What changed in this filing

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Item 9A. Controls and Procedures

2024-03-15 compared with 2023-03-01 · 71 added, 47 removed, 256 unchanged (32% of the section changed)

2 unchanged sentences

Our management, with the participation of our chief executive officer (principal executive officer) and chief financial officer (principal financial officer), conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the year ended December 31, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Based on this evaluation, our chief executive officer and chief financial officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective.

Refer to the below for a discussion of the Company’s remediation of previously reported material weaknesses.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Based on this evaluation, our chief executive officer and chief financial officer have concluded that during the period covered by this report, the Company’s disclosure controls and procedures were not effective due to material weaknesses in the Company’s internal control over financial reporting described below.

Notwithstanding the ineffective disclosure controls and procedures as a result of the identified material weaknesses, our chief executive officer and chief financial officer have concluded that the consolidated financial statements in this Annual Report on Form 10-K present fairly, in all material respects, the Company’s financial position, results of operations and cash flows in accordance with generally accepted accounting principles in the United States of America (U.S.

Management’s Report on Internal Control over Financial Reporting

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Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023.

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013).

The Company completed its acquisition of Tropicana Las Vegas on September 26, 2022 and has not yet fully incorporated the internal controls and procedures of Tropicana Las Vegas into the Company’s internal control over financial reporting.

Therefore, management excluded Tropicana Las Vegas from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022.

This acquisition constituted approximately $326.8 million, or 5.2%, of the Company’s total consolidated assets, and approximately $24.1 million, or 1.1%, of the Company’s consolidated revenues as of and for the year ended December 31, 2022.

Based on our assessment, management believes that, as of December 31, 2022, the Company’s internal control over financial reporting is effective based on these criteria.

In making this assessment, management used the criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“the COSO framework”).

Based on evaluation under the criteria established in the COSO framework, management determined, based upon the existence of the material weaknesses described below, we did not maintain effective internal control over financial reporting as of the December 31, 2023.

During the year ended December 31, 2023, the Company completed its acquisition of Bally’s Golf Links and has not yet fully incorporated the internal controls and procedures of this acquisition into the Company’s internal control over financial reporting.

Therefore, management excluded Bally’s Golf Links from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023.

Bally’s Golf Links constituted approximately $115 million, or 2%, of the Company’s total consolidated assets, and approximately $1 million, or 0.1%, of the Company’s consolidated revenues as of and for the year ended December 31, 2023.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

Material Weaknesses Identified

Control Environment

• We have an insufficient number of personnel with the appropriate level of accounting knowledge, training and experience to appropriately analyze, record and disclose significant and complex accounting and tax matters timely and accurately.

Specifically, the control owners did not perform adequate reviews of all available evidence and appropriately challenge assumptions used in certain estimates including litigation losses, impairment of indefinite-lived intangible assets, goodwill and other long-lived assets, and income taxes.

These material weaknesses described above resulted in adjustments which were identified and corrected in connection with the completion of the audit for the year ended December 31, 2023.

Control Activities

• We lack segregation of duties over the preparation, review, and recording of journal entries within our International Interactive reportable segment.

The failure to maintain appropriate segregation of duties has a pervasive impact and consequently, this deficiency impacts control activities over all financial statement account balances, classes of transactions, and disclosures within the International Interactive reportable segment.

• We did not effectively review account reconciliation and account analysis controls, including the controls to validate the completeness and accuracy of information used in the performance of those controls, at our International Interactive reportable segment.

The failure to operate effective controls over account reconciliations and account analyses has a pervasive impact and consequently, this deficiency impacts control activities over all financial statement account balances, classes of transactions, and disclosures within the International Interactive reportable segment.

Deloitte & Touche LLP, the Company’s independent registered public accounting firm that audited the Consolidated Financial Statements for the year ended December 31, 2023, issued an attestation report on the Company’s internal control over financial reporting which immediately follows this report.

Remediation of Previously Reported Material Weaknesses

As previously disclosed in Part II, 9A.

Controls and Procedures in the Company’s Form 10-K/A for the year ended December 31, 2021, subsequent to the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, management identified deficiencies in internal control over financial reporting that resulted in material weaknesses.

Specifically, the Company did not appropriately design a control to monitor the functional currency assessment of its subsidiaries in accordance with ASC Topic 830, Foreign Currency Matters, specifically with regard to foreign currency held by a newly formed subsidiary to effectuate a large international acquisition.

The Company did not record the foreign currency transaction loss through earnings as required by ASC Topic 830 and did not reassess this conclusion upon review of the accumulated other comprehensive loss account each subsequent period.

This design deficiency contributed to the potential for there to have been material errors in the Company’s financial statements and therefore resulted in the following material weaknesses:

• Risk Assessment— control deficiencies constituting a material weakness, either individually or in the aggregate, relating to identifying and assessing changes in the business that could impact the system of internal controls;

• Control Activities— control deficiencies constituting a material weakness, either individually or in the aggregate, relating to:

(i) designing controls that would address relevant risks identified through the assessment of changes in the business and (ii) operation at a level of precision to identify all potentially material errors.

The material weaknesses contributed to the correction of an error in the consolidated financial statements as originally filed for the year ended December 31, 2021, for which the Company concluded such error required an immaterial revision of the previously reported financial statements and related notes thereto.

In response to the material weaknesses in the Company’s internal control over financial reporting, management enhanced its risk assessment to identify changes in its business that could impact the system of internal controls and implemented control activities related to the monitoring of foreign currency and the application of ASC 830.

Management concluded that these controls were operating effectively at December 31, 2022.

Remediation Plan and Status

We are in the process of, and we are focused on, designing and implementing effective measures to improve our internal controls over financial reporting and remediate the material weaknesses.

Management is in the process of developing a detailed plan for remediation, which includes:

• Realigning resources and, where applicable, hiring qualified staff or using third-party subject matter experts with the appropriate level of experience and training to segregate key functions within our financial processes in order to support the review of significant and complex accounting matters, including appropriately analyzing, recording and disclosing accounting matters timely and accurately, specifically around assumptions used in certain estimates.

• Educating control owners within our International Interactive reportable segment of the appropriate design elements of journal entry controls and enhancing our monitoring control to ensure that these control activities are performed and that journal entries have a separate preparer and independent reviewer.

• Strengthening controls over account reconciliations and account analyses within our International Interactive reportable segment to support financial reporting requirements.

Specifically, controls will address the timeliness of the review and the quality of information used in the review to ensure the completeness and accuracy.

• Implementing a new enterprise resource planning (“ERP”) system, which we believe will enhance the flow of financial information, improve data management and control and provide timely information to our management team will enable us to remediate segregation of duties over journal entries.

As the implementation of the new ERP system progresses, we may change our processes and procedures which, in turn, could result in further changes to our internal control over financial reporting.

As such changes occur, we will evaluate quarterly whether such changes materially affect our internal control over financial reporting.

While we believe our remediation efforts above will improve the effectiveness of our internal control over financial reporting, we cannot assure that the measures will be sufficient to remediate the material weaknesses we have identified or will prevent potential future material weaknesses.

The material weaknesses cannot be considered remediated until applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Accordingly, we will continue to monitor and evaluate the effectiveness of our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

During the year ended December 31, 2022, the Company completed its acquisition of Tropicana Las Vegas, as defined above.

See Note 6 “ Business Combinations ” included in Part II.

Item 8 of this Annual Report on Form 10-K for a discussion of the acquisition and related financial data.

The Company is currently in the process of integrating Tropicana Las Vegas’ internal controls over financial reporting and except for its inclusion and the remediation of the previously reported material weakness described above, there has been no change in our internal control over financial reporting that occurred during the fourth quarter of 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other than the material weaknesses noted above and the acquisition of Bally’s Golf Links, there has been no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2023 covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the internal control over financial reporting of Bally’s Corporation and subsidiaries (the “Company”) 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 (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

In our opinion, because of the effect of the material weaknesses identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated March 15, 2024, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at the Tropicana Las Vegas Hotel and Casino, Inc., which was acquired on September 26, 2022, whose financial statements constitute approximately 5.2%, of the Company’s total consolidated assets and approximately 1.1% of the Company’s consolidated net revenues as of and for the year ended December 31, 2022.

Accordingly, our audit did not include the internal control over financial reporting at the Tropicana Las Vegas Hotel and Casino, Inc.

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Bally’s Golf Links and whose financial statements constitute approximately 2.0% of the Company’s total consolidated assets and approximately 0.1% of the Company’s consolidated revenues as of and for the year ended December 31, 2023.

Accordingly, our audit did not include the internal control over financial reporting at Bally’s Golf Links.

Basis for Opinion

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Material Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified and included in management’s assessment:

Control environment

Management identified material weaknesses related to an insufficient number of professionals with an appropriate level of accounting knowledge, training, and experience to appropriately analyze, record, and disclose significant and complex accounting and tax matters timely and accurately.

Specifically, the control owners did not perform adequate reviews of all available evidence and appropriately challenge assumptions used in certain estimates including litigation expenses, impairment of indefinite-lived intangible assets, goodwill, and other long-lived assets, and income taxes.

These material weaknesses described above resulted in adjustments which were identified and corrected in connection with the completion of the audit for the year ended December 31, 2023.

Control Activities

Management identified a material weakness related to the lack of segregation of duties over the preparation, review, and recording of journal entries within the International Interactive reportable segment.

Management identified a material weakness related to the ineffective review of account reconciliation and account analysis controls, including the controls to validate the completeness and accuracy of information used in the performance of those controls, at the International Interactive reportable segment.

These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2023, of the Company, and this report does not affect our report on such financial statements.

/s/ Deloitte & Touche LLP

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OTHER INFORMATION

During the quarter ended December 31, 2023, none of our officers or directors adopted , modified or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as defined in Item 408(a) of Regulation S-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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4.4 Second Supplemental Indenture, dated as of April 13, 2022, among the guarantors party thereto and U.S.

Bank Trust Company, National Association, as trustee

Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.4 to the Company’s Annual Report on Form 10-K (File No.

001-38850) filed on March 1, 2023)

4.5 Third Supplemental Indenture, dated as of December 30, 2022, among the guarantors party thereto and U.S.

Bank Trust Company, National Association, as trustee

Number Description of Exhibit

4.6 Description of Registrant’s Securities (incorporated by reference to Exhibit 4.4 to the Company’s Annual Report on Form 10-K (File No.

Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.5 to the Company’s Annual Report on Form 10-K (File No.

001-38850) filed on March 1, 2023)

Number Description of Exhibit

4.6* Description of Registrant’s Securities

4.7 Form of Warrant (incorporated by reference to Exhibit 4.6 to the Company’s Annual Report on Form 10-K (File No.

98 unchanged sentences

001-38850) filed March 14, 2022)

10.39** Employment Agreement, dated March 11, 2022, by and between Bally’s Corporation and Robert Lavan (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K (File No.

001-38850) filed March 14, 2022)

10.39** Employment Agreement, effective July 10, 2013, by and between Twin River Management Group, Inc.

1 unchanged sentence

001-38850) filed on March 13, 2020)

10.41** Form of Lee Fenton Service Agreement, effective October 1, 2021 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No.

001-38850) filed on October 7, 2021)

10.40** Employment Agreement, dated May 8, 2023, by and between Bally’s Corporation and Marcus Glover (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No.

001-38850) filed May 9, 2023)

10.41** Form of Robeson Reeves Service Agreement, effective October 1, 2021 (incorporated by reference to Exhibit 10.44 to the Company’s Annual Report on Form 10-K (File No.

1 unchanged sentence

10.42** Amendment No.

1 to Service Agreement, dated June 1, 2022, by and between Bally’s Corporation and Robeson Reeves

1 to Service Agreement, dated June 1, 2022, by and between Bally’s Corporation and Robeson Reeves (incorporated by reference to Exhibit 10.43 to the Company’s Annual Report on Form 10-K (File No.

001-38850) filed on March 1, 2023)

10.43** Amendment No.

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001-38850) filed on February 13, 2023)

10.45** * Form of Kim Barker Lee Employment Agreement, effective December 7, 2022

10.44** Form of Kim Barker Lee Employment Agreement, effective December 7, 2022 (incorporated by reference to Exhibit 10.45 to the Company’s Annual Report on Form 10-K (File No.

001-38850) filed on March 1, 2023)

10.45** Separation Agreement and Release, dated February 13, 2023, by and between Bally’s Corporation and Lee Fenton (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No.

1 unchanged sentence

10.46 Credit Agreement, dated October 1, 2021, among Bally’s Corporation, the subsidiary guarantors party thereto, the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File 001-38850) filed on October 7, 2021)

10.47 First Amendment to Credit Agreement, dated June 23, 2023, among Bally’s Corporation, the subsidiary guarantors party thereto, the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 10-Q (File 001-38850) filed on November 3, 2023)

Number Description of Exhibit

10.48 Amended and Restated Regulatory Agreement, dated February 17, 2022, by and among the Rhode Island Department of Business Regulation, the Division of Lotteries of the Rhode Island Department of Revenue, Bally’s Corporation, Twin River Management Group, Inc., UTGR, Inc.

and Twin River-Tiverton, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File 001-38850) filed on February 24, 2022)

10.48* Amended and Restated Regulatory Agreement, dated March 1, 2024, by and among the Rhode Island Department of Business Regulation, the State Lottery Division of the Rhode Island Department of Revenue, Bally’s Corporation, Bally’s Management Group, LLC, UTGR, LLC, Twin River-Tiverton, LLC, and Bally’s RI iCasino, LLC

10.49** Bally’s Corporation 2021 Equity Incentive Plan - Performance Unit Award Agreement (incorporated by reference to Exhibit 10.47 to the Company’s Annual Report on Form 10-K (File No.

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32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

97.1* Bally’s Corporation Compensation Clawback Policy

99.1* Description of Government Regulations

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BALLY’S CORPORATION

/s/ ROBERT M.

/s/ MARCUS GLOVER

Marcus Glover

Chief Financial Officer

(Principal Financial and Accounting Officer)

/s/ ROBESON M.

Chief Executive Officer

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Signature Title Date

FENTON President, Chief Executive Officer and Director March 1, 2023

Fenton (Principal Executive Officer)

/s/ ROBERT M.

LAVAN Chief Financial Officer March 1, 2023

Lavan (Principal Financial and Accounting Officer)

/s/ ROBESON M.

REEVES President, Chief Executive Officer and Director March 15, 2024

Reeves (Principal Executive Officer)

/s/ MARCUS GLOVER Chief Financial Officer March 15, 2024

Marcus Glover (Principal Financial and Accounting Officer)

/s/ SOOHYUNG KIM Chairman March 15, 2024

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PATEL Director March 15, 2024

/s/ ROBESON M.

REEVES Director March 1, 2023

/s/ JEFFREY W.

2 unchanged sentences

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 9A. Controls and Procedures