Bally's Corp 10-Q

ITEM 1. Financial Statements BALLY’S CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (In thousands, except share data) Successor Predecessor March 31, 2025 December 31, 2024 Assets Cash and cash equivalents $ 209,727 $ 171,233 Restricted cash 54,955 60,021 Accounts receivable, net 85,396 55,486 Inventory 20,851 19,317 Tax receivable 36,923 26,345 Prepaid expenses and other current assets 162,231 115,471 Total current assets 570,083 447,873 Property and equipment, net 1,136,623 630,702 Right of use assets, net 1,912,395 1,544,936 Goodwill 1,621,711 1,799,944 Intangible assets, net 1,947,993 1,307,343 Deferred tax asset 2,345 2,309 Other assets 300,580 127,030 Total assets $ 7,491,730 $ 5,860,137 Liabilities and Stockholders’ Equity Current portion of long-term debt $ 19,450 $ 19,450 Current portion of lease liabilities 81,426 65,827 Accounts payable 106,602 85,771 Accrued income taxes 13,411 25,468 Accrued and other current liabilities 542,977 481,292 Total current liabilities 763,866 677,808 Long-term debt, net 3,430,709 3,299,323 Long-term portion of lease liabilities 2,016,877 1,554,479 Deferred tax liability 338,120 118,214 Other long-term liabilities 133,311 179,411 Total liabilities 6,682,883 5,829,235 Commitments and contingencies (Note 18) Stockholders’ equity: Common stock ($ 0.01 par value, 200,000,000 shares authorized; 49,011,796 (Successor) and 40,787,007 (Predecessor) shares issued; 49,011,796 (Successor) and 40,787,007 (Predecessor) shares outstanding) 489 408 Preferred stock ($ 0.01 par value; 10,000,000 shares authorized; no shares outstanding) — — Additional paid-in-capital 749,318 1,414,410 Retained earnings (deficit) 34,516 ( 1,123,649 ) Accumulated other comprehensive income (loss) 12,163 ( 260,267 ) Total Bally’s Corporation stockholders’ equity 796,486 30,902 Non-controlling interest 12,361 — Total stockholders’ equity 808,847 30,902 Total liabilities and stockholders’ equity $ 7,491,730 $ 5,860,137 See accompanying notes to condensed consolidated financial statements. 3 BALLY’S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (In thousands, except per share data) Successor Predecessor Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Revenue: Gaming $ 313,779 $ 185,767 $ 516,057 Non-gaming 54,915 34,731 102,425 Total revenue 368,694 220,498 618,482 Operating (income) costs and expenses: Gaming 133,523 87,994 236,144 Non-gaming 29,109 16,526 48,111 General and administrative 160,391 114,401 248,436 Depreciation and amortization 47,481 22,343 159,746 Total operating costs and expenses 370,504 241,264 692,437 Loss from operations ( 1,810 ) ( 20,766 ) ( 73,955 ) Other (expense) income: Interest expense, net ( 51,737 ) ( 27,229 ) ( 73,131 ) Other non-operating income (expense), net ( 9,030 ) ( 2,365 ) 4,554 Total other expense, net ( 60,767 ) ( 29,594 ) ( 68,577 ) Loss before income taxes ( 62,577 ) ( 50,360 ) ( 142,532 ) (Benefit) provision for income taxes ( 97,093 ) 664 31,382 Net income (loss) $ 34,516 $ ( 51,024 ) $ ( 173,914 ) Basic earnings (loss) per share $ 0.57 $ ( 1.05 ) $ ( 3.61 ) Weighted average common shares outstanding - basic 60,322 48,743 48,119 Diluted earnings (loss) per share $ 0.57 $ ( 1.05 ) $ ( 3.61 ) Weighted average common shares outstanding - diluted 60,729 48,743 48,119 See accompanying notes to condensed consolidated financial statements. 4 BALLY’S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (unaudited) (In thousands) Successor Predecessor Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Net income (loss) $ 34,516 $ ( 51,024 ) $ ( 173,914 ) Other comprehensive income (loss): Foreign currency translation adjustments 43,040 ( 13,097 ) ( 37,794 ) Net unrealized derivative (loss) gain on cash flow hedges, net of tax ( 13,428 ) 968 12,283 Net unrealized derivative (loss) gain on net investment hedges, net of tax ( 17,449 ) 2,686 11,466 Other comprehensive income (loss) 12,163 ( 9,443 ) ( 14,045 ) Total comprehensive income (loss) $ 46,679 $ ( 60,467 ) $ ( 187,959 ) See accompanying notes to condensed consolidated financial statements. 5 BALLY’S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (unaudited) (In thousands, except share data) Predecessor Common Stock Additional Paid-in Capital Treasury Stock Accumulated Deficit Accumulated Other Comprehensive Loss Non-controlling Interest Total Stockholders’ Equity (Deficit) Shares Outstanding Amount Balance as of December 31, 2024 40,787,007 $ 408 $ 1,414,410 $ — $ ( 1,123,649 ) $ ( 260,267 ) $ — $ 30,902 Issuance of restricted stock and other stock awards 19,660 — ( 76 ) — — — — ( 76 ) Share-based compensation — — 1,954 — — — — 1,954 Other comprehensive loss — — — — — ( 9,443 ) — ( 9,443 ) Net loss — — — — ( 51,024 ) — — ( 51,024 ) Balance as of February 7, 2025 (Predecessor) 40,806,667 408 1,416,288 — ( 1,174,673 ) ( 269,710 ) — ( 27,687 ) Successor Common Stock Additional Paid-in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income Non-controlling Interest Total Stockholders’ Equity Shares Outstanding Amount Balance as of February 8, 2025 (Successor) 71,258,763 712 1,171,824 — — — — 1,172,536 Share repurchases ( 22,804,384 ) ( 228 ) ( 420,114 ) — — — — ( 420,342 ) Issuance of restricted stock and other stock awards 557,417 5 ( 5,132 ) — — — — ( 5,127 ) Bally’s Chicago Inc. Issuance — — — — — — 12,361 12,361 Share-based compensation — — 2,740 — — — — 2,740 Other comprehensive income — — — — — 12,163 — 12,163 Net income — — — — 34,516 — — 34,516 Balance as of March 31, 2025 (Successor) 49,011,796 $ 489 $ 749,318 $ — $ 34,516 $ 12,163 $ 12,361 $ 808,847 6 BALLY’S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (unaudited) (In thousands, except share data) Predecessor Common Stock Additional Paid-in Capital Treasury Stock Accumulated Deficit Accumulated Other Comprehensive Loss Non-controlling Interest Total Stockholders’ Equity Shares Outstanding Amount Balance as of December 31, 2023 (Predecessor) 39,973,202 $ 400 $ 1,400,479 $ — $ ( 555,895 ) $ ( 209,558 ) $ 428 $ 635,854 Issuance of restricted stock and other stock awards 423,805 4 ( 2,778 ) — — — — ( 2,774 ) Share-based compensation — — 3,058 — — — — 3,058 Settlement of consideration 86,368 1 ( 125 ) — — — — ( 124 ) Other — — 1,750 — — — — 1,750 Other comprehensive loss — — — — — ( 14,045 ) — ( 14,045 ) Net loss — — — — ( 173,914 ) — — ( 173,914 ) Balance as of March 31, 2024 (Predecessor) 40,483,375 $ 405 $ 1,402,384 $ — $ ( 729,809 ) $ ( 223,603 ) $ 428 $ 449,805 See accompanying notes to condensed consolidated financial statements. 7 BALLY’S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Successor Predecessor (in thousands) Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Cash flows from operating activities: Net income (loss) $ 34,516 $ ( 51,024 ) $ ( 173,914 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 47,481 22,343 159,746 Non-cash lease expense 12,744 7,228 14,222 Share-based compensation 2,740 1,954 3,058 Amortization of debt discount and debt issuance costs 14,648 1,004 2,877 Loss on extinguishment of debt 17,372 — — Deferred income taxes ( 71,798 ) ( 3,010 ) 26,890 Change in fair value of equity method investments ( 5,544 ) — — (Income) loss from equity method investments ( 863 ) 594 ( 555 ) Change in value of performance warrants — 1,180 — Change in contingent consideration payable ( 867 ) 786 ( 1,835 ) Foreign exchange gain ( 1,591 ) ( 194 ) ( 2,816 ) Other operating activities 854 1,545 ( 1,584 ) Changes in operating assets and liabilities ( 7,691 ) ( 62,592 ) ( 33,943 ) Net cash provided by (used in) operating activities 42,001 ( 80,186 ) ( 7,854 ) Cash flows from investing activities: Cash paid for acquisitions, net of cash acquired 21,233 — 208 Capital expenditures ( 30,457 ) ( 16,424 ) ( 28,053 ) Cash paid for capitalized software ( 10,611 ) ( 2,315 ) ( 13,583 ) Acquisition of gaming licenses — — ( 1,211 ) Other investing activities ( 962 ) 1,042 ( 762 ) Net cash used in investing activities ( 20,797 ) ( 17,697 ) ( 43,401 ) Cash flows from financing activities: Issuance of long-term debt 695,000 97,000 135,000 Repayments of long-term debt ( 259,623 ) ( 10,000 ) ( 119,863 ) Deferred payables 8,973 11,064 42,195 Cash paid for repurchased shares ( 416,180 ) — — Payment of financing fees ( 21,326 ) — — Bally’s Chicago Inc. issuance under private placement 12,361 — — Other financing activities ( 5,132 ) ( 76 ) ( 6,005 ) Net cash provided by financing activities 14,073 97,988 51,327 Effect of foreign currency on cash and cash equivalents and restricted cash ( 1,497 ) ( 457 ) ( 4,445 ) Net change in cash and cash equivalents and restricted cash 33,780 ( 352 ) ( 4,373 ) Cash and cash equivalents and restricted cash, beginning of period 230,902 231,254 315,262 Cash and cash equivalents and restricted cash, end of period $ 264,682 $ 230,902 $ 310,889 8 BALLY’S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Successor Predecessor (in thousands) Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Supplemental disclosure of cash flow information: Cash paid for interest, net of amounts capitalized $ 42,339 $ 39,069 $ 100,128 Income taxes paid, net of refunds 7,550 ( 73 ) ( 10,410 ) Non-cash investing and financing activities: Unpaid property and equipment $ 21,603 $ 15,772 $ 18,854 Unpaid internally developed software 1,529 6,158 633 Consideration issued for the Company Merger 955,647 — — Consideration issued for the Queen Merger 555,751 — — Bally’s Chicago - land development liability — — 956 Successor Predecessor March 31, February 7, December 31, Reconciliation of cash and cash equivalents and restricted cash: 2025 2025 2024 Cash and cash equivalents $ 209,727 $ 173,549 $ 171,233 Restricted cash 54,955 57,353 60,021 Total cash and cash equivalents and restricted cash $ 264,682 $ 230,902 $ 231,254 See accompanying notes to condensed consolidated financial statements. 9 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. GENERAL INFORMATION Description of Business Bally’s Corporation (the “Company,” or “Bally’s”) is a global gaming, hospitality and entertainment company with casinos and resorts and online gaming (“iGaming”) businesses. The Company owns and manages the following properties within its Casinos & Resorts reportable segment: Casinos & Resorts Location Type Built/Acquired Bally’s Twin River Lincoln Casino Resort (“Bally’s Twin River”) Lincoln, Rhode Island Casino and Resort 2004 Bally’s Arapahoe Park Aurora, Colorado Racetrack/OTB Site 2004 Hard Rock Hotel & Casino Biloxi (“Hard Rock Biloxi”) (2) Biloxi, Mississippi Casino and Resort 2014 Bally’s Tiverton Casino & Hotel (“Bally’s Tiverton”) (2) Tiverton, Rhode Island Casino and Hotel 2018 Bally’s Dover Casino Resort (“Bally’s Dover”) (2) Dover, Delaware Casino, Resort and Raceway 2019 Bally’s Black Hawk (1)(2) Black Hawk, Colorado Three Casinos 2020 Bally’s Kansas City Casino (“Bally’s Kansas City”) Kansas City, Missouri Casino 2020 Bally’s Vicksburg Casino (“Bally’s Vicksburg”) Vicksburg, Mississippi Casino and Hotel 2020 Bally’s Atlantic City Casino Resort (“Bally’s Atlantic City”) Atlantic City, New Jersey Casino and Resort 2020 Bally’s Shreveport Casino & Hotel (“Bally’s Shreveport”) Shreveport, Louisiana Casino and Hotel 2020 Bally’s Lake Tahoe Casino Resort (“Bally’s Lake Tahoe”) Lake Tahoe, Nevada Casino and Resort 2021 Bally’s Evansville Casino & Hotel (“Bally’s Evansville”) (2) Evansville, Indiana Casino and Hotel 2021 Bally’s Quad Cities Casino & Hotel (“Bally’s Quad Cities”) (2) Rock Island, Illinois Casino and Hotel 2021 Bally’s Chicago Casino (“Bally’s Chicago”) (3) Chicago, Illinois Casino 2023 Bally’s Golf Links at Ferry Point (“Bally’s Golf Links”) Bronx, New York Golf Course 2023 The Queen Baton Rouge (2) Baton Rouge, Louisiana Casino 2025 The Belle of Baton Rouge (2) Baton Rouge, Louisiana Casino and Hotel 2025 Casino Queen Marquette (2) Marquette, Iowa Casino 2025 DraftKings at Casino Queen (2) East St. Louis, Illinois Casino and Hotel 2025 __________________________________ (1) Includes Bally’s Black Hawk North Casino, Bally’s Black Hawk West Casino and Bally’s Black Hawk East Casino. (2) Properties leased from Gaming and Leisure Properties, Inc. (“GLPI”). Refer to Note 16 “ Leases ” for further information. (3) Temporary casino facility as permanent casino resort is constructed. Site of future permanent casino resort is leased from GLPI. The Company’s International Interactive reportable segment includes the Company’s interactive European gaming operations, the Company’s global licensing revenue generating operations, as well as one casino property, Bally’s Newcastle, in the UK. The North America Interactive reportable segment includes a portfolio of sports betting, iGaming, and free-to-play gaming brands, and the North American operations of Gamesys. Refer to Note 19 “ Segment Reportin g” for further information. 10 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Agreement and Plan of Merger On February 7, 2025, the Company completed the previously announced transactions under the 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”). As a result of the transactions, Parent and its affiliates beneficially own 73.8% of the issued and outstanding Company common stock Pursuant to the Merger Agreement, (i) SG Gaming contributed 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 2.4536890595 share exchange ratio, (ii) the Company issued approximately 3,542,201 shares of Company Common Stock to the other stockholders of Queen, (iii) immediately thereafter, Merger Sub I merged into the Company (the “Company Merger”), with the Company surviving the Company Merger and (iv) immediately thereafter, Merger Sub II merged into Queen (the “Queen Merger,” and together with the Company Merger, the “Merger”), with Queen surviving the Queen Merger as a direct, wholly owned subsidiary of the Company. At the effective time of the Merger, each share of the Company’s Common Stock issued and outstanding (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”)) were 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) had the option to make a Rolling Share Election. Concurrently with 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”), collectively known as the “Support Agreements”. The Support Agreements obligated the parties to vote their respective shares in favor of the Merger Agreement and related transactions, and to make a Rolling Share Election for their shares, including those acquired through options or warrants. Additionally, under the SBG Support Agreement, SBG agreed to waive its right to the options it previously acquired under a Framework Agreement originally entered into in 2020 (the “Framework Agreement”), upon completion of the Merger, and in exchange, the Company issued SBG warrants to purchase 384,536 shares of the Company’s common stock under substantially similar terms to the Penny Warrants issued to SBG under the Framework Agreement. In connection with the Merger, as of February 7, 2025, all outstanding Performance Warrants became immediately exercisable at a price of $ 0.01 per share 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of the Company, its majority-owned subsidiaries and entities the Company identifies as variable interest entities (“VIEs”), of which the Company is determined to be the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year’s presentation. The financial statements of our foreign subsidiaries are translated into US Dollars (“USD”) using exchange rates in effect at period-end for assets and liabilities and average exchange rates during each reporting period for results of operations. Adjustments resulting from financial statement translations are reflected as a separate component of accumulated other comprehensive income (loss). Foreign currency transaction gains and losses are included in net income (loss). 11 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (the “SEC”) for interim financial information, including the instructions to Form 10-Q and Rule 10-01 of the SEC’s Regulation S-X. Accordingly, certain information and note disclosures normally required in complete financial statements prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. In the Company’s opinion, these condensed consolidated financial statements include all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. We have made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes. The actual results that we experience may differ materially from our estimates. As described in Note 1, “General Information”, the Company completed the Merger with Queen on February 7, 2025 (the “Closing”), with Queen surviving the Merger as a wholly-owned subsidiary of the Company. The Merger with Queen was accounted for as a transaction between entities under common control due to the control of the Company and Queen by the Parent and its affiliates before and after the Merger. The Company has elected to push down its Parent’s basis in its net assets into its unaudited condensed consolidated financial statements, and as a result, unless the context otherwise requires, the “Company,” for periods prior to the Closing refers to Bally’s (“Predecessor”), and for the periods after the Closing refers to the combined Company of Bally’s and Queen (“Successor” or the “Company”). As a result of the Merger, the results of operations, financial position and cash flows of the Predecessor and the Successor are not directly comparable. As Bally’s was deemed to be the predecessor entity, the historical financial statements of Bally’s became the historical financial statements of the combined Company, upon the consummation of the Merger. As a result, the financial statements included in this report reflect (i) the historical operating results of Bally’s prior to the Merger and (ii) the combined results of the Company following the Closing. The accompanying unaudited condensed consolidated financial statements include a Predecessor period, which includes the period through February 7, 2025 concurrent with the Merger, and a Successor period from February 8, 2025 through March 31, 2025. A black line between the Successor and Predecessor periods has been placed in the condensed consolidated financial statements and in the tables to the notes to the condensed consolidated financial statements to highlight the lack of comparability between these two periods. Queen is a regional gaming, hospitality and entertainment company that owns and operates four casinos across three states. The Merger expands the Company’s Casinos & Resorts geographic footprint and enhances the Company’s development pipeline, which aligns with the Company’s broader strategic initiatives. Certain adjustments have been made to Queen’s historical carrying values to conform accounting policies with the Company, with any such adjustments being recorded to equity. The preliminary purchase price of Queen is estimated based on the fair value of all existing and outstanding shares of Queen that were exchanged for shares of Company common stock, with the net effect of the transaction being charged to equity. The preliminary purchase price of Queen and adjustment to equity resulting from the merger consists of the following: (in thousands, except share and per share data) Amount Queen common stock outstanding on February 7, 2025 10,967,117 Per share ratio 2.45 Equivalent Bally’s common stock to be issued 26,909,895 Bally’s common stock issued to settle Queen’s outstanding warrant and restricted stock awards 3,542,201 Total Bally’s shares issued for Queen shares outstanding 30,452,096 Share price per Merger Agreement $ 18.25 Total purchase price $ 555,751 Less: Queen net assets assumed 218,342 Equity adjustment associated with the Queen merger $ 337,409 For the period from February 8, 2025 to March 31, 2025 (Successor), revenue and net income for Queen were $ 34.7 million were $ 13.0 million, respectively. 12 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Equity Method Investments In 2025, following the Queen merger, the Company has an investment in Intralot S.A. Integrated Lottery Systems and Services (“Intralot”), a Greek publicly listed company on the Athens Stock Exchange, that supplies integrated gaming and transaction processing systems, game content, sports betting management and interactive gaming services to the state-licensed gaming and lottery organizations worldwide. The total initial investment represented approximately 26.9 % of the outstanding shares of Intralot. The investment is accounted for as an equity method investment. The investment is accounted for under the fair value option as the Company believes this best depicts the economics of the investment. In 2024, the Company completed the sale of portions of its international 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 management of the Carved-Out Business. In connection with the disposition, the Company acquired penny warrants that represent a 19.99 % fully diluted interest in the Buyer, for approximately $ 1.9 million. The Company accounts for this interest as an equity method investment. 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 and changes in fair value for equity method investments accounted for under the fair value option within “Other non-operating income (expense), net” in the condensed consolidated statements of operations. Refer to Note 4 “Consolidated Financial Information” for further information. Variable Interest Entities The Company evaluates entities for which control is achieved through means other than voting rights to determine if it is the primary beneficiary of a VIE. An entity is a VIE if it has any of the following characteristics (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support (ii) equity holders, as a group, lack the characteristics of a controlling financial interest or (iii) the entity is structured with non-substantive voting rights. The primary beneficiary of the VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company consolidates its investment in a VIE when it determines that it is its primary beneficiary. In determining whether it is the primary beneficiary of the VIE, the Company considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities and significance of the Company’s investment and other means of participation in the VIE’s expected profits/losses. Significant judgments related to these determinations include estimates about the current and future fair values and performance of assets held by these VIEs and general market conditions. Management has analyzed and concluded that a trust, that was established in connection with the disposal of the Asia Interactive Business, is a VIE that will be consolidated based on the applicable criteria. As of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), consolidated VIEs had total assets of $ 276.8 million and $ 263.9 million, respectively, and total liabilities of $ 36.3 million and $ 27.9 million, respectively. Consolidated VIEs had total revenue of $ 4.9 million, $ 3.7 million, and $ 61.9 million for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor), 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. The Company performs this analysis on an ongoing basis. 13 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Non-controlling interest In the first quarter of 2025, Bally’s Chicago, Inc., a consolidated subsidiary of the Company, successfully completed a private placement (the “Private Placement”), whereby shares of Class A-1, A-2, A-3 and A-4 were issued to third parties for total consideration of $ 12.4 million, net of $ 0.8 million of issuance costs. Based on the shares issued in the private placement the Company has a de minimus non-controlling interest in Bally’s Chicago, Inc. as of March 31, 2025 (Successor). Net income attributable to non-controlling interest was de minimus for the period from February 8, 2025 to March 31, 2025 (Successor). Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents includes cash balances and highly liquid investments with an original maturity of three months or less. Restricted cash includes player deposits, payment service provider deposits, and VLT and table games related cash payables to certain states where we operate, which are unavailable for the Company’s use. Accounts Receivable, Net Accounts receivable, net consists of the following: Successor Predecessor March 31, December 31, (in thousands) 2025 2024 Amounts due from Rhode Island and Delaware (1) $ 14,177 $ 14,135 Gaming receivables 34,287 20,700 Non-gaming receivables 42,061 27,803 Accounts receivable 90,525 62,638 Less: Allowance for credit losses ( 5,129 ) ( 7,152 ) Accounts receivable, net $ 85,396 $ 55,486 __________________________________ (1) Represents the Company’s share of VLT and table games revenue for Bally’s Twin River and Bally’s Tiverton due from the State of Rhode Island and for Bally’s Dover from the State of Delaware. Deferred Payables In order to execute on its strategy of improving working capital efficiency, the Company will, from time to time, participate in trade finance or deferred payable initiatives, including programs that may securitize or accelerate liquidity realized from receivables, or alternatively extend trade terms with certain suppliers or vendors. In certain cases, where the Company is not able to extend payment terms directly with suppliers or vendors, the Company will consider deferred payable solutions that simulate such trade term extensions. These solutions generally involve entering into exchange agreements with intermediary institutions who will make payments to the supplier or vendor within the original terms on behalf of the Company, in exchange for a new bill with terms that conforms to the Company’s payment policy of net 90 days. The Company will then pay the new bill to the intermediary institutions, inclusive of any embedded premium, which the Company records as “Interest expense, net,” within three months or less. Amounts outstanding under these deferred payable arrangements were $ 97.2 million and $ 72.8 million as of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), respectively, and are included in “Accrued and other current liabilities” on the condensed consolidated balance sheets. For the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor), and the three months ended March 31, 2024 (Predecessor) the Company borrowed $ 13.9 million, $ 79.6 million, and $ 41.9 million, respectively, under these deferred payable arrangements. For the period from February 8, 2025 to March 31, 2025 (Successor) and the period from January 1, 2025 to February 7, 2025 (Predecessor) the Company repaid $ 5.0 million and $ 68.5 million, respectively, under these arrangements. There were no repayments during the three months ended March 31, 2024 (Predecessor). For the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor), and the three months ended March 31, 2024 (Predecessor) the Company incurred $ 1.6 million, $ 0.5 million and $ 0.8 million, respectively, of interest expense under these arrangements. 14 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 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 certain marketing costs directly associated with the Company’s iGaming products and services. 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. Advertising Expense The Company expenses advertising costs as incurred. Advertising expenses, including production and agency fees of campaigns, for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor), and the three months ended March 31, 2024 (Predecessor) was $ 1.4 million, $ 0.9 million and $ 5.6 million, respectively, and are included in “General and administrative” on the condensed consolidated statements of operations. Additionally, the Company incurred certain advertising and marketing costs directly associated with the Company’s iGaming products and services of $ 18.1 million, $ 12.6 million and $ 46.2 million during the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor), and the three months ended March 31, 2024 (Predecessor), respectively. These costs are included within Gaming expenses in the condensed consolidated statements of operations. Share-Based Compensation The Company recognized total share-based compensation expense of $ 2.7 million, $ 2.0 million and $ 3.1 million for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor), respectively. The total income tax benefit for share-based compensation arrangements was $ 0.7 million, $ 0.5 million and $ 0.8 million for the period from February 8, 2025 to March 31, 2025 (Successor), period from January 1, 2025 to February 7, 2025 (Predecessor), and the three months ended March 31, 2024 (Predecessor), respectively. Strategic Partnership - Sinclair Broadcast Group In 2020, the Company and Sinclair Broadcast Group, Inc. (“Sinclair”) entered into the Framework Agreement, providing for a long-term strategic relationship between Sinclair and the Company. Under the Framework Agreement, the Company issued to Sinclair warrants to purchase up to 4,915,726 shares of the Company at an exercise price of $ 0.01 per share (“the Penny Warrants”), a warrant to purchase up to 3,279,337 shares of the Company at an exercise price of $ 0.01 per share, subject to the achievement of various performance metrics (the “Performance Warrants”), and 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 in November 2024 (the “Options”). Additionally, the Company is required to share 60 % of the tax benefits it realizes from the Penny Warrants, Options, Performance Warrants and other related payments. Changes in the estimate of the tax benefit to be realized and tax rates in effect at the time, among other changes, was treated as an adjustment to the intangible asset. In connection with the Queen merger, as of February 7, 2025, all outstanding Performance Warrants became immediately exercisable at a price of $ 0.01 per share and the Options were returned to the Company in exchange for 384,536 penny warrants. The Performance Warrants were reclassified from liability to equity as of February 7, 2025. Refer to Note 12 “Fair Value Measurements” for more information. 15 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Provision for Income Taxes During the period from February 8, 2025 to March 31, 2025 (Successor), the Company recorded a benefit for income tax of $ 97.1 million, and a provision for income tax of $ 0.7 million, and $ 31.4 million during the period from January 1, 2025 to February 7, 2025 (Predecessor), and the three months ended March 31, 2024 (Predecessor), respectively. The effective tax rate for period from February 8, 2025 to March 31, 2025 (Successor), period from January 1, 2025 to February 7, 2025 (Predecessor), and the three months ended March 31, 2024 (Predecessor) was 155.2 %, ( 1.3 )%, and 22.0 %, respectively. As of March 31, 2025 (Successor), the Company projects an annual tax provision relative to its pre-tax loss in the US due to the valuation allowance on interest, and a tax provision internationally relative to its pre-tax income, which results in a combined 204 % annual effective tax rate, as the combined pre-tax income by jurisdiction is minimized. 3. RELATED PARTY TRANSACTIONS The Company holds a warrant, representing a 19.99 % fully diluted equity interest in the Carved-Out Business, which as a result is an unconsolidated entity accounted for under the equity method and is considered to be a related party under ASC 850. Revenues generated from this equity method investee are included in “Non-gaming revenue” and were $ 3.7 million and $ 4.9 million for the period from February 8, 2025 to March 31, 2025 (Successor) and period from January 1, 2025 to February 7, 2025 (Predecessor), respectively. There was no revenue generated from this equity method investee during the three months ended March 31, 2024 (Predecessor). Receivables from this equity method investee are included in Accounts receivable, net and were $ 3.3 million and $ 1.1 million as of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), respectively. In connection with the disposal of the Carved-Out Business, the Company entered into a seven-year term loan with the Buyer for a principal amount of € 30 million, subject to applicable interest. As of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), the Company had a loan receivable of approximately $ 29.3 million and $ 31.2 million, respectively, included in Other assets within the condensed consolidated balance sheets, and recorded interest income of $ 0.5 million and $ 0.3 million, respectively, for the period from February 8, 2025 to March 31, 2025 (Successor) and the period from January 1, 2025 to February 7, 2025 (Predecessor), included within Interest expense, net in the condensed consolidated statements of operations. 4. CONSOLIDATED FINANCIAL INFORMATION General and Administrative Expense Amounts included in General and administrative for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor), and the three months ended March 31, 2024 (Predecessor) were as follows: Successor Predecessor (in thousands) Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Advertising, general and administrative $ 140,416 $ 100,969 $ 224,201 Acquisition and integration 4,100 2,199 4,852 Merger costs 15,875 11,233 770 Restructuring charges, net — — 18,613 Total general and administrative $ 160,391 $ 114,401 $ 248,436 16 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Other Non-Operating (Expense) Income, Net Amounts included in Other non-operating income (expense), net for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor), and the three months ended March 31, 2024 (Predecessor) were as follows: Successor Predecessor (in thousands) Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Loss on extinguishment of debt $ ( 17,372 ) $ — $ — Change in value of performance warrants — ( 1,180 ) — Gain on fair value of equity method investment 5,544 — — Net income (loss) from equity method investments 863 ( 594 ) 555 Foreign exchange gain 1,591 194 2,816 Other, net 344 ( 785 ) 1,183 Total other non-operating income (expense), net $ ( 9,030 ) $ ( 2,365 ) $ 4,554 Interest Expense, Net Amounts included in interest expense, net, for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor) were as follows: Successor Predecessor (in thousands) Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Interest income $ 1,450 $ ( 1 ) $ 4,795 Interest expense ( 53,187 ) ( 27,228 ) ( 77,926 ) Total interest expense, net $ ( 51,737 ) $ ( 27,229 ) $ ( 73,131 ) 5. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Standards to Be Implemented In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative . The amendments in this update align the requirements in the ASC to the SEC’s regulations. The effective date for each amended topic in the ASC is the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective. If by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective. Early adoption is prohibited. The Company is currently in the process of evaluating the impact of this amendment on its condensed consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures . The amendments in this update enhance the transparency and decision usefulness of income tax disclosures. This update will be effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently in the process of evaluating the impact of this amendment on its condensed consolidated financial statements and related disclosures. 17 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) In March 2024, the FASB issued ASU 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements . This amendment to the Codification removes references to various Concepts Statements. This update will be effective for public business entities for fiscal years beginning after December 15, 2024, with early adoption permitted if adopted as of the beginning of the fiscal year that includes that interim period. The Company is currently in the process of evaluating the impact of this amendment on its condensed consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . The amendments in this update require disclosure of certain costs and expenses on an interim and annual basis in the notes to the financial statements. This update will be effective for fiscal years beginning after December 15, 2026, and interim reporting periods in fiscal years beginning after December 15, 2027, with early adoption permitted. The disclosures required under the guidance can be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all periods presented in the financial statements. The Company is currently evaluating the impact that this guidance will have on its financial statement disclosures. 6. REVENUE RECOGNITION The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers , which requires the revenue to be recognized when a performance obligation is satisfied by transferring the control of promised goods or services and is measured at the transaction price or the amount of consideration that the Company expects to receive through satisfaction of the identified performance obligations. The Company generates revenue from four principal sources: (1) gaming (which includes retail gaming, online gaming, sports betting and racing), (2) hotel, (3) food and beverage and (4) retail, entertainment and other. Sales tax and other taxes collected on behalf of governmental authorities are accounted for on a net basis and are not included in revenue or operating expenses. Gaming Revenue Performance Obligations Retail gaming service contracts involving our land-based casinos, each have an obligation to honor the outcome of a wager and to pay out an amount equal to the stated odds, including the return of the initial wager, if the customer receives a winning hand. These elements of honoring the outcome of the hand of play and generating a payout are considered one performance obligation, with an additional performance obligation for those customers earning incentives under the Company’s player loyalty program. Online gaming and sports betting represent a single performance obligation for the Company to operate contests or games and award prizes or payouts to users based on results of the arrangement. Additionally, the use of incentives across the online gaming products create future customer rights and are a separate performance obligation. Racing revenue is earned through advance deposit wagering, which consists of patrons wagering through an advance deposit account. Each wagering contract contains a single performance obligation. Transaction Price The Company applies a practical expedient to account for its gaming contracts on a portfolio basis as such wagers have similar characteristics and the Company reasonably expects the impact on the consolidated financial statements of applying the revenue recognition guidance to the portfolio would not differ materially from the application of an individual wagering contract. The transaction price for a retail gaming, online gaming or sports betting wagering contract is the difference between wins and losses, not the total amount wagered. In addition, in the event of a multi-stage contest, the Company will allocate transaction price ratably from contest start to the contest’s final stage. The transaction price for racing operations, inclusive of live racing events conducted at the Company’s racing facilities, is the commission received from the pari-mutuel pool less contractual fees and obligations, primarily consisting of purse funding requirements, simulcasting fees, tote fees and certain pari-mutuel taxes that are directly related to the racing operations. 18 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. The performance obligation related to loyalty program incentives are deferred and recognized as revenue upon redemption by the customer. Revenue Recognition The allocated revenue for retail gaming wagers is recognized when the wagering occurs as all such wagers settle immediately. Online gaming revenue is recognized at the point in time when the player completes a gaming session and payout occurs. Sports betting involves a player wagering money on an outcome or series of outcomes. If a player wins the wager, the Company pays the player a pre-determined amount known as fixed odds, and its revenue is recognized as total wagers net of payouts made and incentives awarded to players. Racing revenue includes several of our casinos and resorts’ share of wagering from live racing and the import of simulcast signals, and is recognized upon completion of the wager based upon an established take-out percentage. The estimated retail value related to goods and services provided to customers without charge or upon redemption under the Company’s player loyalty programs included in departmental revenues, and therefore reducing gaming revenues, are as follows for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor): Successor Predecessor (in thousands) Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Hotel $ 10,796 $ 7,098 $ 20,479 Food and beverage 11,059 7,559 20,213 Retail, entertainment and other 3,899 713 2,428 $ 25,754 $ 15,370 $ 43,120 Non-gaming Revenue Performance Obligations Hotel, food and beverage, and retail, entertainment and other services have been determined to be separate, stand-alone performance obligations and revenue is recognized as the good or service is transferred at the point in time of the transaction. Transaction Price The transaction price for hotel, food and beverage, and retail, entertainment and other, is the net amount collected from the customer for such goods and services. The estimated standalone selling price of hotel rooms is determined based on observable prices. The standalone selling price of these goods and services are determined based upon the actual retail prices charged to customers for those items. Revenue Recognition Hotel revenue is recognized when the customer obtains control through occupancy of the room over their stay at the hotel. Advance deposits for hotel rooms are recorded as liabilities until revenue recognition criteria are met. Food, beverage and retail revenues are recognized at the time the goods are sold from Company-operated outlets. Other revenue includes cancellation fees for hotel and meeting space services, which are recognized upon cancellation by the customer, and golf revenues from the Company’s operations of Bally’s Golf Links, which are recognized at the time of sale. Additionally, other revenue includes market access and business-to-business service revenue generated by the International Interactive and North America Interactive reportable segments, which is recognized at the time the goods are sold or the service is provided, and are included in Non-gaming revenue within our condensed consolidated statements of operations. 19 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The following tables provide a disaggregation of revenue by segment (in thousands): Period from February 8, 2025 to March 31, 2025 (Successor) Casinos & Resorts International Interactive North America Interactive Corporate & Other Total Gaming $ 178,534 $ 107,736 $ 27,509 $ — $ 313,779 Non-gaming: Hotel 18,713 — — — 18,713 Food and beverage 20,254 — — — 20,254 Licensing — 4,883 — — 4,883 Retail, entertainment and other 9,350 131 48 1,536 11,065 Total non-gaming revenue 48,317 5,014 48 1,536 54,915 Total revenue $ 226,851 $ 112,750 $ 27,557 $ 1,536 $ 368,694 Period from January 1, 2025 to February 7, 2025 (Predecessor) Gaming $ 95,984 $ 74,849 $ 14,934 $ — $ 185,767 Non-gaming: Hotel 11,006 — — — 11,006 Food and beverage 11,304 — — — 11,304 Licensing — 3,720 — — 3,720 Retail, entertainment and other 6,005 416 2,007 273 8,701 Total non-gaming revenue 28,315 4,136 2,007 273 34,731 Total revenue $ 124,299 $ 78,985 $ 16,941 $ 273 $ 220,498 Three Months Ended March 31, 2024 (Predecessor) Gaming $ 250,418 $ 231,267 $ 34,372 $ — $ 516,057 Non-gaming: Hotel 41,090 — — — 41,090 Food and beverage 34,952 — — — 34,952 Licensing — — — — — Retail, entertainment and other 15,869 3,416 5,195 1,903 26,383 Total non-gaming revenue 91,911 3,416 5,195 1,903 102,425 Total revenue $ 342,329 $ 234,683 $ 39,567 $ 1,903 $ 618,482 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 $ 38.8 million and $ 41.3 million as of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), respectively. The Company has the following liabilities related to contracts with customers: liabilities for loyalty programs, advance deposits made for goods and services yet to be provided and unpaid wagers. All of the contract liabilities are short-term in nature and are included in “Accrued and other current liabilities” in the condensed consolidated balance sheets. Loyalty program incentives earned by customers are typically redeemed within one year from when they are earned and expire if a customer’s account is inactive for more than 12 months; therefore, the majority of these incentives outstanding at the end of a period will either be redeemed or expire within the next 12 months. 20 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. The Company holds restricted cash for interactive player deposits and records a corresponding withdrawal liability. The banquet and hotel reservation deposits are usually received weeks or months in advance of the event or hotel stay. Unpaid wagers include the Company’s outstanding chip liability and unpaid slot, pari-mutuel and sports betting tickets. Liabilities related to contracts with customers as of March 31, 2025 (Successor) and December 31, 2024 (Predecessor) were as follows: Successor Predecessor March 31, December 31, (in thousands) 2025 2024 Unpaid wagers $ 33,487 $ 32,992 Advanced deposits from customers 26,667 26,141 Loyalty programs 11,044 12,167 Total $ 71,198 $ 71,300 The Company recognized $ 3.2 million, $ 2.2 million and $ 7.6 million of revenue related to loyalty program redemptions for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor), respectively. 7. BUSINESS COMBINATIONS Merger with Queen Casino & Entertainment, Inc. The Merger between the Company and Queen was accounted for as a transaction between entities under common control in accordance with ASC Topic 805, Business Combinations (“ASC 805”), in which the accounting acquirer (Parent and its affiliates) obtained control of the Company. As described in Note 2, “Summary of Significant Accounting Policies”, the Company has elected to push down its Parent’s basis in its net assets into its financial statements, and as a result, the net assets of the Predecessor will be measured and recognized at their fair values as of the acquisition date and will be combined with those of Queen at Queen’s historical carrying amounts and will be presented on a combined basis. The following disclosures relate to the Company’s election to apply push down and show the effect of the change in control. The fair value of the Merger consideration was $ 955.6 million, which represents the total number of shares outstanding prior to the Merger multiplied by the Merger value of $ 18.25 per share. Immediately following the transaction, the Company repurchased 22.8 million shares at a price of $ 18.25 for total a total repurchase price of $ 416.2 million. 21 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The preliminary allocation of the purchase price is as follows: (in thousands) February 7, 2025 Cash and cash equivalents $ 173,550 Restricted cash 57,352 Other current assets 210,447 Property and equipment 1,065,486 Right of use assets 1,692,346 Goodwill 1,555,354 Intangible assets 1,866,963 Other assets 131,457 Total current liabilities ( 548,702 ) Lease liabilities ( 1,823,153 ) Long-term debt ( 2,914,688 ) Other long-term liabilities ( 510,765 ) Net assets acquired $ 955,647 The purchase consideration has been allocated to the tangible and identifiable intangible assets and liabilities based upon their estimated fair values as of the acquisition date, with the excess of the purchase consideration over the aggregate net fair values recorded as goodwill, which is not deductible for tax purposes. Accounts receivable, other assets, current liabilities and inventories were stated at their historical carrying value, which approximates fair value given the short-term nature of these assets and liabilities. The estimate of fair value for property and equipment and owned real property was based on an assessment of the assets' condition as well as an evaluation of the current market value of such assets. The fair value of leasehold interests were estimated based on evaluating contractual rent payments relative to market rent giving consideration to the Company’s capitalization rates and rent coverage ratios, under the income method or by estimating the fee simple value and estimated rate of return, depending on the nature of the underlying leasehold interest. The estimated fair values were based on assumptions that the Company believes are reasonable. As of March 31, 2025 (Successor), the Company is in the process of completing its valuation of tangible and intangible assets and the allocation of the purchase price to the assets acquired and liabilities assumed, including the goodwill allocation to reporting units, which will be completed once the valuation process has been finalized. The Company recorded intangible assets based on estimates of fair value which consisted of the following: Valuation Approach Estimated Useful Life (in years) Estimated Fair Value Gaming licenses Greenfield Method 16 $ 759,383 Customer relationships Multi-period Excess earnings method 4 357,180 Developed technology Relief from royalty method 5 253,200 Trade names Relief from royalty method 12 74,700 Intellectual property license Relief from royalty method 7 141,000 Trade names and other Relief from royalty method Indefinite 281,500 Total fair value of intangible assets $ 1,866,963 The valuation of intangible assets was determined using income approach methodologies including the greenfield method, multi-period excess earnings method and the relief from royalty method. Level 3 inputs used in estimating future cash flows included terminal growth rates of 3 %, royalty rates between 2 % and 19 %, discount rates between 11 % and 15 %, operating cash flows, estimated construction costs, and pre-opening expenses, among others. The projected future cash flows are discounted to present value using an appropriate discount rate. As of March 31, 2025 (Successor), the Company is in the process of completing its valuation of intangible assets and the allocation of the purchase price to net assets, which will be completed once the valuation process has been finalized. 22 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The Company incurred $ 15.9 million, $ 11.2 million and $ 0.8 million of transaction-related expenses for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor), and the three months ended March 31, 2024 (Predecessor), respectively. Transaction-related expenses were incurred in connection with the Merger and are primarily related to legal and professional fees, which have been included in General and administrative in the condensed consolidated statements of operations. 8. PREPAID EXPENSES AND OTHER CURRENT ASSETS As of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), prepaid expenses and other current assets was comprised of the following: Successor Predecessor March 31, December 31, (in thousands) 2025 2024 Short term notes receivable $ 16,221 $ 17,342 Services and license agreements 51,012 43,141 Loan receivable 38,599 — Sales tax 18,261 18,988 Prepaid marketing 12,328 11,952 Short term derivative assets 4,999 5,359 Prepaid insurance 4,588 3,341 Other 16,223 15,348 Total prepaid expenses and other current assets $ 162,231 $ 115,471 9. PROPERTY AND EQUIPMENT As of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), property and equipment was comprised of the following: Successor Predecessor March 31, December 31, (in thousands) 2025 2024 Land and improvements $ 96,237 $ 49,553 Building and improvements 639,064 370,086 Equipment 90,881 280,946 Furniture and fixtures 135,473 64,109 Construction in process 206,834 149,906 Total property, plant and equipment 1,168,489 914,600 Less: Accumulated depreciation ( 31,866 ) ( 283,898 ) Property and equipment, net $ 1,136,623 $ 630,702 Depreciation expense relating to property and equipment was $ 14.5 million, $ 7.6 million and $ 99.5 million for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor), respectively. Depreciation expense during the three months ended March 31, 2024 (Predecessor) 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 Ex pense ” for further information. The Company recorded capitalized interest of $ 1.7 million, $ 0.8 million and $ 1.8 million during the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor), respectively. 23 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 10. GOODWILL AND INTANGIBLE ASSETS The change in carrying value of goodwill by reportable segment for the three months ended March 31, 2025 (Successor) is as follows (in thousands): Casinos & Resorts International Interactive North America Interactive Corporate & Other Total Goodwill as of December 31, 2024 (Predecessor) (1) $ 313,285 $ 1,451,273 $ 35,386 $ — $ 1,799,944 Effect of foreign exchange — ( 11,268 ) — — ( 11,268 ) Goodwill as of February 7, 2025 (Predecessor) (1) 313,285 1,440,005 35,386 — $ 1,788,676 Goodwill as of February 8, 2025 (Successor) 612,191 716,260 56,845 205,352 $ 1,590,648 Effect of foreign exchange — 31,063 — 31,063 Goodwill as of March 31, 2025 (Successor) $ 612,191 $ 747,323 $ 56,845 $ 205,352 $ 1,621,711 __________________________________ (1) Amounts are shown net of accumulated goodwill impairment charges of $ 5.4 million and $ 140.4 million for Casinos & Resorts and North America Interactive, respectively. The change in intangible assets, net for the three months ended March 31, 2025 (Successor) is as follows (in thousands): Intangible assets, net as of December 31, 2024 (Predecessor) $ 1,307,343 Effect of foreign exchange ( 3,662 ) Internally developed software 3,054 Less: Amortization of intangible assets ( 14,765 ) Intangible assets, net as of February 07, 2025 (Predecessor) $ 1,291,970 Intangible assets, net as of February 08, 2025 (Successor) $ 1,941,245 Additions in current period 962 Effect of foreign exchange 32,740 Internally developed software 5,982 Less: Amortization of intangible assets ( 32,936 ) Intangible assets, net as of March 31, 2025 (Successor) $ 1,947,993 24 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The Company’s identifiable intangible assets consist of the following: Successor March 31, 2025 (in thousands) Gross Carrying Amount Accumulated Amortization Net Amortizable intangible assets: Trade names $ 79,464 $ ( 2,250 ) $ 77,214 Customer relationships 370,890 ( 15,261 ) 355,629 Developed technology 264,179 ( 7,528 ) 256,651 Internally developed software 5,982 ( 130 ) 5,852 Gaming licenses 752,296 ( 7,362 ) 744,934 Licensing asset 147,138 ( 2,995 ) 144,143 Other 25,006 ( 4,037 ) 20,969 Total amortizable intangible assets 1,644,955 ( 39,563 ) 1,605,392 Intangible assets not subject to amortization: Gaming licenses 61,101 — 61,101 Trade names 281,500 — 281,500 Total unamortizable intangible assets 342,601 — 342,601 Total intangible assets, net $ 1,987,556 $ ( 39,563 ) $ 1,947,993 Predecessor December 31, 2024 (in thousands) Gross Carrying Amount Accumulated Amortization Net Amortizable intangible assets: Trade names $ 31,723 $ ( 18,032 ) $ 13,691 Hard Rock license 8,000 ( 2,545 ) 5,455 Customer relationships 660,005 ( 272,333 ) 387,672 Developed technology 210,712 ( 70,073 ) 140,639 Internally developed software 105,284 ( 26,791 ) 78,493 Gaming licenses 47,797 ( 19,864 ) 27,933 Other 11,473 ( 4,918 ) 6,555 Total amortizable intangible assets 1,074,994 ( 414,556 ) 660,438 Intangible assets not subject to amortization: Gaming licenses 546,908 — 546,908 Trade names 98,784 — 98,784 Other 1,213 — 1,213 Total unamortizable intangible assets 646,905 — 646,905 Total intangible assets, net $ 1,721,899 $ ( 414,556 ) $ 1,307,343 __________________________________ 25 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Amortization of intangible assets was approximately $ 32.9 million, $ 14.8 million and $ 60.3 million for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor), respectively. The following table reflects the remaining amortization expense associated with the finite-lived intangible assets as of March 31, 2025 (Successor): (in thousands) Remaining 2025 $ 173,157 2026 231,342 2027 229,032 2028 209,397 2029 139,008 Thereafter 623,456 Total $ 1,605,392 11. DERIVATIVE INSTRUMENTS The Company utilizes derivative instruments in order to mitigate interest rate and currency exchange rate risk in accordance with its financial risk and liability management policy. The Company has entered into a series of interest rate contracts and cross currency swap derivative transactions with multiple bank counterparties in order to synthetically convert a notional aggregate amount of $ 500.0 million of the Company’s USD denominated variable rate Term Loan Facility, as disclosed in Note 15 “ Long-Term Debt ,” into fixed rate debt over five years and $ 200 million of the Term Loan Facility, to an equivalent GBP denominated floating rate instrument over three years . These contracts mature in October, 2028 and 2026, respectively. Additionally, the Company has 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. Cross Currency Swaps Net Investment Hedges - The Company is exposed to fluctuations in foreign exchange rates on investments it holds in its European foreign entities. The Company uses fixed and fixed-cross-currency swaps to hedge its exposure to changes in the foreign exchange rate on its foreign investment in Europe and their exposure to changes in the EUR-GBP exchange rate. Currency forward agreements involve fixing the USD-EUR exchange rate for delivery of a specified amount of foreign currency on a specified date. The currency forward agreements are typically cash settled in USD for their fair value at or close to their settlement date. Cross-currency swaps involve the receipt of functional-currency-fixed-rate amounts from a counterparty in exchange for the Company making foreign-currency-fixed-rate payments over the life of the agreement. These derivative arrangements qualify as net investment hedges under ASC 815, with the gain or loss resulting from changes in the spot value of the derivative reported in other comprehensive income (loss). Amounts are reclassified out of other comprehensive income (loss) into earnings when the hedged net investment is either sold or substantially liquidated. Additionally, the accrual of foreign currency and USD denominated coupons will be recognized in “Interest expense, net” in the condensed consolidated statements of operations. Refer to Note 12 “Fair Value Measurements” and Note 17 “Stockholders’ Equity” for further information. Economic Hedges - During the fourth quarter of 2024, the Company dedesignated its EUR-GBP cross currency swaps as net investment hedges and began recording changes in fair value of the derivative and the accrual of foreign currency and USD denominated coupons through earnings reported in Other non-operating income (expense), net in the consolidated statements of operations. 26 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The following tables summarize the Company’s cross currency swap arrangements as of March 31, 2025 (Successor) and December 31, 2024 (Predecessor) (in thousands): Hedge Designation Notional Sold Notional Purchased Cross currency swaps Economic Hedges € 461,595 £ 387,531 Cross currency swaps Net Investment Hedge £ 546,759 $ 700,000 Cash Flow Hedges Interest Rate Contracts - The Company’s objectives in using interest rate derivatives are to hedge its exposure to variability in cash flows on a portion of its floating-rate debt, to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps and collars as part of its financial risk and liability management policy. The Company’s interest rate swaps and collars are designated as cash flow hedges under ASC 815. The changes in the fair value of these instruments are recorded as a component of accumulated other comprehensive income (loss) and reclassified into “Interest expense, net” in the condensed consolidated statements of operations in the same period in which the hedged interest payments associated with the Company’s borrowings are recorded. Refer to Note 12 “Fair Value Measurements” and Note 17 “Stockholders’ Equity” for further information. The following table summarizes the Company’s cash flow hedges as of March 31, 2025 (Successor) and December 31, 2024 (Predecessor) (in thousands): Successor Predecessor March 31, 2025 December 31, 2024 Cash Flow Hedges Index Notional Amount Notional Amount Interest rate contracts - swaps US - SOFR $ 1,500,000 $ 1,500,000 27 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 12. FAIR VALUE MEASUREMENTS The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement: Successor March 31, 2025 (in thousands) Balance Sheet Location Level 1 Level 2 Level 3 Assets: Cash and cash equivalents Cash and cash equivalents $ 209,727 $ — $ — Restricted cash Restricted cash 54,955 — — Fair value option loan receivable Prepaid and other current assets — 38,599 — Fair value option equity method investments Other assets 182,581 — — Investment in GLPI partnership Other assets — 21,579 — Derivative assets not designated as hedging instruments: Cross currency swaps Prepaid expenses and other current assets — 4,859 — Cross currency swaps Other assets — 108 — Derivative assets designated as hedging instruments: Interest rate contracts Prepaid expenses and other current assets — 140 — Interest rate contracts Other assets — 7,256 — Total derivative assets at fair value — 12,363 — Total assets $ 447,263 $ 72,541 $ — Liabilities: Contingent consideration Other long-term liabilities $ — $ — $ 60,709 Derivative liabilities not designated as hedging instruments: Cross Currency Swaps Other long-term liabilities — 12,169 — Derivative liabilities designated as hedging instruments: Interest rate contracts Accrued and other current liabilities — 3,175 — Interest rate contracts Other long-term liabilities — 28,942 — Cross currency swaps Accrued and other current liabilities — 2,263 — Cross currency swaps Other long-term liabilities — 14,294 — Total derivative liabilities at fair value — 60,843 — Total liabilities $ — $ 60,843 $ 60,709 28 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Predecessor December 31, 2024 (in thousands) Balance Sheet Location Level 1 Level 2 Level 3 Assets: Cash and cash equivalents Cash and cash equivalents $ 171,233 $ — $ — Restricted cash Restricted cash 60,021 — — Investment in GLPI partnership Other assets — 20,418 — Derivative assets not designated as hedging instruments Cross currency swaps Prepaid expenses and other current assets — 4,871 — Cross currency swaps Other assets — 615 — Derivative assets designated as hedging instruments: Interest rate contracts Prepaid expenses and other current assets — 340 — Interest rate contracts Other assets — 336 — Cross currency swaps Prepaid expenses and other current assets — 148 — Cross currency swaps Other assets — 13,181 — Total derivative assets at fair value — 19,491 — Total assets $ 231,254 $ 39,909 $ — Liabilities: Contingent consideration Other long-term liabilities $ — $ — $ 59,923 Derivatives not designated as hedging instruments Sinclair Performance Warrants Other long-term liabilities — — 58,668 Cross currency swaps Other long-term liabilities — 11,174 — Derivative liabilities designated as hedging instruments: Interest rate contracts Accrued and other current liabilities — 1,855 — Interest rate contracts Other long-term liabilities — 13,372 — Cross currency swaps Accrued and other current liabilities — 1,189 — Cross currency swaps Other long-term liabilities — 1,624 — Total derivative liabilities at fair value — 29,214 58,668 Total liabilities $ — $ 29,214 $ 118,591 The following tables summarize the changes in fair value of the Company’s Level 3 liabilities: (in thousands) Sinclair Performance Warrants Contingent Consideration Beginning as of December 31, 2024 (Predecessor) $ 58,668 $ 59,923 Change in fair value 1,180 786 Ending as of February 7, 2025 (Predecessor) $ 59,848 $ 60,709 Beginning as of February 8, 2025 (Successor) — 60,709 Change in fair value — — Ending as of March 31, 2025 (Successor) $ — $ 60,709 29 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (in thousands) Sinclair Performance Warrants Contingent Consideration Convertible Loans Beginning as of December 31, 2023 (Predecessor) $ 44,703 $ 58,580 $ 4,115 Change in fair value — ( 1,835 ) ( 33 ) Ending as of March 31, 2024 (Predecessor) $ 44,703 $ 56,745 $ 4,082 The gains (losses) recognized in the condensed consolidated statements of operations for derivative instruments during the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor) are as follows: Condensed Consolidated Statements of Operations Location Successor Predecessor (in thousands) Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Derivatives not designated as hedging instruments Sinclair Performance Warrants Other non-operating income (expense), net $ — $ ( 1,180 ) $ — Cross Currency Swaps Other non-operating income (expense), net 221 50 — Derivatives designated as hedging instruments Interest rate contracts Interest expense, net $ 485 $ ( 105 ) $ ( 2,886 ) Cross currency swaps Interest expense, net 369 7 ( 1,211 ) Interest Rate Contracts and Cross Currency Swaps The fair values of interest rate contracts and cross currency swap assets and liabilities are classified within Level 2 of the fair value hierarchy as the valuation inputs are based on estimates using currency spot and forward rates and standard pricing models that consider the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments. These standard pricing models utilize inputs that are derived from or corroborated by observable market data such as interest rate yield curves as well as currency spot and forward rates. When designated as hedging instruments, changes in the fair value of these contracts are reported as a component of other comprehensive income (loss). When not designated as hedging instruments, changes in fair value of these contracts are reported within Other non-operating income (expense), net in the consolidated statements of operations. Sinclair Performance Warrants Sinclair Performance Warrants were accounted for as a derivative instrument classified as a liability within Level 3 of the hierarchy through February 7, 2024 (predecessor) as the warrants are not traded in active markets and are subject to certain assumptions and estimates made by management related to the probability of meeting performance milestones. These assumptions and the probability of meeting performance targets may have a significant impact on the value of the warrant. The Performance Warrants were valued using an option pricing model, considering the Company’s estimated probabilities of achieving the performance milestones for each tranche. Inputs to this valuation approach include volatility between 40 % and 67 %, risk free rates between 3.84 % and 4.79 %, the Company’s common stock price for each period and expected terms between 1.5 and 6.3 years. In connection with the Queen merger, as of February 7, 2025, all outstanding Performance Warrants became immediately exercisable at a price of $0.01 per share and were reclassified out of liabilities and into equity and are no longer measured at fair value. The fair value is recorded within Other long-term liabilities of the condensed consolidated balance sheets as of December 31, 2024 (predecessor). 30 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Contingent Consideration Contingent consideration related to acquisitions is recorded at fair value as a liability on the acquisition date and subsequently remeasured at each reporting date, based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The remeasurements are based primarily on the expected probability of achievement of the contingency targets which are subject to management’s estimates. These changes in fair value are recognized within “Other non-operating income (expense), net” of the condensed consolidated statements of operations. In connection with the acquisition of Bally’s Golf Links on September 12, 2023, the Company recorded contingent consideration, which was valued at $ 57.7 million as of March 31, 2025 (Successor). The amount included in purchase consideration is the fair value, under GAAP, of expected cash payments totaling up to $125 million to the seller, based upon future events, which are uncertain. The contingent consideration was recorded at fair value, using discounted cash flow analyses with level 3 inputs, and is remeasured quarterly, with fair value adjustments recognized in earnings, until the contingencies are resolved. Inputs to this valuation approach include the Company’s estimated probabilities of achieving the conditions for payment, expected terms between 1.3 and 1.8 Years, and discount rates of 6.6%. The settlement of the contingent consideration liabilities will be due to the seller in the event the license agreement is extended or if the Company is successful in its bid for a casino license. Convertible Loans The Company has certain agreements with vendors to provide a portfolio of games to its customers. Pursuant to these agreements, the Company has issued loans to its vendors and has an option to convert the loans to shares of the vendors’ equity, exercisable within a specified time period. The Company recorded instruments within “Other assets” at their fair value. The fair value of the loans to vendors have share values based on unobservable inputs and are classified within Level 3 of the hierarchy, with changes to fair value included within “Other non-operating income (expense), net” of the condensed consolidated statements of operations. Loan Receivable Following the Queen Merger, the Company has a receivable from a third-party investment holding company for a delayed draw term loan issued (“Delayed Draw Loan”). The Delayed Draw Loan has an unpaid principal balance of € 25.0 million and is accounted for under the fair value option allowed by ASC 825, Financial Instruments, as the Company believes the fair value option more closely approximates the economics associated with the loan. The estimated fair value of the Delayed Draw Loan is based upon the fair value of the shares of Intralot the Company would expect to receive upon repayment of the Delayed Draw Loan. The Company measures fair value using quoted prices in active markets and its assessment of the share settlement feature, which are classified within Level 2 of the hierarchy, with changes to fair value of $ 1.2 million included within “Other non-operating income (expense), net” of the condensed consolidated statements of operations for the period from February 8, 2025 to March 31, 2025 (Successor). Equity Method Investment The Company has a long-term investment in an unconsolidated entity which it accounts for under the equity method of accounting. The Company has elected the fair value option allowed by ASC 825, Financial Instruments , with respect to this investment. Under the fair value option, the investment is remeasured at fair value at each reporting period through earnings. The Company measures fair value using quoted prices in active markets that are classified within Level 1 of the hierarchy, with changes to fair value included within “Other non-operating income (expense), 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 income (expense), net” of the condensed consolidated statements of operations. 31 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Long-Term Debt The fair value of the Company’s Term Loan Facility and senior notes are estimated based on quoted prices in active markets and are classified as Level 1 measurements. The fair value of the Revolving Credit Facility approximates its carrying amount as it is revolving, variable rate debt, and is also classified as a Level 1 measurement. In the table below, the carrying amounts of the Company’s long-term debt are net of debt issuance costs and debt discounts. Refer to Note 15 “Long-Term Debt” for further information. Successor Predecessor March 31, 2025 December 31, 2024 (in thousands) Carrying Amount Fair Value Carrying Amount Fair Value Term Loan Facility $ 1,781,402 $ 1,695,287 $ 1,858,800 $ 1,792,804 5.625 % Senior Notes due 2029 555,170 552,187 738,517 587,813 5.875 % Senior Notes due 2031 499,247 489,694 721,456 535,631 11.00 % Senior Secured Notes due 2028 479,340 479,340 — — 13. ACCRUED AND OTHER CURRENT LIABILITIES As of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), accrued and other current liabilities consisted of the following: Successor Predecessor (in thousands) March 31, 2025 December 31, 2024 Gaming liabilities $ 186,703 $ 187,233 Compensation 65,941 66,356 Interest payable 45,307 60,792 Construction accruals 11,052 2,144 Insurance reserves 20,723 23,898 Property taxes 14,443 8,502 Other 198,808 132,367 Total accrued and other current liabilities $ 542,977 $ 481,292 14. RESTRUCTURING EXPENSE On January 18, 2023, the Company announced a restructuring plan of the Interactive business intended to reduce operating costs and continue the Company’s commitment to achieving profitable operations in its North America Interactive segment which included a reduction of the Company’s then current Interactive workforce by up to 15 percent. In furtherance of and as an expansion of the January 2023 restructuring plan, on October 20, 2023, the Company announced further restructuring initiatives targeted at reshaping the technology utilized by its Interactive segments. On January 29, 2024, the Company announced that it will cease its operations at the Tropicana Las Vegas on April 2, 2024 in order to redevelop the site with a state-of-the-art integrated resort and ballpark. As a result of the closure, the Company incurred restructuring charges representing employee-related severance costs and accelerated depreciation of certain property and equipment. 32 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The components of restructuring charges by segment for the three months ended March 31, 2024 (Predecessor) are summarized as follows (in thousands): Predecessor Three Months Ended March 31, 2024 Severance and employee related benefits (1) Casinos & Resorts $ 19,655 International Interactive 52 North America Interactive ( 1,479 ) Corporate & Other 385 Total severance and employee related benefits 18,613 Accelerated depreciation expense (2) 80,117 Total restructuring charges 98,730 __________________________________ (1) Included within “General and administrative” of the condensed consolidated statements of operations. (2) Included within “Depreciation and amortization” of the Casinos & Resorts reportable segment within the condensed consolidated statements of operations. The was no restructuring liability as of March 31, 2025 (Successor) and December 31, 2024 (Predecessor) on the condensed consolidated balance sheets. 15. LONG-TERM DEBT As of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), long-term debt consisted of the following: Successor Predecessor (in thousands) March 31, 2025 December 31, 2024 Term Loan Facility (1) $ 1,881,788 $ 1,886,650 Revolving Credit Facility 135,000 — 5.625 % Senior Notes due 2029 750,000 750,000 5.875 % Senior Notes due 2031 735,000 735,000 11.00 % Senior Secured Notes due 2028 500,000 — Less: Unamortized original issue discount ( 14,531 ) ( 19,760 ) Less: Unamortized deferred financing fees ( 6,128 ) ( 33,117 ) Less: Unamortized fair value adjustment (2) ( 530,970 ) — Long-term debt, including current portion 3,450,159 3,318,773 Less: Current portion of Term Loan and Revolving Credit Facility ( 19,450 ) ( 19,450 ) Long-term debt, net of discount, deferred financing fees and fair value adjustment, excluding current portion $ 3,430,709 $ 3,299,323 __________________________________ (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 11 “ Derivative Instruments ” for further information. (2) Represents adjustment to recognize the Company’s existing debt at fair value in the Company Merger, calculated as the difference between the fair value of the Company’s term loan facility and unsecured notes, estimated based on quoted prices in active markets as of the Closing Date, and the respective ending principal balances as of February 7, 2025. The adjustment is amortized through Interest Expense, Net using the effective interest method. 33 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 2028 Notes In connection with the closing of the Merger on February 7, 2025, the Company entered into a note purchase agreement and issued $ 500.0 million in aggregate principal amount of first lien senior secured notes due 2028 (the “2028 Notes”) at an annual interest rate of 11 %, payable in cash quarterly in arrears, beginning on April 1, 2025. The 2028 Notes were issued by the Company and certain of its restricted subsidiaries that guarantee the Company’s obligations under its Credit Agreement as guarantors, Alter Domus (US) LLC as the note agent and collateral agent, and the purchasers party thereto. The 2028 Notes mature on October 2, 2028. The 2028 Notes are guaranteed by the Company’s restricted subsidiaries, subject to certain exceptions, and secured by a first-priority lien on substantially all of the Company’s and each of the guarantors’ assets, subject to certain exceptions. The note purchase agreement includes mandatory redemption offer provisions that require the Company to make an offer to redeem the 2028 Notes upon certain events, include with the proceeds of certain asset sales and casualty events, certain unpermitted debt issuances and a percentage of the Company’s and its restricted subsidiaries’ annual excess cash flow. The Company may also voluntarily redeem some or all of the 2028 Notes. Voluntary and mandatory redemptions of the 2028 Notes on or prior to the first anniversary of the issuance date are subject to a customary “make-whole” premium. Voluntary and mandatory repayments or redemptions of the 2028 Notes after the first anniversary of the issuance date but on or prior to the second anniversary are subject to a prepayment premium of 5.50 % of the principal amount of notes so repaid or redeemed. Voluntary and mandatory repayments or redemptions of the 2028 Notes after the second anniversary are not subject to any prepayment or similar premium and may be made at par. The note purchase agreement contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, (1) incur additional indebtedness, (2) pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, (3) enter into certain transactions with affiliates, (4) sell or otherwise dispose of assets, (5) create or incur liens, and (6) merge, consolidate, or sell all or substantially all of the Company’s assets. These covenants are subject to exceptions and qualifications set forth in the note purchase agreement. As of March 31, 2025 (Successor), the Company was in compliance with all such covenants. In connection with the Merger, the Company settled the pre-existing debt of Queen and recorded a loss on extinguishment of debt of $ 17.4 million, recorded within “Other non-operating income (expense), net” in the condensed consolidated statements of operations for the period from February 8, 2025, to March 31, 2025 (Successor). Unsecured Notes On August 20, 2021, two unrestricted subsidiaries (together, the “Escrow Issuers”) of the Company issued $ 750.0 million aggregate principal amount of 5.625 % senior notes due 2029 (the “2029 Notes”) and $ 750.0 million aggregate principal amount of 5.875 % Senior Notes due 2031 (the “2031 Notes” and, together with the 2029 Notes, the “Senior Notes”). The Senior Notes were issued pursuant to an indenture, dated as of August 20, 2021, among the Escrow Issuers and U.S. Bank National Association, as trustee. Certain of the net proceeds from the Senior Notes offering were placed in escrow accounts for use in connection with the Gamesys acquisition. On October 1, 2021, upon the closing of the Gamesys acquisition, the Company assumed the issuer obligation under the Senior Notes. The Senior Notes are guaranteed, jointly and severally, by each of the Company’s restricted subsidiaries that guarantees the Company’s obligations under its Credit Agreement (as defined below). The 2029 Notes mature on September 1, 2029 and the 2031 Notes mature on September 1, 2031. Interest is payable on the Senior Notes in cash semi-annually on March 1 and September 1 of each year, beginning on March 1, 2022. The Company may redeem some or all of the Senior Notes at any time prior to September 1, 2024, in the case of the 2029 Notes, and September 1, 2026, in the case of the 2031 Notes, at prices equal to 100 % of the principal amount of the Senior Notes to be redeemed plus certain “make-whole” premiums, plus accrued and unpaid interest. In addition, prior to September 1, 2024, the Company may redeem up to 40 % of the original principal amount of each series of the Senior Notes with proceeds of certain equity offerings at a redemption price equal to 105.625 % of the principal amount, in the case of the 2029 Notes, and 105.875 %, in the case of the 2031 Notes, plus accrued and unpaid interest. The Company may redeem some or all of the Senior Notes at any time on or after September 1, 2024, in the case of the 2029 Notes, and September 1, 2026, in the case of the 2031 Notes, at certain redemption prices set forth in the indenture plus accrued and unpaid interest. 34 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The indenture contains covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, (1) incur additional indebtedness, (2) pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments, (3) enter into certain transactions with affiliates, (4) sell or otherwise dispose of assets, (5) create or incur liens and (6) merge, consolidate or sell all or substantially all of the Company’s assets. These covenants are subject to exceptions and qualifications set forth in the indenture. Credit Facility On October 1, 2021, the Company and certain of its subsidiaries entered into a credit agreement (the “Credit Agreement”) with Deutsche Bank AG New York Branch, as administrative agent and collateral agent, and the other lenders party thereto, providing for senior secured financing of up to $ 2.565 billion, consisting of a senior secured term loan facility in an aggregate principal amount of $ 1.945 billion (the “Term Loan Facility”), which will mature in 2028, and a senior secured revolving credit facility in an aggregate principal amount of $ 620.0 million (the “Revolving Credit Facility”), which will mature in 2026. The credit facilities allow the Company to increase the size of the Term Loan Facility or request one or more incremental term loan facilities or increase commitments under the Revolving Credit Facility or add one or more incremental revolving facilities in an aggregate amount not to exceed the greater of $ 650.0 million and 100 % of the Company’s consolidated EBITDA for the most recent four-quarter period plus or minus certain amounts as specified in the Credit Agreement, including an unlimited amount subject to compliance with a consolidated total secured net leverage ratio as set out in the Credit Agreement. The credit facilities are guaranteed by the Company’s restricted subsidiaries, subject to certain exceptions, and secured by a first-priority lien on substantially all of the Company’s and each of the guarantors’ assets, subject to certain exceptions. As of June 30, 2023, with the discontinuation of the LIBOR reference rate, borrowings under the credit facilities bear interest at a rate equal to, at the Company’s option, either (1) the term Secured Overnight Financing Rate (“SOFR”), adjusted for certain additional costs and subject to a floor of 0.50 % in the case of term loans and 0.00 % in the case of revolving loans or (2) a base rate determined by reference to the greatest of (a) the federal funds rate plus 0.50 %, (b) the prime rate, (c) the one-month SOFR rate plus 1.00 %, (d) solely in the case of term loans, 1.50 % and (e) solely in the case of revolving loans, 1.00 %, in each case of clauses (1) and (2), plus an applicable margin. In addition, on a quarterly basis, the Company is required to pay each lender under the Revolving Credit Facility a 0.50 % or 0.375 % commitment fee in respect of commitments under the Revolving Credit Facility, with the applicable commitment fee determined based on the Company’s total net leverage ratio. The credit facilities contain covenants that limit the ability of the Company and its restricted subsidiaries to, among other things, incur additional indebtedness, pay dividends or make certain other restricted payments, sell assets, make certain investments and grant liens. These covenants are subject to exceptions and qualifications set forth in the Credit Agreement. The Revolving Credit Facility contains a financial covenant regarding a maximum first lien net leverage ratio that applies when borrowings under the Revolving Credit Facility exceed 30 % of the total revolving commitment. As of March 31, 2025 (Successor), 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 11 “Derivative Instruments” for further information. 16. LEASES Operating Leases The Company is committed under various operating lease agreements for real estate and property used in operations. Certain leases include various renewal options which are included in the lease term when the Company has determined it is reasonably certain of exercising the options. Certain of these leases include percentage rent payments based on property revenues and/or rent escalation provisions determined by increases in the consumer price index (“CPI”). These percentage rent and escalation provisions are treated as variable lease payments and recognized as lease expense in the period in which the obligation for those payments are incurred. Discount rates used to determine the present value of the lease payments are based on the Company’s incremental borrowing rate commensurate with the term of the lease. 35 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The Company had total operating lease liabilities of $ 2.10 billion and $ 1.62 billion as of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), respectively, and right of use assets of $ 1.91 billion and $ 1.54 billion as of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), respectively, which were included in the condensed consolidated balance sheets. As of March 31, 2025 (Successor), unfavorable off-market components of $ 130.8 million were recognized as a decrease to right of use assets in connection with remeasuring the Company’s lease liabilities to the present value of the remaining lease payments due to the Company Merger (refer to Note 7, “Business Combinations” for further information). The off-market components will be amortized as a reduction of lease expense on a straight line basis over the remaining lease term. GLPI Leases As of March 31, 2025 (Successor), the Company leases certain properties from GLPI under two separate master lease agreements, the “Master Lease,” and the “Master Lease No. 2.” 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 the “Master Lease” which requires combined minimum annual payments of $ 106.1 million. The Company’s Bally’s Kansas City and Bally’s Shreveport properties are leased under the terms of the “Master Lease No. 2” which requires combined minimum annual payments of $ 32.2 million. 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. Both leases have an initial term of 15 years and include four , five-year options to renew and are subject to a minimum 1% annual escalation or greater escalation dependent on CPI. The renewal options are not reasonably certain of exercise as of March 31, 2025 (Successor). Following the Merger, the Company also has a master lease agreement through Queen with GLPI, the “Queen Master Lease”, with The Queen Baton Rouge, The Belle of Baton Rouge, Casino Queen Marquette and DraftKings at Casino Queen properties being leased under the terms of the Queen Master Lease, which requires combined minimum annual payments of $ 31.9 million. All GLPI leases are accounted for as operating leases within the provisions of ASC 842, over the lease term or until a re-assessment event occurs. The Queen Master Lease has an initial term of 15 years and includes four , five-year options to renew and is subject to annual escalation. The renewal options are not reasonably certain of exercise as of March 31, 2025 (Successor). In addition to the properties under the master leases 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 March 31, 2025 (Successor), the renewal options are not considered reasonably certain to be exercised. During the third quarter of 2024, 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. Components of lease expense, included within “General and administrative” in the condensed consolidated statements of operations, for operating leases during the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor) are as follows: Successor Predecessor (in thousands) Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Operating leases: Operating lease cost $ 34,020 $ 21,714 $ 37,331 Variable lease cost 1,739 1,238 2,786 Operating lease expense 35,759 22,952 40,117 Short-term lease expense 3,383 2,393 5,345 Total lease expense $ 39,142 $ 25,345 $ 45,462 36 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Supplemental cash flow and other information related to operating leases for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor) are as follows: Successor Predecessor (in thousands) Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Cash paid for amounts included in the lease liability - operating cash flows from operating leases $ 18,484 $ 30,843 $ 31,549 Successor Predecessor March 31, 2025 December 31, 2024 Weighted average remaining lease term 26.2 years 26.2 years Weighted average discount rate 7.3 % 8.5 % As of March 31, 2025 (Successor), future minimum lease payments under noncancellable operating leases are as follows: Successor (in thousands) March 31, 2025 Remaining 2025 $ 181,152 2026 236,710 2027 231,784 2028 234,180 2029 234,729 Thereafter 4,106,884 Total lease payments 5,225,439 Less: present value discount ( 3,127,136 ) Lease obligations $ 2,098,303 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. 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. Lessor The Company leases its hotel rooms to patrons and records the corresponding lessor revenue in Non-gaming revenue within our condensed consolidated statements of operations. The Company had lessor revenues related to the rental of hotel rooms of $ 18.7 million, $ 11.0 million and $ 41.1 million for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor), respectively. Hotel leasing arrangements vary in duration, but are short-term in nature. 37 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 17. STOCKHOLDERS’ EQUITY Capital Return Program The Company has a Board of Directors approved capital return program under which the Company may expend a total of up to $ 700 million for share repurchases and payment of dividends. Future share repurchases may be effected in various ways, which could include open-market or private repurchase transactions, accelerated stock repurchase programs, tender offers or other transactions. The amount, timing and terms of any return of capital transaction will be determined based on prevailing market conditions and other factors. There is no fixed time period to complete share repurchases. As of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), $ 95.5 million was available for use under the capital return program. There was no share repurchase activity under the capital return program during the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the three months ended March 31, 2024 (Predecessor). There were no cash dividends paid during the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) or the three months ended March 31, 2024 (Predecessor). Common Stock Offering On April 20, 2021, the Company issued a total of 12,650,000 shares of Bally’s common stock in an underwritten public offering at a price to the public of $ 55.00 per share. Net proceeds from the offering were approximately $ 671.4 million, after deducting underwriting discounts, but before expenses. On April 20, 2021, the Company issued to affiliates of Sinclair a warrant to purchase 909,090 common shares for an aggregate purchase price of $ 50.0 million, or $ 55.00 per share. The net proceeds were used to finance a portion of the purchase price of the Gamesys acquisition. The exercise price of the warrant is nominal and its exercise is subject to, among other conditions, requisite gaming authority approvals. Sinclair agreed not to acquire more than 4.9 % of Bally’s outstanding common shares without such approvals. In addition, in accordance with the agreements that Bally’s and Sinclair entered into in November 2020, Sinclair exchanged 2,086,908 common shares for substantially identical warrants. Preferred Stock The Company has authorized the issuance of up to 10 million shares of $ 0.01 par value preferred stock. As of March 31, 2025 (Successor) and December 31, 2024 (Predecessor), no shares of preferred stock have been issued. Shares Outstanding As of March 31, 2025 (Successor), the Company had 49,011,796 common shares issued and outstanding. The Company issued warrants 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 or the achievement of certain performance targets. These incremental shares are summarized below: Sinclair Penny Warrants (Note 2) 11,575,597 MKF penny warrants (Note 12) 44,128 Outstanding awards under Equity Incentive Plans 701,108 12,320,833 Accumulated Other Comprehensive Income (Loss) The following tables reflect the changes in accumulated other comprehensive loss by component for the period from February 8, 2025 to March 31, 2025 (Successor), Period from January 1, 2025 to February 7, 2025 (Predecessor) and three months ended March 31, 2024 (Predecessor), respectively: 38 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Predecessor (in thousands) Foreign Currency Translation Adjustment Benefit Plans Cash Flow Hedges (1) Net Investment Hedges Total Accumulated other comprehensive (loss) income at December 31, 2024 (Predecessor) $ ( 261,745 ) $ 1,746 $ ( 8,189 ) $ 7,921 $ ( 260,267 ) Other comprehensive income (loss) before reclassifications ( 13,097 ) — 1,425 3,655 ( 8,017 ) Reclassifications from accumulated other comprehensive income (loss) to earnings — — ( 105 ) 7 ( 98 ) Tax effect — — ( 352 ) ( 976 ) ( 1,328 ) Accumulated other comprehensive (loss) income at February 07, 2025 (Predecessor) $ ( 274,842 ) $ 1,746 $ ( 7,221 ) $ 10,607 $ ( 269,710 ) Successor (in thousands) Foreign Currency Translation Adjustment Cash Flow Hedges (1) Net Investment Hedges Total Accumulated other comprehensive (loss) income at February 8, 2025 (Successor) $ — $ — $ — $ — Other comprehensive income (loss) before reclassifications 58,675 ( 18,791 ) ( 24,157 ) 15,727 Reclassifications from accumulated other comprehensive income (loss) to earnings — 485 369 854 Tax effect ( 15,635 ) 4,878 6,339 ( 4,418 ) Accumulated other comprehensive (loss) income at March 31, 2025 (Successor) $ 43,040 $ ( 13,428 ) $ ( 17,449 ) $ 12,163 __________________________________ (1) As of March 31, 2025 (Successor), approximately $9.2 million of existing gains and losses are estimated to be reclassified into earnings within the next 12 months. Predecessor (in thousands) Foreign Currency Translation Adjustment Benefit Plans Cash Flow Hedges Net Investment Hedges Total Accumulated other comprehensive (loss) income at December 31, 2023 $ ( 177,203 ) $ 886 $ ( 11,246 ) $ ( 21,995 ) $ ( 209,558 ) Other comprehensive income (loss) before reclassifications ( 37,794 ) — 20,426 6,526 ( 10,842 ) Reclassifications from accumulated other comprehensive income (loss) to earnings — — ( 2,886 ) ( 1,211 ) ( 4,097 ) Tax effect — — ( 5,257 ) 6,151 894 Accumulated other comprehensive (loss) income at March 31, 2024 $ ( 214,997 ) $ 886 $ 1,037 $ ( 10,529 ) $ ( 223,603 ) 39 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 18. COMMITMENTS AND CONTINGENCIES Litigation The Company is a party to other various legal and administrative proceedings which have arisen in the ordinary course of its business. Estimated losses are accrued for these proceedings when the loss is probable and can be estimated. The current liability for the estimated losses associated with these proceedings is not material to the Company’s consolidated financial condition and those estimated losses are not expected to have a material impact on results of operations. Although the Company maintains what it believes is adequate insurance coverage to mitigate the risk of loss pertaining to covered matters, legal and administrative proceedings can be costly, time-consuming and unpredictable. Although no assurance can be given, the Company does not believe that the final outcome of these matters, including costs to defend itself in such matters, will have a material adverse effect on the company’s condensed consolidated financial statements. Further, no assurance can be given that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters. Capital Expenditure Commitments Bally’s 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 March 31, 2025 (Successor), approximately $ 45.0 million of the commitment remains. Bally’s Chicago - Pursuant to the Host Community Agreement with the City of Chicago, the Company’s indirect subsidiary is required to spend at least $ 1.34 billion on the design, construction and outfitting of the temporary casino and the permanent resort and casino. The actual cost of the development may exceed this minimum capital investment requirement. In addition, land acquisition costs and financing costs, among other types of costs, are not counted toward meeting this requirement. As of March 31, 2025 (Successor), approximately $ 1.00 billion of this commitment remains. City of Chicago Guaranty In connection with the Host Community Agreement, entered into by Bally’s Chicago Operating Company, LLC (the “Developer”), a wholly-owned indirect subsidiary of the Company, the Company provided the City of Chicago with a performance guaranty whereby the Company agreed to have and maintain available financial resources in an amount reasonably sufficient to allow the Developer to complete its obligations under the host community agreement. In addition, upon notice from the City of Chicago that the Developer has failed to perform various obligations under the Host Community Agreement, the Company has agreed to indemnify the City of Chicago against any and all liability, claim or reasonable and documented expense the City of Chicago may suffer or incur by reason of any nonperformance of any of the Developer’s obligations. Bally’s Chicago Casino Fees Under the Illinois Gambling Act, the Company will be responsible to pay the Illinois Gaming Board a reconciliation fee payment three years after the date operations commenced (in a temporary or permanent facility) in an amount equal to 75% of the adjusted gross receipt (“AGR”) for the most lucrative 12-month period of operations, minus the amount equal to the initial payment per gaming position paid. Sponsorship Commitments As of March 31, 2025 (Successor), the Company has entered into multiple sponsorship agreements with various professional sports leagues and teams. These agreements commit a total of $ 122.7 million through 2036 and grant the Company rights to use official league marks for branding and promotions, among other benefits. 40 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 March 31, 2025 (Successor), the cumulative minimum obligation committed in these agreements is approximately $ 37.6 million through 2029. 19. SEGMENT REPORTING The Company has three operating and reportable segments: Casinos & Resorts, International Interactive and North America Interactive. The “Corporate & Other” category includes interest expense, select immaterial operating segments, unallocated corporate operating expenses, and other adjustments, such as eliminations of inter-segment transactions, to reconcile with the Company’s consolidated results. This category further accounts for other expenses such as share-based compensation, acquisition and transaction costs, and other non-recurring charges. During the first quarter of 2025, the Company moved a component of the North America Interactive operating segment to a separate operating segment, which is reported in the Corporate & Other category, to better align with the Company’s strategic growth initiatives and how its chief operating decision maker evaluates performance and allocates resources. Comparable prior period segment results have been re-cast to reflect this change. The prior year results presented below were reclassified to conform to the new segment presentation. The Company’s three reportable segments as of March 31, 2025 (Successor) are: Casinos & Resorts - Includes the Company’s 19 casino and resort properties, one horse racetrack and one golf course. International Interactive - Includes the Company’s interactive European gaming operations, the Company’s global licensing revenue generating operations, as well as one casino property, Bally's Newcastle, in the UK. North America Interactive - A portfolio of sports betting, iGaming, and free-to-play gaming brands. The Company’s chief operating decision maker is its Executive Committee, consisting of the Chief Executive Officer, President, and Chief Financial Officer. The Company uses consolidated Adjusted EBITDA and segment Adjusted EBITDAR to analyze the performance of its business and they are used as determining factors for performance-based compensation for members of the Company’s management team. The Company uses consolidated Adjusted EBITDA and segment Adjusted EBITDAR when evaluating the operating performance of the business because management believes that the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a more fulsome understanding of the core operating results and as a means to evaluate period-to-period performance. Management believes segment Adjusted EBITDAR is representative of its ongoing business operations including its ability to service debt and to fund capital expenditures, acquisitions and operations, in addition to it being a commonly used measure of performance in the gaming industry and used by industry analysts to evaluate operations and operating performance. As of March 31, 2025 (Successor), the Company’s operations were predominately in the US and Europe 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. Revenue generated from the UK represented approximately 27 % and 32 % of total revenue for the period from February 8, 2025 to March 31, 2025 (Successor) and the period from January 1, 2025 to February 7, 2025 (Predecessor), respectively. For the the three months ended March 31, 2024 (Predecessor), the Company’s revenue generated outside of the US consisted primarily of revenue from the UK and Japan of approximately 26 % and 10 % of total revenue, respectively. The Company does not have any revenues from any individual customers that exceed 10% of total reported revenues. The following table sets forth revenue and Adjusted EBITDAR for the Company’s three reportable segments and reconciles Adjusted EBITDAR on a consolidated basis to net (loss) income. The Other category is included in the following tables in order to reconcile the segment information to the Company’s condensed consolidated financial statements. 41 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Successor Predecessor (in thousands) Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Revenue Casinos & Resorts $ 226,851 $ 124,299 $ 342,329 International Interactive 112,750 78,985 234,683 North America Interactive 27,557 16,941 39,567 Corporate & Other 1,536 273 1,903 Total $ 368,694 $ 220,498 $ 618,482 Adjusted EBITDAR (1) Casinos & Resorts $ 71,540 $ 23,554 $ 89,418 International Interactive 48,195 28,940 83,532 North America Interactive ( 2,345 ) ( 5,661 ) ( 9,114 ) Corporate & Other ( 9,703 ) ( 6,774 ) ( 15,721 ) Total 107,687 40,059 148,115 Operating (expense) income Rent expense associated with triple net operating leases (2) ( 24,416 ) ( 15,669 ) ( 31,647 ) Depreciation and amortization ( 47,481 ) ( 22,343 ) ( 159,746 ) Transaction costs ( 7,738 ) ( 5,106 ) ( 5,560 ) Restructuring — — ( 18,613 ) Tropicana Las Vegas demolition and closure costs ( 5,931 ) ( 2,605 ) ( 464 ) Share-based compensation ( 2,740 ) ( 1,954 ) ( 3,058 ) Merger Agreement costs (3) ( 15,875 ) ( 11,233 ) ( 770 ) Payment Service Provider write-off (4) — — — Other ( 5,316 ) ( 1,915 ) ( 2,212 ) Loss from operations ( 1,810 ) ( 20,766 ) ( 73,955 ) Other (expense) income Interest expense, net of interest income ( 51,737 ) ( 27,229 ) ( 73,131 ) Other ( 9,030 ) ( 2,365 ) 4,554 Total other expense, net ( 60,767 ) ( 29,594 ) ( 68,577 ) Loss before income taxes ( 62,577 ) ( 50,360 ) ( 142,532 ) Benefit (provision) for income taxes 97,093 ( 664 ) ( 31,382 ) Net income (loss) $ 34,516 $ ( 51,024 ) $ ( 173,914 ) __________________________________ (1) Adjusted EBITDAR is defined as earnings, or loss, for the Company before interest expense, net of interest income, provision (benefit) for income taxes, depreciation and amortization, non-operating (income) expense, acquisition, integration and restructuring expense, share-based compensation, and certain other gains or losses as well as, when presented for our reporting segments, an adjustment related to the allocation of corporate cost among segments, plus rent expense associated with triple net operating leases. Adjusted EBITDAR should not be construed as an alternative to GAAP net income, its most directly comparable GAAP measure, nor is it directly comparable to similarly titled measures presented by other companies. (2) Consists primarily of the operating lease components contained within certain triple net leases with GLPI. Refer to Note 16 “ Leases ” for further information. (3) Costs incurred in connection with the Merger Agreement discussed in Note 1 “General Information.” 42 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The following table sets forth significant segment expenses and other segment items by reportable segment (in thousands): Casinos & Resorts International Interactive North America Interactive Period from February 8, 2025 to March 31, 2025 (Successor) Revenue $ 226,851 $ 112,750 $ 27,557 Less: segment expenses Marketing costs 11,612 11,662 7,051 Gaming tax 29,173 23,061 9,012 Compensation 57,716 11,843 4,481 Other direct costs — 11,413 11,652 Casino property costs 37,174 — — General and administrative 14,941 8,732 3,096 Other segment items (1) 4,695 ( 2,156 ) ( 5,390 ) Segment EBITDAR 71,540 48,195 ( 2,345 ) Period from January 1, 2025 to February 7, 2025 (Predecessor) Revenue $ 124,299 $ 78,985 $ 16,941 Less: segment expenses Marketing costs 8,814 8,362 5,055 Gaming tax 20,917 16,535 6,461 Compensation 41,381 8,492 3,213 Other direct costs — 8,183 8,355 Casino property costs 26,653 — — General and administrative 10,712 6,261 2,220 Other segment items (1) ( 7,732 ) 2,212 ( 2,702 ) Segment EBITDAR 23,554 28,940 ( 5,661 ) Three Months Ended March 31, 2024 (Predecessor) Revenue $ 342,329 $ 234,683 $ 39,567 Less: segment expenses Marketing costs 20,668 34,561 12,530 Gaming tax 47,081 36,344 10,135 Compensation 95,830 29,463 4,933 Other direct costs — 37,121 14,485 Casino property costs 33,714 — — General and administrative 17,262 16,486 4,530 Other segment items (1) 38,356 ( 2,824 ) 2,068 Segment EBITDAR $ 89,418 $ 83,532 $ ( 9,114 ) __________________________________ (1) Other Segment Items primarily includes Gaming and non-gaming expenses within our Casinos & Resorts reportable segment, and certain other immaterial costs and allocations within each of the Company’s reportable segments. 43 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Successor Predecessor (in thousands) Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Capital Expenditures Casinos & Resorts $ 10,706 $ 5,306 $ 9,879 International Interactive — 148 246 North America Interactive — — 260 Corporate & Other (1) 19,751 10,970 17,668 Total $ 30,457 $ 16,424 $ 28,053 __________________________________ (1) Includes $ 26.3 million, $ 11.0 million and $ 17.5 million related to our future Bally’s Chicago permanent facility during the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor), and the three months ended March 31, 2024 (Predecessor), respectively. Total assets are not regularly reviewed for each operating segment when assessing segment performance or allocating resources and accordingly, are not presented. 20. EARNINGS (LOSS) PER SHARE Diluted earnings per share includes the determinants of basic earnings per share and, in addition, reflects the dilutive effect of the common stock deliverable for stock options, using the treasury stock method, and for RSUs, RSAs and PSUs for which future service is required as a condition to the delivery of the underlying common stock. Successor Predecessor (in thousands, except per share data) Period from February 8, 2025 to March 31, 2025 Period from January 1, 2025 to February 7, 2025 Three Months Ended March 31, 2024 Net income (loss) applicable to common stockholders $ 34,516 $ ( 51,024 ) $ ( 173,914 ) Weighted average common shares outstanding, basic 60,322 48,743 48,119 Weighted average effect of dilutive securities 407 — — Weighted average common shares outstanding, diluted 60,729 48,743 48,119 Basic earnings (loss) per share $ 0.57 $ ( 1.05 ) $ ( 3.61 ) Diluted earnings (loss) per share $ 0.57 $ ( 1.05 ) $ ( 3.61 ) There were 19,943 , 5,056,640 and 5,157,927 share-based awards that were considered anti-dilutive for the period from February 8, 2025 to March 31, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and three months ended March 31, 2024 (Predecessor), respectively. The Company has Penny Warrants which participate in dividends with the Company’s common stock subject to certain contingencies. In the period in which the contingencies are met, those instruments are participating securities to which income will be allocated using the two-class method. The Penny Warrants were considered exercisable for little to no consideration and are therefore included in basic shares outstanding at their issuance date. Refer to Note 2 “ Summary of Significant Accounting Policies ” for further information regarding the Framework Agreement. 44 BALLY’S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 21. SUBSEQUENT EVENTS On April 7, 2025, the Company entered into a Binding Term Sheet with The Star Entertainment Group Limited (“The Star”), pursuant to which Bally’s will invest in a multi-tranche issuance of The Star’s convertible notes and subordinated debt with an aggregate principal amount of AUD $ 300 million (the “Investment”). The Binding Term Sheet permits The Star’s largest shareholder, Investment Holdings Pty (“Investment Holdings”), to subscribe for up to AUD $ 100 million of the Investment. On April 8, 2025, The Star announced that it entered into a commitment letter with Investment Holdings under which Investment Holdings will subscribe for AUD $ 100 million of the Investment. As a result, Bally’s portion of the Investment was reduced to AUD $ 200 million, of which the first tranche, approximately AUD $ 66.7 million (equivalent to USD $ 40.3 million at settlement), closed on April 9, 2025. Bally’s remaining investment subscription is subject to various approvals and conditions. 45