Bally's Corp 10-Q

ITEM 1. Financial Statements BALLY’S CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (In thousands, except share data) June 30, 2024 December 31, 2023 Assets Cash and cash equivalents $ 154,733 $ 163,194 Restricted cash 169,616 152,068 Accounts receivable, net 65,823 70,328 Inventory 18,082 14,629 Tax receivable 29,315 62,215 Prepaid expenses and other current assets 118,030 108,096 Assets held for sale — 1,815 Total current assets 555,599 572,345 Property and equipment, net 1,124,546 1,174,888 Right of use assets, net 1,131,211 1,160,288 Goodwill 1,910,316 1,935,803 Intangible assets, net 1,760,490 1,871,428 Deferred tax asset 2,848 36,034 Other assets 105,208 110,317 Total assets $ 6,590,218 $ 6,861,103 Liabilities and Stockholders’ Equity Current portion of long-term debt $ 19,450 $ 19,450 Current portion of lease liabilities 56,389 54,842 Accounts payable 94,116 69,161 Accrued income taxes 35,482 78,301 Accrued and other current liabilities 717,811 651,719 Liabilities related to assets held for sale — 1,307 Total current liabilities 923,248 874,780 Long-term debt, net 3,653,681 3,643,185 Long-term portion of financing obligation 200,000 200,000 Long-term portion of lease liabilities 1,126,826 1,148,407 Deferred tax liability 147,375 125,590 Commercial rights liabilities 55,521 113,626 Other long-term liabilities 90,016 119,661 Total liabilities 6,196,667 6,225,249 Commitments and contingencies (Note 17) Stockholders’ equity: Common stock ($ 0.01 par value, 200,000,000 shares authorized; 40,619,356 and 39,973,202 shares issued; 40,619,356 and 39,973,202 shares outstanding) 406 400 Preferred stock ($ 0.01 par value; 10,000,000 shares authorized; no shares outstanding) — — Additional paid-in-capital 1,407,118 1,400,479 Treasury stock, at cost, no shares outstanding as of June 30, 2024 and December 31, 2023 — — Accumulated deficit ( 790,005 ) ( 555,895 ) Accumulated other comprehensive loss ( 224,396 ) ( 209,558 ) Total Bally’s Corporation stockholders’ equity 393,123 635,426 Non-controlling interest 428 428 Total stockholders’ equity 393,551 635,854 Total liabilities and stockholders’ equity $ 6,590,218 $ 6,861,103 See accompanying notes to condensed consolidated financial statements. 3 BALLY’S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (In thousands, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Revenue: Gaming $ 524,751 $ 493,296 $ 1,040,808 $ 980,191 Non-gaming 96,906 112,910 199,331 224,735 Total revenue 621,657 606,206 1,240,139 1,204,926 Operating (income) costs and expenses: Gaming 236,170 218,939 472,314 436,600 Non-gaming 48,713 52,276 96,824 104,620 General and administrative 252,419 249,957 500,855 501,565 Gain from sale-leaseback, net — ( 135 ) — ( 374,321 ) Depreciation and amortization 78,782 79,187 238,528 153,748 Total operating costs and expenses 616,084 600,224 1,308,521 822,212 Income (loss) from operations 5,573 5,982 ( 68,382 ) 382,714 Other (expense) income: Interest expense, net ( 74,200 ) ( 67,093 ) ( 147,331 ) ( 130,357 ) Other non-operating income, net 6,930 6,811 11,484 9,421 Total other expense, net ( 67,270 ) ( 60,282 ) ( 135,847 ) ( 120,936 ) (Loss) income before income taxes ( 61,697 ) ( 54,300 ) ( 204,229 ) 261,778 (Benefit) provision for income taxes ( 1,501 ) ( 28,649 ) 29,881 109,093 Net (loss) income $ ( 60,196 ) $ ( 25,651 ) $ ( 234,110 ) $ 152,685 Basic (loss) earnings per share $ ( 1.24 ) $ ( 0.48 ) $ ( 4.85 ) $ 2.82 Weighted average common shares outstanding - basic 48,498 53,942 48,308 54,173 Diluted (loss) earnings per share $ ( 1.24 ) $ ( 0.48 ) $ ( 4.85 ) $ 2.80 Weighted average common shares outstanding - diluted 48,498 53,942 48,308 54,582 See accompanying notes to condensed consolidated financial statements. 4 BALLY’S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (unaudited) (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net (loss) income $ ( 60,196 ) $ ( 25,651 ) $ ( 234,110 ) $ 152,685 Other comprehensive (loss) income: Foreign currency translation adjustments ( 8,885 ) 38,625 ( 46,679 ) 90,698 Net unrealized derivative gain on cash flow hedges, net of tax 2,304 — 14,587 — Net unrealized derivative gain on net investment hedges, net of tax 5,788 — 17,254 — Other comprehensive (loss) income ( 793 ) 38,625 ( 14,838 ) 90,698 Total comprehensive (loss) income $ ( 60,989 ) $ 12,974 $ ( 248,948 ) $ 243,383 See accompanying notes to condensed consolidated financial statements. 5 BALLY’S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited) (In thousands, except share data) Common Stock Additional Paid-in Capital Treasury Stock Accumulated Deficit Accumulated Other Comprehensive Loss Non-controlling Interest Total Stockholders’ Equity Shares Outstanding Amount Balance as of December 31, 2023 39,973,202 $ 400 $ 1,400,479 $ — $ ( 555,895 ) $ ( 209,558 ) $ 428 $ 635,854 Issuance of restricted stock and other stock awards 423,805 4 ( 2,778 ) — — — — ( 2,774 ) Share-based compensation — — 3,058 — — — — 3,058 Settlement of consideration 86,368 1 ( 125 ) — — — — ( 124 ) Other — — 1,750 — — — — 1,750 Other comprehensive loss — — — — — ( 14,045 ) — ( 14,045 ) Net loss — — — — ( 173,914 ) — — ( 173,914 ) Balance as of March 31, 2024 40,483,375 $ 405 $ 1,402,384 $ — $ ( 729,809 ) $ ( 223,603 ) $ 428 $ 449,805 Issuance of restricted stock and other stock awards 135,981 1 262 — — — — 263 Share-based compensation — — 4,472 — — — — 4,472 Other comprehensive loss — — — — — ( 793 ) — ( 793 ) Net loss — — — — ( 60,196 ) — — ( 60,196 ) Balance as of June 30, 2024 40,619,356 $ 406 $ 1,407,118 $ — $ ( 790,005 ) $ ( 224,396 ) $ 428 $ 393,551 Common Stock Additional Paid-in Capital Treasury Stock Accumulated Deficit Accumulated Other Comprehensive Loss Non-controlling Interest Total Stockholders’ Equity Shares Outstanding Amount 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 124,050 1 ( 1,332 ) — — — — ( 1,331 ) Share-based compensation — — 6,040 — — — — 6,040 Retirement of treasury shares — ( 10 ) ( 35,987 ) 19,753 16,244 — — — Share repurchases ( 1,026,343 ) — — ( 19,753 ) — — — ( 19,753 ) Other comprehensive income — — — — — 52,073 — 52,073 Net income — — — — 178,336 — — 178,336 Balance as of March 31, 2023 45,767,764 $ 457 $ 1,605,087 $ — $ ( 340,793 ) $ ( 243,567 ) $ 428 $ 1,021,612 Issuance of restricted stock and other stock awards 125,842 1 ( 495 ) 529 — — — 35 Share-based compensation — — 6,290 — — — — 6,290 Retirement of treasury shares — ( 7 ) ( 25,279 ) 10,176 14,805 — — ( 305 ) Share repurchases ( 748,502 ) — — ( 10,705 ) — — — ( 10,705 ) Issuance of MKF penny warrants — — 7,371 — — — — 7,371 Penny warrants exercised 377,253 4 — — — — — 4 Settlement of consideration to SportCaller 103,656 1 1,883 — — — — 1,884 Other comprehensive income — — — — — 38,625 — 38,625 Net loss — — — — ( 25,651 ) — — ( 25,651 ) Balance as of June 30, 2023 45,626,013 $ 456 $ 1,594,857 $ — $ ( 351,639 ) $ ( 204,942 ) $ 428 $ 1,039,160 See accompanying notes to condensed consolidated financial statements. 6 BALLY’S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended June 30, (in thousands) 2024 2023 Cash flows from operating activities: Net (loss) income $ ( 234,110 ) $ 152,685 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 238,528 153,748 Non-cash lease expense 28,876 28,117 Share-based compensation 7,530 12,330 Impairment charges 12,757 9,653 Amortization of debt discount and debt issuance costs 5,781 5,563 Gain on sale-leaseback — ( 374,321 ) Gain on extinguishment of debt — ( 4,044 ) Deferred income taxes 31,654 48,870 Net gain on assets and liabilities measured at fair value ( 6,066 ) ( 293 ) Gain on equity method investments ( 789 ) ( 3,090 ) Change in value of commercial rights liabilities ( 6,317 ) ( 7,291 ) Change in contingent consideration payable ( 795 ) 1,024 Foreign exchange (gain) loss ( 3,799 ) 5,947 Proceeds from interest rate contracts 4,399 — Other operating activities 2,277 1,041 Changes in operating assets and liabilities ( 40,227 ) 34,111 Net cash provided by operating activities 39,699 64,050 Cash flows from investing activities: Cash paid for acquisitions, net of cash acquired 208 ( 38,243 ) Proceeds from sale-leaseback — 411,000 Proceeds from net investment hedges 2,051 — Capital expenditures ( 63,762 ) ( 119,546 ) Cash paid for capitalized software ( 24,209 ) ( 14,342 ) Acquisition of gaming licenses ( 1,211 ) ( 10,150 ) Other investing activities ( 679 ) ( 4,743 ) Net cash (used in) provided by investing activities ( 87,602 ) 223,976 Cash flows from financing activities: Issuance of long-term debt 230,000 35,000 Repayments of long-term debt ( 224,725 ) ( 177,345 ) Deferred payables 60,796 — Share repurchases — ( 30,458 ) Other financing activities ( 6,269 ) ( 1,716 ) Net cash provided by (used in) financing activities 59,802 ( 174,519 ) Effect of foreign currency on cash and cash equivalents ( 2,812 ) ( 4,195 ) Change in cash and cash equivalents and restricted cash held for sale — ( 1,648 ) Net change in cash and cash equivalents and restricted cash 9,087 107,664 Cash and cash equivalents and restricted cash, beginning of period 315,262 265,184 Cash and cash equivalents and restricted cash, end of period $ 324,349 $ 372,848 7 BALLY’S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended June 30, (in thousands) 2024 2023 Supplemental disclosure of cash flow information: Cash paid for interest, net of amounts capitalized $ 158,505 $ 134,266 Income taxes paid, net of refunds ( 13,630 ) 9,722 Non-cash investing and financing activities: Unpaid property and equipment $ 25,746 $ 26,793 Bally’s Chicago - land development liability 1,931 135,290 Unpaid internally developed software 781 904 Investment in GLP Capital, L.P. — 14,412 Investment in RI Joint Venture — 17,832 June 30, December 31, Reconciliation of cash and cash equivalents and restricted cash: 2024 2023 Cash and cash equivalents $ 154,733 $ 163,194 Restricted cash 169,616 152,068 Total cash and cash equivalents and restricted cash $ 324,349 $ 315,262 See accompanying notes to condensed consolidated financial statements. 8 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. GENERAL INFORMATION Description of Business 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 properties within its Casinos & Resorts reportable segment: Casinos & 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”) (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) Dover, Delaware Casino, Resort and Raceway 2019 Bally’s Black Hawk (1)(2) 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 Lake Tahoe Casino Resort (“Bally’s Lake Tahoe”) Lake Tahoe, Nevada Casino and Resort 2021 Bally’s Evansville Casino & Hotel (“Bally’s Evansville”) (2) Evansville, Indiana Casino and Hotel 2021 Bally’s Quad Cities Casino & Hotel (“Bally’s Quad Cities”) (2) Rock Island, Illinois Casino and Hotel 2021 Tropicana Las Vegas Casino and Resort (“Tropicana Las Vegas”) (2)(4) 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 __________________________________ (1) Includes Bally’s Black Hawk North Casino, Bally’s Black Hawk West Casino and Bally’s Black Hawk East Casino. (2) Properties leased from Gaming and Leisure Properties, Inc. (“GLPI”). Refer to Note 15 “ Leases ” for further information. (3) Temporary casino facility as permanent casino resort is constructed. (4) This property closed on April 2, 2024 as part of a plan to redevelop the site with a state-of-the-art integrated resort and ballpark. 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. Refer to Note 18 “ Segment Reportin g” for further information. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements 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. All intercompany transactions and balances have been eliminated in consolidation. 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 loss. Foreign currency transaction gains and losses are included in net loss. 9 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (the “SEC”) for interim financial information, including the instructions to Form 10-Q and Rule 10-01 of the SEC’s Regulation S-X. Accordingly, certain information and note disclosures normally required in complete financial statements prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. In the Company’s opinion, these condensed consolidated financial statements include all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. We have made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes. The actual results that we experience may differ materially from our estimates. 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 condensed consolidated statements of operations. For the three months ended June 30, 2024 and 2023, the Company recorded income from equity method investments of $ 0.2 million and $ 1.0 million, respectively, and for the six months ended June 30, 2024 and 2023, the Company recorded income from equity method investments of $ 0.8 million and $ 3.1 million, respectively. Variable Interest Entities The Company evaluates entities for which control is achieved through means other than voting rights to determine if it is the primary beneficiary of a VIE. An entity is a VIE if it has any of the following characteristics (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support (ii) equity holders, as a group, lack the characteristics of a controlling financial interest or (iii) the entity is structured with non-substantive voting rights. The primary beneficiary of the VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company consolidates its investment in a VIE when it determines that it is its primary beneficiary. In determining whether it is the primary beneficiary of the VIE, the Company considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities and significance of the Company’s investment and other means of participation in the VIE’s expected profits/losses. 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. Management has analyzed and concluded that Breckenridge Curacao B.V. (“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 Breckenridge and its subsidiaries in the accompanying condensed consolidated financial statements. As of June 30, 2024 and December 31, 2023, Breckenridge had total assets of $ 147.2 million and $ 161.3 million, respectively, and total liabilities of $ 78.2 million and $ 87.7 million, respectively. Breckenridge had revenues of $ 46.5 million and $ 76.5 million for the three months ended June 30, 2024 and 2023, respectively, and $ 108.4 million and $ 160.5 million for the six months ended June 30, 2024 and 2023, respectively. 10 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. The Company performs this analysis on an ongoing basis. Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents includes cash balances and highly liquid investments with an original maturity of three months or less. Restricted cash includes cash collateral in connection with amounts due to the Chicago Tribune (refer to Note 8 “ Property and Equipment ”), player deposits, payment service provider deposits, and VLT and table games related cash payables to certain states where we operate, which are unavailable for the Company’s use. Accounts Receivable, Net Accounts receivable, net consists of the following: June 30, December 31, (in thousands) 2024 2023 Amounts due from Rhode Island and Delaware (1) $ 15,563 $ 13,028 Gaming receivables 23,179 26,127 Non-gaming receivables 33,274 37,221 Accounts receivable 72,016 76,376 Less: Allowance for credit losses ( 6,193 ) ( 6,048 ) Accounts receivable, net $ 65,823 $ 70,328 __________________________________ (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 for Bally’s Dover from the State of Delaware. Deferred Payables In order to execute on its strategy of improving working capital efficiency, the Company will, from time to time, participate in trade finance or deferred payable initiatives, including programs that may securitize or accelerate liquidity realized from receivables, or alternatively extend trade terms with certain suppliers or vendors. In certain cases, where the Company is not able to extend payment terms directly with suppliers or vendors, the Company will consider deferred payable solutions that simulate such trade term extensions. These solutions generally involve entering into exchange agreements with intermediary institutions who will make payment to the supplier or vendor within the original terms on behalf of the Company, in exchange for a new bill with terms that conforms to the Company’s payment policy of net 90 days. The Company will then pay the new bill to the intermediary institutions, inclusive of any embedded premium, which the Company records as “Interest expense, net,” within three months or less. During the three and six months ended June 30, 2024, the Company borrowed $60.1 million and $102.3 million, respectively, under these deferred payable arrangements and during the three months ended June 30, 2024 repaid $41.5 million. Amounts outstanding under these deferred payable arrangements were $ 60.2 million as of June 30, 2024 and are included in “Accrued and other current liabilities” on the condensed consolidated balance sheets. For the three and six months ended June 30, 2024, the Company incurred $ 1.4 million and $ 2.2 million of interest expense, respectively, under these arrangements. These arrangements were not utilized by the Company during the three and six months ended June 30, 2023. Gaming Expenses Gaming expenses include, among other things, payroll costs and expenses associated with the operation of VLTs, slots and table games, including gaming taxes payable to jurisdictions in which the Company operates outside of Rhode Island and Delaware, and marketing costs directly associated with the Company’s iGaming products and services. These marketing expenses are included within Gaming expenses in the condensed consolidated statements of operations and were $ 47.0 million and $ 47.8 million for the three months ended June 30, 2024 and 2023, respectively, and $ 93.2 million and $ 93.7 million for the six months ended June 30, 2024 and 2023, 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. 11 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Advertising Expense The Company expenses advertising costs as incurred. For the three months ended June 30, 2024 and 2023, advertising expense was $ 4.0 million and $ 3.2 million, respectively, and for the six months ended June 30, 2024 and 2023, advertising expense was $ 9.6 million and $ 8.6 million, respectively. Advertising costs are included in “General and administrative” on the condensed consolidated statements of operations. Share-Based Compensation The Company recognized total share-based compensation expense of $ 4.5 million and $ 6.3 million for the three months ended June 30, 2024 and 2023, respectively, and $ 7.5 million and $ 12.3 million for the six months ended June 30, 2024 and 2023, respectively. The total income tax benefit for share-based compensation arrangements was $ 1.2 million and $ 1.7 million for the three months ended June 30, 2024 and 2023, respectively, and $ 2.0 million and $ 3.2 million for the six months ended June 30, 2024 and 2023, respectively. Strategic Partnership - Sinclair Broadcast Group In 2020, the Company and Sinclair Broadcast Group, Inc. (“Sinclair”) entered into a Framework Agreement (the “Framework Agreement”), which provides for a long-term strategic relationship between Sinclair and the Company. Under the Framework Agreement, the Company 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 paid annual fees to Diamond Sports Group (“Diamond”), a Sinclair subsidiary, for naming rights over Diamond’s regional sports networks (“RSNs”) and other consideration. 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 $ 210.4 million and $ 225.9 million as of June 30, 2024 and December 31, 2023, respectively. Amortization was $ 7.8 million and $ 7.7 million for the three months ended June 30, 2024 and 2023, respectively, and $ 15.6 million and $ 15.5 million for the six months ended June 30, 2024 and 2023, respectively. Refer to Note 9 “ Goodwill and Intangible Assets ” for further information. The present value of the naming rights fees was recorded as part of intangible assets, with a corresponding liability, which was accreted through interest expense. As of December 31, 2023, the total value of the liability was $ 57.7 million, with $ 8.0 million recorded within “Accrued and other current liabilities” related to the short-term portion of the liability, and $ 49.7 million related to the long-term portion of the liability reflected as “Commercial rights liability” in the condensed consolidated balance sheets. Accretion expense reported in “Interest expense, net” in our condensed consolidated statements of operations was $ 1.1 million and $ 2.2 million for the three and six months ended June 30, 2023, respectively. In the first quarter of 2024, the Company’s obligation to pay Diamond for the naming rights terminated upon the bankruptcy court’s approval of certain settlement terms, which the court approved on March 1, 2024. Refer to Note 17 “ Commitments and Contingencies ” for further information. Under the Framework Agreement, the Company issued to SBG Gaming, LLC, a designated subsidiary of Sinclair (“SBG”) (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. Refer to Note 20 “Subsequent Events” for further information. 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 condensed consolidated balance sheets, with an offset to the Commercial rights intangible asset. 12 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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 11 “ Fair Value Measurements ” for further information. Under the Framework Agreement, the Company agreed to share 60 % of the tax benefits it realizes from the Penny Warrants, Options, Performance Warrants and other related payments. Changes in the estimate of the tax benefit to be realized and tax rates in effect at the time, among other changes, are treated as an adjustment to the intangible asset. The liability for these obligations was $ 17.0 million and $ 19.1 million as of June 30, 2024 and December 31, 2023, respectively, and is reflected in “Commercial rights liabilities” within our condensed consolidated balance sheets. Provision for Income Taxes During the six months ended June 30, 2024 and 2023, the Company recorded a provision for income tax of $ 29.9 million, at an effective year to date tax rate of ( 14.6 )% and a provision for income tax of $ 109.1 million, at an effective year to date tax rate of 41.7 %, respectively. The 2024 year to date effective tax rate differed from the US federal statutory tax rate of 21%, creating a provision for income tax on the Company’s Loss before income taxes, largely due to an increase in the valuation allowance, coupled with a tax liability for foreign discrete items. The 2023 year to date effective tax rate was higher than the US federal statutory tax rate of 21%, largely due to an increase in the valuation allowance and a tax liability for a discrete item related to the deferred gain on sale leaseback transactions in Mississippi and Rhode Island. 3. CONSOLIDATED FINANCIAL INFORMATION General and Administrative Expense Amounts included in General and administrative for the three and six months ended June 30, 2024 and 2023 were as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Advertising, general and administrative $ 233,441 $ 223,760 $ 458,412 $ 444,765 Acquisition and integration 5,845 13,104 10,697 26,885 Restructuring 376 3,440 18,989 20,262 Impairment charges (1) 12,757 9,653 12,757 9,653 Total general and administrative $ 252,419 $ 249,957 $ 500,855 $ 501,565 __________________________________ (1) Includes impairment charges on long-lived assets within the International Interactive segment in the second quarter of 2024 and impairment charges related to assets held-for-sale within the North America Interactive segment in 2023. Other Non-Operating Income, Net Amounts included in Other non-operating income, net for the three and six months ended June 30, 2024 and 2023 were as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Change in value of commercial rights liabilities $ 6,317 $ 7,558 $ 6,317 $ 7,291 Net income from equity method investments 234 990 789 3,090 Gain on extinguishment of debt — — — 4,044 Foreign exchange gain (loss) 983 ( 1,639 ) 3,799 ( 5,947 ) Other, net ( 604 ) ( 98 ) 579 943 Total other non-operating income, net $ 6,930 $ 6,811 $ 11,484 $ 9,421 13 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 4. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS 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 SEC’s 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 condensed 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 condensed 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 condensed consolidated financial statements and related disclosures. In March 2024, the FASB issued ASU 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements . This amendment to the Codification removes references to various Concepts Statements. This update will be effective for public business entities for fiscal years beginning after December 15, 2024, with early adoption permitted if adopted as of the beginning of the fiscal year that includes that interim period. The Company is currently in the process of evaluating the impact of this amendment on its condensed consolidated financial statements and related disclosures. 5. REVENUE RECOGNITION The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers , which requires the revenue to be recognized when a performance obligation is satisfied by transferring the control of promised goods or services and is measured at the transaction price or the amount of consideration that the Company expects to receive through satisfaction of the identified performance obligations. The Company generates revenue from four principal sources: (1) gaming (which includes retail gaming, online gaming, sports betting and racing), (2) hotel, (3) food and beverage and (4) retail, entertainment and other. 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. Gaming Revenue Performance Obligations Retail gaming service contracts involving our land-based casinos, each have an obligation to honor the outcome of a wager and to pay out an amount equal to the stated odds, including the return of the initial wager, if the customer receives a winning hand. These elements of honoring the outcome of the hand of play and generating a payout are considered one performance obligation, with an additional performance obligation for those customers earning incentives under the Company’s player loyalty program. Online gaming and sports betting represent a single performance obligation for the Company to operate contests or games and award prizes or payouts to users based on results of the arrangement. Additionally, the use of incentives across the online gaming products create future customer rights and are a separate performance obligation. 14 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Racing revenue is earned through advance deposit wagering, which consists of patrons wagering through an advance deposit account. Each wagering contract contains a single performance obligation. Transaction Price The Company applies a practical expedient to account for its gaming contracts on a portfolio basis as such wagers have similar characteristics and the Company reasonably expects the impact on the consolidated financial statements of applying the revenue recognition guidance to the portfolio would not differ materially from the application of an individual wagering contract. The transaction price for a retail gaming, online gaming or sports betting wagering contract is the difference between wins and losses, not the total amount wagered. In addition, in the event of a multi-stage contest, the Company will allocate transaction price ratably from contest start to the contest’s final stage. The transaction price for racing operations, inclusive of live racing events conducted at the Company’s racing facilities, is the commission received from the pari-mutuel pool less contractual fees and obligations, primarily consisting of purse funding requirements, simulcasting fees, tote fees and certain pari-mutuel taxes that are directly related to the racing operations. For purposes of allocating the transaction price in a wagering contract between the wagering performance obligation and the obligation associated with incentives earned under loyalty programs, the Company allocates an amount to the loyalty program contract liability based on the stand-alone selling price of the incentive earned. The performance obligation related to loyalty program incentives are deferred and recognized as revenue upon redemption by the customer. Revenue Recognition The allocated revenue for retail gaming wagers is recognized when the wagering occurs as all such wagers settle immediately. Online gaming revenue is recognized at the point in time when the player completes a gaming session and payout occurs. Sports betting involves a player wagering money on an outcome or series of outcomes. If a player wins the wager, the Company pays the player a pre-determined amount known as fixed odds, and its revenue is recognized as total wagers net of payouts made and incentives awarded to players. Racing revenue includes several of our casinos and resorts’ share of wagering from live racing and the import of simulcast signals, and is recognized upon completion of the wager based upon an established take-out percentage. The estimated retail value related to goods and services provided to customers without charge or upon redemption under the Company’s player loyalty programs included in departmental revenues, and therefore reducing gaming revenues, are as follows for the three and six months ended June 30, 2024 and 2023: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Hotel $ 20,435 $ 24,123 $ 40,906 $ 46,558 Food and beverage 20,302 19,823 40,515 39,297 Retail, entertainment and other 2,442 2,420 4,870 5,011 $ 43,179 $ 46,366 $ 86,291 $ 90,866 Non-gaming Revenue Performance Obligations Hotel, food and beverage, and retail, entertainment and other services have been determined to be separate, stand-alone performance obligations and revenue is recognized as the good or service is transferred at the point in time of the transaction. Transaction Price The transaction price for hotel, food and beverage, and retail, entertainment and other, is the net amount collected from the customer for such goods and services. The estimated standalone selling price of hotel rooms is determined based on observable prices. The standalone selling price of these goods and services are determined based upon the actual retail prices charged to customers for those items. 15 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Revenue Recognition 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. Food, beverage and retail revenues are recognized at the time the goods are sold from Company-operated outlets. 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 condensed consolidated statements of operations. The following tables provide a disaggregation of revenue by segment (in thousands): Three Months Ended June 30, 2024 Casinos & Resorts International Interactive North America Interactive Total Gaming $ 255,545 $ 227,149 $ 42,057 $ 524,751 Non-gaming: Hotel 35,264 — — 35,264 Food and beverage 33,123 — — 33,123 Retail, entertainment and other 19,119 2,247 7,153 28,519 Total non-gaming revenue 87,506 2,247 7,153 96,906 Total revenue $ 343,051 $ 229,396 $ 49,210 $ 621,657 Three Months Ended June 30, 2023 Gaming $ 231,018 $ 243,167 $ 19,111 $ 493,296 Non-gaming: Hotel 51,391 — — 51,391 Food and beverage 35,224 — — 35,224 Retail, entertainment and other 15,529 4,607 6,159 26,295 Total non-gaming revenue 102,144 4,607 6,159 112,910 Total revenue $ 333,162 $ 247,774 $ 25,270 $ 606,206 Six Months Ended June 30, 2024 Gaming $ 505,963 $ 458,416 $ 76,429 $ 1,040,808 Non-gaming: Hotel 76,354 — — 76,354 Food and beverage 68,075 — — 68,075 Retail, entertainment and other 34,988 5,663 14,251 54,902 Total non-gaming revenue 179,417 5,663 14,251 199,331 Total revenue $ 685,380 $ 464,079 $ 90,680 $ 1,240,139 Six Months Ended June 30, 2023 Gaming $ 464,125 $ 480,348 $ 35,718 $ 980,191 Non-gaming: Hotel 98,723 — — 98,723 Food and beverage 68,832 — — 68,832 Retail, entertainment and other 30,268 12,998 13,914 57,180 Total non-gaming revenue 197,823 12,998 13,914 224,735 Total revenue $ 661,948 $ 493,346 $ 49,632 $ 1,204,926 16 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Contract Assets and Contract Related Liabilities The Company’s receivables related to contracts with customers are primarily comprised of marker balances, interactive platform business-to-business service receivables, other amounts due from gaming activities, amounts due for hotel stays and amounts due from tracks and OTB locations. The Company’s receivables related to contracts with customers were $ 33.5 million and $ 38.5 million as of June 30, 2024 and December 31, 2023, respectively. The Company has the following liabilities related to contracts with customers: liabilities for loyalty programs, advance deposits made for goods and services yet to be provided and unpaid wagers. All of the contract liabilities are short-term in nature and are included in “Accrued and other current liabilities” in the condensed consolidated balance sheets. Loyalty program incentives earned by customers are typically redeemed within one year from when they are earned and expire if a customer’s account is inactive for more than 12 months; therefore, the majority of these incentives outstanding at the end of a period will either be redeemed or expire within the next 12 months. Advance deposits are typically interactive player deposits and customer deposits for future banquet events, hotel room reservations, and gift cards. The Company holds restricted cash for interactive player deposits and records a corresponding withdrawal liability. The banquet and hotel reservation deposits are usually received weeks or months in advance of the event or hotel stay. Unpaid wagers include the Company’s outstanding chip liability and unpaid slot, pari-mutuel and sports betting tickets. Liabilities related to contracts with customers as of June 30, 2024 and December 31, 2023 were as follows: June 30, December 31, (in thousands) 2024 2023 Advanced deposits from customers $ 28,464 $ 29,052 Loyalty programs 14,775 16,803 Unpaid wagers 11,704 20,481 Total $ 54,943 $ 66,336 The Company recognized $ 7.8 million and $ 9.9 million of revenue related to loyalty program redemptions for the three months ended June 30, 2024 and 2023, respectively, and $ 15.5 million and $ 17.6 million of revenue related to loyalty program redemptions for the six months ended June 30, 2024 and 2023, respectively. 6. BUSINESS COMBINATIONS Casinos & Resorts Acquisitions 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 $ 55.0 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 with level 3 inputs, and is remeasured quarterly, with fair value adjustments recognized in earnings, until the contingencies are resolved. Inputs to this valuation approach include the Company’s estimated probabilities of achieving the conditions for payment, expected terms between 1.5 and 3 Years, and discount rates between 7.2 % and 7.8 %. 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. 17 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The following table summarizes the consideration paid and the fair values of the assets acquired and liabilities assumed in connection with the Casinos & Resorts acquisition as of June 30, 2024: Bally’s Golf Links (in thousands) Preliminary (2) Total current assets $ 1,108 Property and equipment, net 505 Intangible assets, net (1) 6,500 Other assets 2,000 Goodwill 103,824 Total current liabilities ( 345 ) Total purchase price $ 113,592 __________________________________ (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) The Company recorded adjustments to the preliminary purchase price allocation during the six months ended June 30, 2024 which decreased Goodwill and the total purchase price by $ 0.2 million. Goodwill recognized is deductible for local tax purposes and has been assigned as of the acquisition date to the Company’s Casinos & Resorts reportable segment, which includes the reporting unit expected to benefit from the synergies of the acquisitions. Qualitative factors that contribute to the recognition of goodwill include expected synergies from integrating the business into the Company’s casino portfolio and future development of its omni-channel strategy. The Company incurred $ 0.1 million and $ 0.3 million of acquisition costs related to the above Casinos & Resorts acquisition during the three and six months ended June 30, 2024, respectively. There were no acquisition costs related to the above Casinos & Resorts acquisition during the three and six months ended June 30, 2023. These costs are included within “General and administrative” of the condensed 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. 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 Final (2) Total current assets $ 8,862 Property and equipment, net 50 Intangible assets, net (1) 29,471 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 did not record adjustments to the preliminary purchase price allocation during the six months ended June 30, 2024. 18 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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 six months ended June 30, 2023. There were no acquisition costs related to the International Interactive acquisition during the three months ended June 30, 2023 or three and six months ended June 30, 2024. These costs are included within “General and administrative” of the condensed consolidated statements of operations. 7. PREPAID EXPENSES AND OTHER CURRENT ASSETS As of June 30, 2024 and December 31, 2023, prepaid expenses and other current assets was comprised of the following: June 30, December 31, (in thousands) 2024 2023 Services and license agreements $ 45,777 $ 32,466 Prepaid marketing 12,406 8,685 Short term derivative assets 11,191 9,530 Gaming taxes and licenses 10,518 9,309 Prepaid insurance 10,321 12,181 Due from payment service providers 9,025 12,662 Sales tax 5,429 7,565 Purse funds 4,810 6,404 Other 8,553 9,294 Total prepaid expenses and other current assets $ 118,030 $ 108,096 8. PROPERTY AND EQUIPMENT As of June 30, 2024 and December 31, 2023, property and equipment was comprised of the following: June 30, December 31, (in thousands) 2024 2023 Land $ 238,997 $ 238,997 Land improvements 164,424 162,211 Building and improvements 686,039 673,071 Equipment 279,013 264,398 Furniture and fixtures 68,980 68,746 Construction in process 108,337 73,810 Total property, plant and equipment 1,545,790 1,481,233 Less: Accumulated depreciation ( 421,244 ) ( 306,345 ) Property and equipment, net $ 1,124,546 $ 1,174,888 19 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Depreciation expense relating to property and equipment was $ 19.8 million and $ 19.0 million for the three months ended June 30, 2024 and 2023, respectively, and $ 119.3 million and $ 37.6 million for the six months ended June 30, 2024 and 2023, respectively. Depreciation expense during the six months ended June 30, 2024 included $ 80.1 million of accelerated depreciation related to the closure of the Tropicana Las Vegas property on April 2, 2024. Refer to Note 13 “ Restructuring Expense ” for further information. The Company recorded capitalized interest of $ 2.1 million during each of the three months ended June 30, 2024 and 2023, and $ 3.9 million and $ 5.0 million during the six months ended June 30, 2024 and 2023, 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, provided that the Company will have possession of 777 West Chicago Avenue, Chicago, Illinois 60610 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 was secured by cash-collateralized letters of credit, issued by Citizens Bank. Cash collaterals are reported as restricted cash as of June 30, 2024. The Company paid the remaining $ 50 million on July 9, 2024 and gained possession of the property per the agreement with Tribune. The Company recorded the present value of the remaining payments of $ 49.7 million within “Accrued and other current liabilities” with an offsetting increase to “Property and equipment, net” within the condensed consolidated balance sheets as of June 30, 2024. 9. GOODWILL AND INTANGIBLE ASSETS The change in intangible assets, net for the six months ended June 30, 2024 is as follows (in thousands): Intangible assets, net as of December 31, 2023 $ 1,871,428 Effect of foreign exchange ( 17,031 ) Internally developed software 23,099 Other intangibles acquired 2,234 Less: Accumulated amortization ( 119,240 ) Intangible assets, net as of June 30, 2024 $ 1,760,490 20 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The Company’s identifiable intangible assets consist of the following: June 30, 2024 (in thousands) Gross Carrying Amount Accumulated Amortization Net Amortizable intangible assets: Commercial rights - Sinclair (1) $ 315,847 $ ( 105,483 ) $ 210,364 Trade names 37,190 ( 20,131 ) 17,059 Hard Rock license 8,000 ( 2,424 ) 5,576 Customer relationships 956,596 ( 378,122 ) 578,474 Developed technology 263,241 ( 103,416 ) 159,825 Internally developed software 82,644 ( 19,889 ) 62,755 Gaming licenses 46,654 ( 16,037 ) 30,617 Other 11,491 ( 4,453 ) 7,038 Total amortizable intangible assets 1,721,663 ( 649,955 ) 1,071,708 Intangible assets not subject to amortization: Gaming licenses 586,971 — 586,971 Trade names 99,774 — 99,774 Other 2,037 — 2,037 Total unamortizable intangible assets 688,782 — 688,782 Total intangible assets, net $ 2,410,445 $ ( 649,955 ) $ 1,760,490 __________________________________ (1) Commercial rights intangible asset in connection with the Framework Agreement. Refer to Note 2 “ Summary of Significant Accounting Policies ” for further information. December 31, 2023 (in thousands) Gross Carrying Amount Accumulated Amortization Net Amortizable intangible assets: Commercial rights - Sinclair (2) $ 315,847 $ ( 89,901 ) $ 225,946 Trade names 37,042 ( 18,125 ) 18,917 Hard Rock license 8,000 ( 2,303 ) 5,697 Customer relationships 974,286 ( 314,053 ) 660,233 Developed technology 267,927 ( 86,119 ) 181,808 Internally developed software 61,687 ( 13,091 ) 48,596 Gaming licenses 45,008 ( 11,964 ) 33,044 Other 11,505 ( 3,621 ) 7,884 Total amortizable intangible assets 1,721,302 ( 539,177 ) 1,182,125 Intangible assets not subject to amortization: Gaming licenses 586,971 — 586,971 Trade names 100,544 — 100,544 Other 1,788 — 1,788 Total unamortizable intangible assets 689,303 — 689,303 Total intangible assets, net $ 2,410,605 $ ( 539,177 ) $ 1,871,428 __________________________________ (2) See note (1) above. 21 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Amortization of intangible assets was approximately $ 59.0 million and $ 60.2 million for the three months ended June 30, 2024 and 2023, respectively, and $ 119.2 million and $ 116.1 million for the six months ended June 30, 2024 and 2023, respectively. The following table reflects the remaining amortization expense associated with the finite-lived intangible assets as of June 30, 2024: (in thousands) Remaining 2024 $ 116,527 2025 230,930 2026 229,146 2027 228,074 2028 172,565 Thereafter 94,466 Total $ 1,071,708 10. 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. In 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 14 “ 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 condensed consolidated statements of operations. Refer to Note 11 “ Fair Value Measurements ” and Note 16 “ Stockholders’ Equity ” for further information. The following tables summarize the Company’s net investment hedges as of June 30, 2024 and 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 22 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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 condensed consolidated statements of operations in the same period in which the hedged interest payments associated with the Company’s borrowings are recorded. Refer to Note 11 “ Fair Value Measurements ” and Note 16 “ Stockholders’ Equity ” for further information. The following table summarizes the Company’s cash flow hedges as of June 30, 2024 and 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. 11. FAIR VALUE MEASUREMENTS 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: June 30, 2024 (in thousands) Balance Sheet Location Level 1 Level 2 Level 3 Assets: Cash and cash equivalents Cash and cash equivalents $ 154,733 $ — $ — Restricted cash Restricted cash 169,616 — — Convertible loans Other assets — — 4,086 Investments in equity securities Other assets 2,368 — — Investment in GLPI partnership Other assets — 12,959 — Derivative assets designated as hedging instruments: Interest rate contracts Prepaid expenses and other current assets — 6,575 — Interest rate contracts Other assets — 1,764 — Cross currency swaps Prepaid expenses and other current assets — 4,616 — Cross currency swaps Other assets — 8,909 — Total derivative assets at fair value — 21,864 — Total assets $ 326,717 $ 34,823 $ 4,086 Liabilities: Contingent consideration Other long-term liabilities $ — $ — $ 57,785 Derivative liabilities not designated as hedging instruments: Sinclair Performance Warrants Commercial rights liabilities — — 38,386 Derivative liabilities designated as hedging instruments: Interest rate contracts Other long-term liabilities — 3,814 — Cross currency swaps Accrued and other current liabilities — 1,022 — Cross currency swaps Other long-term liabilities — 19,331 — Total derivative liabilities at fair value — 24,167 38,386 Total liabilities $ — $ 24,167 $ 96,171 23 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) December 31, 2023 (in thousands) Balance Sheet Location Level 1 Level 2 Level 3 Assets: Cash and cash equivalents Cash and cash equivalents $ 163,194 $ — $ — Restricted cash Restricted cash 152,068 — — Convertible loans Other assets — — 4,115 Investments in equity securities Other assets 3,409 — — 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 Liabilities: Contingent consideration Other long-term liabilities $ — $ — $ 58,580 Derivatives 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 and other current 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 The following tables summarize the changes in fair value of the Company’s Level 3 assets and liabilities: (in thousands) Sinclair Performance Warrants Contingent Consideration Convertible Loans Beginning as of December 31, 2023 $ 44,703 $ 58,580 $ 4,115 Change in fair value — ( 1,835 ) ( 33 ) Ending as of March 31, 2024 $ 44,703 $ 56,745 $ 4,082 Change in fair value ( 6,317 ) 1,040 4 Ending as of June 30, 2024 $ 38,386 $ 57,785 $ 4,086 24 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (in thousands) Sinclair Performance Warrants Contingent Consideration Convertible Loans Beginning as of December 31, 2022 $ 36,987 $ 8,220 $ 10,212 Additions in the period (acquisition fair value) — — 500 Change in fair value 267 1,241 126 Ending as of March 31, 2023 $ 37,254 $ 9,461 $ 10,838 Additions in the period (acquisition fair value) — — 500 Reductions in the period — ( 9,292 ) — Change in fair value ( 7,558 ) ( 169 ) 136 Ending as of June 30, 2023 $ 29,696 $ — $ 11,474 The gains (losses) recognized in the condensed consolidated statements of operations for derivative instruments during the three and six months ended June 30, 2024 and 2023 are as follows: Condensed Consolidated Statements of Operations Location Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Derivatives not designated as hedging instruments Sinclair Performance Warrants Other non-operating income, net $ 6,317 $ 7,558 $ 6,317 $ 7,291 Derivatives designated as hedging instruments Interest rate contracts Interest expense, net $ ( 2,809 ) $ — $ ( 5,695 ) $ — Cross currency swaps Interest expense, net ( 1,325 ) — ( 2,536 ) — Interest Rate Contracts and Cross Currency Swaps The fair values of interest rate contracts and cross currency swap 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). Sinclair Performance Warrants Sinclair Performance Warrants are accounted for as a derivative instrument classified as a liability within Level 3 of the hierarchy as the warrants are not traded in active markets and are subject to certain assumptions and estimates made by management related to the probability of meeting performance milestones. These assumptions and the probability of meeting performance targets may have a significant impact on the value of the warrant. 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 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 condensed consolidated balance sheets. 25 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Contingent Consideration 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 condensed consolidated statements of operations. 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 second quarter of 2023, the Company, in satisfaction of contingencies related to the respective acquisition agreements, 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. In connection with the acquisition of Bally’s Golf Links on September 12, 2023, the Company recorded contingent consideration, which was valued at $ 57.8 million as of June 30, 2024. Refer to Note 6 “ Business Combinations ” for further information. Convertible Loans The Company has certain agreements with vendors to provide a portfolio of games to its customers. Pursuant to these agreements, the Company has issued loans to its vendors and has an option to convert the loans to shares of the vendors’ equity, exercisable within a specified time period. The Company recorded instruments within “Other assets” at their fair value. The fair value of the loans to vendors have share values based on unobservable inputs and are classified within Level 3 of the hierarchy, with changes to fair value included within “Other non-operating expenses, net” of the condensed consolidated statements of operations. Investments in Equity Securities The Company has a long term investment in an unconsolidated entity which it accounts for under the equity method of accounting. The Company has elected the fair value option allowed by ASC 825, Financial Instruments , with respect to this investment. Under the fair value option, the investment is remeasured at fair value at each reporting period through earnings. The Company measures fair value using quoted prices in active markets that are classified within Level 1 of the hierarchy, with changes to fair value included within “Other non-operating expenses, net” of the condensed consolidated statements of operations. 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 condensed consolidated statements of operations. Long-Term Debt The fair value of the Company’s Term Loan Facility and senior notes are estimated based on quoted prices in active markets and are classified as Level 1 measurements. The fair value of the Revolving Credit Facility approximates its carrying amount as it is revolving, variable rate debt, and is also classified as a Level 1 measurement. In the table below, the carrying amounts of the Company’s long-term debt is net of debt issuance costs and debt discounts. Refer to Note 14 “ Long-Term Debt ” for further information. June 30, 2024 December 31, 2023 (in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Term Loan Facility $ 1,865,020 $ 1,808,248 $ 1,871,330 $ 1,888,100 5.625 % Senior Notes due 2029 737,467 535,313 736,447 596,250 5.875 % Senior Notes due 2031 720,644 502,556 719,858 570,544 26 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 12. ACCRUED AND OTHER CURRENT LIABILITIES As of June 30, 2024 and December 31, 2023, accrued and other current liabilities consisted of the following: (in thousands) June 30, 2024 December 31, 2023 Gaming liabilities $ 165,354 $ 177,557 Diamond Sports Group non-cash liability (1) 202,572 144,883 Compensation 62,146 83,112 Bally’s Chicago - land development liability 49,671 47,739 Interest payable 66,278 66,587 Other 171,790 131,841 Total accrued and other current liabilities $ 717,811 $ 651,719 __________________________________ (1) Refer to Note 17 “ Commitments and Contingencies ” for further information. 13. 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. 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 incurred restructuring charges representing employee related severance costs and accelerated depreciation of certain property and equipment. The components of restructuring charges by segment for the three and six months ended June 30, 2024 and 2023 are summarized as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Severance and employee related benefits (1) Casinos & Resorts $ 348 $ — $ 20,003 — International Interactive 3 1,595 55 10,927 North America Interactive — 1,789 ( 1,479 ) 7,647 Other 25 56 410 1,688 Total severance and employee related benefits 376 3,440 18,989 20,262 Accelerated depreciation expense (2) — — 80,117 — Total restructuring charges $ 376 3,440 99,106 20,262 __________________________________ (1) Included within “General and administrative” of the condensed consolidated statements of operations. (2) Included within “Depreciation and amortization” of the Casinos & Resorts reportable segment within the condensed consolidated statements of operations. 27 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The changes in the Company’s restructuring related liabilities for the six months ended June 30, 2024 is as follows: (in thousands) Balance as of December 31, 2023 $ 5,291 Charges 18,989 Payments ( 21,927 ) Effect of foreign exchange ( 849 ) Balance as of June 30, 2024 $ 1,504 The restructuring liability as of June 30, 2024 and December 31, 2023 is included within “Accrued and other current liabilities” on the condensed consolidated balance sheets. 14. LONG-TERM DEBT As of June 30, 2024 and December 31, 2023, long-term debt consisted of the following: (in thousands) June 30, 2024 December 31, 2023 Term Loan Facility (1) $ 1,896,375 $ 1,906,100 Revolving Credit Facility 350,000 335,000 5.625 % Senior Notes due 2029 750,000 750,000 5.875 % Senior Notes due 2031 735,000 735,000 Less: Unamortized original issue discount ( 21,785 ) ( 23,756 ) Less: Unamortized deferred financing fees ( 36,459 ) ( 39,709 ) Long-term debt, including current portion 3,673,131 3,662,635 Less: Current portion of Term Loan and Revolving Credit Facility ( 19,450 ) ( 19,450 ) Long-term debt, net of discount and deferred financing fees, excluding current portion $ 3,653,681 $ 3,643,185 __________________________________ (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 USD denominated variable rate Term Loan Facility into fixed rate debt through its maturity in 2028. Refer to Note 10 “ Derivative Instruments ” for further information. Senior Notes 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”). The Senior Notes were issued pursuant to an indenture, dated as of August 20, 2021, among the Escrow Issuers and U.S. Bank National Association, as trustee. Certain of the net proceeds from the Senior Notes offering were placed in escrow accounts for use in connection with the Gamesys acquisition. 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 (as defined below). The 2029 Notes mature on September 1, 2029 and the 2031 Notes mature on September 1, 2031. Interest is payable on the Senior Notes in cash semi-annually on March 1 and September 1 of each year, beginning on March 1, 2022. The Company may redeem some or all of the Senior Notes at any time prior to September 1, 2024, in the case of the 2029 Notes, and September 1, 2026, in the case of the 2031 Notes, at prices equal to 100% of the principal amount of the Senior Notes to be redeemed plus certain “make-whole” premiums, plus accrued and unpaid interest. In addition, prior to September 1, 2024, the Company may redeem up to 40 % of the original principal amount of each series of the Senior Notes with proceeds of certain equity offerings at a redemption price equal to 105.625 % of the principal amount, in the case of the 2029 Notes, and 105.875 %, in the case of the 2031 Notes, plus accrued and unpaid interest. 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. 28 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) During the six months ended June 30, 2023, the Company repurchased and retired $ 15.0 million of the 2031 Notes at a weighted average price of 70.80 % of the principal. In connection with the repurchase of these 2031 Notes, the Company recorded a gain on extinguishment of debt of $ 4.0 million recorded within “Other non-operating income, net” in the condensed consolidated statements of operations. The indenture contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, (1) incur additional indebtedness, (2) pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, (3) enter into certain transactions with affiliates, (4) sell or otherwise dispose of assets, (5) create or incur liens and (6) merge, consolidate or sell all or substantially all of the Company’s assets. These covenants are subject to exceptions and qualifications set forth in the indenture. Credit Facility On October 1, 2021, the Company and certain of its subsidiaries entered into a credit agreement (the “Credit Agreement”) with Deutsche Bank AG New York Branch, as administrative agent and collateral agent, and the other lenders party thereto, providing for senior secured financing of up to $ 2.565 billion, consisting of a senior secured term loan facility in an aggregate principal amount of $ 1.945 billion (the “Term Loan Facility”), which will mature in 2028, and a senior secured revolving credit facility in an aggregate principal amount of $ 620.0 million (the “Revolving Credit Facility”), which will mature in 2026. The credit facilities allow the Company to increase the size of the Term Loan Facility or request one or more incremental term loan facilities or increase commitments under the Revolving Credit Facility or add one or more incremental revolving facilities in an aggregate amount not to exceed the greater of $ 650 million and 100 % of the Company’s consolidated EBITDA for the most recent four-quarter period plus or minus certain amounts as specified in the Credit Agreement, including an unlimited amount subject to compliance with a consolidated total secured net leverage ratio as set out in the Credit Agreement. 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. 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. 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. These covenants are subject to exceptions and qualifications set forth in the Credit Agreement. The Revolving Credit Facility contains a financial covenant regarding a maximum first lien net leverage ratio that applies when borrowings under the Revolving Credit Facility exceed 30 % of the total revolving commitment. As of June 30, 2024, 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 10 “ Derivative Instruments ” for further information. 29 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 15. LEASES Operating Leases The Company is committed under various operating lease agreements for real estate and property used in operations. 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”). 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 $ 1.18 billion and $ 1.20 billion as of June 30, 2024 and December 31, 2023, respectively, and right of use assets of $ 1.13 billion and $ 1.16 billion as of June 30, 2024 and December 31, 2023, respectively, which were included in the condensed consolidated balance sheets. GLPI Leases As of June 30, 2024, the Company’s Bally’s Evansville, Bally’s Dover, Bally’s Quad Cities, Bally’s Black Hawk, Bally’s Tiverton and Hard Rock Biloxi properties are leased under the terms of a master lease agreement (the “Master Lease”) with GLPI. All GLPI leases are accounted for as operating leases within the provisions of ASC 842, Leases (“ASC 842”), over the lease term or until a re-assessment event occurs. The Master Lease has an initial term of 15 years and includes four , five-year options to renew and requires combined minimum annual payments of $ 100.5 million, subject to minimum 1% annual escalation or greater escalation dependent on CPI. The renewal options are not reasonably certain of exercise as of June 30, 2024. On January 3, 2023, the Company completed a transaction with GLP Capital, L.P (“GLP”)., an affiliate 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. During the six months ended June 30, 2023, the Company recorded a gain of $ 374.3 million representing the difference in the transaction price and the derecognition of assets. This gain is reflected as “Gain from sale-leaseback, net” in the condensed 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. This lease has an initial term of 50 years (with a maximum term of 99 years with renewal options) at annual rent of $ 10.5 million, subject to minimum 1% annual escalation or greater escalation dependent on CPI. The renewal options are not reasonably certain of exercise as of June 30, 2024. Components of lease expense, included within “General and administrative” in the condensed consolidated statements of operations, for operating leases during the three and six months ended June 30, 2024 and 2023 are as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Operating leases: Operating lease cost $ 36,957 $ 36,956 $ 74,288 $ 73,775 Variable lease cost 2,823 2,365 5,609 4,835 Operating lease expense 39,780 39,321 79,897 78,610 Short-term lease expense 5,633 3,785 11,488 6,111 Total lease expense $ 45,413 $ 43,106 $ 91,385 $ 84,721 30 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Supplemental cash flow and other information related to operating leases for the three and six months ended June 30, 2024 and 2023 are as follows: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Cash paid for amounts included in the lease liability - operating cash flows from operating leases $ 32,956 $ 33,215 $ 64,505 $ 64,992 Right of use assets obtained in exchange for operating lease liabilities $ 631 $ 7,094 $ 631 $ 403,659 June 30, 2024 December 31, 2023 Weighted average remaining lease term 17.3 years 17.6 years Weighted average discount rate 7.5 % 7.5 % As of June 30, 2024, future minimum lease payments under noncancelable operating leases are as follows: (in thousands) June 30, 2024 Remaining 2024 $ 72,174 2025 142,731 2026 142,477 2027 137,262 2028 139,368 Thereafter 1,610,642 Total lease payments 2,244,654 Less: present value discount ( 1,061,439 ) Lease obligations $ 1,183,215 Future minimum lease payments disclosed in the table above include $ 87.7 million related to extension options that are reasonably certain of being exercised. Financing Obligation Bally’s Chicago Operating Company, LLC., an indirect wholly-owned subsidiary of the Company, entered into a ground lease for the land on which Bally’s Chicago will be built, which is accounted for as a financing obligation in accordance with ASC 470, Debt, as the transaction did not qualify as a sale under ASC 842. 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 liability within ”Long-term portion of financing obligation” of $ 200.0 million on its condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023. All lease payments are recorded as interest expense and there is no reduction to the financing obligation over the lease term. Bally’s Chicago made cash payments, and recorded corresponding interest expense of $ 4.7 million and $ 4.5 million during the three months ended June 30, 2024 and 2023, respectively, and $ 9.3 million and $ 8.7 million during the six months ended June 30, 2024 and 2023, respectively. Lessor The Company leases its hotel rooms to patrons and records the corresponding lessor revenue in Non-gaming revenue within our condensed consolidated statements of operations. The Company had lessor revenues related to the rental of hotel rooms of $ 35.3 million and $ 51.4 million for the three months ended June 30, 2024 and 2023, respectively, and $ 76.4 million and $ 98.7 million for the six months ended June 30, 2024 and 2023, respectively. Hotel leasing arrangements vary in duration, but are short-term in nature. 31 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 16. STOCKHOLDERS’ EQUITY Capital Return Program The Company has a Board of Directors approved capital return program under which the Company may expend a total of up to $ 700 million for share repurchases and payment of dividends. Future share repurchases may be effected in various ways, which could include open-market or private repurchase transactions, accelerated stock repurchase programs, tender offers or other transactions. The amount, timing and terms of any return of capital transaction will be determined based on prevailing market conditions and other factors. There is no fixed time period to complete share repurchases. As of June 30, 2024 and December 31, 2023, $ 95.5 million was available for use under the capital return program. There was no share repurchase activity during the three and six months ended June 30, 2024. Total share repurchase activity during the three and six months ended 2023 was as follows: (in thousands, except share and per share data) Three Months Ended June 30, 2023 Six Months Ended June 30, 2023 Number of common shares repurchased 748,502 1,774,845 Total cost $ 10,705 $ 30,458 Average cost per share, including commissions $ 14.30 $ 17.16 All shares repurchased during the three and six months ended June 30, 2023 were transferred to treasury stock and 712,122 and 1,738,465 shares were retired during those same periods, respectively. The shares were returned to the status of authorized but unissued. As of June 30, 2024, there were no shares remaining in treasury. There were no cash dividends paid during the three and six months ended June 30, 2024 and 2023. Common Stock Offering On April 20, 2021, the Company issued a total of 12,650,000 shares of Bally’s common stock in an underwritten public offering at a price to the public of $ 55.00 per share. Net proceeds from the offering were approximately $ 671.4 million, after deducting underwriting discounts, but before expenses. On April 20, 2021, the Company issued to affiliates of Sinclair a warrant to purchase 909,090 common shares for an aggregate purchase price of $ 50.0 million, or $ 55.00 per share. The net proceeds were used to finance a portion of the purchase price of the Gamesys acquisition. The exercise price of the warrant is nominal and its exercise is subject to, among other conditions, requisite gaming authority approvals. Sinclair agreed not to acquire more than 4.9 % of Bally’s outstanding common shares without such approvals. In addition, in accordance with the agreements that Bally’s and Sinclair entered into in November 2020, Sinclair exchanged 2,086,908 common shares for substantially identical warrants. Preferred Stock The Company has authorized the issuance of up to 10 million shares of $ 0.01 par value preferred stock. As of June 30, 2024 and December 31, 2023, no shares of preferred stock have been issued. 32 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Shares Outstanding As of June 30, 2024, the Company had 40,619,356 common shares issued and outstanding. The Company issued warrants, options and other contingent consideration in acquisitions and strategic partnerships that are expected to result in the issuance of common shares in future periods resulting from the exercise of warrants and options or the achievement of certain performance targets. These incremental shares are summarized below: Sinclair Penny Warrants (Note 2) 7,911,724 Sinclair Performance Warrants (Note 2) 3,279,337 Sinclair Options (1) (Note 2) 1,639,669 MKF penny warrants (Note 11) 44,128 Telescope contingent shares (Note 11) 8,626 Outstanding awards under Equity Incentive Plans 1,643,103 14,526,587 __________________________________ (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 Framework Agreement. Accumulated Other Comprehensive Income (Loss) The following tables reflect the changes in accumulated other comprehensive loss by component for the six months ended June 30, 2024 and 2023, respectively: (in thousands) Foreign Currency Translation Adjustment Benefit Plans Cash Flow Hedges (1) Net Investment Hedges Total Accumulated other comprehensive (loss) income at December 31, 2023 $ ( 177,203 ) $ 886 $ ( 11,246 ) $ ( 21,995 ) $ ( 209,558 ) Other comprehensive income (loss) before reclassifications ( 46,679 ) — 26,356 15,597 ( 4,726 ) Reclassifications from accumulated other comprehensive income (loss) to earnings — — ( 5,695 ) ( 2,536 ) ( 8,231 ) Tax effect — — ( 6,074 ) 4,193 ( 1,881 ) Accumulated other comprehensive (loss) income at June 30, 2024 $ ( 223,882 ) $ 886 $ 3,341 $ ( 4,741 ) $ ( 224,396 ) __________________________________ (1) As of June 30, 2024, approximately $ 7.3 million of existing gains and losses are estimated to be reclassified into earnings within the next 12 months. (in thousands) Foreign Currency Translation Adjustment Benefit Plans Total Accumulated other comprehensive (loss) income at December 31, 2022 $ ( 295,984 ) $ 344 $ ( 295,640 ) Other comprehensive income 90,698 — 90,698 Accumulated other comprehensive (loss) income at June 30, 2023 $ ( 205,286 ) $ 344 $ ( 204,942 ) 33 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 17. COMMITMENTS AND CONTINGENCIES Litigation 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. In the first quarter of 2024, 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 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. 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, and the Company derecognized the rights fees liability against the non-cash liability established at December 31, 2023. Bally’s has recorded a $ 202.6 million non-cash liability to reflect the effect of the termination of naming rights on its remaining commercial rights intangible asset originally recorded at the time that the arrangement was agreed, which is expected to occur in 2024. 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. The current liability for the estimated losses associated with these proceedings is not material to the Company’s consolidated financial condition and those estimated losses are not expected to have a material impact on results of operations. Although the Company maintains what it believes is adequate insurance coverage to mitigate the risk of loss pertaining to covered matters, legal and administrative proceedings can be costly, time-consuming and unpredictable. Although no assurance can be given, the Company does not believe that the final outcome of these matters, including costs to defend itself in such matters, will have a material adverse effect on the company’s consolidated financial statements. Further, no assurance can be given that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters. Capital Expenditure Commitments 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 $ 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. As of June 30, 2024, all investment requirements had been met and no commitment to invest in non-hotel projects 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 June 30, 2024, approximately $ 55.9 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. City of Chicago Guaranty 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. 34 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Bally’s Chicago Casino Fees Under the Illinois Gambling Act, the Company will be responsible to pay the Illinois Gaming Board 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. Sponsorship Commitments As of June 30, 2024, the Company has entered into multiple sponsorship agreements with various professional sports leagues and teams. These agreements commit a total of $ 139.0 million through 2037 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. As of June 30, 2024, the cumulative minimum obligation committed in these agreements is approximately $ 44.8 million through 2029. 18. SEGMENT REPORTING The Company has three operating and reportable segments: Casinos & Resorts, International Interactive and North America Interactive. The “Other” category includes interest expense for the Company and certain unallocated corporate operating expenses and other adjustments, including eliminations of transactions among segments to reconcile to the Company’s consolidated results including, among other expenses, share-based compensation, acquisition and other transaction costs and certain non-recurring charges. The Company’s three reportable segments as of June 30, 2024 are: Casinos & Resorts - Includes the Company’s 15 casino and resort properties, one horse racetrack and one golf course. International Interactive - Gamesys’ European and Asian operations. North America Interactive - A portfolio of sports betting, iGaming, and free-to-play gaming brands, and the North American operations of Gamesys. As of June 30, 2024, 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 28 % and 7 % of total revenue, respectively, for the three months ended June 30, 2024, approximately 26 % and 12 %, respectively for the three months ended June 30, 2023, approximately 27 % and 8 %, respectively for the six months ended June 30, 2024, and approximately 25 % and 12 %, respectively for the six months ended June 30, 2023. The Company does not have any revenues from any individual customers that exceed 10% of total reported revenues. 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) income. The Other category is included in the following tables in order to reconcile the segment information to the Company’s condensed consolidated financial statements. 35 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Revenue Casinos & Resorts $ 343,051 $ 333,162 $ 685,380 $ 661,948 International Interactive 229,396 247,774 464,079 493,346 North America Interactive 49,210 25,270 90,680 49,632 Total $ 621,657 $ 606,206 $ 1,240,139 $ 1,204,926 Adjusted EBITDAR (1) Casinos & Resorts $ 99,801 $ 111,005 $ 189,219 $ 216,128 International Interactive 81,292 84,574 164,824 164,875 North America Interactive ( 6,757 ) ( 17,685 ) ( 16,915 ) ( 28,248 ) Other ( 12,537 ) ( 16,536 ) ( 27,214 ) ( 33,804 ) Total 161,799 161,358 309,914 318,951 Operating (expense) income Rent expense associated with triple net operating leases (2) ( 31,737 ) ( 31,320 ) ( 63,384 ) ( 62,558 ) Depreciation and amortization ( 78,782 ) ( 79,187 ) ( 238,528 ) ( 153,748 ) Transaction costs ( 11,119 ) ( 16,434 ) ( 17,913 ) ( 38,452 ) Restructuring ( 376 ) ( 3,440 ) ( 18,989 ) ( 20,262 ) Tropicana Las Vegas demolition costs ( 12,261 ) — ( 12,261 ) — Share-based compensation ( 4,472 ) ( 6,290 ) ( 7,530 ) ( 12,330 ) Gain on sale-leaseback — 135 — 374,321 Impairment charges ( 12,757 ) ( 9,653 ) ( 12,757 ) ( 9,653 ) Other ( 4,722 ) ( 9,187 ) ( 6,934 ) ( 13,555 ) Income (loss) from operations 5,573 5,982 ( 68,382 ) 382,714 Other (expense) income Interest expense, net of interest income ( 74,200 ) ( 67,093 ) ( 147,331 ) ( 130,357 ) Other 6,930 6,811 11,484 9,421 Total other expense, net ( 67,270 ) ( 60,282 ) ( 135,847 ) ( 120,936 ) (Loss) income before income taxes ( 61,697 ) ( 54,300 ) ( 204,229 ) 261,778 Provision for income taxes 1,501 28,649 ( 29,881 ) ( 109,093 ) Net (loss) income $ ( 60,196 ) $ ( 25,651 ) $ ( 234,110 ) $ 152,685 __________________________________ (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 15 “ Leases ” for further information. 36 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Capital Expenditures Casinos & Resorts $ 13,278 $ 34,477 $ 23,157 $ 59,702 International Interactive 112 876 358 1,657 North America Interactive 429 1,032 689 1,558 Other (1) 21,890 39,483 39,558 56,629 Total $ 35,709 $ 75,868 $ 63,762 $ 119,546 __________________________________ (1) Includes $ 21.6 million and $ 39.1 million related to our future Bally’s Chicago permanent facility during the three and six months ended June 30, 2024, respectively. Total assets are not regularly reviewed for each operating segment when assessing segment performance or allocating resources and accordingly, are not presented. As of June 30, 2024 and December 31, 2023, carrying values of goodwill by reportable segment are as follows: (in thousands) June 30, 2024 December 31, 2023 Goodwill Casinos & Resorts (1) $ 313,285 $ 313,493 International Interactive 1,561,449 1,586,590 North America Interactive (2) 35,582 35,720 Total $ 1,910,316 $ 1,935,803 __________________________________ (1) Net of accumulated goodwill impairment charges of $ 5.4 million. (2) Net of accumulated goodwill impairment charges of $ 140.4 million. 19. EARNINGS (LOSS) PER SHARE Diluted earnings per share includes the determinants of basic earnings per share and, in addition, reflects the dilutive effect of the common stock deliverable for stock options, using the treasury stock method, and for RSUs, RSAs and PSUs for which future service is required as a condition to the delivery of the underlying common stock. Three Months Ended June 30, Six Months Ended June 30, (in thousands, except per share data) 2024 2023 2024 2023 Net (loss) income applicable to common stockholders $ ( 60,196 ) $ ( 25,651 ) $ ( 234,110 ) $ 152,685 Weighted average common shares outstanding, basic 48,498 53,942 48,308 54,173 Weighted average effect of dilutive securities — — — 409 Weighted average common shares outstanding, diluted 48,498 53,942 48,308 54,582 Basic earnings per share $ ( 1.24 ) $ ( 0.48 ) $ ( 4.85 ) $ 2.82 Diluted earnings per share $ ( 1.24 ) $ ( 0.48 ) $ ( 4.85 ) $ 2.80 There were 4,951,558 and 5,193,897 share-based awards that were considered anti-dilutive for the three months ended June 30, 2024 and 2023, respectively, and 5,254,089 and 5,091,986 share-based awards that were considered anti-dilutive for the six months ended June 30, 2024 and 2023, respectively. 37 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) On November 18, 2020, the Company issued Penny Warrants, Performance Warrants and Options which participate in dividends with the Company’s common stock subject to certain contingencies. In the period in which the contingencies are met, those instruments are participating securities to which income will be allocated using the two-class method. The Performance Warrants and Options do not participate in net losses. The Penny Warrants were considered exercisable for little to no consideration and are therefore included in basic shares outstanding at their issuance date. For the three and six months ended June 30, 2024 and 2023, the shares underlying the Performance Warrants were anti-dilutive as certain contingencies were not met. Refer to Note 2 “ Summary of Significant Accounting Policies ” for further information regarding the Framework Agreement. 20. SUBSEQUENT EVENTS Construction and Financing Arrangement On July 11, 2024, the Company entered into a Binding Term Sheet to form a strategic construction and financing arrangement with GLP, an affiliate of GLPI, which includes the funding to complete the construction of Bally’s Chicago’s permanent casino. GLP has agreed to acquire the real estate underlying the Bally’s Chicago project, for which the Company is currently subject to a financing obligation with an unrelated party, referenced in Note 15 “Leases”. GLP will amend the existing land lease through a new master lease agreement with Bally’s Chicago Operating Company, LLC (“Chicago MLA”). The Chicago MLA will include annual rent of $ 20 million, subject to customary escalation provisions. The Chicago MLA will also provide up to $ 940 million in construction financing, subject to conditions and approvals. The Company will pay additional rent under the Chicago MLA based on a 8.5 % capitalization rate on funded amounts. The initial lease term for the Chicago MLA is 15 years with renewal options to be agreed upon by the parties. The Company will also sell and lease back from GLP its properties in Kansas City and Shreveport for $ 395 million, with initial annual rent of $ 32.2 million, subject to escalation. In addition, the Company plans to sell and lease back its Bally’s Twin River property to GLP by the end of 2026 for $ 735 million, with initial annual rent of $ 58.8 million. GLP has the right to call this transaction starting October 2026. All such transactions are subject to required regulatory approvals. Agreement and Plan of Merger On July 25, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with SG Parent LLC, a Delaware limited liability company (“Parent”), The Queen Casino & Entertainment, Inc., a Delaware corporation and affiliate of Parent (“Queen”), Epsilon Sub I, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub I”), Epsilon Sub II, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub II”, and together with the Company and Merger Sub I, the “Company Parties”), and, solely for purposes of specified provisions of the Merger Agreement, SG CQ Gaming LLC, a Delaware limited liability company (“SG Gaming” and together with Parent and Queen, the “Buyer Parties”). The Merger Agreement provides, among other things and on the terms and subject to the conditions in the Merger Agreement, in connection with the closing of the transaction, (i) SG Gaming will contribute to the Company all shares of common stock of Queen that it owns (the “Queen Share Contribution”) in exchange for shares of common stock of the Company (“Company Common Stock”) based on a 2.45368905950 share exchange ratio, (ii) immediately thereafter, Merger Sub I will merge with and into the Company (the “Company Merger”), with the Company surviving the Company Merger and (iii) immediately thereafter, Merger Sub II will merge with and into Queen (the “Queen Merger,” and together with the Company Merger, the “Mergers”), with Queen surviving the Queen Merger as a direct, wholly owned subsidiary of the Company. 38 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The transaction is expected to close in the second calendar quarter of 2025, subject to the satisfaction of closing conditions contained in the Merger Agreement, including approval of the Company Merger by (a) the affirmative vote of the holders of a majority of all of the outstanding shares of Company Common Stock entitled to vote; (b) the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock held by the unaffiliated stockholders of the Company entitled to vote; (c) the expiration of any waiting period applicable to the consummation of the Queen Share Contribution or Mergers under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and (d) receipt of specified gaming approvals by the Company and Queen (as defined in the Merger Agreement ). Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “ Effective Time ”), each share of the Company’s Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of common stock owned by (i) the Company or any of its wholly owned subsidiaries, (ii) Parent or any of Parent’s affiliates, (iii) by holders exercising statutory appraisal rights; (iv) by SG Gaming following the Queen Share Contribution; or (v) by holders who have elected to have such shares remain issued and outstanding following the Company Merger (a “Rolling Share Election”)) will be converted into the right to receive cash consideration equal to $ 18.25 per share of common stock (the “ Per Share Price ”). Each holder of shares of Company Common Stock (other than the Company or its subsidiaries) will have the option to make a Rolling Share Election. The Merger Agreement contains customary representations, warranties and covenants of the Company Parties and the Buyer Parties, including, among others, covenants by each the Company and Queen relating (i) to conduct of their respective business prior to the closing of the Queen Share Contribution and the Mergers in the ordinary course during the period between the execution of the Merger Agreement and consummation of the Merger and (ii) not to engage in certain expressly enumerated transactions during such period. Under the terms of the Merger Agreement, the Company is subject to a customary “no-shop” provision that restricts the Company and its representatives from soliciting an alternative acquisition proposal (as described in the Merger Agreement) from third parties or providing information to or participating in any discussions or negotiations with third parties regarding any alternative acquisition proposal. However, prior to the receipt of the requisite approval of the holders of Company Common Stock, the “no-shop” provision permits the Company, under certain circumstances and in compliance with certain obligations set forth in the Merger Agreement, to provide non-public information and engage in discussions and negotiations with respect to an unsolicited alternative acquisition that would reasonably be expected to lead to a Superior Proposal (as defined in the Merger Agreement). The Merger Agreement also contains certain termination rights for the Company and Parent, with a termination fee equal to $ 11,100,000 payable by the Company to Parent under certain circumstances and a termination fee equal to $ 22,200,000 in cash or stock payable by Parent to the Company under certain circumstances. In addition, the Company or Parent may terminate the Merger Agreement if the Merger is not consummated by July 25, 2025. The Merger Agreement, the Merger and the transactions contemplated thereby were (i) unanimously recommended by a special committee of the board of directors of the Company (the “Board”), consisting solely of disinterested members of the Board, on July 24, 2024 and (ii) approved by the disinterested members of the Board on July 24, 2025. The foregoing descriptions of the Merger, the Merger Agreement, and the transactions contemplated thereby are not complete and are subject to and qualified in their entirety by the full text of the Merger Agreement, which is attached as an exhibit to, and described in, the Company’s Form 8-K filed with the SEC on July 25, 2024. Concurrently with the execution of the Merger Agreement, the Company and Parent entered into support agreements with SRL (the “SG Support Agreement”), SBG (the “SBG Support Agreement”), and Noel Hayden (the “Hayden Support Agreement”), each dated as of July 25, 2024 (collectively, the “Support Agreements”), pursuant to which each of them agreed, among other things, to vote their shares of Company Common Stock to adopt and approve the Merger Agreement and the other transactions contemplated by the Merger Agreement and to make a Rolling Share Election with respect to all shares of Company Common Stock owned or acquired by them, if any, including via the exercise of outstanding options or warrants. In addition, with respect to the SBG Support Agreement, the Company and SBG agreed that SBG would waive the right to receive the Per Share Price as the result of any exercise of performance warrants or options held by SBG. The SBG Support Agreement provides also that, simultaneously with the consummation of the transactions contemplated by the Merger Agreement, SBG will deliver to the Company the options it previously acquired from the Company to purchase 1,639,669 shares of Company Common Stock at prices between $ 30.00 and $ 45.00 per share for cancellation and retirement and in exchange therefor, the Company will issue to SBG warrants to purchase 384,536 shares of Company Common Stock containing terms substantially similar to the terms set forth in certain warrants currently held by SBG. The foregoing descriptions of the Support Agreements are not complete and are subject to and qualified in their entirety by reference to each of the SG Support Agreement, SBG Support Agreement and Hayden Support Agreement, each of which is attached as an exhibit to, and described in, the Company’s Form 8-K filed with the SEC on July 25, 2024. 39