What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-15 compared with 2023-03-01 · 675 added, 470 removed, 1256 unchanged (48% of the section changed)

6 unchanged sentences

Consolidated Statements of Operations for the years ended December 31, 202 3 , 202 2 and 20 21

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Comprehensive Income ( Loss ) for the years ended December 31, 202 3 , 202 2 and 20 21

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 202 3 , 202 2 and 20 21

6 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Bally’s Corporation and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

We have audited the accompanying consolidated balance sheets of Bally’s Corporation and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 15, 2024, expressed an adverse opinion on the Company’s internal control over financial reporting because of material weaknesses.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill – International Interactive and North America Interactive Reporting Units – Refer to Notes 2 and 10 to the financial statements

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill – International Interactive Reporting Unit – Refer to Notes 2 and 10 to the financial statements.

Critical Audit Matter Description

3 unchanged sentences

As of December 31, 2023, the carrying value of the International Interactive reporting unit goodwill is $1,586.6 million.

The key inputs in determining the fair value of the North American Interactive reporting unit include forecasted revenues and market multiples.

As of December 31, 2022, the carrying value of the North America Interactive reporting unit goodwill is $39.7 million.

The Company’s fair value determination of its International Interactive and North America Interactive reporting units required management to make significant estimates and assumptions of International Interactive forecasts, discount rates, and market multiples, and of North America Interactive forecasted revenue and market multiples.

The Company’s fair value determination of its International Interactive reporting unit required management to make significant estimates and assumptions of International Interactive forecasts, discount rates, and market multiples.

Therefore, performing audit procedures to evaluate the reasonableness of these estimates and assumptions involved a high degree of auditor judgment and increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the International Interactive forecasts, discount rates, and market multiples, and the North America Interactive forecasted revenue and market multiples used by management to estimate the fair value of the International Interactive and North America Interactive reporting units included the following, among others:

• We tested the effectiveness of controls over determining the fair value of the Company’s International Interactive and North America Interactive reporting units, including controls over the International Interactive forecasts, discount rates, and market multiples, and the North America Interactive forecasted revenue and market multiples.

• We evaluated management’s ability to accurately project the International Interactive forecasts and the North America Interactive forecasted revenue by performing a retrospective review of actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s projected International Interactive forecasts and the North America Interactive forecasted revenue by:

◦ Comparing the International Interactive forecasts and the North America Interactive forecasted revenue to information included in the Company’s communications to the Board of Directors, industry reports, and analyst reports for the Company and certain of its peer companies;

◦ Comparing the International Interactive forecasts and the North America Interactive forecasted revenue to historical financial results;

◦ Evaluating the impact of changes in the regulatory environment on management’s projections.

Our audit procedures related to the International Interactive forecasts, discount rates, and market multiples used by management to estimate the fair value of the International Interactive reporting unit included the following, among others:

• We tested the effectiveness of controls over determining the fair value of the Company’s International Interactive reporting unit, including controls over the International Interactive forecasts and the selection of discount rates and market multiples.

• We evaluated management’s ability to accurately project the International Interactive forecasts by performing a retrospective review of actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s projected International Interactive forecasts by:

◦ Comparing the International Interactive forecasts to information included in the Company’s communications to the Board of Directors, industry reports, and analyst reports for the Company and certain of its peer companies;

◦ Comparing the International Interactive forecasts to historical financial results;

◦ Evaluating the impact of changes in the regulatory environment on management’s forecasts;

◦ Conducting inquiries with management;

◦ Evaluating whether the International Interactive forecasts and the North America Interactive forecasted revenue were consistent with evidence obtained in other areas of the audit.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the International Interactive discount rate and market multiples and the North America Interactive market multiples by:

◦ Evaluating whether the International Interactive forecasts were consistent with evidence obtained in other areas of the audit.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the International Interactive discount rate and market multiples by:

◦ Testing the inputs underlying the determination of the discount rate and testing the mathematical accuracy of the calculation;

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◦ Developing a range of independent estimates and comparing those to the market multiples selected by management.

Gaming Licenses – Refer to Notes 2 and 10 to the financial statements.

Critical Audit Matter Description

The Company has three indefinite-lived gaming licenses in the Casinos & Resorts segment that were determined to have indicators of impairment based on declines in results compared to those projected when the gaming licenses were originally valued at acquisition.

The Company assesses the fair value of these gaming licenses using the Greenfield Method under the income approach, which estimates the fair value using the discounted cash flow model assuming the Company built a casino with similar utility to that of the existing casino.

The key inputs in determining the fair value, among others, include forecasted revenue and operating cash flows and the discount rates utilized to reflect the level of risk associated with receiving future cash flows attributable to the licenses.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to forecasted revenue and operating cash flows and the determination of discount rates used by management to estimate the fair value of the three gaming licenses in the Casinos & Resorts segment with indicators of impairment included the following, among others:

• We tested the effectiveness of controls over determining the fair value of the gaming licenses, including controls over forecasts of revenue and operating cash flows and the selection of the discount rates.

• We evaluated management’s ability to accurately project revenues and operating cash flows by performing a retrospective review of actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s projected revenue and operating cash flow forecasts by:

◦ Comparing the revenue and operating cash flow forecasts to information included in the Company’s communications to the Board of Directors, industry reports, and certain of its peer companies;

◦ Comparing the revenue and operating cash forecasts to historical financial results;

◦ Evaluating the impact of changes in the regulatory environment and market competition on management’s forecasts;

◦ Conducting inquiries with management;

◦ Evaluating whether the forecasts were consistent with evidence obtained in other areas of the audit.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rates by:

◦ Testing the inputs underlying the determination of the discount rate and testing the mathematical accuracy of the calculation;

◦ Developing a range of independent estimates and comparing those to the discount rate selected by management.

/s/ Deloitte & Touche LLP

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Right of use assets, net 1,160,288 808,926

Goodwill, net 1,746,202 2,122,653

Goodwill 1,935,803 1,746,202

Intangible assets, net 1,871,428 1,961,938

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Deferred tax liability 125,590 138,017

Naming rights liabilities 109,807 168,929

Commercial rights liabilities 113,626 109,807

Other long-term liabilities 119,661 17,923

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Additional paid-in-capital 1,400,479 1,636,366

Treasury stock, at cost, 0 and 795,578 shares as of December 31, 2022 and 2021, respectively

Retained deficit ( 535,373 ) ( 181,581 )

Treasury stock, at cost, no shares outstanding as of December 31, 2023 and 2022

Accumulated deficit ( 555,895 ) ( 535,373 )

Accumulated other comprehensive loss ( 209,558 ) ( 295,640 )

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Total revenue 2,449,073 2,255,705 1,322,443

Operating costs and expenses:

Operating (income) costs and expenses:

Gaming 888,937 812,918 407,032

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General and administrative 1,113,976 825,706 597,946

Gain from sale-leaseback, net ( 374,321 ) ( 50,766 ) ( 53,425 )

Impairment charges 149,825 463,978 4,675

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Total operating costs and expenses 2,345,064 2,548,713 1,229,061

(Loss) income from operations ( 293,008 ) 93,382 ( 18,386 )

Other income (expense):

Income (loss) from operations 104,009 ( 293,008 ) 93,382

Other (expense) income:

Interest expense, net ( 277,561 ) ( 208,153 ) ( 117,924 )

Other non-operating expenses, net 46,692 ( 94,532 ) 6,211

Other non-operating income (expense), net ( 12,186 ) 46,692 ( 94,532 )

Total other expense, net ( 289,747 ) ( 161,461 ) ( 212,456 )

Loss before provision for income taxes ( 454,469 ) ( 119,074 ) ( 74,811 )

Benefit for income taxes ( 28,923 ) ( 4,377 ) ( 69,324 )

Net loss $ ( 425,546 ) $ ( 114,697 ) $ ( 5,487 )

Loss before income taxes ( 185,738 ) ( 454,469 ) ( 119,074 )

Provision (benefit) for income taxes 1,762 ( 28,923 ) ( 4,377 )

$ ( 187,500 ) $ ( 425,546 ) $ ( 114,697 )

Basic loss per share $ ( 3.51 ) $ ( 7.32 ) $ ( 2.31 )

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BALLY’S CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

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2023 2022 2021

Net loss $ ( 425,546 ) $ ( 114,697 ) $ ( 5,487 )

$ ( 187,500 ) $ ( 425,546 ) $ ( 114,697 )

Other comprehensive income (loss):

Foreign currency translation adjustments, net of tax ( 270,151 ) ( 25,833 ) —

Defined benefit pension plan:

Gains (losses) arising during the period 1,911 3,040 ( 1,844 )

Reclassification adjustments — 104 —

Tax effect ( 591 ) ( 976 ) 588

Net of tax amount 1,320 2,168 ( 1,256 )

Comprehensive loss ( 268,831 ) ( 23,665 ) ( 1,256 )

Foreign currency translation adjustments 118,781 ( 270,151 ) ( 25,833 )

Defined benefit pension plan adjustments, net of tax 542 1,320 2,168

Net unrealized derivative loss on cash flow hedges, net of tax ( 11,246 ) — —

Net unrealized derivative loss on net investment hedges, net of tax ( 21,995 ) — —

Other comprehensive income (loss)

86,082 ( 268,831 ) ( 23,665 )

Total comprehensive loss

$ ( 101,418 ) $ ( 694,377 ) $ ( 138,362 )

The accompanying notes are an integral part of these consolidated financial statements.

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Balance as of December 31, 2020 30,685,938 $ 307 $ 294,643 $ — $ 34,792 $ ( 3,144 ) $ — $ 326,598

Release of restricted stock, net 365,439 4 ( 9,766 ) — — — — ( 9,762 )

Dividends and dividend equivalents - $ 0.10 per share

— — — — ( 3,174 ) — — ( 3,174 )

Share-based compensation — — 17,706 — — — — 17,706

Retirement of treasury shares — ( 109 ) ( 49,351 ) 256,367 ( 206,907 ) — — —

Share repurchases ( 1,812,393 ) — — ( 33,292 ) — — — ( 33,292 )

Stock options exercised 19,564 — 84 — — — — 84

Issuance of penny warrants for naming rights — — 150,426 — — — — 150,426

Adoption of ASU 2016-13 — — — — ( 58 ) — — ( 58 )

Other comprehensive income — — — — — ( 1,256 ) — ( 1,256 )

Net loss — — — — ( 5,487 ) — — ( 5,487 )

Balance as of December 31, 2020 30,685,938 307 294,643 — 34,792 ( 3,144 ) — 326,598

Release of restricted stock and other stock awards, net 121,379 1 ( 3,260 ) ( 116 ) — — — ( 3,375 )

Issuance of restricted stock and other stock awards 121,379 1 ( 3,260 ) ( 116 ) — — — ( 3,375 )

Share-based compensation — — 20,143 — — — — 20,143

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

Issuance of penny warrants - MKF — — 64,694 — — — — 64,694

Issuance of MKF penny warrants — — 64,694 — — — — 64,694

Shares issued for purchase of SportCaller 221,391 2 11,774 — — — — 11,776

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Balance as of December 31, 2021 52,254,477 530 1,849,068 ( 29,166 ) ( 181,581 ) ( 26,809 ) 3,760 1,615,802

Release of restricted stock and other stock awards, net 458,603 4 ( 5,957 ) 429 — — — ( 5,524 )

Issuance of restricted stock and other stock awards 458,603 4 ( 5,957 ) 429 — — — ( 5,524 )

Share-based compensation — — 27,912 — — — — 27,912

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Penny warrants exercised 383,934 4 — — — — — 4

Issuance of penny warrants - MKF — — 12,010 — — — — 12,010

Issuance of MKF penny warrants — — 12,010 — — — — 12,010

Settlement of consideration to SportCaller 107,832 1 3,699 — — — — 3,700

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

Issuance of restricted stock and other stock awards 444,115 4 ( 2,762 ) 529 — — — ( 2,229 )

Share-based compensation — — 24,074 — — — — 24,074

Retirement of treasury shares — ( 75 ) ( 267,054 ) 99,153 166,978 — — ( 998 )

Share repurchases ( 7,581,428 ) — — ( 99,081 ) — — — ( 99,081 )

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

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

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

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

Other comprehensive income

— — — — — 86,082 — 86,082

— — — — ( 187,500 ) — — ( 187,500 )

Balance as of December 31, 2023 39,973,202 $ 400 $ 1,400,479 $ — $ ( 555,895 ) $ ( 209,558 ) $ 428 $ 635,854

The accompanying notes are an integral part of these consolidated financial statements.

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Cash flows from operating activities:

Net loss $ ( 425,546 ) $ ( 114,697 ) $ ( 5,487 )

$ ( 187,500 ) $ ( 425,546 ) $ ( 114,697 )

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

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11,312 10,896 7,557

Loss on extinguishment of debt — 103,007 —

(Gain) loss on extinguishment of debt ( 4,044 ) — 103,007

Gain from insurance recoveries — ( 1,265 ) ( 18,660 )

Storm related losses — — 14,408

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

Gain from sale-leaseback, net ( 374,321 ) ( 50,766 ) ( 53,425 )

Diamond Sports Group non-cash liability 144,883 — —

Contract termination — — 30,000

Deferred income taxes ( 23,923 ) ( 88,129 ) ( 5,217 )

(Gain) loss on assets and liabilities measured at fair value ( 3,251 ) 21,440 —

Change in value of naming rights liabilities ( 32,577 ) ( 17,029 ) 57,660

Loss (gain) on assets and liabilities measured at fair value 1,180 ( 3,251 ) 21,440

Net gain on equity method investments ( 4,255 ) — —

Change in value of commercial rights liabilities 7,716 ( 32,577 ) ( 17,029 )

Change in contingent consideration payable 1,024 ( 10,747 ) ( 23,503 )

Adjustment (gain) on bargain purchase — 107 ( 22,841 )

Foreign exchange (gain) loss ( 516 ) 33,461 —

Foreign exchange loss (gain) 11,019 ( 516 ) 33,461

Other operating activities 11,166 10,764 19,712

6 unchanged sentences

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

Deposit for acquisition of Bally’s Quad Cities Casino & Hotel — — ( 4,000 )

Foreign exchange forward contract premiums — — ( 22,592 )

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Insurance proceeds — 1,265 18,660

Cash paid for internally developed software ( 37,121 ) ( 15,891 ) —

Cash paid for capitalized software ( 45,200 ) ( 37,121 ) ( 15,891 )

Acquisition of gaming licenses ( 145,485 ) ( 55,117 ) ( 30,159 )

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Issuance of Sinclair penny warrants — — 50,000

Payment of shareholder dividends — — ( 3,204 )

Other financing activities ( 3,094 ) ( 5,922 ) ( 3,074 )

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Unpaid property and equipment $ 22,397 $ 24,080 $ 31,123

Unpaid internally developed software 1,891 — —

Bally’s Chicago - land development liability 47,739 — —

Investment in GLP Capital, L.P.

Investment in RI Joint Venture 17,832 — —

Non-controlling interest — ( 3,332 ) 3,760

Stock and equity instruments issued for North America Interactive acquisitions and Gamesys — — 716,162

Acquisitions in exchange for contingent liability — 58,685 —

Net purchase consideration for acquisitions 58,580 — 58,685

Deferred purchase price payable — — 14,071

Deposit applied to acquisition purchase price — — 4,000

Unpaid trade name — — 20,000

Unpaid Naming Rights — — 332,313

Years Ended December 31,

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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:

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

Casinos and Resorts Location Type Built/Acquired

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

Bally’s Arapahoe Park Aurora, Colorado

Racetrack/OTB Site 2004

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

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

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

Lincoln, Rhode Island Casino and Resort 2004

Bally’s Arapahoe Park

Aurora, Colorado Racetrack/OTB Site 2004

Hard Rock Hotel & Casino Biloxi (“Hard Rock Biloxi”) (2)

Biloxi, Mississippi Casino and Resort 2014

Bally’s Tiverton Casino & Hotel (“Bally’s Tiverton”) (2)

Tiverton, Rhode Island Casino and Hotel 2018

Bally’s Dover Casino Resort (“Bally’s Dover”) (2)

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Black Hawk, Colorado Three Casinos 2020

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

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

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

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

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

Kansas City, Missouri Casino 2020

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

Vicksburg, Mississippi Casino and Hotel 2020

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

Atlantic City, New Jersey Casino and Resort 2020

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

Shreveport, Louisiana Casino and Hotel 2020

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

Lake Tahoe, Nevada

Casino and Resort 2021

Lake Tahoe, Nevada Casino and Resort 2021

Bally’s Evansville Casino & Hotel (“Bally’s Evansville”) (2)

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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

__________________________________

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

Refer to Note 15 “ 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.

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

Refer to Note 17 “ Leas es ” for further information.

(3) Temporary casino facility, as a permanent casino resort is being 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 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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of the Company, its majority-owned subsidiaries and entities the Company identifies as variable interest entities (“VIEs”), of which the Company is determined to be the primary beneficiary.

1 unchanged sentence

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 (“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).

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

Equity Method Investments

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

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

The 40 % ownership in the joint venture qualifies for 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 consolidated statements of operations.

For the year ended December 31, 2023, the Company recorded net gains on equity method investments of $ 4.3 million.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Variable Interest Entities

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Significant judgments related to these determinations include estimates about the current and future fair values and performance of assets held by these VIEs and general market conditions.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Management has analyzed and concluded that Breckenridge Curacao B.V.

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

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

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

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

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

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

As of December 31, 2022 and 2021, Breckenridge had total assets of $ 93.4 million and $ 85.4 million, respectively, total liabilities of $ 77.1 million and $ 75.2 million, respectively, and revenues of $ 298.1 million and $ 79.6 million for the years ended December 31, 2022 and 2021, respectively.

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

As of December 31, 2023 and 2022, Breckenridge had total assets of $ 161.3 million and $ 93.4 million, respectively, total liabilities of $ 87.7 million and $ 77.1 million, respectively, and revenues of $ 293.3 million, $ 298.1 million and $ 79.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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

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

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

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

Concentrations of Credit Risk

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The Company maintains cash with financial institutions in excess of federally insured limits, however, management believes the credit risk is mitigated by the quality of the institutions holding such deposits.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts Receivable, Net

10 unchanged sentences

(1) Represents the Company’s share of VLT and table games revenue for Bally’s Twin River and Bally’s Tiverton due from the State of Rhode Island and from the State of Delaware for Bally’s Dover.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

An allowance for doubtful accounts is determined to reduce the Company’s receivables for amounts that may not be collected.

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Expenditures for renewals and betterments that extend the life or value of an asset are capitalized and expenditures for repairs and maintenance are charged to expense as incurred.

The costs and related accumulated depreciation applicable to assets sold or disposed are removed from the balance sheet accounts and the resulting gains or losses are reflected in the consolidated statements of operations.

The costs and related accumulated depreciation applicable to assets sold or disposed of are removed from the balance sheet accounts and the resulting gains or losses are reflected in the consolidated statements of operations.

Depreciation is recorded using the straight-line method over the estimated useful lives of the assets or the related lease term, if any, as follows:

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If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

During the years ended December 31, 2022 and 2021, there was $ 1.9 million and $ 0.2 million of capitalized interest, respectively.

There was no capitalized interest in the year ended December 31, 2020.

During the years ended December 31, 2023, 2022 and 2021, there was $ 13.6 million, $ 1.9 million and $ 0.2 million of capitalized interest, respectively.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company determines if a contract is or contains a lease at the contract inception date or the date in which a modification of an existing contract occurs.

4 unchanged sentences

The Company recognizes a lease liability for the present value of lease payments at the lease commencement date using its incremental borrowing rate commensurate with the lease term based on information available at the commencement date unless the rate implicit in the lease is readily determinable.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Certain of the Company’s leases include renewal options and escalation clauses;

11 unchanged sentences

If the results of the qualitative assessment indicate it is more likely than not that a reporting unit’s carrying value exceeds its fair value, or if the Company elects to bypass the qualitative assessment, a quantitative goodwill test is performed.

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

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

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

6 unchanged sentences

The Company’s intangible assets primarily consist of customer relationships, developed technology, internally developed software, gaming licenses and trade names.

The Company also has a Naming rights intangible asset obtained through the Sinclair Agreement (as defined herein).

Refer to Note 13 “ Sinclair Agreement ” for further information regarding the Sinclair Broadcast Group (“Sinclair”) naming rights.

The Company also has a commercial rights intangible asset obtained through the Framework Agreement (as defined herein).

Refer to Note 14 “Strategic Partnership - Sinclair Broadcast Group” for further information regarding the Sinclair Broadcast Group (“Sinclair”) commercial rights.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For its finite-lived intangible assets, the Company establishes a useful life upon initial recognition based on the period over which the asset is expected to contribute to the future cash flows of the Company and periodically evaluates the remaining useful lives to determine whether events and circumstances warrant a revision to the remaining amortization period.

5 unchanged sentences

Customer Relationships - The Company considers customer relationships to be finite-lived intangible assets, which are amortized over their estimated useful lives, and are recognized as the result of a business combination.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Developed Technology - Developed technology relates to the design and development of sports betting and casino gaming software and online gaming products acquired through the Company’s acquisitions of the businesses within the North America Interactive and International Interactive segments.

Developed Technology - Developed technology relates to the design and development of sports betting and casino gaming software and online gaming products acquired through the Company’s acquisitions of the businesses within the International Interactive and North America Interactive segments.

Developed technology is considered to be a finite-lived intangible asset, which are amortized over their estimated useful lives, which is generally between three to 10 years.

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The Company also has certain gaming licenses, including its VLT licenses, and trade names, which are considered to be indefinite lived based on future expectations of operating its gaming properties indefinitely, continuing to brand its corporate name and certain properties under the Bally’s trade name indefinitely and continuing to indefinitely brand its online casino offerings within the International Interactive segment with the trade names acquired through the Gamesys acquisition.

Intangible assets not subject to amortization are reviewed for impairment annually as of October 1 and between annual test dates whenever events or changes in circumstances may indicate that the carrying amount of the related asset may not be recoverable.

Refer to Note 10 “ Goodwill and Intangible Assets ” for further information.

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Debt issuance costs of the revolving credit facility are amortized on a straight-line basis, while all other debt issuance costs and debt discounts are amortized using the effective interest method.

Amortization of debt issuance costs and debt discounts included in interest expense was $ 10.9 million, $ 7.6 million and $ 4.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Amortization of debt issuance costs and debt discounts included in “Interest expense” in the consolidated statements of operations was $ 11.3 million, $ 10.9 million and $ 7.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Self-Insurance Reserves

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The self-insurance liabilities are included in “Accrued liabilities” in the consolidated balance sheets and wer e $ 21.0 million and $ 16.2 million as of December 31, 2023 and 2022, respectively.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Share-Based Compensation

4 unchanged sentences

The Company recognizes share-based compensation expense on a straight-line basis over the requisite service period of the individual grants.

The Company’s Chief Executive Officer and certain of its other executive officers or members of senior management have been granted PSUs which vest, when and if earned, in accordance with the terms of the related PSU award agreements.

PSUs vest, when and if earned, in accordance with the terms of the related PSU award agreements.

The Company recognizes share-based compensation expense based on the target number of shares of common stock that may be earned pursuant to the award and the Company’s stock price on the date of grant and subsequently adjusts expense based on actual and forecasted performance compared to planned targets.

1 unchanged sentence

Warrant/Option Liabilities

The Company accounts for Penny Warrants and Options issued to Sinclair under the Sinclair Agreement in accordance with ASC 815-40, Contracts in an Entity’s Own Equity .

The Company accounts for Penny Warrants and Options in accordance with ASC 815-40, Contracts in an Entity’s Own Equity .

The Penny Warrants and Options are classified in equity because they are indexed to the Company’s own stock and meet all conditions for equity classification.

The Performance Warrants are accounted for as a derivative liability in accordance with ASC 815, Derivatives and Hedging (“ASC 815”) 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.

The Performance Warrants are marked to market each reporting period, with changes in fair value recorded in “Other non-operating expenses, net” in the consolidated statements of operations.

Refer to Note 13 “ Sinclair Agreement ” for further information.

The Performance Warrants are marked to market each reporting period, with changes in fair value recorded in “Other non-operating income (expense), net” in the consolidated statements of operations.

Refer to Note 14 “Strategic Partnership - Sinclair Broadcast Group” for further information.

Sequencing Policy

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The Company generates revenue from four principal sources:

gaming (which includes retail gaming, online gaming, sports betting and racing), hotel, food, beverage, retail entertainment and other.

gaming (which includes retail gaming, online gaming, sports betting and racing), hotel, food and beverage and retail, entertainment and other.

Refer to Note 5 “ Revenue Recognition ” for further information.

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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 consolidated statements of operations for the years ended December 31, 2022 and 2021 and were $ 174.7 million and $ 60.8 million, respectively.

There were no such marketing expenses included within Gaming expenses for the year ended December 31, 2020 .

These marketing expenses are included within Gaming expenses in the consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021 were $ 178.7 million, $ 174.7 million and $ 60.8 million, 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.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Advertising Expenses

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For the years ended December 31, 2023, 2022 and 2021, advertising expense was $ 19.0 million , $ 26.8 million and $ 7.5 million, respectively, and are included in “General and administrative” on the consolidated statements of operations.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Expansion and Pre-opening Expenses

Expansion and pre-opening expenses are charged to expense as incurred.

The Company defines pre-opening expenses as costs incurred before the property commences commercial operations and defines expansion expenses as costs incurred in connection with the opening of a new facility or significant expansion of an existing property.

Costs classified as expansion and pre-opening costs consist primarily of marketing, master planning, conceptual design fees and legal and professional fees that are not eligible for capitalization and are included in “General and administrative” on the consolidated statements of operations.

Pre-opening expenses for the years ended December 31, 2022, 2021 and 2020 was $ 0.7 million , $ 1.8 million and $ 0.9 million , respectively.

There were no expansion expenses during the years ended December 31, 2022, 2021 and 2020.

Interest Expense, Net

Interest expense, net is comprised of interest costs for the Company’s debt and amortization of debt issuance costs and debt discounts, net of interest income and amounts capitalized for construction projects.

Interest expense, net is comprised of interest costs for the Company’s debt, amortization of debt issuance costs and debt discounts, net of interest income and amounts capitalized for construction projects, realized changes in fair value relating to interest rate derivative contracts designated as cash flow hedges and lease payments associated with the Company’s financing obligation.

The Company prepares its income tax provision in accordance with ASC 740, Income Taxes .

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Translation adjustments resulting from this process are recorded to other comprehensive income (loss).

Gains or losses from foreign currency remeasurements that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in “Other non-operating expenses, net” on the consolidated statements of operations.

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 and foreign currency translation adjustments.

Gains or losses from foreign currency remeasurements that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in “Other non-operating income (expense), net” on the consolidated statements of operations.

Comprehensive Income (Loss)

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

Comprehensive income (loss) consists of net income (loss), 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, net of tax.

Treasury Stock

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Operating segments are identified as components of an enterprise that engage in business activities from which it recognizes revenues and expenses, and for which discrete financial information is available and regularly reviewed by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance.

Statement of Cash Flows

The Company has presented the consolidated statements of cash flows using the indirect method, which involves the reconciliation of net income to net cash flow from operating activities.

Fair Value Measurements

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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 (loss) with amounts reclassified out of other comprehensive income (loss) into earnings when the hedged net investment is either sold or substantially liquidated.

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

Interest Rate Contracts - 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 and collars are designated as cash flow hedges under ASC 815, with changes in the fair value reported in other comprehensive income (loss) and reclassified into “Interest expense, net” in the 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.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL INFORMATION

General and Administrative Expenses

General and Administrative Expense

Amounts included in General and administrative for the years ended December 31, 2023, 2022 and 2021 were as follows:

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Advertising, general and administrative $ 888,787 $ 776,226 $ 496,658

Acquisition costs 49,480 71,288 13,257

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

Diamond Sports Group non-cash liability (1)

Acquisition and integration 49,292 49,480 71,288

Restructuring 31,014 — —

Contract termination — — 30,000

Total general and administrative $ 1,113,976 $ 825,706 $ 597,946

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Non-Operating Expenses

Amounts included in Other non-operating expenses for the years ended December 31, 2022, 2021 and 2020 were as follows:

__________________________________

(1) Refer to Note 22 “ Commitments and Contingencies ” for further information

Other Non-Operating Income (Expense)

Amounts included in Other non-operating income (expense), net for the years ended December 31, 2023, 2022 and 2021 were as follows:

Year Ended December 31,

(in thousands) 2023 2022 2021

Change in value of naming rights liabilities $ 32,577 $ 17,029 $ ( 57,660 )

Change in value of commercial rights liabilities $ ( 7,716 ) $ 32,577 $ 17,029

Net gain on equity method investments 4,255 — —

(Adjustment) gain on bargain purchases — ( 107 ) 22,841

Loss on extinguishment of debt — ( 103,007 ) —

Foreign exchange gain (loss) 516 ( 33,461 ) —

Gain (loss) on extinguishment of debt 4,044 — ( 103,007 )

Foreign exchange (loss) gain ( 11,019 ) 516 ( 33,461 )

Other, net ( 1,750 ) 13,706 2,066

Total other non-operating expenses, net $ 46,692 $ ( 94,532 ) $ 6,211

Total other non-operating (expense) income, net $ ( 12,186 ) $ 46,692 $ ( 94,532 )

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

Standards Implemented

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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This update is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted.

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

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

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

Deferral of the Sunset Date of Topic 848 .

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

In December 2022, the FASB issued ASU No.

2022-06, Reference Rate Reform (Topic 848) - Deferral of the Sunset Date of Topic 848 .

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

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

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

Standards to Be Implemented

In October 2023, the FASB issued ASU No.

2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative .

The amendments in this update align the requirements in the ASC to the Securities and Exchange Commission’s (“SEC”) regulations.

The effective date for each amended topic in the ASC is the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective.

If by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective.

Early adoption is prohibited.

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

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures .

The amendments in this update enhance the disclosures required for significant segment expenses on an annual and interim basis.

The guidance will apply retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024.

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

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures .

The amendments in this update enhance the transparency and decision usefulness of income tax disclosures.

This update will be effective for annual periods beginning after December 15, 2024, with early adoption permitted.

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

REVENUE RECOGNITION

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

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

Additional services include hotel, food, beverage, retail, entertainment and other.

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.

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Bally’s Twin River is entitled to a 28.85 % share of VLT revenue on the initial 3,002 units and a 26.00 % share on VLT revenue generated from units in excess of 3,002 units.

Beginning July 1, 2021, Bally’s Twin River is entitled to an additional 7.00 % share of revenue on VLTs owned by the Company.

Bally’s Tiverton is entitled to receive a percentage of VLT revenue that is equivalent to the percentage received by Bally’s Twin River.

From July 1, 2021 through December 31, 2022, Bally’s Twin River and Bally’s Tiverton were entitled to an additional 7.00 % share of revenue, as the technology provider, on VLTs owned by the Company.

Beginning on January 1, 2023, the Company contributed all of its VLT assets to the RI Joint Venture and the RI Joint Venture, as the sole Technology Provider, is now entitled to that additional 7.00 % of VLT revenue.

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

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Online gaming

Online gaming refers to digital versions of wagering games available in land-based casinos, such as blackjack, roulette and slot machines.

For these offerings, the Company operates similarly to land-based casinos, generating revenue from player wagers net of payouts and incentives awarded to players.

The Company’s online gaming operations, similar to land-based casinos, generates revenue from player wagers net of payouts and incentives awarded to players.

Online gaming revenue includes the online bingo and casino revenue of Gamesys since the date of acquisition, beginning October 1, 2021.

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Deferred revenue associated with third-party operators for online sports betting and iGaming market access was $ 3.7 million and $ 4.1 million as of December 31, 2023 and 2022, respectively, and is included in “Accrued liabilities” and “Other long-term liabilities” in the 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.

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.

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.

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

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

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

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

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The standalone selling price of food, beverage, retail, entertainment and other goods and services are determined based upon the actual retail prices charged to customers for those items.

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

Other revenue includes cancellation fees for hotel and meeting space services, which are recognized upon cancellation by the customer, and golf revenues from the Company’s operations of Bally’s Golf Links, which are recognized at the time of sale.

Additionally, other revenue includes market access and business-to-business service revenue generated by the International Interactive and North America Interactive reportable segments, which is recognized at the time the goods are sold or the service is provided, and are included in Non-gaming revenue within our consolidated statements of operations.

The estimated retail value related to goods and services provided to guests without charge or upon redemption under the Company’s player loyalty programs included in departmental revenues, and therefore reducing gaming revenues, are as follows for the years ended December 31, 2023, 2022 and 2021:

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

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a disaggregation of total revenue by segment (in thousands):

Years Ended December 31, Casinos & Resorts North America Interactive International Interactive Total

Years Ended December 31, Casinos & Resorts International Interactive North America Interactive Total

Gaming $ 954,725 $ 952,921 $ 84,395 $ 1,992,041

16 unchanged sentences

Total revenue $ 1,032,828 $ 251,263 $ 38,352 $ 1,322,443

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue included in operations from Tropicana Las Vegas from the date of acquisition, September 26, 2022, of $ 24.1 million is reported in the Casinos & Resorts segment.

Refer to Note 6 “ Business Combinat ions ” for revenue included in operations from recent acquisitions.

Revenue included in operations from Bally’s Golf Links from the date of its acquisition, September 12, 2023, is reported in the Casinos & Resorts segment and was $ 1.4 million.

Revenue included in operations from Casino Secret from the date of its acquisition, January 5, 2023, is reported in the International Interactive segment and was $ 36.4 million.

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

Contract Assets and Contract Related Liabilities

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The Company holds restricted cash for interactive player deposits and records a corresponding withdrawal liability.

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

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

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

6 unchanged sentences

Casinos & Resorts Acquisitions

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

The total purchase price was $ 148.1 million.

Bally’s Golf Links - On September 12, 2023, the Company completed the acquisition of Trump Golf Links at Ferry Point, subsequently renamed 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.

The total purchase consideration included cash paid, net of cash acquired and net working capital adjustments, which amounted to $ 55.2 million.

This acquisition continues the Company’s strategic objective of developing a diversified portfolio within 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.

Tropicana Las Vegas - On September 26, 2022, the Company completed its acquisition of Tropicana Las Vegas for $ 148.2 million.

Cash paid by the Company at closing net of $ 1.7 million cash acquired, was $ 146.5 million, excluding transaction costs.

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Bally’s Quad Cities - On June 14, 2021, the Company completed its acquisition of Bally’s Quad Cities.

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

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

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

Bally’s Evansville - On June 3, 2021, the Company completed its acquisition of Bally’s Evansville.

The total purchase price was $ 139.7 million.

Bally’s Evansville - On June 3, 2021, the Company completed its acquisition of Bally’s Evansville for $ 139.7 million.

Cash paid by the Company at closing, net of $ 9.4 million cash acquired, was $ 130.4 million, excluding transaction costs.

1 unchanged sentence

Refer to Note 17 “ Leases ” for further information.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Bally’s Lake Tahoe - On April 6, 2021, the Company completed its acquisition of Bally’s Lake Tahoe for $ 14.2 million.

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

Bally’s Shreveport - On December 23, 2020, the Company completed its acquisition of Bally’s Shreveport for total cash consideration of approximately $ 137.2 million.

Cash paid by the Company was $ 133.1 million, net cash acquired and a net working capital adjustment, excluding transaction costs.

Bally’s Atlantic City - On November 18, 2020, the Company completed its acquisition of Bally’s Atlantic City.

The Company paid cash of approximately $ 24.7 million, or $ 16.1 million net of cash acquired, excluding transaction costs.

Bally’s Kansas City and Bally’s Vicksburg - On July 1, 2020, the Company completed its acquisition Bally’s Kansas City and Bally’s Vicksburg for total cash consideration of approximately $ 229.9 million, or $ 225.5 million net of cash acquired, excluding transaction costs.

Bally’s Black Hawk - On January 23, 2020, the Company acquired three casino properties located in Black Hawk, Colorado for total cash consideration of $ 53.8 million, or $ 50.5 million net of cash acquired, excluding transaction costs.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Acquired during the year ended December 31, 2023 2022 2021 2021 2021

(in thousands) Tropicana Las Vegas Bally’s Quad Cities Bally’s Evansville Bally’s Lake Tahoe Bally’s Shreveport Bally’s Atlantic City Bally’s Kansas City and Bally’s Vicksburg

(in thousands) Bally’s Golf Links Tropicana Las Vegas Bally’s Quad Cities Bally’s Evansville Bally’s Lake Tahoe

Preliminary (6)

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Right of use assets, net — 164,884 — 285,772 57,017

Goodwill 104,032 8,794 13,308 — —

Intangible assets, net (1) to (5)

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Other assets 2,000 766 — 468 —

Goodwill 8,590 13,308 — — — — 54,276

Total current liabilities ( 345 ) ( 10,129 ) ( 5,412 ) ( 10,927 ) ( 3,546 )

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__________________________________

(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.

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(5) Bally’s Lake Tahoe’s intangible assets include gaming licenses of $ 5.2 million with an indefinite life and a trade name of $ 0.2 million, which are being amortized on a straight-line basis over its estimated useful life of approximately six months .

(5) Bally’s Shreveport intangible assets include gaming licenses of $ 57.7 million with an indefinite life and rated player relationships of $ 0.4 million which is being amortized on a straight-line basis over an estimated useful life of eight years .

(6) Bally’s Atlantic City intangible assets include rated player relationships of $ 0.9 million and hotel and conference pre-bookings of $ 0.2 million, which are being amortized over useful lives of eight years and three years , respectively.

(7) Bally’s Kansas City and Bally’s Vicksburg intangible assets include gaming licenses of $ 137.3 million with an indefinite life and rated player relationships of $ 0.9 million, which are being amortized on a straight-line basis over estimated useful lives of approximately eight years .

(8) The Company recorded adjustments to the preliminary purchase price allocation during the year ended December 31, 2022 which decreased other current assets by $ 2.5 million, increased total current liabilities by $ 1.5 million, increased lease liabilities by $ 0.7 million, and increased right of use assets, net by $ 0.5 million, with the offset increasing goodwill by $ 4.2 million.

(6) The Company recorded adjustments to the preliminary purchase price allocation during the year ended December 31, 2023 which increased goodwill and the total purchase price by $ 2.6 million.

(7) The Company recorded adjustments to the preliminary purchase price allocation during the year ended December 31, 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.

(8) The Company recorded immaterial adjustments to purchase price allocations for 2021 acquisitions during the year ended December 31, 2022.

The Company finalized purchase price allocations for 2020 acquisitions during the year ended December 31, 2021.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

During the year ended December 31, 2021, the Company recorded bargain purchase gains related to Bally’s Evansville and Bally’s Lake Tahoe of $ 20.9 million and $ 2.0 million, respectively.

During the year ended December 31, 2022, based on the final purchase price allocation for Bally’s Lake Tahoe, an adjustment of $ 0.1 million was recorded reducing the bargain purchase gain to $ 1.9 million.

During the year ended December 31, 2020, the Company recorded bargain purchase gains related to Bally’s Shreveport and Bally’s Atlantic City of $ 31.3 million and $ 32.6 million.

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

The Company believes that it was able to acquire the net assets of Bally’s Atlantic City for less than fair value as a result of a capital expenditure requirement imposed on the Company by the New Jersey Casino Control Commission, which would have been imposed on the seller had they not divested the property.

The Company incurred $ 4.0 million and $ 10.4 million of acquisition costs related to the above Casino & Resorts acquisitions during the years ended December 31, 2022 and 2021, respectively.

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

The Company incurred $ 1.1 million, $ 4.0 million and $ 10.4 million of acquisition costs related to the above Casinos & Resorts acquisitions during the years ended December 31, 2023, 2022 and 2021, respectively.

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

International Interactive Acquisition

Casino Secret - On January 5, 2023, the Company completed the acquisition of BACA Limited (“Casino Secret”), a European based online casino that offers slots, tables and live dealer games to Asian markets for total consideration of $ 50.4 million.

Cash paid by the Company, net of $ 8.3 million cash acquired, was $ 38.7 million, excluding transaction costs.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the consideration paid and the fair values of the assets acquired and liabilities assumed in connection with the International Interactive acquisition:

(in thousands) Casino Secret

Preliminary (2)

Total current assets $ 8,862

Property and equipment, net 50

Intangible assets, net (1)

Goodwill 18,422

Total current liabilities ( 6,371 )

Total purchase price $ 50,434

__________________________________

(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 recorded adjustments to the preliminary purchase price allocation during the year ended December 31, 2023 which decreased right of use assets and corresponding lease liabilities by $ 0.4 million , increased goodwill by $ 0.3 million , decreased total current liabilities by $ 0.8 million , and increased the total purchase price by $ 1.1 million .

Total goodwill recorded in connection with the above acquisition was $ 18.4 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 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 year ended December 31, 2023.

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

North America Interactive Acquisitions

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Earnings attributable to the non-controlling interest are not material for the years ended December 31, 2023, 2022 and 2021.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

12 unchanged sentences

(2) The Company recorded immaterial adjustments to the purchase price allocation during the year ended December 31, 2022.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Total goodwill recorded in connection with the North America Interactive Acquisitions was $ 250.7 million, of which $ 102.9 million is deductible for local tax purposes.

2 unchanged sentences

The Company incurred $ 3.9 million and $ 5.3 million of transaction costs related to the North America Interactive Acquisitions in the years ended December 31, 2022 and 2021, respectively.

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

The Company did not incur any costs related to the North America Interactive Acquisitions in the year ended December 31, 2023.

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

Gamesys Acquisition

3 unchanged sentences

During the year ended December 31, 2022, the Company incurred $ 6.3 million of transaction costs related to the acquisition of Gamesys compared to $ 43.5 million during the year ended December 31, 2021.

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

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

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

1 unchanged sentence

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

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

18 unchanged sentences

(2) During the year ended December 31, 2022, the Company recorded adjustments to the purchase price allocation including a $ 0.5 million increase to prepaid expenses and other current assets, a $ 5.3 million increase to goodwill, a $ 2.7 million decrease to intangible assets, net and a $ 3.1 million increase to accrued liabilities.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4 unchanged sentences

The following unaudited pro forma consolidated financial information for the twelve months ended December 31, 2021 combines the results of the Company for the year ended December 31, 2021 and the unaudited results of Bally’s Lake Tahoe, Bally’s Evansville and Gamesys for each period subsequent to their respective acquisition dates through December 31, 2021.

The following unaudited pro forma consolidated financial information for the twelve months ended December 31, 2020 combines the Company’s historical results with pro forma amounts for Bally’s Lake Tahoe, Bally’s Evansville and Gamesys.

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

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

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

The revenue, earnings and pro forma effects of the Bally’s Interactive Acquisitions and Bally’s Quad Cities completed during the year ended December 31, 2021, and the acquisitions completed during the years ended December 31, 2023 and 2022 are not material to results of operations, individually or in the aggregate.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

These unaudited pro forma financial results are presented for informational purposes only and do not purport to be indicative of the operating results of the Company that would have been achieved had the acquisitions actually taken place on January 1, 2021.

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

Years Ended December 31,

(in thousands, except per share data) 2021 2020

Revenue $ 2,221,870 $ 1,529,369

Net income (loss) $ 46,048 $ ( 129,374 )

The following unaudited pro forma consolidated financial information for the year ended December 31, 2020 combines the results of the Company for the year ended December 31, 2020 and the unaudited results of Bally’s Kansas City, Bally’s Vicksburg and Bally’s Shreveport for each period subsequent to their respective acquisition dates through December 31, 2020.

The unaudited pro forma consolidated financial information assumes that the acquisitions of Bally’s Kansas City, Bally’s Vicksburg and Bally’s Shreveport had occurred as of January 1, 2019.

(in thousands, except per share data) Year Ended December 31, 2020

(in thousands, except per share data) Years Ended December 31, 2021

Revenue $ 2,221,870

Net loss $ ( 7,450 )

Net income $ 46,048

ASSETS AND LIABILITIES HELD FOR SALE

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The Company then compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset.

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.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

If the undiscounted cash flows do not exceed the carrying value, then an impairment charge is 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 year ended December 31, 2023, the Company recognized impairment charges of $ 9.4 million and $ 4.0 million on goodwill and intangible assets held for sale, respectively.

These charges have been accounted for within “ Impairment charges ” in the consolidated statements of operations.

As of 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 December 31, 2022 are as follows:

(in thousands) December 31, 2022

As of December 31, 2023, the Company is still pursuing the plan to sell the business, however, it does not expect it will be completed within one year.

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

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

Restricted cash, prepaid expenses and other current assets $ 1,815 $ 3,756

2 unchanged sentences

Assets held for sale (1)

$ 1,815 $ 17,177

Liabilities related to assets held for sale (1)(2)

$ 1,307 $ 3,409

(1) All assets and liabilities held for sale were classified as current as it’s probable the sale will be completed within one year.

__________________________________

(1) All assets and liabilities held for sale were classified as current as of December 31, 2023 and 2022.

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

The revenues and net loss attributable to the business classified as held for sale were not significant for the year ended December 31, 2022.

PREPAID EXPENSES AND OTHER ASSETS

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

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PREPAID EXPENSES AND OTHER CURRENT ASSETS

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

2 unchanged sentences

Due from payment service providers 12,662 30,621

Purse funds 8,093 8,286

Prepaid marketing 8,042 10,066

Prepaid insurance 12,181 6,374

Short term derivative assets 9,530 —

Gaming taxes and licenses 9,309 4,644

Prepaid marketing 8,685 8,042

Sales tax 7,565 5,900

Purse funds 6,404 8,093

Other 9,294 5,647

15 unchanged sentences

(1) Depreciation expenses on property and equipment for the years ended December 31, 2023, 2022 and 2021 was $ 118.7 million, $ 71.7 million and $ 53.7 million, 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”).

$ 10 million of the Payment was paid upon execution of the Lease Termination and Short Term License Agreement and $ 90 million of the Payment was paid during the third quarter of 2023.

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

Cash collaterals are reported as restricted cash as of December 31, 2023.

The Company recorded the present value of the remaining payments of $ 47.7 million within “Accrued liabilities” with an offsetting increase to “Property and equipment, net” within the consolidated balance sheets as of December 31, 2023.

BALLY’S CORPORATION

1 unchanged sentence

GOODWILL AND INTANGIBLE ASSETS

2023 Interim Impairment

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.

2023 Annual Impairment Assessment

1 unchanged sentence

Each individual property within the Casinos and Resorts operating segment is determined to be its own reporting unit and asset group.

The reporting units and asset groups for the North America Interactive and International Interactive operating segments are the operating segments.

The estimated fair values of the reporting units were determined through a combination of discounted cash flow models and market-based approaches, which utilized Level 3 inputs.

For the North America Interactive reporting unit and asset group, primarily due to a decline in actual and projected revenues, the Company determined that it was more likely than not that the fair value of the reporting unit was less than its carrying value and therefore, a quantitative impairment analysis was performed.

Based on this analysis, the Company recorded an aggregate $ 390.7 million non-cash impairment charge in its North America Interactive reporting unit.

The Company allocated the loss first to intangible assets in the amount of $ 159.1 million and then the residual of $ 231.6 million to goodwill.

One component of the North America Interactive reporting unit met the criteria to be classified as held for sale during the fourth quarter of 2022.

Accordingly, the Company performed a relative fair value allocation of goodwill to this component.

No further impairment was recorded upon classifying this component as held for sale as the fair value exceeded the carrying value as of December 31, 2022.

The Company performed a quantitative test of goodwill for the International Interactive reporting unit and determined that the fair value of the International Interactive reporting unit and asset group exceeded its carrying amount and thus, there was no impairment.

The reporting units for the North America Interactive and International Interactive operating segments are the operating segments.

The Company performed a quantitative test of goodwill for its International Interactive reporting unit and determined that the fair value of the reporting unit exceeded its carrying amount and thus, there was no impairment.

The estimated fair value of the reporting unit was determined through a combination of a discounted cash flow model and market-based approach, which utilized Level 3 inputs.

If future results significantly vary from current estimates and related projections, the Company may be required to record impairment charges.

The Company recorded an impairment loss within the International Interactive segment of $ 73.3 million related to a long-standing indefinite lived trademark acquired as part of the Gamesys acquisition.

This trademark is being de-emphasized for other newer brands in Asia and Rest of World, resulting in a decline in actual and projected revenues attributable to the trademark as compared to when the fair value was determined during the purchase price allocation of the Gamesys acquisition.

The fair value of the trademark was determined using a relief from royalty method, which utilized Level 3 inputs.

These charges are recorded within “Impairment charges” in the consolidated statement of operations.

For all reporting units within the Casinos and Resorts segment, the Company performed a qualitative analysis for the annual assessment of goodwill and indefinite lived intangible assets (commonly referred to as “Step Zero”).

For the North America Interactive reporting unit and all reporting units within the Casinos and Resorts segment with goodwill, the Company performed a qualitative analysis for the annual assessment of goodwill (commonly referred to as “Step Zero”).

From a qualitative perspective, in evaluating whether it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, relevant events and circumstances are taken into account, with greater weight assigned to events and circumstances that most affect the fair value or the carrying amounts of its assets.

Items that were considered included, but were not limited to, the following:

macroeconomic conditions, industry and market conditions and overall financial performance.

After assessing these and other factors, the Company determined that it was more likely than not that the fair value of all reporting units within the Casinos and Resorts segment exceeded their carrying amounts as of October 1, 2022.

macroeconomic conditions, industry and market conditions and overall financial performance, and the most recent quantitative assessment performed for the reporting unit.

After assessing these and other factors, the Company determined that it was more likely than not that the fair value of the North America Interactive reporting unit all reporting units within the Casinos and Resorts segment exceeded their carrying amounts as of October 1, 2023.

If future results vary significantly from current estimates and related projections, the Company may be required to record impairment charges.

In connection with the annual impairment test, the Company evaluated whether facts and circumstances surrounding its indefinite lived intangible assets remained appropriate.

For one indefinite lived trademark in the International Interactive segment, the Company determined that based on a combination of factors regarding the Company’s intended use of the trademark and future uncertainty, that a useful life of 7 years should be applied.

The change in useful life required the Company to perform a quantitative test for impairment of the trademark.

The fair value of the trademark was determined using a relief from royalty method, which utilized Level 3 inputs and was exceeded by the carrying value, indicating an impairment.

As such, the Company recorded an impairment loss within the International Interactive segment of $ 54.0 million related to this trademark intangible asset.

The decline in value of the trademark was primarily driven by the change in useful life and the de-emphasis of the trademark for other newer brands in Asia and Rest of World, resulting in a decline in actual and projected revenues attributable to the trademark as compared to when the fair value was determined during the purchase price allocation of the Gamesys acquisition.

These charges are recorded within “Impairment charges” in the consolidated statements of operations.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For three indefinite lived gaming licenses in the Casinos & Resorts segment, the Company determined it had an indicator of impairment based on declines in results compared to those projected when the gaming licenses were originally valued at acquisition.

The Company valued the gaming licenses using the Greenfield Method under the income approach which estimates the fair value of the gaming license using a discounted cash flow model assuming the Company built a new casino with similar utility to that of the existing casino.

The primary inputs to the valuation involve estimating projected revenues and operating cash flows, estimated construction costs, and pre-opening expenses and is discounted at a rate that reflects the level of risk associated with receiving cash flows attributable to the license.

The fair values of these gaming licenses were below their respective carrying values and the Company recorded an impairment loss of $ 76.7 million.

For all other indefinite lived intangible assets, the Company performed a qualitative assessment of impairment and determined that it was more likely than not that the fair values of all assets exceed their carrying values as of October 1, 2023.

If future results vary significantly from current estimates and related projections, the Company may be required to record impairment charges.

In connection with the expansion of the Company’s restructuring plan announced on October 20, 2023 targeted at reshaping the technology utilized by its Interactive segments (refer to Note 15 “ Restructuring Expense ”), the Company recorded impairment charges of $ 5.7 million, related to certain technology intangible assets which will no longer be utilized.

As of December 31, 2023, the Bally’s Tiverton, Bally’s Dover and Hard Rock Biloxi reporting units within the Company’s Casinos & Resorts reportable segment had negative carrying amounts of net assets.

Goodwill assigned to these reporting units as of December 31, 2023 were $ 0.4 million, $ 1.0 million and $ 48.9 million, respectively.

2022 Impairment Assessment

As a result of the analysis, the Company recorded an aggregate $ 390.7 million non-cash impairment charge in its North America Interactive reporting unit.

The Company allocated the loss first to intangible assets, in the amount of $ 159.1 million, and then the residual of $ 231.6 million to goodwill.

These charges are recorded within “Impairment charges” in the consolidated statements of operations.

2021 Trade Name Impairment

5 unchanged sentences

The change in carrying value of goodwill by reportable segment for the years ended December 31, 2023 and 2022 is as follows:

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

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

Goodwill as of December 31, 2021 (1)

1 unchanged sentence

Goodwill from current year business combinations 8,590 — — 8,590

Impairment charges — — ( 231,569 ) ( 231,569 )

Effect of foreign exchange — ( 145,424 ) ( 2,889 ) ( 148,313 )

Purchase accounting adjustments on prior year business combinations ( 1,285 ) 5,286 239 4,240

Transferred to assets held for sale (2)

— — ( 9,399 ) ( 9,399 )

Goodwill as of December 31, 2022 (3)

1 unchanged sentence

Goodwill from current year business combinations 104,032 18,422 — 122,454

Impairment charges — ( 231,569 ) — ( 231,569 )

Effect of foreign exchange — 70,963 184 71,147

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

Transferred to assets held for sale (3)

— ( 9,399 ) — ( 9,399 )

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

Goodwill as of December 31, 2023 (3)

2 unchanged sentences

(1) Amounts are shown net of accumulated goodwill impairment charges of $ 5.4 million for Casinos and Resorts.

(2) 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.

(2) Goodwill transferred to assets held for sale consists of $ 100.6 million of goodwill and $ 91.2 million of accumulated impairment.

(3) 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 years ended December 31, 2023 and 2022 is as follows (in thousands):

1 unchanged sentence

Intangible assets from current year business combinations 5,140

Change in TRA with Sinclair (1)

Effect of foreign exchange ( 125,911 )

2 unchanged sentences

Other intangibles acquired 32,976

Transferred to assets held for sale ( 4,022 )

Accumulated amortization ( 228,909 )

1 unchanged sentence

Intangible assets from current year business combinations 35,971

Change in TRA with Sinclair (1)

Effect of foreign exchange 46,926

2 unchanged sentences

Other intangibles acquired (1)

Transferred to assets held for sale ( 4,022 )

Accumulated amortization ( 231,713 )

1 unchanged sentence

__________________________________

(1) Refer to Note 13 “ Sinclair Agreement .”

(2) Includes the gaming license related to Bally’s Chicago.

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

Refer to Note 22 “ Commitments and Contingencies ” for further information.

BALLY’S CORPORATION

6 unchanged sentences

Amortizable intangible assets:

Naming rights - Sinclair (1)

Commercial rights - Sinclair (1)

7.2 $ 315,847 $ ( 89,901 ) $ 225,946

14 unchanged sentences

__________________________________

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

Refer to Note 13 “ Sinclair Agreement ” for further information.

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

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

Refer to Note 14 “Strategic Partnership - Sinclair Broadcast Group” for further information.

remaining life

4 unchanged sentences

Amortizable intangible assets:

Naming rights - Sinclair (2)

Commercial rights - Sinclair (2)

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

15 unchanged sentences

(2) See note (1) above.

Amortization of intangible assets was approximately $ 228.9 million, $ 91.1 million and $ 4.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Amortization of intangible assets was approximately $ 231.7 million, $ 228.9 million and $ 91.1 million for the years ended

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023, 2022 and 2021, respectively.

Refer to Note 6 “ Business Combinations ” for further information about the preliminary purchase price allocation and provisional goodwill and intangible balances added from current year business combinations.

Refer to Note 13 “ Sinclair Agreement ” for intangible assets added through the Sinclair Agreement.

Refer to Note 14 “Strategic Partnership - Sinclair Broadcast Group” for intangible assets added through the Framework Agreement.

The following table shows the remaining amortization expense associated with finite lived intangible assets as of December 31, 2023:

2 unchanged sentences

Thereafter 90,752

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 year ended December 31, 2023, the Company entered into a series of interest rate contracts and cross currency swap derivative transactions with multiple bank counterparties in order to synthetically convert a notional aggregate amount of $ 500.0 million of the Company’s USD denominated variable rate Term Loan Facility, as disclosed in Note 16 “ Long-Term Debt ,” into fixed rate debt over five years and $ 200 million of the Term Loan Facility, to an equivalent GBP denominated floating rate instrument over three years.

These contracts mature in October, 2028 and 2026, respectively.

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 and 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 (loss).

Amounts are reclassified out of other comprehensive income (loss) 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 consolidated statements of operations.

During the year ended December 31, 2023, the Company recognized $ 1.35 million of related expense.

Refer to Note 12 “ Fair Value Measurements ” and Note 19 “ Stockholders’ Equity ” for further information.

The following tables summarize the Company’s net investment hedges as of December 31, 2023 (in thousands):

Net Investment Hedges Notional Sold Notional Purchased

Cross currency swaps € 461,595 £ 387,531

Cross currency swaps £ 546,759 $ 700,000

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash Flow Hedges

Interest Rate Contracts - 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, to add stability to interest expense and to manage its exposure to interest rate movements.

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

The Company’s interest rate swaps and collars 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 (loss) and reclassified into “Interest expense, net” in the consolidated statements of operations in the same period in which the hedged interest payments associated with the Company’s borrowings are recorded.

During the year ended December 31, 2023, the Company recognized $ 1.95 million of related expense.

Refer to Note 12 “ Fair Value Measurements ” and Note 19 “ Stockholders’ Equity ” for further information.

The following tables summarize the Company’s cash flow hedges as of December 31, 2023 (in thousands):

Cash Flow Hedges Notional Amount Index Cap Floor (1)

Interest rate contracts - swaps $ 500,000 US - SOFR — —

Interest rate contracts - collars $ 500,000 US - SOFR 4.25 % 3.22 %

__________________________________

(1) Weighted average rate.

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 consolidated balance sheets with changes in fair value recognized in earnings within “Other non-operating income, net” on the consolidated statements of operations.

FAIR VALUE MEASUREMENTS

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

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

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

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023

1 unchanged sentence

Cash and cash equivalents Cash and cash equivalents $ 163,194 $ — $ —

Restricted cash Cash and cash equivalents 52,669 — —

Convertible loans Prepaid expenses and other current assets 657 — —

Restricted cash Restricted cash 152,068 — —

Convertible loans Other assets — — 4,115

Investments in equity securities Other assets 3,409 — —

Total $ 268,236 $ — $ 10,212

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

Contingent consideration Contingent consideration payable — — 8,220

Total $ — $ — $ 45,207

Investment in GLPI partnership Other assets — 14,146 —

Derivative assets designated as hedging instruments:

Interest rate contracts Prepaid expenses and other current assets — 5,356 —

Cross currency swaps Prepaid expenses and other current assets — 4,174 —

Cross currency swaps Other assets — 6,477 —

Total derivative assets at fair value — 16,007 —

Total assets $ 318,671 $ 30,153 $ 4,115

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

Derivative liabilities not designated as hedging instruments:

Sinclair Performance Warrants Commercial rights liabilities — — 44,703

Derivative liabilities designated as hedging instruments:

Interest rate contracts Other long-term liabilities — 21,492 —

Cross currency swaps Accrued liabilities — 1,225 —

Cross currency swaps Other long-term liabilities — 29,376 —

Total derivative liabilities at fair value — 52,093 44,703

Total liabilities $ — $ 52,093 $ 103,283

December 31, 2022

1 unchanged sentence

Cash and cash equivalents Cash and cash equivalents $ 212,515 $ — $ —

Restricted cash Cash and cash equivalents 68,647 — —

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

Restricted cash Restricted cash 52,669 — —

Convertible loans Prepaid expenses and other current assets 657 — —

Convertible loans Other assets — — 10,212

Total $ 280,921 $ — $ 2,025

Sinclair Performance Warrants Naming rights liabilities $ — $ — $ 69,564

Contingent consideration Contingent consideration payable — — 34,931

Total $ — $ — $ 104,495

Investments in equity securities Other assets 2,395 — —

Total assets $ 268,236 $ — $ 10,212

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

Derivatives not designated as hedging instruments:

Sinclair Performance Warrants Commercial rights liabilities — — 36,987

Total liabilities $ — $ — $ 45,207

There were no transfers made among the three levels in the fair value hierarchy for the years ended December 31, 2023 and 2022.

2 unchanged sentences

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

( in thousands) Performance Warrants Contingent Consideration Other Assets Total

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

Balance as of December 31, 2021 $ 69,564 $ 34,931 $ 2,025 $ 106,520

Additions in the period (acquisition fair value) — — 3,777 3,777

Reductions in the period — ( 15,862 ) — ( 15,862 )

Change in fair value ( 32,577 ) ( 10,849 ) 4,410 ( 39,016 )

7 unchanged sentences

(in thousands) 2023 2022 2021

Foreign exchange forward contracts Other non-operating expenses, net $ — $ ( 20,882 ) $ —

Sinclair Performance Warrants Other non-operating expenses, net 32,577 18,555 ( 32,878 )

Sinclair Options Other non-operating expenses, net — ( 1,526 ) ( 24,782 )

Foreign exchange forward contracts Other non-operating income (expense), net $ — $ — $ ( 20,882 )

Sinclair Performance Warrants Other non-operating income (expense), net ( 7,716 ) 32,577 18,555

Sinclair Options Other non-operating income (expense), net — — ( 1,526 )

Interest Rate Contracts 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 fair values of foreign exchange forward contract assets and liabilities 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.

The Company’s foreign exchange forward contracts were not designated as hedging instruments under ASC 815.

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

On April 16, 2021, a subsidiary of the Company entered into foreign exchange forward contracts to hedge the risk of appreciation of the British Pound Sterling (“GBP”)-denominated purchase price related to the Gamesys acquisition pursuant to which the subsidiary can purchase approximately £ 900 million at a contracted exchange rate and appreciation of both the GBP-denominated and Euro-denominated debt held by Gamesys which would be paid off at closing of the Gamesys acquisition pursuant to which the subsidiary can purchase £ 200 million and € 336 million, at contracted exchange rates, respectively.

To enter into these foreign exchange forward contracts, the Company paid total premiums to the contract counterparties of $ 22.6 million.

On August 20, 2021, two of the above mentioned foreign exchange forward contracts were modified, decreasing the notional amount of the GBP-denominated forward purchase commitments by £ 746 million to £ 354 million, collectively.

The Company received $ 1.7 million upon settlement of the modification, which decreased the remaining fair value of the contracts.

On October 1, 2021, the above mentioned foreign exchange forward contracts were discontinued as part of the acquisition of Gamesys.

The Company received $ 0.1 million at closing, which was reported within “Other non-operating expenses, net” on the consolidated statements of operations.

The company did not have any foreign exchange forward contracts outstanding as of December 31, 2022 and 2021.

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 consolidated statements of operations.

Sinclair Performance Warrants

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The Performance Warrants are valued using an option pricing model, considering the Company’s estimated probabilities of achieving the performance milestones for each tranche.

Inputs to this valuation approach include volatility of the Company’s common stock trading price, risk free interest rates, the Company’s common stock price as of the valuation date and expected terms.

Inputs to this valuation approach include volatility between 40 % and 67 %, risk free rates between 3.84 % and 4.79 %, the Company’s common stock price for each period and expected terms between 1.5 and 6.3 years.

The fair value is recorded within “Commercial rights liabilities” of the consolidated balance sheets.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Sinclair Options

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 December 31, 2023 and 2022, and is recorded within “Additional paid-in-capital” in the 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 Company’s acquisition of Monkey Knife Fight (“MKF”) and Telescope Inc.

(“Telescope”) which are included within the Company’s North America Interactive acquisitions in Note 6 “ Business Combinations ”, the Company recorded contingent consideration at fair value of $ 58.7 million as of the acquisition dates.

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

Contingent consideration related to acquisitions is 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 estimates.

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

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

In connection with the acquisitions of SportCaller and Monkey Knife Fight (“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 minimis 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

8 unchanged sentences

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

Investment in GLPI Partnership

The Company holds a limited partnership interest in GLP Capital, L.P., the operating partnership of GLPI.

The investment is reported at fair value based on Level 2 inputs, with changes to fair value included within “Other non-operating expenses, net” of the consolidated statements of operations.

Long-term debt

3 unchanged sentences

Refer to Note 16 “ Long-Term Debt ” for further information.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 December 31, 2022

5 unchanged sentences

719,858 570,544 732,976 529,905

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

ACCRUED LIABILITIES

1 unchanged sentence

(in thousands) 2023 2022

GLPI advance deposit (1)

$ 200,000 $ —

Gaming liabilities $ 177,557 $ 168,386

Diamond Sports Group non-cash liability (1)

Compensation 83,112 60,463

Interest payable 66,587 36,173

Bally’s Chicago - land development liability 47,739 —

GLPI advance deposit (2)

Other 131,841 108,909

1 unchanged sentence

__________________________________

(1) Refer to Note 22 “ Commitments and Contingencies ” for further information

(2) Refer to Note 17 “ Leases ” for further information

SINCLAIR AGREEMENT

On November 18, 2020, the Company and 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 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 $ 255.6 million and $ 311.7 million as of December 31, 2022 and 2021, respectively.

Amortization began on April 1, 2021, the commencement date of the re-branded Sinclair regional sports networks, and was $ 33.3 million and $ 25.7 million for the years ended December 31, 2022 and 2021, respectively.

STRATEGIC PARTNERSHIP - SINCLAIR BROADCAST GROUP

In 2020, the Company and Sinclair entered into a Framework Agreement (the “Framework Agreement”) providing for a long-term strategic relationship between Sinclair and the Company.

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

In March 2023, Diamond commenced reorganization proceedings under Chapter 11 of the Bankruptcy Code, and in July 2023, Diamond commenced litigation against Sinclair, Bally’s and others as part of its bankruptcy proceedings.

Subsequent to December 31, 2023, Diamond agreed to settle its claims against all defendants, including Bally’s.

Pursuant to the settlement terms, Diamond would receive payments from Sinclair and would reject the Commercial Agreement.

Bally’s would continue to have naming rights on Diamond’s RSNs through the 2024 major league baseball season at no cost to either party (unless Diamond agrees with a new counterparty that will pay for such naming rights).

Bally’s, in turn, would receive a release of all claims Diamond may have against it.

Separately, Bally’s and Sinclair agreed that their relative rights and obligations under the Framework Agreement and all agreements contemplated thereby would terminate, except for rights and obligations in respect of certain local broadcast television station integrations under the Commercial Agreement, and except for their respective rights and obligations under the Option Agreement (regarding the Options referenced below), the Warrant Agreement (regarding the Penny Warrants referenced below), the Performance Warrant Agreement (regarding the Performance Warrants referenced below), the Registration Rights Agreement, the Investor Rights Agreement and the Tax Receivable Agreement.

Bally’s obligation to pay Diamond for the naming rights terminated upon the bankruptcy court’s approval of the settlement terms, which the court approved on March 1, 2024.

Refer to Note 22 “Commitments and Contingencies” for further information.

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 $ 225.9 million and $ 255.6 million as of December 31, 2023 and 2022, respectively.

Amortization was $ 30.9 million, $ 33.3 million and $ 25.7 million for the years ended December 31, 2023, 2022 and 2021, 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 December 31, 2022 and 2021 was $ 59.3 million and $ 58.9 million, respectively.

The short-term portion of the liability, which was $ 6.0 million and $ 2.0 million as of December 31, 2022 and 2021, respectively, is recorded within “Accrued liabilities” and the long-term portion of the liability, which was $ 53.3 million and $ 56.9 million as of December 31, 2022 and 2021, respectively, is recorded within “Naming rights liabilities” in the consolidated balance sheets.

Accretion expense for the years ended December 31, 2022 and 2021 was $ 4.4 million and $ 4.3 million, respectively, and was reported in “Interest expense, net of amounts capitalized” in the consolidated statements of operations.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 accreted through interest expense through the termination date of the Commercial Agreement.

The total value of the liability as of December 31, 2023 and 2022 was $ 57.7 million and $ 59.3 million, respectively.

The short-term portion of the liability, which was $ 8.0 million and $ 6.0 million as of December 31, 2023 and 2022, respectively, is recorded within “Accrued liabilities” and the long-term portion of the liability, which was $ 49.7 million and $ 53.3 million as of December 31 2023 and 2022, respectively, is reflected as “Commercial rights liability” in our consolidated balance sheets.

Accretion expense reported in “Interest expense, net” in our consolidated statements of operations was $ 4.4 million, $ 4.4 million and $ 4.3 million for years ended December 31, 2023, 2022 and 2021.

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 New York Stock Exchange, which was obtained on January 27, 2021.

Penny Warrants & Options - The Penny Warrants and Options are equity classified instruments under 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 consolidated balance sheets, with an offset to the naming rights intangible asset.

The fair value of the Options was $ 59.7 million as of December 31, 2022 and 2021, and is recorded within “Additional paid-in capital” in the consolidated balance sheets.

Performance Warrants - 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.

The fair value as of December 31, 2022 and 2021 was $ 37.0 million and $ 69.6 million, respectively, and was calculated using an option pricing model, considering the Company’s estimated probabilities of achieving the performance milestones for each tranche.

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.

The fair value is recorded within “Naming Rights liabilities” of the consolidated balance sheets.

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 $ 19.4 million and $ 42.2 million as of December 31, 2022 and 2021, respectively, and is included in “Naming rights liabilities” in the consolidated balance sheets.

The change in value of the TRA liability, in the amount of $( 22.8 ) million and $( 0.8 ) million for the years ended December 31, 2022 and 2021, respectively, is included in “Other non-operating expenses, net” in the consolidated statements of operations.

The Penny Warrants and Options are equity classified instruments under 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 consolidated balance sheets, with an offset to the Commercial rights intangible asset.

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

Under the Framework Agreement, the Company is required to share 60 % of the tax benefit 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, was treated as an adjustment to the intangible asset.

The liability for these obligations was $ 19.1 million and $ 19.4 million as of December 31, 2023 and 2022, respectively, and is reflected in our consolidated balance sheets.

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

RESTRUCTURING EXPENSE

On January 18, 2023, the Company announced a restructuring 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 which included a reduction of the Company’s then current Interactive workforce by up to 15 percent.

In furtherance of and as an expansion of the January 2023 restructuring plan, on October 20, 2023, the Company announced further restructuring initiatives targeted at reshaping the technology utilized by its Interactive segments.

During the year ended December 31, 2023, the Company incurred restructuring charges of $ 31.0 million representing employee related severance costs as well as $ 5.7 million of impairment charges representing the impairment of certain technology which will no longer be utilized.

The components of restructuring charges by segment, for the year ended December 31, 2023, are summarized as follows:

International Interactive North America Interactive Other Total

Severance and employee related benefits (1)

$ 19,591 $ 9,735 $ 1,688 $ 31,014

Impairment (2)

— 5,745 — 5,745

Total restructuring charges $ 19,591 $ 15,480 $ 1,688 $ 36,759

__________________________________

(1) Included within “General and administrative” of the consolidated statements of operations.

(2) Included within “Impairment charges” of the consolidated statements of operations.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The changes in the Company’s restructuring related liabilities for the year ended December 31, 2023 is as follows:

(in thousands)

Balance as of December 31, 2022 $ —

Charges 31,014

Payments ( 26,649 )

Effect of foreign exchange 926

Balance as of December 31, 2023

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

LONG-TERM DEBT

2 unchanged sentences

Term Loan Facility (1)

$ 1,906,100 $ 1,925,550

Revolving Credit Facility 335,000 137,000

9 unchanged sentences

excluding current portion $ 3,643,185 $ 3,469,105

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

__________________________________

(1) The Company has a series of interest rate and cross currency swap derivatives to synthetically convert $ 500.0 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.

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

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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 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.

3 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.

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

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

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

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The credit facilities contain covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional indebtedness, pay dividends or make certain other restricted payments, sell assets, make certain investments and grant liens.

1 unchanged sentence

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

As of December 31, 2023, the Company was in compliance with all such covenants.

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 second half of 2023.

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

6.75 % Senior Notes due 2027

3 unchanged sentences

In connection with the termination of a prior credit agreement and the 2027 Notes, the Company recorded a loss on extinguishment of debt of $ 103.0 million in its consolidated statements of operations during the year ended December 31, 2021.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt Maturities

2 unchanged sentences

2024 $ 19,450

2028 1,828,300

Thereafter 1,485,000

2 unchanged sentences

Certain leases include various renewal options which are included in the lease term when the Company has determined it is reasonably certain of exercising the options.

Certain of these leases include percentage rent payments based on property revenues and/or rent escalation provisions determined by increases in the consumer price index (“CPI”).

Certain of these leases include percentage rent payments based on property revenues and/or rent escalation provisions determined by increases in the CPI.

These percentage rent and escalation provisions are treated as variable lease payments and recognized as lease expense in the period in which the obligation for those payments are incurred.

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 $ 836.1 million and $ 531.0 million as of December 31, 2022 and 2021, respectively, and right of use assets of $ 808.9 million and $ 507.8 million as of December 31, 2022 and 2021, respectively, which were included in the consolidated balance sheets.

As of December 31, 2022, the Company’s Bally’s Evansville, Bally’s Dover, Bally’s Quad Cities and Bally’s Black Hawk properties are leased under the terms of a master lease agreement (the “Master Lease”) with GLPI.

The Company had total operating lease liabilities of $ 1.20 billion and $ 836.1 million as of December 31, 2023 and 2022, respectively, and right of use assets of $ 1.16 billion and $ 808.9 million as of December 31, 2023 and 2022, respectively, which were included in the consolidated balance sheets.

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

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.

1 unchanged sentence

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

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with the sale of the real estate for Bally’s Dover in the second quarter of 2021, the Company received proceeds of $ 144.0 million and recognized a net gain of $ 53.4 million.

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.

The gains recorded on the transactions represent the difference in the respective transaction prices and the derecognition of assets and are recorded within “General and administrative” in the consolidated statements of operations.

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

The gains recorded on the transactions represent the difference in the respective transaction prices and the derecognition of assets and are recorded within “Gain from sale-leaseback, net” in the consolidated statements of operations.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On January 3, 2023, the Company completed a transaction with GLP Capital, L.P., the operating partnership of GLPI, related to the land and real estate assets of Bally’s Tiverton and Hard Rock Biloxi for total consideration of $ 625.4 million.

The transaction was structured as a tax-free capital contribution and a substantial portion of the proceeds was used to reduce the Company’s debt.

These properties were added to the Master Lease, increasing minimum annual payments by $ 48.5 million.

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 consolidated balance sheets as of December 31, 2022.

During the year ended December 31, 2023, the Company recorded a gain of $ 374.3 million representing the difference in the transaction price and the derecognition of assets.

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

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 December 31, 2023.

The transaction was structured as a tax-free capital contribution and a substantial portion of the proceeds will be applied to reduce the Company’s debt.

These properties will be added to the Master Lease, increasing minimum annual payments by $ 48.5 million.

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

Components of lease expense included within “General and administrative” for operating leases during the years ended December 31, 2023, 2022 and 2021 are as follows:

5 unchanged sentences

Short-term lease expense 13,249 17,536 11,746

Total operating lease expense $ 101,597 $ 52,291 $ 5,470

Total lease expense $ 171,984 $ 101,597 $ 52,291

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

12 unchanged sentences

Lease obligations $ 1,203,249

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 CONSOLIDATED FINANCIAL STATEMENTS

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

The table above does not include $ 18.1 million of payments for leases signed but not yet commenced as of December 31, 2022.

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 consolidated balance sheets as of December 31, 2023 and 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 $ 2.0 million during the year ended December 31, 2022.

Bally’s Chicago made cash payments, and recorded corresponding interest expense, of $ 17.4 million and $ 2.0 million during the years ended December 31, 2023 and 2022, respectively.

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

1 unchanged sentence

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

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

Equity Incentive Plans

The Company has three equity incentive plans:

the 2010 BLB Worldwide Holdings, Inc.

Stock Option Plan (the “2010 Option Plan”), the 2015 Stock Incentive Plan (“2015 Incentive Plan”) and the Bally’s Corporation 2021 Equity Incentive Plan (“2021 Incentive Plan”), collectively (the “Equity Incentive Plans”).

The 2010 Option Plan provided for options to acquire 2,455,368 shares of the Company’s common stock.

Options granted to employees, officers and directors of the Company under the 2010 Option Plan vested on various schedules by individual as defined in the individual participants’ option agreements.

Vested options can generally be exercised all or in part at any time until the tenth anniversary of the date of grant.

Effective December 9, 2015, it was determined that no new awards would be granted under the 2010 Option Plan.

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

As of December 31, 2023, the Company has two equity incentive plans:

the 2015 Stock Incentive Plan (“2015 Incentive Plan”) and the Bally’s Corporation 2021 Equity Incentive Plan (“2021 Incentive Plan”), collectively (the “Equity Incentive Plans”).

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

The 2015 Incentive Plan authorized for the issuance of up to 1,700,000 shares of the Company’s common stock pursuant to grants of awards made under the plan.

7 unchanged sentences

As of December 31, 2023, there was $ 17.0 million of unrecognized compensation cost related to outstanding share-based compensation arrangements (including stock options, RSA, RSU and PSU arrangements) which is expected to be recognized over a weighted average period of 1.9 years.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock Options

Stock option activity under the 2010 Option Plan for the year ended December 31, 2022 is as follows:

Shares Weighted

Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value

Outstanding at December 31, 2021 20,000 $ 4.31 1.9 years $ 0.7 million

Exercised ( 20,000 ) $ 4.31

Outstanding at December 31, 2022 —

Exercisable at December 31, 2022 — $ — $ — $ —

There were no stock options granted during the years ended December 31, 2022, 2021 or 2020.

The total intrinsic value of options exercised was $ 0.6 million, $ 3.4 million and $ 0.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

There was no remaining compensation cost relating to unvested stock options as of December 31, 2022, 2021 or 2020.

Restricted Stock Units and Performance-Based Restricted Stock Units

5 unchanged sentences

The fair value of RSUs and PSUs is based on the Company’s common stock price as of the grant date.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following summary presents information of equity-classified RSU and PSU activity for the year ended December 31, 2023:

10 unchanged sentences

For PSU awards, performance objectives for each year are established no later than 90 days following the start of the year.

As the performance targets have not yet been established for the PSUs that are eligible to be earned in 2023, a grant date has not yet been established for those awards in accordance with ASC 718.

As the performance targets have not yet been established for the PSUs that are eligible to be earned in 2024 or later, a grant date has not yet been established for those awards in accordance with ASC 718.

The grant date for the 2023, 2022, and 2021 performance periods have been established and, based upon achievement of the performance criteria for the years ended December 31, 2023, 2022, and 2021, 348,835 , 62,133 and 29,995 PSUs, respectively, became eligible for vesting.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On December 30, 2020, the Company issued OSBAs in the form of immediately vested common stock to eligible employees, members of the Company’s senior management and certain members of its Board of Directors under the 2015 Incentive Plan.

These OSBAs were awarded in recognition of the strategic accomplishments of individuals and the Company as a whole for fiscal 2020 in lieu of potential cash incentive compensation.

The Company elected to utilize stock as a form of compensation in an effort to preserve liquidity for the Company in light of COVID-19 and its impact on operations.

Total net shares awarded on December 30, 2020 were 131,046 and the associated expense recognized was $ 6.3 million for the year ended December 31, 2020.

STOCKHOLDERS’ EQUITY

17 unchanged sentences

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

During the year ended December 31, 2020, the Company paid cash dividends of $ 0.10 per common share for a total cost of approximately $ 3.2 million.

There were no cash dividends paid during the years ended December 31, 2023, 2022, and 2021.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Common Stock Offering

9 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Shares Outstanding

6 unchanged sentences

MKF Penny warrants (Note 12)

MKF Contingent shares (Note 11)

Telescope Contingent shares (Note 12)

SportCaller contingent shares (4) (Note 11)

Outstanding awards under Equity Incentive Plans (Note 18)

__________________________________

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

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

For purposes of this estimate, the Company used the EUR>US Dollar conversion rate of 1.0666 as of December 31, 2022 and the closing share price of Company common shares of $ 19.38 per share to calculate the shares expected to be issued if all earn-out targets are met.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accumulated Other Comprehensive Income (Loss)

The following table reflects the change in accumulated other comprehensive loss by component, net of tax, for the years ended December 31, 2022, 2021 and 2020:

(in thousands) Foreign Currency Translation Adjustments Defined Benefit Pension Plan Total

Accumulated other comprehensive loss at December 31, 2019 $ — $ ( 1,888 ) $ ( 1,888 )

Current period other comprehensive loss — ( 1,256 ) ( 1,256 )

The following table reflects the change in accumulated other comprehensive loss by component for the years ended December 31, 2023, 2022 and 2021:

(in thousands) Foreign Currency Translation Adjustment Benefit Plans Cash Flow Hedges (1)

Net Investment Hedges Total

Accumulated other comprehensive loss at December 31, 2020 $ — $ ( 3,144 ) $ — $ — $ ( 3,144 )

Current period other comprehensive income (loss) ( 25,833 ) 2,064 ( 23,769 )

Reclassification adjustments to net earnings — 104 104

Other comprehensive income (loss) before reclassifications ( 25,833 ) 3,040 — — ( 22,793 )

Reclassifications from accumulated other comprehensive income (loss) to earnings — 104 — — 104

Tax effect — ( 976 ) — — ( 976 )

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

Current period other comprehensive income (loss) ( 270,151 ) 1,320 ( 268,831 )

Other comprehensive income (loss) before reclassifications ( 270,151 ) 1,911 — — ( 268,240 )

Tax effect — ( 591 ) — — ( 591 )

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

Other comprehensive income (loss) before reclassifications 118,781 977 ( 14,183 ) ( 18,116 ) 87,459

Reclassifications from accumulated other comprehensive income (loss) to earnings — — ( 1,953 ) ( 1,350 ) ( 3,303 )

Effects of settlement (Note 20)

— ( 244 ) — — ( 244 )

Tax effect — ( 191 ) 4,890 ( 2,529 ) 2,170

Accumulated other comprehensive income (loss) at December 31, 2023 $ ( 177,203 ) $ 886 $ ( 11,246 ) $ ( 21,995 ) $ ( 209,558 )

__________________________________

(1) As of December 31, 2023, approximately $ 5.0 million of existing gains and losses are estimated to be reclassified into earnings within the next 12 months.

EMPLOYEE BENEFIT PLANS

5 unchanged sentences

• If the Company chooses to stop participating in some of its multi-employer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table outlines the Company’s participation in multi-employer pension plans for the years ended December 31, 2023, 2022 and 2021 and sets forth the calendar year contributions and accruals for each plan.

5 unchanged sentences

As of December 31, 2023 and 2022, all plans that have either a FIP or RP requirement have had the respective plan implemented.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Plan Number Pension Protection Act

4 unchanged sentences

SEIU National Industry Pension Fund 52-6148540 Red Red Yes/Implemented $ 562 $ 495 $ 460 No 4/30/2025

New England Carpenters Pension Fund (1)

51-6040899 Green Green No 95 75 91 No 5/31/2024

Plumbers and Pipefitters Pension Fund (4)

52-6152779 Yellow Yellow Yes/Implemented 267 175 171 No 8/31/2022

Rhode Island Laborers Pension Fund (4)

51-6095806 Green Green No 656 671 483 No 10/31/2022

New England Carpenters Pension Fund 51-6040899 Green Green No 138 95 75 No 5/31/2024

Plumbers and Pipefitters Pension Fund 52-6152779 Green Yellow No 277 267 175 No 8/30/2026

Rhode Island Laborers Pension Fund 51-6095806 Green Green No 597 656 671 No 10/31/2025

New England Teamsters Pension Fund 04-6372430 Red Red Yes/Implemented 298 278 254 No 6/30/2028

5 unchanged sentences

Northeast Carpenters Pension Fund 11-1991772 Green Green No 94 127 122 No 4/30/2027

International Painters and Allied Trades Industry Pension Fund 52-6073909 Yellow Yellow Yes/Implemented 82 80 5 No 4/30/2027

International Painters and Allied Trades Industry Pension Fund 52-6073909 Red Yellow No 68 82 80 No 4/30/2027

Total Contributions $ 3,337 $ 3,249 $ 3,425

__________________________________

(1) Effective January 1, 2018, the Rhode Island Carpenters Pension Fund (05-6016572) merged into the New England Carpenters Pension Fund.

(1) The Plan is not subject to the Pension Protection Act of 2016 zone status certification rule.

1 unchanged sentence

Unions at Bally’s Twin River and Bally’s Atlantic City participate in the UNITE HERE Retirement funds.

(4) Union contract under negotiation as of 12/31/2022.

Contributions, based on wages paid to covered employees totaled approximately $ 3.3 million, $ 3.2 million and $ 3.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

5 unchanged sentences

Contributions made to these plans by the Company were $ 2.8 million , $ 2.6 million and $ 2.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dover Downs Defined Benefit Pension Plan

2 unchanged sentences

The Company did not make any contributions to the plan during the year ended December 31, 2023 and does not expect to contribute in 2024.

Net periodic benefit income and total income recognized in other comprehensive loss for the year ended December 31, 2022 were $ 1.0 million and $ 1.9 million, respectively.

Net periodic benefit income and total income recognized in other comprehensive income for the year ended December 31, 2023 were $ 0.3 million and $ 0.7 million, respectively.

Amounts relating to the plan recognized in the consolidated balance sheets as of December 31, 2023 and 2022 consist of non-current liabilities of $ 0.5 million and $ 1.8 million, respectively.

During the year ended December 31, 2023, a settlement was recognized under the Dover Downs Defined Benefit Pension Plan as the total amount of lump sum benefit payments was greater than the sum of the service and interest costs for the fiscal year.

The settlement reduced the Company’s benefit obligation by $ 3.4 million and reduced total income recognized in other comprehensive income for the year by $ 0.2 million.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Defined Contribution Plans

10 unchanged sentences

Total $ ( 185,738 ) $ ( 454,469 ) $ ( 119,074 )

The components of the provision for income taxes are as follows:

The components of the provision (benefit) for income taxes are as follows:

Years Ended December 31,

10 unchanged sentences

( 23,923 ) ( 88,129 ) ( 5,217 )

(Benefit) Provision for income taxes $ ( 28,923 ) $ ( 4,377 ) $ ( 69,324 )

Provision (benefit) for income taxes $ 1,762 $ ( 28,923 ) $ ( 4,377 )

BALLY’S CORPORATION

17 unchanged sentences

Change in valuation allowance 94,870 60,073 —

Total (benefit) provision for income taxes $ ( 28,923 ) $ ( 4,377 ) $ ( 69,324 )

Total provision (benefit) for income taxes $ 1,762 $ ( 28,923 ) $ ( 4,377 )

Effective income tax rate on continuing operations ( 0.9 ) % 6.4 % 3.7 %

6 unchanged sentences

Share-based compensation 7,818 1,699

Naming rights liabilities 29,248 43,298

Commercial rights liabilities 31,376 29,248

Self constructed assets — 5,690

8 unchanged sentences

Change in accounting method ( 280 ) ( 73 )

Goodwill — ( 12,544 )

RI Joint Venture and GLPI Partnership ( 108,598 ) —

Amortizable assets ( 83,118 ) ( 140,229 )

5 unchanged sentences

The Company has assessed its deferred tax liabilities arising from taxable temporary differences and has concluded such liabilities are not a sufficient source of income for the realization of deferred tax assets, including indefinite life taxable temporary differences which offset, subject to limitation, deferred tax assets with unlimited carryovers, such as the Section 163(j) interest limitation.

Accordingly, a $ 60.1 million valuation allowance has been established as of December 31, 2022.

There was no valuation allowance established as of December 31, 2021.

The change in valuation allowance for the year ended December 31, 2022 was $ 60.1 million.

There was no change in valuation allowance for the years ended December 31, 2021 and 2020.

Accordingly, a $ 154.9 million and $ 60.1 million valuation allowance has been established as of December 31, 2023 and 2022, respectively.

The change in valuation allowance for the years ended December 31, 2023 and 2022 was $ 94.9 million and $ 60.1 million, respectively.

There was no change in valuation allowance for the year ended December 31, 2021.

At December 31, 2023, the Company’s cash and cash equivalents totaled $ 163.2 million, of which approximately 10 % was held in locations outside the US.

During the year, the Company changed its assertion and will not indefinitely reinvest undistributed earnings.

Accordingly, the Company has determined that no deferred tax liability is required for undistributed foreign earnings at December 31, 2022 and will continue to monitor for future changes.

For the years ended December 31, 2022 and 2021 the net deferred tax liabilities decreased by $ 90.1 million and increased by $ 165.6 million, respectively.

For the year ended December 31, 2022, a decrease of $ 88.1 million was included in income from operations and a decrease of $ 2.0 million was included in other comprehensive loss.

For the year ended December 31, 2021, a decrease of $ 5.2 million was included in income from operations, an increase of $ 169.8 million was acquired from business combinations in 2021, and a decrease of $ 1.0 million was included in other comprehensive loss.

During the year ended December 31, 2022, the Company changed its assertion and will not indefinitely reinvest undistributed earnings.

Accordingly, the Company has determined that no deferred tax liability is required for undistributed foreign earnings at December 31, 2023 and 2022 and will continue to monitor for future changes.

For the years ended December 31, 2023 and 2022 the net deferred tax liabilities decreased by $ 22.9 million and decreased by $ 90.1 million, respectively.

For the year ended December 31, 2023, a decrease of $ 23.9 million was included in income from operations, a decrease related to the foreign exchange remeasurement of $1.2 million, and offset by an increase of $ 2.2 million included in other comprehensive loss.

For the year ended December 31, 2022, a decrease of $ 88.1 million was included in income from operations, a decrease related to the foreign exchange remeasurement of $1.4 million and a decrease of $ 0.6 million included in other comprehensive loss.

As of December 31, 2023, the Company has $ 25.4 million of federal net operating carryforwards subject to a section 382 limitation with an unlimited carryforward period.

There was $ 9.1 million of federal net operating carryforwards subject to a section 382 limitation with an unlimited carryforward period as of December 31, 2022.

As of December 31, 2022 and December 31, 2021, the Company had $ 174.5 million and $ 92.4 million of state net operating loss carryforwards, respectively, which expire at various dates through 2041.

As of December 31, 2023 and 2022, the Company had $ 310.3 million and $ 174.5 million of state net operating loss carryforwards, respectively, which expire at various dates through 2041.

The Internal Revenue Code (IRC) Section 382 provides for a limitation of the annual use of net operating loss and tax credit carryforwards following certain ownership changes (as defined by the IRC Section 382) that limits the Company’s ability to utilize these carryforwards prior to expiration.

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the employee retention credit, providing a refundable federal tax credit equal to 50% of the first $10,000 of qualified wages and benefits, including qualified medical plan contributions, paid to employees while they are not performing services after March 12, 2020 and before January 1, 2021.

The Company realized a tax benefit of $ 5.3 million and $ 33.3 million in the years ended December 31, 2021 and 2020, respectively.

The Company realized no tax benefit in the year ended December 31, 2022.

The Company realized a tax benefit of $ 5.3 million in the year ended December 31, 2021.

The Company realized no tax benefit during the years ended December 31, 2023 and 2022.

The Company intends to continue to review and consider any available potential benefits under the CARES Act for which it qualifies, including those described above.

6 unchanged sentences

This can give rise to tax uncertainties which, upon audit, may not be resolved in the Company’s favor.

There was an acquired tax contingency accrual of $ 5.1 million for uncertain tax positions recorded as of December 31, 2021.

There was no unrecognized tax benefit recorded as of December 31, 2020.

As of December 31, 2023, there was $ 29.3 million tax contingency accruals and deferred tax asset reductions for uncertain tax positions, of which $ 25.7 million would impact the effective tax rate, if recognized.

2 unchanged sentences

Uncertain tax position liability at the beginning of the year $ 11,277 $ 5,131 $ —

Increases related to tax positions taken during the year 18,009 — —

Increases related to tax positions taken during prior period — 11,277 5,131

1 unchanged sentence

Uncertain tax position liability at the end of the year $ 29,286 $ 11,277 $ 5,131

__________________________________

(1) There was an acquired tax contingency accrual of $ 5.1 million for uncertain tax positions recorded as of December 31, 2021.

It is reasonably possible that the Company’s unrecognized tax benefits could change in the next twelve months, however the Company is unable to estimate a range at this time.

The Company records interest and penalties related to uncertain tax positions as a component of the income tax provision (benefit).

The Company has reserved interest and penalties on uncertain tax positions of $ 0.1 million as of December 31, 2022.

The Company has not reserved interest and penalties on uncertain tax positions as of December 31, 2021.

The Company has recorded $ 0.1 million of interest on uncertain tax positions on the statement of operations for the year ended December 31, 2022.

There was no interest on uncertain tax positions recorded in the statement of operations for the years ended December 31, 2021 and 2020.

The Company has reserved interest and penalties on uncertain tax positions of $ 0.7 million and $ 0.1 million as of December 31, 2023 and 2022, respectively.

The Company has recorded $ 0.6 million and $ 0.1 million of interest on uncertain tax positions on the consolidated statements of operations for the years ended December 31, 2023 and 2022, respectively.

The Company and its subsidiaries file tax returns in several jurisdictions including the US and various US state and foreign jurisdictions.

4 unchanged sentences

In addition, the disallowance of a loss carryforward generated in a period outside of the normal statute of limitations is generally open until the statute of limitations expires in the year of the utilization of the loss.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 against Sinclair, Bally’s and others 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 Commercial Agreement with Sinclair involved fraudulent transfers and unlawful distributions.

Subsequent to December 31, 2023, Diamond agreed to settle these claims against all defendants, including Bally’s.

Under the settlement terms, Diamond would receive payments from Sinclair and would reject the Commercial Agreement.

Bally’s, in turn, would receive a release of all claims Diamond may have against it.

Bally’s obligation to pay Diamond for the naming rights terminated upon the bankruptcy court’s approval of the settlement terms, which the court approved on March 1, 2024.

Bally’s recognized a $ 144.9 million non-cash liability to reflect the net effect of the termination of naming rights on its remaining commercial rights intangible asset originally recorded at the time that the arrangement was agreed.

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.

6 unchanged sentences

The Tiverton Casino Hotel contract was automatically assigned, pursuant to Rhode Island law, from Newport Grand to Tiverton Casino Hotel upon commencement of gaming operations at the Tiverton Casino Hotel.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with the Company’s joint venture with International Game Technology PLC (“IGT”) a joint venture was organized as the Rhode Island VLT Company, LLC to supply the State of Rhode Island with all VLTs at both Bally’s Twin River and Bally’s Tiverton.

Under the transaction agreement for the joint venture, dated December 21, 2022, the Company has agreed to pay $ 7.5 million to an affiliate of IGT, payable in two equal parts on or before June 15, 2023 and 2024, respectively.

In connection with the Company’s joint venture with IGT, a joint venture was organized as the Rhode Island VLT Company, LLC to supply the State of Rhode Island with all VLTs at both Bally’s Twin River and Bally’s Tiverton.

Under the transaction agreement for the joint venture, dated December 21, 2022, the Company has agreed to pay $ 7.5 million to an affiliate of IGT, payable in two equal parts, the first was paid in the first half of 2023 and the second will be payable on or before June 15, 2024.

Capital Expenditure Commitments

Bally’s Atlantic City - As part of the regulatory approval process with the State of New Jersey, the Company committed to spend $ 100 million in capital expenditures over a five year period to invest in and improve the property.

The commitment calls for expenditures of no less than $ 25 million each in 2021, 2022 and 2023 and $ 85 million in aggregate for 2021, 2022 and 2023.

The commitment calls for expenditures of no less than $ 85 million in aggregate by 2023.

The remaining $ 15 million of committed capital must be spent over 2024 and 2025.

From 2021 through 2025, no less than $ 35 million must be invested in the hotel and no less than $ 65 million must be invested in non-hotel projects.

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

As of December 31, 2023, approximately $ 7.7 million of the commitment remains.

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

As of December 31, 2023, approximately $ 64 million of the commitment remains.

Bally’s Chicago - Pursuant to the Host Community Agreement with the City of Chicago, the Company’s indirect subsidiary is required to spend at least $ 1.34 billion on the design, construction and outfitting of the temporary casino and the permanent resort and casino.

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

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

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

City of Chicago Guaranty

In connection with the host community agreement, signed by Bally’s Chicago Operating Company, LLC (the “Developer”), a wholly-owned indirect subsidiary of the Company, the Company provided the City of Chicago with a performance guaranty whereby the Company agreed to have and maintain available financial resources in an amount reasonably sufficient to allow the Developer to complete its obligations under the host community agreement.

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

In connection with the Host Community Agreement, entered into by Bally’s Chicago Operating Company, LLC (the “Developer”), a wholly-owned indirect subsidiary of the Company, the Company provided the City of Chicago with a performance guaranty whereby the Company agreed to have and maintain available financial resources in an amount reasonably sufficient to allow the Developer to complete its obligations under the Host Community Agreement.

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

Bally’s Chicago Casino Fees

Under the Illinois Gambling Act, the Company must pay various gaming license fees to the Illinois Gaming Board in connection with the Company’s casino operations.

These fees include:

(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, which triggered $ 135.3 million in such required gaming license fees to be paid to the Illinois Gaming Board.

Sponsorship Commitments

The Company has entered into several sponsorship agreements, totaling $ 83.3 million over 15 years, with various professional sports leagues and teams, allowing the Company use of official league marks for branding and promotions, among other rights.

As of December 31, 2023, the Company has entered into multiple sponsorship agreements with various professional sports leagues and teams.

These agreements commit a total of $ 135.0 million through 2036 and grant the Company rights to use official league marks for branding and promotions, among other benefits.

Interactive Technology Commitments

The Company has certain multi-year agreements with its various market access and content providers, as well as its online sports betting platform partners, that require the Company to pay variable fees based on revenue, with minimum annual guarantees.

The cumulative minimum obligation committed in these agreements is approximately $ 55.4 million, beginning in 2024, and extending through 2028.

Collective Bargaining Agreements

2 unchanged sentences

As of such date, the Company had 32 collective bargaining agreements covering approximately 3,040 employees.

All collective bargaining agreements are in good standing and have been renegotiated for a three or five year term.

All collective bargaining agreements are in good standing and most have been renegotiated with terms between three and five years.

There can be no assurance that we will be able to extend or enter into replacement agreements.

2 unchanged sentences

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.

During the first quarter of 2022, the Company changed its methodology for allocating certain corporate operating expenses within general and administrative expense previously reported in “Other” to directly apply such costs to the segment supported.

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

The Company’s three reportable segments as of December 31, 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.

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

International Interactive - Gamesys’ European and Asian operations.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

As of December 31, 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 25 % and 12 % of total revenue, respectively, during the year ended December 31, 2022, and approximately 11 % and 6 %, respectively, for the year ended December 31, 2021.

Revenue generated from the UK and Japan represented approximately 25 % and 11 %, 25 % and 12 %, and 11 % and 6 % of total revenue, respectively, during the year ended December 31, 2023, 2022 and 2021, respectively.

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 loss.

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

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31,

1 unchanged sentence

Casinos & Resorts $ 1,363,291 $ 1,227,563 $ 1,032,828

North America Interactive 81,700 38,352 —

International Interactive 973,210 946,442 251,263

North America Interactive 112,572 81,700 38,352

Total $ 2,449,073 $ 2,255,705 $ 1,322,443

Adjusted EBITDA (1)

Adjusted EBITDAR (1)

Casinos & Resorts $ 428,968 $ 398,930 $ 345,276

North America Interactive ( 65,729 ) ( 12,413 ) —

International Interactive 343,559 321,651 69,944

North America Interactive ( 55,653 ) ( 65,729 ) ( 12,413 )

Other ( 63,770 ) ( 53,024 ) ( 45,334 )

Total 653,104 601,828 357,473

Operating income (expense)

Operating income (costs) and (expenses):

Rent expense associated with triple net operating leases (2)

( 125,775 ) ( 53,313 ) ( 27,571 )

Depreciation and amortization ( 350,408 ) ( 300,559 ) ( 144,786 )

Transaction costs ( 80,376 ) ( 85,604 ) ( 84,543 )

Restructuring ( 31,014 ) — —

Share-based compensation ( 24,074 ) ( 27,912 ) ( 20,143 )

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

Gain from sale-leaseback, net 374,321 50,766 53,425

Impairment charges ( 149,825 ) ( 463,978 ) ( 4,675 )

Diamond Sports Group non-cash liability ( 144,883 ) — —

Other ( 17,061 ) ( 14,236 ) ( 35,798 )

(Loss) income from operations ( 293,008 ) 93,382 ( 18,386 )

Income (loss) from operations 104,009 ( 293,008 ) 93,382

Other income (expense)

2 unchanged sentences

Total other expense, net ( 289,747 ) ( 161,461 ) ( 212,456 )

Loss before provision for income taxes ( 454,469 ) ( 119,074 ) ( 74,811 )

Benefit for income taxes 28,923 4,377 69,324

$ ( 425,546 ) $ ( 114,697 ) $ ( 5,487 )

Loss before income taxes ( 185,738 ) ( 454,469 ) ( 119,074 )

(Provision) benefit for income taxes ( 1,762 ) 28,923 4,377

Net loss $ ( 187,500 ) $ ( 425,546 ) $ ( 114,697 )

__________________________________

(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 and other transaction related costs, 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.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(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 17 “ Leases ” for further information.

Years Ended December 31,

2 unchanged sentences

Casinos & Resorts $ 143,526 $ 183,693 $ 92,479

North America Interactive 6,635 172 —

International Interactive 2,462 12,392 4,166

North America Interactive 1,986 6,635 172

Other 163,509 9,536 708

Total $ 311,483 $ 212,256 $ 97,525

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

As of December 31, 2022, the Company’s long-lived assets located outside of the US, consisting primarily of goodwill and intangible assets, were aggregated into the International Interactive reporting segment as disclosed in Note 10 “Goodwill and Intangible Assets.” Over 98 % of property and equipment is located within the US.

EARNINGS (LOSS) PER SHARE

As of December 31, 2023, over 98 % of the Company’s long-lived assets, consisting primarily of property and equipment, are located within the US.

LOSS PER SHARE

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

14 unchanged sentences

For the years ended December 31, 2023, 2022 and 2021, the shares underlying the Performance Warrants were anti-dilutive as certain contingencies were not met.

Refer to Note 13 “ Sinclair Agreement ” for further information.

Refer to Note 14 “Strategic Partnership - Sinclair Broadcast Group” for further information.

SUBSEQUENT EVENTS

On January 3, 2023, the Company completed a transaction for its Bally’s Tiverton and Hard Rock Biloxi properties.

Refer to Note 15 “ Leases ” for further information.

On January 5, 2023, the Company acquired BACA Limited, (“Casino Secret”) a European based, online casino with one of the fastest growing brands in the market, for approximately € 43.9 million.

Due to the timing of the acquisition, the initial purchase accounting is incomplete.

The Company will complete its initial allocation of purchase price to total net assets acquired in the first quarter of 2023.

The results of Casino Secret will be reported within the Company’s International Interactive segment.

The Company estimates that it will incur between $ 10 million to $ 15 million in charges in connection with the restructuring plan representing cash severance costs which the Company expects to incur in the first quarter of 2023.

BALLY’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On January 29, 2024, the Company announced that it will cease its operations at the Tropicana Las Vegas on April 2, 2024 in order to redevelop the site with a state-of-the-art integrated resort and ballpark.

As a result of the closure, the Company expects to incur between $ 15 million to $ 20 million of severance charges and accelerated depreciation of approximately $ 80 million, during the first quarter of 2024.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data