What changed in this filing

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Item 1. Financial Statements

2024-11-08 compared with 2024-08-02 · 324 added, 252 removed, 972 unchanged (37% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30,

2024 December 31,

38 unchanged sentences

Additional paid-in-capital 1,411,114 1,400,479

Treasury stock, at cost, no shares outstanding as of June 30, 2024 and December 31, 2023

Treasury stock, at cost, no shares outstanding as of September 30, 2024 and December 31, 2023

Accumulated deficit ( 1,037,860 ) ( 555,895 )

8 unchanged sentences

(In thousands, except per share data)

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

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

2024 2023 2024 2023

6 unchanged sentences

General and administrative 273,593 230,582 774,448 732,147

Gain from sale-leaseback, net — ( 135 ) — ( 374,321 )

Loss (gain) on sale-leaseback, net 150,000 — 150,000 ( 374,321 )

Depreciation and amortization 77,800 77,487 316,328 231,235

Total operating costs and expenses 787,629 595,241 2,096,150 1,417,453

Income (loss) from operations 5,573 5,982 ( 68,382 ) 382,714

(Loss) income from operations ( 157,655 ) 37,236 ( 226,037 ) 419,950

Other (expense) income:

Interest expense, net ( 73,975 ) ( 70,630 ) ( 221,306 ) ( 200,987 )

Other non-operating income, net 6,930 6,811 11,484 9,421

Other non-operating (expense) income, net ( 49,854 ) 15,528 ( 38,370 ) 24,949

Total other expense, net ( 123,829 ) ( 55,102 ) ( 259,676 ) ( 176,038 )

10 unchanged sentences

(In thousands)

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

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

2024 2023 2024 2023

Net (loss) income $ ( 247,855 ) $ ( 61,802 ) $ ( 481,965 ) $ 90,883

Other comprehensive (loss) income:

Other comprehensive income (loss):

Foreign currency translation adjustments 150,021 ( 89,166 ) 103,342 1,532

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

Net unrealized derivative (loss) gain on cash flow hedges, net of tax ( 41,967 ) 2,593 ( 27,380 ) 2,593

Net unrealized derivative (loss) gain on net investment hedges, net of tax ( 23,903 ) 211 ( 6,649 ) 211

Other comprehensive income (loss) 84,151 ( 86,362 ) 69,313 4,336

Total comprehensive (loss) income $ ( 163,704 ) $ ( 148,164 ) $ ( 412,652 ) $ 95,219

20 unchanged sentences

Balance as of June 30, 2024 40,619,356 $ 406 $ 1,407,118 $ — $ ( 790,005 ) $ ( 224,396 ) $ 428 $ 393,551

Issuance of restricted stock and other stock awards 33,990 — ( 103 ) — — — — ( 103 )

Share-based compensation — — 4,099 — — — — 4,099

Other comprehensive income — — — — — 84,151 — 84,151

Net loss — — — — ( 247,855 ) — — ( 247,855 )

Balance as of September 30, 2024 40,653,346 $ 406 $ 1,411,114 $ — $ ( 1,037,860 ) $ ( 140,245 ) $ 428 $ 233,843

BALLY’S CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

(In thousands, except share data)

Common Stock Additional

20 unchanged sentences

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

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

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

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

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

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

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

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

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2024 2023

7 unchanged sentences

Amortization of debt discount and debt issuance costs 8,730 8,482

Gain on sale-leaseback — ( 374,321 )

Loss (gain) on sale-leaseback 150,000 ( 374,321 )

Gain on extinguishment of debt — ( 4,044 )

Deferred income taxes ( 9,401 ) 59,774

Net gain on assets and liabilities measured at fair value ( 6,066 ) ( 293 )

Gain on equity method investments ( 789 ) ( 3,090 )

Net (gain) loss on assets and liabilities measured at fair value ( 12,474 ) 12

Loss (gain) on equity method investments 284 ( 5,344 )

Change in value of commercial rights liabilities 10,615 ( 11,967 )

Change in contingent consideration payable 264 1,024

Foreign exchange (gain) loss ( 3,799 ) 5,947

Foreign exchange loss (gain) 26,447 ( 2,512 )

Proceeds from interest rate contracts 11,042 —

10 unchanged sentences

Other investing activities ( 1,015 ) ( 7,512 )

Net cash (used in) provided by investing activities ( 87,602 ) 223,976

Net cash used in investing activities ( 191,081 ) ( 2,247 )

Cash flows from financing activities:

12 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2024 2023

4 unchanged sentences

Unpaid property and equipment $ 23,083 $ 24,608

Bally’s Chicago - land development liability 1,931 135,290

Unpaid internally developed software 2,040 1,769

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

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

Investment in GLP Capital, L.P.

Investment in RI Joint Venture — 17,832

June 30, December 31,

Net purchase consideration for acquisitions — 55,933

September 30, December 31,

Reconciliation of cash and cash equivalents and restricted cash:

36 unchanged sentences

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)

6 unchanged sentences

(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.

Site of future permanent casino resort is leased from GLPI.

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

2 unchanged sentences

Refer to Note 18 “ Segment Reportin g” for further information.

Agreement and Plan of Merger

On July 25, 2024, the Company entered into an Agreement and Plan of Merger (as amended, 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 thereof, SG CQ Gaming LLC, a Delaware limited liability company (“SG Gaming” and together with Parent and Queen, the “Buyer Parties”).

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Merger Agreement provides, among other things and on the terms and subject to the conditions therein, 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 26,909,895 shares of common stock of the Company (“Company Common Stock”) based on a 2.45368905950 share exchange ratio, (ii) the Company will issue approximately 3,542,205 shares of Company Common Stock to the other stockholders of Queen, (iii) immediately thereafter, Merger Sub I will merge into the Company (the “Company Merger”), with the Company surviving the Company Merger and (iv) immediately thereafter, Merger Sub II will merge 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.

The transaction is expected to close in the first 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 (which has occurred) 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 Current Report on Form 8-K filed with the SEC on July 25, 2024, and amendments thereto were attached as an exhibit to, and described in, the Company’s Current Reports on Forms 8-K filed with the SEC on August 28, 2024 and October 1, 2024, respectively.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Concurrently with the execution of the Merger Agreement, the Company and Parent entered into support agreements with Standard RI Ltd.

(“SRL”) (the “SG Support Agreement”), SBG Gaming, LLC, a designated subsidiary of Sinclair (“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 Current Report on Form 8-K filed with the SEC on July 25, 2024.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

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

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.

9 unchanged sentences

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.

The Company records its share of net income or loss within “Other non-operating (expense) income, net” in the condensed consolidated statements of operations.

For the three months ended September 30, 2024 and 2023, the Company recorded (loss) income from equity method investments of $( 1.1 ) million and $ 2.3 million, respectively, and for the nine months ended September 30, 2024 and 2023, the Company recorded (loss) income from equity method investments of $( 0.3 ) million and $ 5.3 million, respectively.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Variable Interest Entities

11 unchanged sentences

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

As of June 30, 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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

As of September 30, 2024 and December 31, 2023, Breckenridge had total assets of $ 166.6 million and $ 161.3 million, respectively, and total liabilities of $ 96.8 million and $ 87.7 million, respectively.

Breckenridge had revenues of $ 40.9 million and $ 71.5 million for the three months ended September 30, 2024 and 2023, respectively, and $ 149.4 million and $ 232.0 million for the nine months ended September 30, 2024 and 2023, respectively.

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

2 unchanged sentences

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.

Restricted cash includes player deposits, payment service provider deposits, cash collateral in connection with amounts previously due to the Chicago Tribune (refer to Note 8 “ Property and Equipment ”), 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,

September 30, December 31,

(in thousands) 2024 2023

8 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Deferred Payables

3 unchanged sentences

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.

During the three and nine months ended September 30, 2024, the Company borrowed $ 82.5 million and $ 184.8 million, respectively, under these deferred payable arrangements and during the three and nine months ended September 30, 2024 repaid $ 61.7 million and $ 103.1 million, respectively.

Amounts outstanding under these deferred payable arrangements were $ 84.1 million as of September 30, 2024 and are included in “Accrued and other current liabilities” on the condensed consolidated balance sheets.

For the three and nine months ended September 30, 2024, the Company incurred $ 1.7 million and $ 3.9 million of interest expense, respectively, under these arrangements.

These arrangements were not utilized by the Company during the three and nine months ended September 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.

These marketing expenses are included within Gaming expenses in the condensed consolidated statements of operations and were $ 39.4 million and $ 43.6 million for the three months ended September 30, 2024 and 2023, respectively, and $ 132.6 million and $ 137.3 million for the nine months ended September 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.

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.

For the three months ended September 30, 2024 and 2023, advertising expense was $ 3.5 million and $ 5.6 million, respectively, and for the nine months ended September 30, 2024 and 2023, advertising expense was $ 13.2 million and $ 14.2 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.

The Company recognized total share-based compensation expense of $ 4.1 million and $ 6.3 million for the three months ended September 30, 2024 and 2023, respectively, and $ 11.6 million and $ 18.6 million for the nine months ended September 30, 2024 and 2023, respectively.

The total income tax benefit for share-based compensation arrangements was $ 1.1 million and $ 1.7 million for the three months ended September 30, 2024 and 2023, respectively, and $ 3.0 million and $ 4.9 million for the nine months ended September 30, 2024 and 2023, respectively.

Strategic Partnership - Sinclair Broadcast Group

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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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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.

The Commercial rights intangible asset, net of accumulated amortization, was $ 202.6 million and $ 225.9 million as of September 30, 2024 and December 31, 2023, respectively.

Amortization was $ 7.8 million and $ 7.7 million for the three months ended September 30, 2024 and 2023, respectively, and $ 23.4 million and $ 23.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Refer to Note 9 “ Goodwill and Intangible Assets ” for further information.

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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.

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

Under the Framework Agreement, the Company issued to 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.

Refer to Note 1 “ General Information ” for further information.

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

The fair value of the Penny Warrants approximates the fair value of the underlying shares and was $ 150.4 million on November 18, 2020 at issuance, and was recorded to “Additional paid-in-capital” in the condensed consolidated balance sheets, with an offset to the Commercial rights intangible asset.

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.

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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.

The liability for these obligations was $ 18.8 million and $ 19.1 million as of September 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.

During the nine months ended September 30, 2024 and 2023, the Company recorded a benefit for income tax of $ 3.7 million, at an effective year to date tax rate of 0.8 % and a provision for income tax of $ 153.0 million, at an effective year to date tax rate of 62.7 %, respectively.

The 2024 year to date effective tax rate differed from the US federal statutory tax rate of 21%, creating a benefit for income tax on the Company’s Loss before income taxes, largely due to an increase in the valuation allowance, entirely offset by discrete tax asset related to the sale-leaseback transaction involving the real estate underlying the Bally’s Chicago project.

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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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:

Amounts included in General and administrative for the three and nine months ended September 30, 2024 and 2023 were as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

1 unchanged sentence

Acquisition and integration 7,319 19,595 18,016 46,480

Restructuring 376 3,440 18,989 20,262

Restructuring charges, net ( 1,068 ) 411 17,921 20,673

Impairment charges (1)

3 unchanged sentences

(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:

Other Non-Operating (Expense) Income, Net

Amounts included in Other non-operating (expense) income, net for the three and nine months ended September 30, 2024 and 2023 were as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

Change in value of commercial rights liabilities $ ( 16,932 ) $ 4,676 $ ( 10,615 ) $ 11,967

Net income from equity method investments 234 990 789 3,090

Net (loss) income from equity method investments ( 1,073 ) 2,254 ( 284 ) 5,344

Gain on extinguishment of debt — — — 4,044

Foreign exchange gain (loss) 983 ( 1,639 ) 3,799 ( 5,947 )

Foreign exchange (loss) gain ( 30,246 ) 8,459 ( 26,447 ) 2,512

Other, net ( 1,603 ) 139 ( 1,024 ) 1,082

Total other non-operating income, net $ 6,930 $ 6,811 $ 11,484 $ 9,421

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Total other non-operating (expense) income, net $ ( 49,854 ) $ 15,528 $ ( 38,370 ) $ 24,949

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

12 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

In December 2023, the FASB issued ASU No.

18 unchanged sentences

Additionally, the use of incentives across the online gaming products create future customer rights and are a separate performance obligation.

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.

5 unchanged sentences

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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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.

6 unchanged sentences

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

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

10 unchanged sentences

The standalone selling price of these goods and services are determined based upon the actual retail prices charged to customers for those items.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Revenue Recognition

4 unchanged sentences

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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

Three Months Ended September 30, 2024 Casinos & Resorts International Interactive North America Interactive Total

Gaming $ 256,234 $ 228,693 $ 38,979 $ 523,906

4 unchanged sentences

Total revenue $ 353,358 $ 230,937 $ 45,679 $ 629,974

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

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

4 unchanged sentences

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

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Gaming $ 762,197 $ 687,109 $ 115,408 $ 1,564,714

4 unchanged sentences

Total revenue $ 1,038,738 $ 695,016 $ 136,359 $ 1,870,113

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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

4 unchanged sentences

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

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’s receivables related to contracts with customers were $ 30.8 million and $ 38.5 million as of September 30, 2024 and December 31, 2023, respectively.

The Company has the following liabilities related to contracts with customers:

3 unchanged sentences

therefore, the majority of these incentives outstanding at the end of a period will either be redeemed or expire within the next 12 months.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Advance deposits are typically interactive player deposits and customer deposits for future banquet events, hotel room reservations, and gift cards.

2 unchanged sentences

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

Liabilities related to contracts with customers as of June 30, 2024 and December 31, 2023 were as follows:

June 30, December 31,

Liabilities related to contracts with customers as of September 30, 2024 and December 31, 2023 were as follows:

September 30, December 31,

(in thousands) 2024 2023

Unpaid wagers $ 33,815 $ 20,481

Advanced deposits from customers 30,640 29,052

Loyalty programs 12,726 16,803

Unpaid wagers 11,704 20,481

Total $ 77,181 $ 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.

The Company recognized $ 7.1 million and $ 10.0 million of revenue related to loyalty program redemptions for the three months ended September 30, 2024 and 2023, respectively, and $ 22.6 million and $ 27.7 million of revenue related to loyalty program redemptions for the nine months ended September 30, 2024 and 2023, respectively.

BUSINESS COMBINATIONS

9 unchanged sentences

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:

The following table summarizes the consideration paid and the fair values of the assets acquired and liabilities assumed in connection with the Casinos & Resorts acquisition as of September 30, 2024:

Bally’s Golf Links

(in thousands) Preliminary (2)

(in thousands) Final (2)

Total current assets $ 1,108

7 unchanged sentences

(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.

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

The Company incurred $ 0.2 million of acquisition costs related to the above Casinos & Resorts acquisition during the nine months ended September 30, 2024 and $ 0.5 million during the three and nine months ended September 30, 2023.

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

12 unchanged sentences

(1) Casino Secret intangible assets include player relationships and trade names of $ 26.0 million and $ 3.5 million, respectively, which are both being amortized on a straight-line basis over their estimated useful lives of approximately 7 years.

(2) The Company did not record adjustments to the preliminary purchase price allocation during the six months ended June 30, 2024.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

(2) The Company did not record adjustments to the preliminary purchase price allocation during the nine months ended September 30, 2024.

Total goodwill recorded in connection with the above acquisition was $ 18.4 million, and is not deductible for local tax purposes.

1 unchanged sentence

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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Company incurred $ 1.2 million of acquisition costs related to the above International Interactive acquisition during the nine months ended September 30, 2023.

There were no acquisition costs related to the International Interactive acquisition during the three months ended September 30, 2023 or three and nine months ended September 30, 2024.

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

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,

As of September 30, 2024 and December 31, 2023, prepaid expenses and other current assets was comprised of the following:

September 30, December 31,

(in thousands) 2024 2023

Services and license agreements $ 44,145 $ 32,466

Gaming taxes and licenses 14,216 9,309

Prepaid marketing 12,306 8,685

Purse funds 9,416 6,404

Sales tax 6,375 7,565

Due from payment service providers 6,069 12,662

Short term derivative assets 5,161 9,530

Gaming taxes and licenses 10,518 9,309

Prepaid insurance 2,009 12,181

Due from payment service providers 9,025 12,662

Sales tax 5,429 7,565

Purse funds 4,810 6,404

Other 7,544 9,294

1 unchanged sentence

PROPERTY AND EQUIPMENT

As of June 30, 2024 and December 31, 2023, property and equipment was comprised of the following:

June 30, December 31,

As of September 30, 2024 and December 31, 2023, property and equipment was comprised of the following:

September 30, December 31,

(in thousands) 2024 2023

Land $ 238,997 $ 238,997

Land improvements 164,424 162,211

Land and improvements $ 53,937 $ 401,208

Building and improvements 689,151 673,071

5 unchanged sentences

Property and equipment, net $ 795,491 $ 1,174,888

Depreciation expense relating to property and equipment was $ 19.3 million and $ 20.2 million for the three months ended September 30, 2024 and 2023, respectively, and $ 138.6 million and $ 57.8 million for the nine months ended September 30, 2024 and 2023, respectively.

Depreciation expense during the nine months ended September 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 $ 1.9 million and $2.9 million during the three months ended September 30, 2024 and 2023, respectively, and $ 5.9 million and $ 7.9 million during the nine months ended September 30, 2024 and 2023, respectively.

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

1 unchanged sentence

$ 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.

In the third quarter of 2024, as the result of a lease modification event, the Company derecognized $ 350.0 million of land relating to the site of the future Bally’s Chicago permanent facility.

Refer to Note 15 “ Leases ” for further information.

GOODWILL AND INTANGIBLE ASSETS

The change in intangible assets, net for the six months ended June 30, 2024 is as follows (in thousands):

The change in intangible assets, net for the nine months ended September 30, 2024 is as follows (in thousands):

Intangible assets, net as of December 31, 2023

2 unchanged sentences

Other intangibles acquired 2,127

Accumulated amortization ( 119,240 )

Intangible assets, net as of June 30, 2024

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Amortization of intangible assets ( 177,777 )

Intangible assets, net as of September 30, 2024

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

June 30, 2024

September 30, 2024

(in thousands) Gross Carrying Amount Accumulated

20 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

December 31, 2023

20 unchanged sentences

(2) See note (1) above.

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:

Amortization of intangible assets was approximately $ 58.5 million and $ 57.3 million for the three months ended September 30, 2024 and 2023, respectively, and $ 177.8 million and $ 173.4 million for the nine months ended September 30, 2024 and 2023, respectively.

The following table reflects the remaining amortization expense associated with the finite-lived intangible assets as of September 30, 2024:

(in thousands)

6 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

In the third quarter of 2024, the Company settled $ 500.0 million of notional interest rate collars and received $ 3.9 million in termination payments, reflecting the fair value on the settlement date.

The fair value on the settlement date is recorded as a component of accumulated other comprehensive income (loss), which will be 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.

Additionally, the Company simultaneously entered into a series of interest rate contracts in a notional aggregate amount of $ 1.00 billion, to further manage the Company’s exposure to interest rate movements associated with the Company’s variable rate Term Loan Facility through its synthetic conversion to fixed rate debt.

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

Derivative Instruments Designated as Hedging Instruments

9 unchanged sentences

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):

The following tables summarize the Company’s net investment hedges as of September 30, 2024 and December 31, 2023 (in thousands):

Net Investment Hedges Notional Sold Notional Purchased

1 unchanged sentence

Cross currency swaps £ 546,759 $ 700,000

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Cash Flow Hedges

4 unchanged sentences

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)

The following table summarizes the Company’s cash flow hedges as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

Cash Flow Hedges Index Notional Amount Cap Floor Notional Amount Cap Floor (1)

Interest rate contracts - swaps US - SOFR $ 1,500,000 — — $ 500,000 — —

2 unchanged sentences

(1) Weighted average rate.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

FAIR VALUE MEASUREMENTS

1 unchanged sentence

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

September 30, 2024

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

16 unchanged sentences

Derivative liabilities designated as hedging instruments:

Interest rate contracts Accrued and other current liabilities — 3,570 —

Interest rate contracts Other long-term liabilities — 52,452 —

37 unchanged sentences

$ 38,386 $ 57,785 $ 4,086

Change in fair value 16,932 1,059 235

Ending as of September 30, 2024

$ 55,318 $ 58,844 $ 4,321

BALLY’S CORPORATION

12 unchanged sentences

$ 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:

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

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

Ending as of September 30, 2023

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

The gains (losses) recognized in the condensed consolidated statements of operations for derivative instruments during the three and nine months ended September 30, 2024 and 2023 are as follows:

Condensed Consolidated Statements of Operations Location Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 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

Sinclair Performance Warrants Other non-operating (expense) income, net $ ( 16,932 ) $ 4,676 $ ( 10,615 ) $ 11,967

Derivatives designated as hedging instruments

16 unchanged sentences

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.

These changes in fair value are recognized within “Other non-operating (expense) income, 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.

In connection with the acquisition of Bally’s Golf Links on September 12, 2023, the Company recorded contingent consideration, which was valued at $ 58.8 million as of September 30, 2024.

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

3 unchanged sentences

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.

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 (expense) income, net” of the condensed consolidated statements of operations.

Investments in Equity Securities

2 unchanged sentences

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.

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 (expense) income, 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.

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

Long-Term Debt

1 unchanged sentence

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.

In the table below, the carrying amounts of the Company’s long-term debt are net of debt issuance costs and debt discounts.

Refer to Note 14 “ Long-Term Debt ” for further information.

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

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

7 unchanged sentences

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,

As of September 30, 2024 and December 31, 2023, accrued and other current liabilities consisted of the following:

(in thousands) September 30,

2024 December 31,

Gaming liabilities $ 165,354 $ 177,557

Diamond Sports Group non-cash liability (1)

$ 202,572 $ 144,883

Gaming liabilities 198,592 177,557

Compensation 74,828 83,112

Bally’s Chicago - land development liability 49,671 47,739

Interest payable 45,608 66,587

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

Other 190,305 131,841

7 unchanged sentences

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):

The components of restructuring charges by segment for the three and nine months ended September 30, 2024 and 2023 are summarized as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

12 unchanged sentences

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:

The changes in the Company’s restructuring related liabilities for the nine months ended September 30, 2024 is as follows:

(in thousands)

Balance as of December 31, 2023

Charges 18,989

Charges, net 17,921

Payments ( 22,370 )

Effect of foreign exchange ( 842 )

Balance as of June 30, 2024

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.

Balance as of September 30, 2024

The restructuring liability as of September 30, 2024 and December 31, 2023 is included within “Accrued and other current liabilities” on the condensed consolidated balance sheets.

LONG-TERM DEBT

As of June 30, 2024 and December 31, 2023, long-term debt consisted of the following:

(in thousands) June 30,

As of September 30, 2024 and December 31, 2023, long-term debt consisted of the following:

(in thousands) September 30,

2024 December 31,

12 unchanged sentences

__________________________________

(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.

(1) The Company has a series of interest rate derivatives to synthetically convert $ 1.0 billion notional of the Company’s variable rate Term Loan Facility into fixed rate debt, and a series of cross currency swap derivatives to synthetically convert $ 500.0 million and $ 200.0 million notional of the Company’s USD denominated Term Loan Facility into fixed rate EUR and GBP denominated debt, respectively, through its maturity in 2028.

Refer to Note 10 “ Derivative Instruments ” for further information.

12 unchanged sentences

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.

During the nine months ended September 30, 2023, the Company repurchased and retired $ 15.0 million of the 2031 Notes at a weighted average price of 70.80 % of the principal.

In connection with the repurchase of these 2031 Notes, the Company recorded a gain on extinguishment of debt of $ 4.0 million recorded within “Other non-operating (expense) 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.

9 unchanged sentences

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

As of June 30, 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.

As of September 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 utilizes interest rate and cross currency swap derivative instruments.

Refer to Note 10 “ Derivative Instruments ” for further information.

7 unchanged sentences

Discount rates used to determine the present value of the lease payments are based on the Company’s incremental borrowing rate commensurate with the term of the lease.

The Company had total operating lease liabilities of $ 1.18 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.

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.

The Company had total operating lease liabilities of $ 1.37 billion and $ 1.20 billion as of September 30, 2024 and December 31, 2023, respectively, and right of use assets of $ 1.26 billion and $ 1.16 billion as of September 30, 2024 and December 31, 2023, respectively, which were included in the condensed consolidated balance sheets.

As of September 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.

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

1 unchanged sentence

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:

During the nine months ended September 30, 2023, the Company recorded a gain of $ 374.3 million representing the difference in the transaction price and the derecognition of assets.

This gain is reflected as “Loss (gain) on sale-leaseback, net” in the condensed consolidated statements of operations.

In addition to the properties under the Master Lease explained above, the Company leases land associated with Tropicana Las Vegas under a ground lease established with GLPI in 2022.

This lease has an initial term of 50 years, with the possibility of extending up to 99 years through renewal options.

Annual rent under the lease is $ 10.5 million, subject to minimum 1% annual escalation or greater escalation dependent on CPI.

As of September 30, 2024, the renewal options are not considered reasonably certain to be exercised.

During the third quarter, the Company modified the lease and GLPI paid $ 48.6 million to the Company to fund the demolition of the building at the Tropicana Las Vegas site in exchange for an increase in annual rent of $ 4.1 million, also subject to a minimum 1% annual increase or greater based on CPI.

This lease modification did not change the lease classification.

The cash received is treated as a lessor incentive, leading to an adjustment in the Right of Use asset for the total funding amount.

Upon modification, the Lease Liability and Right of Use asset were adjusted to reflect the present value of the increased future lease payment.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Components of lease expense, included within “General and administrative” in the condensed consolidated statements of operations, for operating leases during the three and nine months ended September 30, 2024 and 2023 are as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

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Total lease expense $ 48,013 $ 44,005 $ 139,398 $ 128,726

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:

Supplemental cash flow and other information related to operating leases for the three and nine months ended September 30, 2024 and 2023 are as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

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Right of use assets obtained in exchange for operating lease liabilities $ 192,085 $ 1,748 $ 192,716 $ 405,407

June 30, 2024 December 31, 2023

Derecognition of financing obligation $ ( 200,000 ) $ — $ ( 200,000 ) $ —

September 30, 2024 December 31, 2023

Weighted average remaining lease term 28.7 years 17.6 years

Weighted average discount rate 8.3 % 7.5 %

As of June 30, 2024, future minimum lease payments under noncancelable operating leases are as follows:

(in thousands) June 30, 2024

As of September 30, 2024, future minimum lease payments under noncancelable operating leases are as follows:

(in thousands) September 30, 2024

Remaining 2024 $ 45,280

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

The table above does not include $ 6.5 million of payments for leases signed but not yet commenced as of September 30, 2024.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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.

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 was 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 had 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 December 31, 2023.

All lease payments were recorded as interest expense and there was no reduction to the financing obligation.

Bally’s Chicago made cash payments, and recorded corresponding interest expense of $ 3.1 million and $ 4.3 million during the three months ended September 30, 2024 and 2023, respectively, and $ 12.4 million and $ 13.0 million during the nine months ended September 30, 2024 and 2023, respectively.

In the third quarter of 2024, GLP acquired the real estate underlying the Bally’s Chicago project, for which the Company was subject to the financing obligation, and assumed the existing lease.

The lease with GLP was amended in the third quarter, creating a lease modification event whereby the land components previously classified as a financing obligation were reassessed and now classified as an operating lease.

This change was due to the transfer of control of the land asset from the Company to the lessor, which permitted sale recognition in accordance with ASC 842.

As a result of this reassessment, the Company derecognized $ 350.0 million from “Property and equipment, net” related to the land asset and $ 200.0 million from the “Long-term portion of financing obligation” within our Condensed Consolidated Balance Sheets.

As a result of the lease modification, a $ 150.0 million offset in “Loss (gain) on sale-leaseback, net” was recorded within the Condensed Consolidated Statements of Operations for the three and nine months ending September 30, 2024.

Pending Lease Transactions

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 will amend the existing land lease through a new master lease agreement with Bally’s Chicago Operating Company, LLC (“Chicago MLA”).

The Chicago MLA includes annual rent of $ 20 million, subject to customary escalation provisions.

The Chicago MLA also provides 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.

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.

The Company had lessor revenues related to the rental of hotel rooms of $ 41.7 million and $ 56.7 million for the three months ended September 30, 2024 and 2023, respectively, and $ 118.0 million and $ 155.5 million for the nine months ended September 30, 2024 and 2023, respectively.

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

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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

As of September 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 nine months ended September 30, 2024 and the three months ended September 30, 2023.

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

(in thousands, except share and per share data) Nine Months Ended

September 30, 2023

Number of common shares repurchased 1,774,845

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Average cost per share, including commissions $ 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.

All shares repurchased during the nine months ended September 30, 2023 were transferred to treasury stock and 40,451 and 1,778,916 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.

As of September 30, 2024, there were no shares remaining in treasury.

There were no cash dividends paid during the three and nine months ended September 30, 2024 and 2023.

Common Stock Offering

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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.

As of September 30, 2024 and December 31, 2023, no shares of preferred stock have been issued.

BALLY’S CORPORATION

1 unchanged sentence

Shares Outstanding

As of June 30, 2024, the Company had 40,619,356 common shares issued and outstanding.

As of September 30, 2024, the Company had 40,653,346 common shares issued and outstanding.

The Company issued warrants, options and other contingent consideration in acquisitions and strategic partnerships that are expected to result in the issuance of common shares in future periods resulting from the exercise of warrants and options or the achievement of certain performance targets.

8 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Accumulated Other Comprehensive Income (Loss)

The following tables reflect the changes in accumulated other comprehensive loss by component for the six months ended June 30, 2024 and 2023, respectively:

The following tables reflect the changes in accumulated other comprehensive loss by component for the nine months ended September 30, 2024 and 2023, respectively:

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

5 unchanged sentences

Tax effect — — 8,805 12,674 21,479

Accumulated other comprehensive (loss) income at June 30, 2024

Accumulated other comprehensive (loss) income at September 30, 2024

$ ( 73,861 ) $ 886 $ ( 38,626 ) $ ( 28,644 ) $ ( 140,245 )

__________________________________

(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

(1) As of September 30, 2024, approximately $ 6.8 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 Cash Flow Hedges Net Investment Hedges 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

Other comprehensive income (loss) before reclassifications 1,532 — 3,970 675 6,177

Reclassifications from accumulated other comprehensive income (loss) to earnings — — ( 443 ) ( 388 ) ( 831 )

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

Accumulated other comprehensive (loss) income at September 30, 2023

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

COMMITMENTS AND CONTINGENCIES

7 unchanged sentences

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.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

2 unchanged sentences

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.

4 unchanged sentences

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.

As of September 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.

As of September 30, 2024, approximately $ 48.2 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.

4 unchanged sentences

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

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Bally’s Chicago Casino Fees

1 unchanged sentence

Sponsorship Commitments

As of June 30, 2024, the Company has entered into multiple sponsorship agreements with various professional sports leagues and teams.

As of September 30, 2024, the Company has entered into multiple sponsorship agreements with various professional sports leagues and teams.

These agreements commit a total of $ 129.8 million through 2037 and grant the Company rights to use official league marks for branding and promotions, among other benefits.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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.

As of September 30, 2024, the cumulative minimum obligation committed in these agreements is approximately $ 54.7 million through 2029.

SEGMENT REPORTING

2 unchanged sentences

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:

The Company’s three reportable segments as of September 30, 2024 are:

Casinos & Resorts - Includes the Company’s 15 casino and resort properties, one horse racetrack and one golf course.

1 unchanged sentence

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.

As of September 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.

Revenue generated from the UK and Japan represented approximately 28 % and 6 % of total revenue, respectively, for the three months ended September 30, 2024, approximately 25 % and 11 %, respectively, for the three months ended September 30, 2023, approximately 27 % and 8 %, respectively, for the nine months ended September 30, 2024, and approximately 25 % and 11 %, respectively, for the nine months ended September 30, 2023.

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

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023 2024 2023

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Share-based compensation ( 4,099 ) ( 6,257 ) ( 11,629 ) ( 18,587 )

Gain on sale-leaseback — 135 — 374,321

(Loss) gain on sale-leaseback, net ( 150,000 ) — ( 150,000 ) 374,321

Impairment charges — — ( 12,757 ) ( 9,653 )

Merger Agreement costs (3)

( 9,802 ) — ( 11,791 ) —

Payment Service Provider write-off (4)

( 6,333 ) — ( 6,333 ) —

Other ( 8,989 ) 721 ( 15,923 ) ( 12,834 )

5 unchanged sentences

(Loss) income before income taxes ( 281,484 ) ( 17,866 ) ( 485,713 ) 243,912

Provision for income taxes 1,501 28,649 ( 29,881 ) ( 109,093 )

(Benefit) provision for income taxes 33,629 ( 43,936 ) 3,748 ( 153,029 )

Net (loss) income $ ( 247,855 ) $ ( 61,802 ) $ ( 481,965 ) $ 90,883

4 unchanged sentences

Refer to Note 15 “ Leases ” for further information.

(3) Costs incurred in connection with the Merger Agreement discussed in Note 1 “General Information.”

(4) In the third quarter, the Company recorded a $ 6.3 million charge to reduce amounts due from payment service providers (“PSP”) due to a circumstance whereby the payment processer for certain online sports wagering deposits failed to capture and settle funds with patrons of the Company.

The Company was not able to recover the full amount due from the payment service provider, resulting in a write down to the recoverable amount.

In addition to amounts recovered, the Company received $ 5.1 million from the PSP as a signing bonus for entering into an extension agreement.

BALLY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

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

(in thousands) 2024 2023 2024 2023

6 unchanged sentences

__________________________________

(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.

(1) Includes $ 70.3 million and $ 108.3 million related to our future Bally’s Chicago permanent facility during the three and nine months ended September 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

As of September 30, 2024 and December 31, 2023, carrying values of goodwill by reportable segment are as follows:

(in thousands) September 30, 2024 December 31, 2023

Casinos & Resorts (1)

3 unchanged sentences

35,750 35,720

Total $ 1,910,316 $ 1,935,803

$ 1,993,809 $ 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

(3) The effect of foreign exchange on the change in total goodwill from December 31, 2023 was $ 58.2 million .

EARNINGS (LOSS) PER SHARE

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share data) 2024 2023 2024 2023

Net (loss) income applicable to common stockholders

$ ( 247,855 ) $ ( 61,802 ) $ ( 481,965 ) $ 90,883

Weighted average common shares outstanding, basic 48,596 53,580 48,405 53,961

1 unchanged sentence

Weighted average common shares outstanding, diluted 48,596 53,580 48,405 54,276

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.

Basic (loss) earnings per share $ ( 5.10 ) $ ( 1.15 ) $ ( 9.96 ) $ 1.68

Diluted (loss) earnings per share $ ( 5.10 ) $ ( 1.15 ) $ ( 9.96 ) $ 1.67

There were 4,927,900 and 5,152,994 share-based awards that were considered anti-dilutive for the three months ended September 30, 2024 and 2023, respectively, and 5,108,453 and 5,235,978 share-based awards that were considered anti-dilutive for the nine months ended September 30, 2024 and 2023, respectively.

BALLY’S CORPORATION

4 unchanged sentences

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.

For the three and nine months ended September 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.

SUBSEQUENT EVENTS

Construction and Financing Arrangement

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.

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;

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.

In addition, the Company or Parent may terminate the Merger Agreement if the Merger is not consummated by July 25, 2025.

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.

On October 31, 2024, the Company entered into an agreement to carve-out components of its interactive business in Asia and certain other international markets in its International Interactive reportable segment (the “Carved-Out Business”) to a company (the “Buyer”) formed by members of the management of the Carved-Out Business.

The Buyer is acquiring the net-assets, predominantly working capital, of the Carved-Out Business, in exchange for a seven-year term note in the principal amount of € 30 million, subject to applicable interest.

Certain intellectual property used in the Carved-Out Business has been placed in trust, with royalty licensing fees paid to the trust by the Buyer for a term of five years (subject to extension).

All royalty licensing fees, net of trustee administrative expenses, are paid to the Company by the trust and are expected to be reported by the Company as licensing revenues.

The Company will also provide the Carved-Out Business with certain transition services.

In connection with the separation transaction, the Company will acquire penny warrants that represent a 19.9 % fully-diluted interest in the Buyer, which is expected to result in the deconsolidation of the Carved-Out Business.

Bally’s will have no role in the management or operational governance of the Carved-Out Business.

The gain or loss on sale of the Carved-Out Business has not yet been determined as it is subject to valuation procedures and associated Goodwill allocation, the release of accumulated currency translation adjustments for the disposed entities, and other post-closing adjustments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements