The $ 50 million remaining Payment is secured by cash-collateralized letters of credit, issued by Citizens Bank.

Cash collaterals are reported as restricted cash as of September 30, 2023.

The Company recorded the present value of the remaining payments of $ 46.8 million within “Accrued liabilities” with an offsetting increase to “Property and equipment, net” within the condensed consolidated balance sheets as of September 30, 2023.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

GOODWILL AND INTANGIBLE ASSETS

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

2023 Impairment Assessment

During the third quarter of 2023, the Company divested a component within the North America Interactive reporting unit.

This divestiture required a relative fair value goodwill allocation to the divested component and a quantitative test for impairment of the remaining North America Interactive reporting unit.

For the quantitative goodwill impairment test, the Company estimated the fair value of the reporting unit and asset group using both income and market-based approaches.

Specifically, the Company applied the discounted cash flow (“DCF”) method under the income approach and the guideline company under the market approach and weighted the results of the two valuation methodologies based on the facts and circumstances surrounding the reporting unit.

For the DCF method, the Company relied on the present value of expected future cash flows, including terminal value, utilizing a market-based weighted average cost of capital (“WACC”) determined separately for the reporting unit as of the valuation date.

The determination of fair value under the DCF method involved the use of significant estimates and assumptions, including revenue growth rates driven by future gaming activity, operating margins, capital expenditures, working capital requirements, tax rates, terminal growth rates, and discount rates.

For the market approach, the Company utilized a comparison of the reporting unit to comparable publicly-traded companies and transactions and, based on the observed earnings multiples, ultimately selected multiples to apply to the reporting unit.

The fair value of the North America Interactive reporting unit exceeded its carrying value and thus no impairment was recorded.

The Company allocated $ 4.2 million to the component that was divested, which was subsequently de-recognized.

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

Casinos & Resorts International Interactive North America Interactive Total

Goodwill as of December 31, 2022 (1)

$ 209,257 $ 1,497,205 $ 39,740 $ 1,746,202

Goodwill from current year business acquisition — — 18,139 18,139

Goodwill from current year business acquisitions 101,385 18,139 — 119,524

Effect of foreign exchange — 4,583 1 4,584

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

Goodwill as of June 30, 2023 (1)

Current year divestiture — — ( 4,204 ) ( 4,204 )

Goodwill as of September 30, 2023 (1)

$ 310,846 $ 1,519,927 $ 35,537 $ 1,866,310

__________________________________

(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 six months ended June 30, 2023 is as follows (in thousands):

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

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

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

Intangible assets from current year business combinations 35,971

Change in TRA with Sinclair (1)

Effect of foreign exchange 3,627

1 unchanged sentence

Other intangibles acquired (1)

Other adjustments ( 1,233 )

Amortization ( 173,395 )

Intangible assets, net as of June 30, 2023

Intangible assets, net as of September 30, 2023

__________________________________

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

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

(1) Includes gaming license fees of $135.3 million due to the Illinois Gaming Board upon commencement of operations at Bally’s Chicago temporary casino facility.

Refer to Note 19 “ Commitments and Contingencies ” for further information.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

remaining life

(in years) June 30, 2023

(in years) September 30, 2023

(in thousands, except years) Gross Carrying Amount Accumulated

1 unchanged sentence

Amortizable intangible assets:

Naming rights - Sinclair (1)

Commercial rights (1)

7.4 $ 313,352 $ ( 82,195 ) $ 231,157

14 unchanged sentences

__________________________________

(1) Naming rights intangible asset in connection with Sinclair Agreement.

(1) Commercial rights intangible asset in connection with the Sinclair Framework Agreement.

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

Amortization began on April 1, 2021, the commencement date of the re-branded Sinclair regional sports networks.

remaining life

3 unchanged sentences

Amortizable intangible assets:

Naming rights - Sinclair (2)

Commercial rights (2)

8.1 $ 314,585 $ ( 58,982 ) $ 255,603

17 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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:

Amortization of intangible assets was approximately $ 57.3 million and $ 56.8 million for the three months ended September 30, 2023 and 2022, respectively, and approximately $ 173.4 million and $ 177.6 million for the nine months ended September 30, 2023 and 2022, respectively.

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

(in thousands)

2 unchanged sentences

Total $ 1,180,208

DERIVATIVE INSTRUMENTS

The Company utilizes derivative instruments in order to mitigate interest rate and currency exchange rate risk in accordance with its financial risk and liability management policy.

During the three months ended September 30, 2023, the Company entered into a series of interest rate and cross currency swap derivative transactions with multiple bank counterparties in order to synthetically convert $ 400.0 million, notional, of the Company’s USD denominated variable rate Term Loan Facility, as disclosed in Note 15 “ L ong - T erm D ebt ,” into fixed rate debt over five years .

The tenor of the contracts were matched with the maturity of the Term Loan Facility tranche maturing on October 1, 2028.

Derivative Instruments Designated as Hedging Instruments

Net Investment Hedges

Cross Currency Swaps - The Company is exposed to fluctuations in foreign exchange rates on investments it holds in its European foreign entities.

The Company uses fixed to fixed-cross-currency swaps to hedge its exposure to changes in the foreign exchange rate on its foreign investment in Europe and their exposure to changes in the EUR-GBP exchange rate.

Currency forward agreements involve fixing the USD-EUR exchange rate for delivery of a specified amount of foreign currency on a specified date.

The currency forward agreements are typically cash settled in USD for their fair value at or close to their settlement date.

Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency-fixed-rate payments over the life of the agreement.

These derivative arrangements qualify as net investment hedges under ASC 815, with the gain or loss resulting from changes in the spot value of the derivative reported in other comprehensive income.

Amounts are reclassified out of other comprehensive income into earnings when the hedged net investment is either sold or substantially liquidated.

Additionally, the accrual of foreign currency and USD denominated coupons will be recognized in “Interest expense, net” in the condensed consolidated statements of operations.

Refer to Note 12 “ Fair Value Measurements ” and Note 18 “ Stockholders’ Equity ” for further information.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Net Investment Hedges Notional Sold Notional Purchased

Cross currency swaps € 369,657 £ 307,920

Cross currency swaps £ 307,920 $ 400,000

Cash Flow Hedges

Interest Rate Swaps - The Company’s objectives in using interest rate derivatives are to hedge its exposure to variability in cash flows on a portion of its floating-rate debt and add stability to interest expense and manage its exposure to interest rate movements.

To accomplish this objective, the Company primarily uses interest rate swaps as part of its financial risk and liability management policy.

The Company’s interest rate swaps are designated as cash flow hedges under ASC 815.

The changes in the fair value of these instruments are recorded as a component of accumulated other comprehensive income and reclassified into “Interest expense, net” in the condensed consolidated statements of operations in the same period in which the hedged interest payments associated with the Company’s borrowings are recorded.

Refer to Note 12 “ Fair Value Measurements ” and Note 18 “ Stockholders’ Equity ” for further information.

Cash Flow Hedges Notional Amount

Interest rate swaps $ 400,000

Economic Hedges

The Company utilizes short term operational hedges or forward currency exchange rate contracts to mitigate foreign currency exchange rate risk.

These instruments are not designated as hedging instruments under ASC 815.

The fair value of these instruments are recorded as derivative assets or liabilities on the condensed consolidated balance sheets with changes in fair value recognized in earnings within “Other non-operating income, net” on the condensed consolidated statements of operations.

Refer to Note 12 “ Fair Value Measurements ” for further information.

Penny Warrants and Options - The Company accounts for its penny warrants and options, under its strategic partnership with Sinclair Broadcast Group, as hedging instruments under ASC 815.

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

Performance Warrants - The Company accounts for its performance warrants, under its strategic partnership with Sinclair Broadcast Group, as a derivative liability and are not designated as hedging instruments.

Refer to Note 2 “ Significant Accounting Policies ” and Note 12 “ Fair V alue M easu rements ” for further information.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

FAIR VALUE MEASUREMENTS

2 unchanged sentences

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

June 30, 2023

September 30, 2023

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

1 unchanged sentence

Restricted cash Restricted cash 119,311 — —

Restricted cash Other assets 50,000 — —

Convertible loans Prepaid expenses and other current assets 918 — —

2 unchanged sentences

Investment in GLPI partnership Other assets — 13,057 —

Total $ 376,743 $ 13,891 $ 11,474

Derivative assets not designated as hedging instruments:

Foreign exchange forward contracts Prepaid expenses and other current assets — 2,427 —

Derivative assets designated as hedging instruments:

Interest rate swaps Prepaid expenses and other current assets — 3,604 —

Interest rate swaps Other assets — 458 —

Cross currency swaps Prepaid expenses and other current assets — 3,397 —

Cross currency swaps Other assets — 15,716 —

Total derivative assets at fair value $ — $ 25,602 $ —

Total assets $ 301,147 $ 38,659 $ 10,685

Contingent consideration Other long-term liabilities $ — $ — $ 58,580

Derivative liabilities not designated as hedging instruments:

Sinclair Performance Warrants

Naming rights liabilities $ — $ — $ 29,696

Total $ — $ — $ 29,696

Commercial rights liabilities — — 25,020

Foreign exchange forward contracts Accrued liabilities — 2,430 —

Derivative liabilities designated as hedging instruments:

Interest rate swaps Other long-term liabilities — 535 —

Cross currency swaps Accrued liabilities — 390 —

Cross currency swaps Other long-term liabilities — 18,191 —

Total derivative liabilities at fair value $ — $ 21,546 $ 25,020

Total liabilities $ — $ 21,546 $ 83,600

BALLY’S CORPORATION

8 unchanged sentences

Total $ 268,236 $ — $ 10,212

Sinclair Performance Warrants Naming rights liabilities $ — $ — $ 36,987

Contingent consideration Accrued liabilities $ — $ — $ 8,220

Derivatives not designated as hedging instruments

Sinclair Performance Warrants Commercial rights liabilities — — 36,987

Total $ — $ — $ 45,207

12 unchanged sentences

$ 29,696 $ — $ 11,474 $ 41,170

Additions in the period (acquisition fair value) — 58,580 500 59,080

Change in fair value ( 4,676 ) — ( 1,289 ) ( 5,965 )

Ending as of September 30, 2023

$ 25,020 $ 58,580 $ 10,685 $ 94,285

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

10 unchanged sentences

$ 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 and six months ended June 30, 2023 and 2022 are as follows:

Additions in the period (acquisition fair value) — — 2,610 2,610

Change in fair value ( 37 ) ( 265 ) ( 411 ) ( 713 )

Ending as of September 30, 2022

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

The gains (losses) recognized in the condensed consolidated statements of operations for derivatives not designated as hedging instruments during the three and nine months ended September 30, 2023 and 2022 are as follows:

Condensed Consolidated Statements of Operations Location Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

Sinclair Performance Warrants Change in value of naming rights liabilities $ 7,558 $ 20,032 $ 7,291 $ 33,411

Sinclair Performance Warrants Other non-operating income, net $ 4,676 $ 37 $ 11,967 $ 33,448

__________________________________

Gains (losses) recognized in earnings resulting from the change in fair value relating to foreign exchange forward contracts were immaterial during the three and nine months ended September 30, 2023.

Interest Rate and Cross Currency Swaps

The fair values of interest rate and cross currency swap contract assets and liabilities are classified within Level 2 of the fair value hierarchy as the valuation inputs are based on estimates using currency spot and forward rates and standard pricing models that consider the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments.

These standard pricing models utilize inputs that are derived from or corroborated by observable market data such as interest rate yield curves as well as currency spot and forward rates.

Changes in the fair value of these contracts are reported as a component of other comprehensive income (loss).

Foreign Exchange Forward Contracts

The foreign exchange forward contracts are accounted for as derivative assets and liabilities and are classified within Level 2 of the fair value hierarchy as the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets, such as currency spot and forward rates.

Gains (losses) recognized in earnings resulting from the change in fair value are reported within “Other non-operating income, net” on the condensed consolidated statements of operations.

Sinclair Performance Warrants

3 unchanged sentences

Inputs to this valuation approach include volatility between 63 % and 66 %, risk free rates between 1.02 % and 4.01 %, the Company’s common stock price for each period and expected terms between 3.4 and 8.0 years.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Sinclair Options

Sinclair Options are accounted for as an equity classified instrument under ASC 815, Derivatives and Hedging .

Sinclair Options are accounted for as an equity classified instrument under ASC 815.

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 June 30, 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 September 30, 2023 and December 31, 2022 and is recorded within “Additional paid-in-capital” in the condensed consolidated balance sheets.

Contingent Consideration

Contingent consideration related to acquisitions is recorded at fair value as a liability on the acquisition date and is remeasured at each reporting date, based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

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 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.

Contingent consideration related to acquisitions are recorded at fair value as a liability on the acquisition date and subsequently remeasured at each reporting date, based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

The remeasurements are based primarily on the expected probability of achievement of the contingency targets which are subject to management’s estimate.

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 connection with the acquisitions of SportCaller and MKF in the first quarter of 2021, the Company recorded contingent consideration of $ 58.7 million.

During the first quarter of 2022, the Company settled contingent consideration of $ 15.9 million, comprised of 393,778 immediately exercisable penny warrants, 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.

In connection with the acquisition of Bally’s Golf Links on September 12, 2023, the Company recorded contingent consideration at fair value of $ 58.6 million.

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

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

11 unchanged sentences

Refer to Note 15 “ Long-Term Debt ” for further information.

June 30, 2023 December 31, 2022

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

September 30, 2023 December 31, 2022

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

5 unchanged sentences

ACCRUED LIABILITIES

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

(in thousands) June 30,

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

(in thousands) September 30,

2023 December 31,

Gaming liabilities $ 181,696 $ 168,386

Bally’s Chicago - land development liability 85,619 —

Compensation 81,892 60,463

Bally’s Chicago - land development liability 46,802 —

Interest payable 42,142 36,173

4 unchanged sentences

(1) Refer to Note 16 “ Leases ” for further information.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

RESTRUCTURING EXPENSE

On January 18, 2023, the Company announced a restructuring plan (the “Plan”) of the Interactive business intended to reduce operating costs and continue the Company’s commitment to achieving profitable operations in its North America Interactive segment.

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

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

During the three and nine months ended September 30, 2023, the Company incurred restructuring charges of $ 0.4 million and $ 20.7 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 statements of operations.

The restructuring charges by segment are summarized as follows:

(in thousands) Three Months Ended

June 30, 2023 Six Months Ended

June 30, 2023

North America Interactive $ 1,789 $ 7,647

September 30, 2023 Nine Months Ended

September 30, 2023

International Interactive $ 325 $ 11,252

North America Interactive 86 7,733

Other — 1,688

Total restructuring charge $ 411 $ 20,673

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

The restructuring activity for the nine months ended September 30, 2023 is as follows:

(in thousands) Workforce Reduction

2 unchanged sentences

Payments ( 18,294 )

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.

Balance as of September 30, 2023

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

LONG-TERM DEBT

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

(in thousands) June 30,

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

(in thousands) September 30,

2023 December 31,

Term Loan Facility (1)

$ 1,910,962 $ 1,925,550

Revolving Credit Facility 115,000 137,000

7 unchanged sentences

Current portion of Term Loan and Revolving Credit Facility ( 19,450 ) ( 19,450 )

Long-term debt, net of discount and deferred financing fees;

excluding current portion $ 3,317,720 $ 3,469,105

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Long-term debt, net of discount and deferred financing fees, excluding current portion $ 3,425,496 $ 3,469,105

__________________________________

(1) The Company has a series of interest rate and cross currency swap derivatives to synthetically convert $ 400.0 million notional of the Company’s in USD denominated variable rate Term Loan Facility into fixed rate debt through its maturity in 2028.

Refer to Note 11 “ Derivative Instruments ” for further information.

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

3 unchanged sentences

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

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

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

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

3 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 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.

During the nine months ended September 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, net” in the condensed consolidated statements of operations.

The indenture contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, (1) incur additional indebtedness, (2) pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, (3) enter into certain transactions with affiliates, (4) sell or otherwise dispose of assets, (5) create or incur liens and (6) merge, consolidate or sell all or substantially all of the Company’s assets.

These covenants are subject to exceptions and qualifications set forth in the indenture.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Credit Facility

2 unchanged sentences

The credit facilities are guaranteed by the Company’s restricted subsidiaries, subject to certain exceptions, and secured by a first-priority lien on substantially all of the Company’s and each of the guarantors’ assets, subject to certain exceptions.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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.

3 unchanged sentences

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

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

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

In an effort to mitigate the interest rate risk associated with the Company’s variable rate credit facilities, the Company entered into a series of interest rate and cross currency swap derivative transactions during the third quarter of 2023.

Refer to Note 11 “ Derivative I nstruments ” for further information.

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 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 Company had total operating lease liabilities of $ 1.21 billion and $ 836.1 million as of September 30, 2023 and December 31, 2022, respectively, and right of use assets of $ 1.17 billion and $ 808.9 million as of September 30, 2023 and December 31, 2022, respectively, which were included in the condensed consolidated balance sheets.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

As of September 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, Leases (“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 June 30, 2023.

The renewal options are not reasonably certain of exercise as of September 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 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.

During the nine months ended September 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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

In addition to the properties under the Master Lease explained above, the Company also entered into a lease with GLPI for the land associated with Tropicana Las Vegas, which the Company acquired during the third quarter of 2022.

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 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,

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

Components of lease expense, included within “General and administrative” in the condensed consolidated statements of operations, for operating leases during the three and nine months ended September 30, 2023 and 2022 are as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

5 unchanged sentences

Total lease expense $ 44,005 $ 26,857 $ 128,726 $ 71,942

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,

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

1 unchanged sentence

Right of use assets obtained in exchange for operating lease liabilities $ 1,748 $ 166,607 $ 405,407 $ 316,729

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Weighted average remaining lease term 17.8 years 20.7 years

Weighted average discount rate 7.5 % 6.7 %

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

(in thousands) June 30, 2023

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

(in thousands) September 30, 2023

Remaining 2023 $ 35,197

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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Financing Obligation

1 unchanged sentence

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

The Company recorded land within property and equipment, net of $ 200.0 million with a corresponding long-term financing obligation of $ 200.0 million on its consolidated balance sheets as of December 31, 2022.

The Company recorded land within “Property and equipment, net” of $ 200.0 million with a corresponding liability within ”Long-term portion of financing obligation” of $ 200.0 million on its condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022.

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 $ 4.5 million and $ 8.7 million during the three and six months ended June 30, 2023, respectively.

Bally’s Chicago made cash payments, and recorded corresponding interest expense of $ 4.3 million and $ 13.0 million during the three and nine months ended September 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.

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.

The Company had lessor revenues related to the rental of hotel rooms of $ 56.7 million and $ 155.5 million for the three and nine months ended September 30, 2023, respectively, and $ 45.7 million and $ 106.5 million for the three and nine months ended September 30, 2022, respectively.

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The cost and accumulated depreciation of property and equipment associated with hotel rooms is included in “Property and equipment, net” within our condensed consolidated balance sheets.

7 unchanged sentences

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

During the six months ended June 30, 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.

During the nine months ended September 30, 2023, the Company granted 1,531,114 restricted awards with an aggregate intrinsic value of $ 28.4 million under the 2021 Incentive Plan.

As of September 30, 2023, 1,261,308 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 1,869,141 restricted awards outstanding as of September 30, 2023.

Share-Based Compensation

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Company recognized total share-based compensation expense of $ 6.3 million and $ 18.6 million for the three and nine months ended September 30, 2023, respectively, and $ 6.7 million and $ 18.1 million for the three and nine months ended September 30, 2022, respectively.

The total income tax benefit for share-based compensation arrangements was $ 1.7 million and $1.8 million for the three months ended September 30, 2023 and 2022, respectively, and $ 4.9 million and $ 4.7 million for the nine months ended September 30, 2023 and 2022, respectively.

STOCKHOLDERS’ EQUITY

Capital Return Program

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,

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

Three Months Ended

September 30, Nine Months Ended

September 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 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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Company retired 40,451 and 5,368,334 shares of its common stock held in treasury during the three months ended September 30, 2023 and 2022, respectively.

The Company retired 1,778,916 and 6,514,528 shares of its common stock held in treasury during the nine months ended September 30, 2023 and 2022, respectively.

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

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.

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

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

Shares Outstanding

As of June 30, 2023, the Company had 45,626,013 common shares issued and outstanding.

As of September 30, 2023, the Company had 45,616,627 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.

8 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Accumulated Other Comprehensive Income (Loss)

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

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

(in thousands) Foreign Currency Translation Adjustment Benefit Plans Cash Flow Hedges (2)

Net Investment Hedges Total

Accumulated other comprehensive loss at December 31, 2022 $ ( 295,984 ) $ 344 $ — $ — $ ( 295,640 )

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

Accumulated other comprehensive loss at June 30, 2023

Other comprehensive income (loss) before reclassifications (1)

1,532 — 3,970 675 6,177

Reclassifications from accumulated other comprehensive loss to earnings (1)

— — ( 443 ) ( 388 ) ( 831 )

Tax effect — — ( 934 ) ( 76 ) ( 1,010 )

Accumulated other comprehensive loss at September 30, 2023

$ ( 294,452 ) $ 344 $ 2,593 $ 211 $ ( 291,304 )

__________________________________

(1) All activity relates to the three months ended September 30, 2023.

(2) As of September 30, 2023, approximately $ 4.5 million of existing gains and losses are estimated to be reclassified into earnings within the next 12 months.

(in thousands) Foreign Currency Translation Adjustment Benefit Plans Total

Accumulated other comprehensive loss at December 31, 2021 $ ( 25,833 ) $ ( 976 ) $ ( 26,809 )

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

Accumulated other comprehensive loss at June 30, 2022

Other comprehensive income (loss) ( 483,548 ) — ( 483,548 )

Accumulated other comprehensive loss at September 30, 2022

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

COMMITMENTS AND CONTINGENCIES

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

Diamond commenced reorganization proceedings under Chapter 11 of the Bankruptcy Code in March 2023.

In July 2023, Diamond commenced litigation as part of its bankruptcy proceedings challenging a series of transactions between Sinclair and Diamond.

One of the 19 counts in the complaint includes Bally’s as a defendant, alleging that the agreement with Sinclair involved fraudulent transfers and unlawful distributions.

To date, Diamond has not sought to reject the Commercial Agreement.

If Sinclair were to do so;

Bally’s would have an unsecured claim for damages resulting from the rejection.

The litigation is in its early stages and Bally’s intends to vigorously defend this claim.

The Company is a party to other 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.

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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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Capital Expenditure Commitments

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(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.

On September 9, 2023, operations commenced at the Company’s Bally’s Chicago temporary casino facility, which triggered required gaming license fees to be paid to the Illinois Gaming Board.

As of September 30, 2023, the Company recorded such fees totaling $ 135.3 million within “Intangible assets, net”, as an indefinite lived gaming license, and “Accounts payable” and on the condensed consolidated balance sheets.

These fees were paid in October 2023 through borrowings on the Revolving Credit Facility.

Sponsorship Commitments

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

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

These agreements commit a total of $ 138.4 million through 2036 and grant the Company rights to use official league marks for branding and promotions, among other benefits.

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The Company has three operating and reportable segments:

Casinos & Resorts, North America Interactive and International Interactive.

Casinos & Resorts, International Interactive and North America Interactive.

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 June 30, 2023 are:

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

North America Interactive - A portfolio of sports betting, iGaming and free-to-play gaming brands.

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

Casinos & Resorts - Includes the Company’s 16 casino and resort properties, one horse race track and one golf course.

International Interactive - Gamesys’ European and Asian operations.

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.

North America Interactive - A portfolio of sports betting, iGaming and free-to-play gaming brands.

As of September 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 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.

Revenue generated from the UK and Japan represented approximately 25 % and 11 % of total revenue, respectively, for the three months ended September 30, 2023, and approximately 24 % and 11 %, respectively for the three months ended September 30, 2022.

Revenue generated from the UK and Japan represented approximately 25 % and 11 % of total revenue, respectively, for the nine months ended September 30, 2023, and approximately 25 % and 13 %, respectively for the nine months ended September 30, 2022.

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

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

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

The following table sets forth revenue and Adjusted EBITDA for the Company’s three reportable segments and reconciles Adjusted EBITDA on a consolidated basis to net income (loss).

Beginning in the third quarter of 2023, the Company updated its measure of segment performance to Adjusted EBITDAR (defined below) from Adjusted EBITDA.

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

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

The following table sets forth revenue and Adjusted EBITDAR for the Company’s three reportable segments and reconciles Adjusted EBITDAR on a consolidated basis to net income (loss).

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

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022 2023 2022

Casinos & Resorts $ 359,026 $ 328,540 $ 1,020,974 $ 908,385

North America Interactive 25,270 18,050 49,632 33,277

International Interactive 243,884 227,579 737,230 715,224

North America Interactive 29,567 22,130 79,199 55,407

Total $ 632,477 $ 578,249 $ 1,837,403 $ 1,679,016

Adjusted EBITDA (1)

Adjusted EBITDAR (1)

Casinos & Resorts $ 118,184 $ 118,740 $ 334,312 $ 303,413

North America Interactive ( 17,685 ) ( 20,874 ) ( 28,248 ) ( 40,199 )

International Interactive 85,477 76,313 250,352 232,252

North America Interactive ( 17,561 ) ( 19,672 ) ( 45,809 ) ( 59,871 )

Other ( 12,883 ) ( 12,578 ) ( 46,687 ) ( 38,380 )

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Operating income (expense)

Rent expense associated with triple net operating leases (2)

( 31,594 ) ( 11,835 ) ( 94,152 ) ( 34,717 )

Depreciation and amortization ( 77,487 ) ( 73,853 ) ( 231,235 ) ( 227,507 )

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(Loss) income before income taxes ( 17,866 ) 1,730 243,912 62,979

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

Provision benefit for income taxes ( 43,936 ) ( 1,137 ) ( 153,029 ) ( 996 )

Net (loss) income $ ( 61,802 ) $ 593 $ 90,883 $ 61,983

__________________________________

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

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 June 30, Six Months Ended June 30,

(1) Adjusted EBITDAR is defined as earnings, or loss, for the Company before interest expense, net of interest income, provision (benefit) for income taxes, depreciation and amortization, non-operating (income) expense, acquisition, integration and restructuring expense, share-based compensation, and certain other gains or losses as well as, when presented for our reporting segments, an adjustment related to the allocation of corporate cost among segments, plus rent expense associated with triple net operating leases.

Adjusted EBITDAR 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.

(2) Consists primarily of the operating lease components contained within certain triple net leases with GLPI.

Refer to Note 16 “ Leases ” for further information.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

(in thousands) 2023 2022 2023 2022

1 unchanged sentence

Casinos & Resorts $ 40,206 $ 46,008 $ 99,908 $ 150,389

North America Interactive 1,032 291 1,558 466

International Interactive 457 887 2,114 10,554

North America Interactive 79 4,097 1,637 6,004

Other 105,943 290 162,572 416

Total $ 146,685 $ 51,282 $ 266,231 $ 167,363

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

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

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

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Diluted earnings per share $ ( 1.15 ) $ 0.01 $ 1.67 $ 1.05

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.

There were 5,152,994 and 5,299,749 share-based awards that were considered anti-dilutive for the three months ended September 30, 2023 and 2022, respectively, and 5,235,978 and 5,105,113 share-based awards that were considered anti-dilutive for the nine months ended September 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.

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

For the three and six months ended June 30, 2023 and 2022, the shares underlying the Performance Warrants were anti-dilutive as certain contingencies were not met.

For the three and nine months ended September 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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

SUBSEQUENT EVENTS

On October 20, 2023, the Company announced a restructuring plan for its North America Interactive segment.

The Company estimates that it will incur restructuring charges between $ 15 million and $ 20 million, representing the impairment of certain technology, which will no longer be utilized, in addition to employee related severance costs.

The estimate of the charges the Company expects to incur are subject to assumptions, and actual charges may differ from such estimates.

The Company may incur other charges or cash expenditures in connection with this plan which are not currently estimable or contemplated.

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