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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-38850
baly-20210331_g1.jpg
Bally’s Corporation
(Exact name of registrant as specified in its charter)
Delaware20-0904604
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
100 Westminster Street
Providence,RI02903
(Address of principal executive offices)(Zip Code)
(401) 475-8474
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, $0.01 par valueBALYNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes       No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes       No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No  

As of April 30, 2021, there were 42,457,181 shares of the registrant’s common stock outstanding.




BALLY’S CORPORATION

TABLE OF CONTENTS
Page No.
  
 

2


PART I.     FINANCIAL INFORMATION
ITEM 1.     Financial Statements
BALLY’S CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(In thousands, except share data)
 March 31,
2021
December 31,
2020
Assets  
Cash and cash equivalents$151,653 $123,445 
Restricted cash3,818 3,110 
Accounts receivable, net24,894 14,798 
Inventory10,784 9,296 
Tax receivable82,417 84,483 
Prepaid expenses and other assets52,543 53,823 
Total current assets326,109 288,955 
Property and equipment, net753,601 749,029 
Right of use assets, net36,341 36,112 
Goodwill289,729 186,979 
Intangible assets, net726,991 663,395 
Other assets6,029 5,385 
Total assets$2,138,800 $1,929,855 
Liabilities and Stockholders’ Equity
Current portion of long-term debt$5,750 $5,750 
Current portion of lease obligations1,578 1,520 
Accounts payable23,732 15,869 
Accrued liabilities131,850 120,055 
Total current liabilities162,910 143,194 
Long-term debt, net of current portion1,128,599 1,094,105 
Lease obligations, net of current portion62,720 62,025 
Pension benefit obligations8,941 9,215 
Deferred tax liability30,642 36,983 
Naming rights liabilities219,867 243,965 
Contingent consideration payable55,543  
Other long-term liabilities14,881 13,770 
Total liabilities1,684,103 1,603,257 
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01; 100,000,000 shares authorized; 31,894,222 and 30,685,938 shares issued as of March 31, 2021 and December 31, 2020, respectively; 31,894,089 and 30,685,938 shares outstanding as of March 31, 2021 and December 31, 2020, respectively.
318 307 
Additional paid-in-capital434,457 294,643 
Treasury stock, at cost, 133 and 0 shares as of March 31, 2021 and December 31, 2020, respectively.
(9) 
Retained earnings24,087 34,792 
Accumulated other comprehensive loss(4,156)(3,144)
Total stockholders’ equity454,697 326,598 
Total liabilities and stockholders’ equity$2,138,800 $1,929,855 
See accompanying notes to condensed consolidated financial statements.
3

BALLY’S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(In thousands, except per share data)



Three Months Ended March 31,
 20212020
Revenue:  
Gaming$152,909 $75,836 
Racing2,369 2,957 
Hotel13,059 7,646 
Food and beverage15,500 15,316 
Other8,429 7,393 
Total revenue192,266 109,148 
Operating costs and expenses:
Gaming45,205 23,213 
Racing2,049 2,407 
Hotel5,149 3,292 
Food and beverage12,209 13,276 
Retail, entertainment and other1,797 1,930 
Advertising, general and administrative80,499 49,609 
Goodwill and asset impairment 8,708 
Expansion and pre-opening603  
Acquisition, integration and restructuring12,258 1,786 
Gain from insurance recoveries, net of losses(10,676)(883)
Rebranding913  
Depreciation and amortization12,786 8,979 
Total operating costs and expenses162,792 112,317 
Income (loss) from operations29,474 (3,169)
Other income (expense):
Interest income524 143 
Interest expense, net of amounts capitalized(20,798)(11,516)
Change in value of naming rights liabilities(27,406) 
Other, net2,671  
Total other expense, net(45,009)(11,373)
Loss before provision for income taxes(15,535)(14,542)
Benefit for income taxes(4,830)(5,664)
Net loss$(10,705)$(8,878)
Net loss per share, basic$(0.30)$(0.28)
Weighted average common shares outstanding, basic35,827 31,569 
Net loss per share, diluted$(0.30)$(0.28)
Weighted average common shares outstanding, diluted35,827 31,569 

See accompanying notes to condensed consolidated financial statements.
4

BALLY’S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE (LOSS) INCOME
(unaudited)
(In thousands)


Three Months Ended
March 31, 2021
Net loss$(10,705)
Other comprehensive (loss) income:
Foreign currency translation adjustment$(1,052)
Defined benefit pension plan reclassification adjustment(1)
40 
Other comprehensive loss(1,012)
Total comprehensive loss$(11,717)
________________________________________________
(1) Tax effect of reclassification adjustment was de minimis.

Note: Net loss equals comprehensive loss for the three months ended March 31, 2020.
See accompanying notes to condensed consolidated financial statements.

5

BALLY’S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
(In thousands, except share data)
 Common StockAdditional
Paid-in Capital
Treasury
Stock
Retained
Earnings
Accumulated Other Comprehensive LossTotal Stockholders’
Equity
 Shares OutstandingAmount
Balance as of December 31, 202030,685,938 $307 $294,643 $ $34,792 $(3,144)$326,598 
Release of restricted stock23,811  (990)— — — (990)
Share-based compensation— — 4,483 — — — 4,483 
Stock options exercised30,000 — 129 — — — 129 
Penny warrants exercised932,949 9 — (9)— — — 
Reclassification of Sinclair options— — 59,724 — — — 59,724 
Issuance of MKF penny warrants— — 64,694 — — — 64,694 
Shares issued for purchase of SportCaller221,391 2 11,774 — — — 11,776 
Other comprehensive loss— — — — — (1,012)(1,012)
Net loss— — — — (10,705)— (10,705)
Balance as of March 31, 202131,894,089 $318 $434,457 $(9)$24,087 $(4,156)$454,697 

 Common StockAdditional
Paid-in Capital
Treasury
Stock
Retained
Earnings
Accumulated Other Comprehensive LossTotal Stockholders’
Equity
 Shares OutstandingAmount
Balance as of December 31, 201932,113,328 $412 $185,544 $(223,075)$250,418 $(1,888)$211,411 
Release of restricted stock131,131 1 (2,484)— — — (2,483)
Dividends and dividend equivalents - $0.10 per share— — — — (3,174)— (3,174)
Share-based compensation— — 5,542 — — — 5,542 
Retirement of treasury shares— (107)(48,618)254,416 (205,691)—  
Share repurchases(1,649,768)— — (31,341)— — (31,341)
Adoption of ASU 2016-13— — — — (58)— (58)
Net loss— — — — (8,878)— (8,878)
Balance as of March 31, 202030,594,691 $306 $139,984 $ $32,617 $(1,888)$171,019 
See accompanying notes to condensed consolidated financial statements.
6

BALLY’S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(In thousands)
 Three Months Ended March 31,
 20212020
Cash flows from operating activities:  
Net loss $(10,705)$(8,878)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization12,786 8,979 
Amortization of operating lease right of use assets159 256 
Share-based compensation4,483 5,542 
Amortization of debt financing costs and discounts on debt1,515 676 
Gain from insurance recoveries(10,513) 
Foreign exchange loss471  
Bad debt expense336 1,277 
Net pension and other postretirement benefit income40  
Deferred income taxes(6,341)(3,954)
Gain on disposal of property and equipment49  
Goodwill and asset impairment 8,708 
Accretion of trade name liability and naming rights1,215  
Change in value of naming rights liabilities27,406  
Change in contingent consideration payable(3,142) 
Changes in operating assets and liabilities:
Accounts receivable(9,668)14,400 
Inventory(1,471)(146)
Prepaid expenses and other assets3,977 4,949 
Accounts payable4,138 (6,582)
Accrued liabilities11,135 (7,915)
Net cash provided by operating activities25,870 17,312 
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired(22,745)(50,451)
Capital expenditures(15,327)(2,999)
Insurance proceeds from hurricane damage10,513  
Payments associated with licenses and market access fees(1,325) 
Net cash used in investing activities(28,884)(53,450)
Cash flows from financing activities:
Revolver borrowings40,000 250,000 
Term loan repayments(1,438)(750)
Payment of financing fees(5,840) 
Share repurchases (31,341)
Payment of shareholder dividends (3,199)
Share redemption for tax withholdings - restricted stock(990)(2,483)
Stock options exercised129  
Net cash provided by financing activities31,861 212,227 
Effect of foreign currency on cash and cash equivalents69  
Net change in cash and cash equivalents and restricted cash28,916 176,089 
Cash and cash equivalents and restricted cash, beginning of period126,555 185,502 
Cash and cash equivalents and restricted cash, end of period$155,471 $361,591 
Supplemental disclosure of cash flow information:
Cash paid for interest$9,128 $3,743 
Cash paid for income taxes, net of refunds(607)(165)
Non-cash investing and financing activities:
Unpaid property and equipment$3,960 $896 
Stock and equity instruments issued for acquisition of SportCaller and MKF76,756  
Acquisitions in exchange for contingent liability58,685  
See accompanying notes to condensed consolidated financial statements.
7

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


1.    GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Bally’s Corporation (the “Company”, “Bally’s”) is a U.S. full-service sports betting/iGaming company with physical casinos and online gaming solutions united under a single, prominent brand. The Company, through its wholly owned subsidiary Twin River Management Group, Inc. (“TRMG”), owns and manages the Twin River Casino Hotel (“Twin River Casino Hotel”) in Lincoln, Rhode Island, the Tiverton Casino Hotel (“Tiverton Casino Hotel”) in Tiverton, Rhode Island, the Hard Rock Hotel & Casino (“Hard Rock Biloxi”) in Biloxi, Mississippi, the Dover Downs Hotel & Casino (“Dover Downs Casino Hotel”) in Dover, Delaware, the Golden Gates, Golden Gulch and Mardi Gras casinos (collectively, “Black Hawk Casinos”) in Black Hawk, Colorado, Casino KC (“Casino KC”) in Kansas City, Missouri, Casino Vicksburg (“Casino Vicksburg”) in Vicksburg, Mississippi, Bally’s Atlantic City (“Bally’s Atlantic City”) in Atlantic City, New Jersey, Eldorado Resort Casino Shreveport (“Shreveport”) in Shreveport, Louisiana, MontBleu Resort Casino & Spa (“MontBleu”) in Lake Tahoe, Nevada, and the Arapahoe Park racetrack and 13 off-track betting licenses (“Mile High USA”) in Aurora, Colorado. Under TRMG’s Bally’s Interactive division, the Company owns and manages Horses Mouth Limited (“SportCaller”), a leading B2B free-to-play game provider for sports betting and media companies across North America, the UK, Europe, Asia, Australia, LATAM and Africa, and Monkey Knife Fight (“MKF”), a North American gaming platform and daily fantasy sports operator.

The Company’s common stock is listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “BALY.”

COVID-19 Pandemic

The COVID-19 pandemic has significantly impacted, and is likely to continue to impact, the Company’s business in a material manner. As of March 16, 2020 all of the Company’s properties at the time were temporarily closed as a result of the COVID-19 pandemic. The Company’s properties began to reopen in mid-2020 in some capacity and remained open for the rest of 2020, with the exception of Twin River Casino Hotel and Tiverton Casino Hotel, each of which closed again from November 29, 2020 through December 20, 2020.

Twin River Casino Hotel and Tiverton Casino Hotel - The Rhode Island properties pre-opened on June 8, 2020 with very limited invitation-only guests allowed. Beginning June 30, 2020, the properties reopened, at approximately 65% capacity, with half of video lottery terminals (“VLTs”) and a limited number of table games (with a three-player limit) available. The properties were closed again from November 29, 2020 through December 20, 2020 due to a state mandated pause to slow the spread of COVID-19. Currently, the casinos are open to the general public and are operating at 65% capacity with about half of VLTs and all table games (with a three-player limit) available. The hotels at the Rhode Island properties remain closed.
Hard Rock Biloxi - The Biloxi property reopened on May 21, 2021 at 50% capacity with 41% of VLTs, all table games (with a three-player limit per table) available and 75% of the hotel rooms available to guests. Currently, Hard Rock Biloxi is operating at 75% capacity with over 85% of VLTs and all table games (with a three-player limit) available, and the hotel is currently operating with all rooms available to guests.
Dover Downs Casino Hotel - The Delaware property re-opened on June 1, 2020 at 30% capacity with 45% of VLTs. Table games (with a two-player limit per table) became available to guests on June 17, 2020 and the hotel, at 60% room capacity, became available on June 18, 2020. Currently, the property is operating at approximately 60% capacity with over 50% of VLTs and approximately 90% of table games (with a four-player limit) available, and all hotel rooms available to guests.
Casino KC - Casino KC, which the Company acquired in July 2020, re-opened on June 1, 2020 at 50% capacity with 70% of VLTs and 30% of table games (with a three-player limit) available. Casino KC is currently operating at 100% capacity with all VLTs and table games (with a three-player limit) available.
Casino Vicksburg - Casino Vicksburg, which the Company acquired in July 2020, re-opened on May 21, 2020 at 50% capacity with 48% of VLTs and 50% of hotel rooms available to guests. Casino Vicksburg is currently operating at 75% capacity with 75% of VLTs are available and all table games (with a three-player limit) available, and the hotel is currently operating with all rooms available to guests.
8

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Black Hawk Casinos - The Black Hawk Casinos, which the Company acquired in January 2020, re-opened on June 17, 2020 at 50% capacity with 55% of VLTs available to guests. Currently, the properties are still operating at 50% capacity; however, 83% of VLTs are now available to guests and all table games (with a three-player limit) are available.
Bally’s Atlantic City - Bally’s Atlantic City, which the Company acquired in November 2020, is operating at 50% capacity with 57% of VLTs and all table games (with a four-player limit) available, and the hotel is currently operating with all rooms available to guests.
Shreveport - Shreveport, which the Company acquired in December 2020, is operating at 75% capacity with 56% of VLTs and all table games (with a four-player limit) available, and the hotel is currently operating with all rooms available to guests.

The Company remains committed to compliance with all state and local operating restrictions as well as and meeting or exceeding all guidelines established by the Centers for Disease Control and Prevention. The Company has implemented property-specific comprehensive health and safety protocols for each of its properties, developed in close consultation with applicable state regulators and public health officials in local jurisdictions. The Company’s operations are expected to continue to be negatively impacted by the COVID-19 pandemic and that impact could be material.

Principles of Consolidation

The accompanying condensed consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiary TRMG and TRMG’s subsidiaries. All intercompany transactions and balances have been eliminated in the consolidation. Certain prior year amounts have been reclassified to conform to the current year’s presentation. The financial statements of our foreign subsidiary is translated into U.S. dollars 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 gain (loss). Foreign currency transaction gains and losses are included in net income (loss).

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 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 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, 2020. There were no material changes in significant accounting policies from those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

We have made estimates and judgments affecting the amounts reported in our condensed consolidated financing statements and the accompanying notes. The inputs into our judgments and estimates consider the economic implications of the COVID-19 pandemic on our critical and significant accounting estimates. The actual results that we experience may differ materially from our estimates.

Cash and Cash Equivalents and Restricted Cash

The Company considers all cash balances and highly liquid investments with an original maturity of three months or less to be cash and cash equivalents.

As of March 31, 2021 and December 31, 2020, restricted cash of $3.8 million and $3.1 million, respectively, was comprised of VLT and table games cash, payable to the State of Rhode Island, and certain cash accounts at Dover Downs and Mile High USA, which is unavailable for the Company’s use. The following table reconciles cash and restricted cash in the condensed consolidated balance sheets to the total shown on the condensed consolidated statements of cash flows.
9

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

March 31,December 31,
(in thousands)20212020
Cash and cash equivalents$151,653 $123,445 
Restricted cash3,818 3,110 
Total cash and cash equivalents and restricted cash$155,471 $126,555 


Accounts Receivable, Net

Accounts receivable, net consists of the following:

March 31,December 31,
(in thousands)20212020
Amounts due from Rhode Island and Delaware(1)
$11,552 $3,880 
Gaming receivables7,764 7,893 
Non-gaming receivables8,716 6,092 
Accounts receivable28,032 17,865 
Less: Allowance for doubtful accounts(3,138)(3,067)
Accounts receivable, net$24,894 $14,798 

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

Treasury Stock

The Company records the repurchase of shares of common stock at cost based on the settlement date of the transaction. Upon settlement, these shares are classified as treasury stock, which is a reduction to stockholders’ equity. Treasury stock is included in authorized and issued shares but excluded from outstanding shares. There were 10,729,458 shares of common stock retired during the three months ended March 31, 2020. The shares were returned to the status of authorized but unissued shares.

Gain from insurance recoveries, net of losses

Gain from insurance recoveries, net of losses relate to costs incurred resulting from storms impacting the Company’s properties, net of insurance recovery proceeds. During the three months ended March 31, 2021, the Company recorded gain from insurance recoveries, net of losses of $10.7 million primarily attributable to insurance proceeds received due to the effects of Hurricane Zeta, which made landfall in Louisiana shutting down the Company’s Hard Rock Biloxi property for three days during the fourth quarter of 2020. During the three months ended March 31, 2020, we recorded a gain on insurance recoveries of $0.9 million related to proceeds received for a damaged roof at the Company’s Arapahoe Park racetrack.

Strategic Partnership - Sinclair Broadcast Group

On November 18, 2020, the Company and Sinclair Broadcast Group, Inc. (“Sinclair”) entered into a Framework Agreement (the “Sinclair Agreement”), which provides for a long-term strategic relationship between the Company and Sinclair combining Bally’s integrated, proprietary sports betting technology with Sinclair’s portfolio of local broadcast stations and live regional sports networks and its Tennis Channel, Stadium sports network and STIRR streaming service, whereby the Company received naming rights to the regional sports networks and certain integrations to network programming in exchange for annual fees paid in cash, the issuance of warrants and options, and an agreement to share in certain tax benefits resulting from the Transactions with Sinclair (the “Tax Receivable Agreement”). The initial term of the Sinclair Agreement is ten years from April 1, 2021, which was the commencement of date of the re-branded Sinclair regional sports networks and can be renewed for one additional five-year term unless either the Company or Sinclair elect not to renew.

10

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Company accounted for this transaction as an asset acquisition in accordance with the “Acquisition of Assets Rather Than a Business” subsections of Accounting Standards Codification (“ASC”) 805-50 using a cost accumulation model. The Company acquired a naming rights intangible asset, the value of which was $345.9 million and $338.2 million as of March 31, 2021 and December 31, 2020, respectively. The naming rights intangible asset will be amortized on a straight-line basis over a useful life of ten years, which has been determined to be the period of anticipated benefit and is consistent with the term of the Sinclair Agreement. Amortization will begin in the second quarter of 2021 upon the commencement date of the re-branded Sinclair regional sports networks. As such, there was no amortization expense for the three months ended March 31, 2021.

Under the terms of the Sinclair Agreement, the Company is required to pay annual naming rights fees to Sinclair for naming rights of the regional sports networks which escalate annually and total $88.0 million over the 10-year term of the agreement and begin on the commencement date of the re-branded Sinclair regional sports networks. The present value of the annual naming rights fees was recorded as part of the cost of the naming rights intangible asset with a corresponding liability which will be accreted through interest expense over the life of the agreement. The value of the liability as of March 31, 2021 and December 31, 2020 was $57.2 million and $56.6 million, respectively. Accretion expense for the three months ended March 31, 2021 was $1.0 million and was reported in “Interest expense, net of amounts capitalized” in the condensed consolidated statements of operations.

The Company issued to Sinclair (i) an immediately exercisable warrant to purchase up to 4,915,726 shares of the Company at an exercise price of $0.01 per share (“the Penny Warrants”), (ii) a warrant to purchase up to a maximum of 3,279,337 additional shares of the Company at a price of $0.01 per share subject to the achievement of various performance metrics (the “Performance Warrants”), and (iii) an option to purchase up to 1,639,669 additional shares in four tranches with purchase prices ranging from $30.00 to $45.00 per share, exercisable over a seven-year period beginning on the fourth anniversary of the November 18, 2020 closing (the “Options”). The exercise and purchase prices and the number of shares issuable upon exercise of the warrants and options are subject to customary anti-dilution adjustments. The issuance pursuant to the warrants and options of shares in excess of 19.9% of the Company’s currently outstanding shares was subject to the approval of the Company’s stockholders in accordance with the rules of the New York Stock Exchange (“NYSE”), which was obtained on January 27, 2021. Prior to stockholder approval, the Company would have been required to pay cash to Sinclair in lieu of Sinclair being permitted to purchase, pursuant to the exercise of warrants or options, greater than 19.9% of the Company’s outstanding common shares.

The Company evaluated the classification of the Penny Warrants, Options and Performance Warrants under ASC 815-40 to determine whether equity classification was precluded for one or more of the warrants and options as a result of the requirement to net cash settle any option of the contracts that result in the delivery of shares in excess of the 19.9% threshold prior to obtaining stockholder approval. Since a portion of the warrants and options could be settled in shares below this threshold, the Company adopted a sequencing policy in the fourth quarter of 2020, as prescribed in ASC 815-40-35 whereby it would allocate available shares under the 19.9% threshold to contracts based on the order in which they become exercisable. This resulted in the allocation of available shares to the immediately exercisable Penny Warrants first, the Performance Warrants second and the Options, which contain a four-year vesting period, third. This policy results in there being a sufficient number of shares below the 19.9% cap to settle the Penny Warrants, but an insufficient number of shares to settle the Performance Warrants and Options.

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

The Performance Warrants were accounted for as a derivative liability because the underlying performance metrics represent an adjustment to the settlement amount that is not indexed to the Company’s own stock and thus equity classification is precluded under ASC 815. The fair values of the Performance Warrants as of March 31, 2021 and December 31, 2020 were $114.0 million and $88.1 million, respectively, and were calculated using an option pricing model considering the Company’s estimated probabilities of achieving the performance milestones for each tranche. The increase in fair value of the Performance Warrants from December 31, 2020 through March 31, 2021 was $25.9 million and resulted in a mark to market loss, reported in “Change in value of naming rights liabilities” in the condensed consolidated statements of operations. The Performance Warrants are expected to continue to be classified as liability awards, with changes in fair value reported in earnings.

11

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

As of December 31, 2020, the Options were accounted for as a derivative liability because the Options could have been required to be settled in cash, outside the Company’s control, prior to formal stockholder approval. The fair value of the Options as of December 31, 2020 was $58.2 million. The Options met the criteria to be classified as equity upon stockholder approval on January 27, 2021, at which point the Options were adjusted to fair value and $59.7 million was reclassified from “Naming rights liabilities” to “Additional paid-in-capital” in the condensed consolidated balance sheet. The increase in fair value of the Options from December 31, 2020 through January 27, 2021 was $1.5 million and resulted in a mark to market loss, reported in “Change in value of naming rights liabilities” in the condensed consolidated statements of operations.

The Company entered into the Tax Receivable Agreement with Sinclair as an additional form of consideration for the acquisition of the naming rights intangible asset. Under the Tax Receivable Agreement, the Company is required to share 60% of the tax benefit the Company receives from the Penny Warrants, the Options, the Performance Warrants and payments under the Tax Receivable Agreement, which are payable to Sinclair over the remaining term of the agreement once the tax benefit amounts become finalized through the filing of the Company’s annual tax returns. The Company accounted for the obligations due under the Tax Receivable Agreement as contingent consideration in the acquisition of the naming rights intangible asset pursuant to ASC 805. Subsequent to the acquisition date, changes in the Tax Receivable Agreement liability due to estimates of the tax benefits to be realized as well as tax rates in effect at the time among other changes are treated as an adjustment of the acquired naming rights intangible asset. As of March 31, 2021, the estimate of the Tax Receivable Agreement liability was $50.7 million, reflecting an increase of $7.7 million from the December 31, 2020 value of $43.0 million.

2.    RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

Recently Issued Accounting Pronouncements

Standards implemented

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Financial Instruments–Credit Losses (Topic 326)–Measurement of Credit Losses on Financial Instruments (“ASC 326”). This standard amends several aspects of the measurement of credit losses on financial instruments, including trade receivables. The standard replaces the existing incurred credit loss model with the Current Expected Credit Losses (“CECL”) model and amends certain aspects of accounting for purchased financial assets with deterioration in credit quality since origination. Under CECL, the allowance for losses for financial assets that are measured at amortized cost reflects management’s estimate of credit losses over the remaining expected life of the financial assets, based on historical experience, current conditions and forecasts that affect the collectability of the reported amount. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments–Credit Losses, to clarify that receivables arising from operating leases are not within the scope of ASC 326 and should instead, be accounted for in accordance with ASC 842, Leases. The standard is effective for annual and interim periods beginning after December 15, 2019. Adoption is through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (a modified-retrospective approach). The Company adopted this ASU in the first quarter of 2020 and recorded a $58,000 adjustment to retained earnings as of January 1, 2020.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820)–Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement, which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this ASU in the first quarter of 2020, with no impact to its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-14, Compensation–Retirement Benefits–Defined Benefit Plans–General. This amendment improves disclosures over defined benefit plans and is effective for interim and annual periods ending after December 15, 2020, with early adoption permitted. The Company’s adoption of this ASU in the first quarter of 2021 did not have a material impact to its condensed consolidated financial statements.

12

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)–Simplifying the Accounting for Income Taxes. This amendment serves to simplify the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740, Income Taxes. The amendment also improves the consistent application of ASC Topic 740 by clarifying and amending existing guidance. This amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted. The Company’s adoption of this ASU in the first quarter of 2021, did not have a material impact to its condensed consolidated financial statements.

3.    REVENUE RECOGNITION

The Company accounts for revenue earned from contracts with customers under ASC 606, Revenue from Contracts with Customers. The Company generates revenue from five principal sources: gaming services, hotel, racing, food and beverage and other.

Gaming revenue includes the share of VLT revenue for Twin River Casino Hotel and Tiverton Casino Hotel, in each case, as determined by each property’s respective master VLT contracts with the State of Rhode Island. Twin River Casino Hotel is entitled to a 28.85% share of VLT revenue on the initial 3,002 units and a 26.00% share of VLT revenue generated from units in excess of 3,002 units. Tiverton Casino Hotel is entitled to receive a percentage of VLT revenue that is equivalent to the percentage received by Twin River Casino Hotel. Gaming revenue also includes Twin River Casino Hotel’s and Tiverton Casino Hotel’s share of table games revenue. Twin River Casino Hotel and Tiverton Casino Hotel each were entitled to an 83.5% share of table games revenue generated as of March 31, 2021 and 2020. Revenue is recognized when the wager is complete, which is when the customer has received the benefits of the Company’s gaming services and the Company has a present right to payment. The Company records revenue from its Rhode Island operations on a net basis which is the percentage share of VLT and table games revenue received as the Company acts as an agent in operating the gaming services on behalf of the State of Rhode Island.

Gaming revenue also includes Dover Downs’ share of revenue as determined under the Delaware State Lottery Code from the date of its acquisition. Dover Downs is authorized to conduct video lottery, sports wagering, table game and internet gaming operations as one of three “Licensed Agents” under the Delaware State Lottery Code. Licensing, administration and control of gaming operations in Delaware is under the Delaware State Lottery Office and Delaware’s Department of Safety and Homeland Security, Division of Gaming Enforcement. As of March 31, 2021 and 2020, Dover Downs was entitled to an approximately 42% share of VLT revenue and an 80% share of table games revenue. Revenue is recognized when the wager is complete, which is when the customer has received the benefits of the Company’s gaming services and the Company has a present right to payment. The Company records revenue from its Delaware operations on a net basis, which is the percentage share of VLT and table games revenue received, as the Company acts as an agent in operating the gaming services on behalf of the State of Delaware.

Gaming revenue also includes the casino revenue of Hard Rock Biloxi, the Black Hawk Casinos, Casino KC and Casino Vicksburg, beginning July 1, 2020, Bally’s Atlantic City, beginning November 18, 2020, and Shreveport, beginning December 23, 2020, which is the aggregate net difference between gaming wins and losses, with liabilities recognized for funds deposited by customers before gaming play occurs, for chips outstanding and “ticket-in, ticket-out” coupons in the customers’ possession, and for accruals related to the anticipated payout of progressive jackpots. Progressive slot machines, which contain base jackpots that increase at a progressive rate based on the number of credits played, are charged to revenue as the amount of the progressive jackpots increase.

13

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Gaming services contracts have two performance obligations for those customers earning incentives under the Company’s player loyalty programs and a single performance obligation for customers who do not participate in the programs. The Company applies a practical expedient by accounting for its gaming contracts on a portfolio basis as such wagers have similar characteristics and the Company reasonably expects the effects on the consolidated financial statements of applying the revenue recognition guidance to the portfolio to not differ materially from that which would result if applying the guidance to an individual wagering contract. 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 for a hotel room stay, food and beverage or other amenity. The estimated standalone selling price of hotel rooms is determined based on observable prices. The standalone selling price of food and beverage, and other miscellaneous goods and services is determined based upon the actual retail prices charged to customers for those items. The performance obligations for the incentives earned under the loyalty programs are deferred and recognized as revenue when the customer redeems the incentive. The allocated revenue for gaming wagers is recognized when the wagers occur as all such wagers settle immediately.

The estimated retail value related to goods and services provided to guests without charge or upon redemption under the Company’s player loyalty programs included in departmental revenues, and therefore reducing gaming revenues, are as follows for the three months ended March 31, 2021 and 2020:
 Three Months Ended March 31,
(in thousands)20212020
Hotel$6,909 $4,586 
Food and beverage10,449 7,833 
Other951 1,774 
 $18,309 $14,193 
During 2020, the Company entered into several multi-year agreements with third-party operators for online sports betting and iGaming market access in the states of Colorado and New Jersey, from which the Company has received or expects to receive one-time, up front market access fees in cash or equity securities (specific to one operator agreement) and certain other fees in cash generally based on a percentage of the gross gaming revenue generated by the operator, with certain annual minimum guarantees due to the Company. The one-time market access fees received have been recorded as deferred revenue and will be recognized as revenue ratably over the respective contract terms, beginning with the commencement of operations of each respective agreement. The Company recognized commissions in certain states from online sports betting and iGaming which are included in gaming revenue for the three months ended March 31, 2021. Deferred revenue associated with third-party operators for online sports betting and iGaming market access was $3.4 million as of March 31, 2021 and is included in “Accrued expenses” and “Other long-term liabilities” in the condensed consolidated balance sheets.
Racing revenue includes Twin River Casino Hotel’s, Tiverton Casino Hotel’s, Mile High USA’s and Dover Downs’ share of wagering from live racing and the import of simulcast signals. Racing revenue is recognized when the wager is complete based on an established take-out percentage. The Company functions as an agent to the pari-mutuel pool. Therefore, fees and obligations related to the Company’s share of purse funding, simulcasting fees, tote fees, pari-mutuel taxes, and other fees directly related to the Company’s racing operations are reported on a net basis and included as a deduction to racing revenue.

Hotel revenue is recognized at the time of occupancy, which is when the customer obtains control through occupancy of the room. Advance deposits for hotel rooms are recorded as liabilities until revenue recognition criteria are met.

Food and beverage revenue are recognized at the time the goods are sold from Company-operated outlets.

All other revenues are recognized at the time the goods are sold or the service is provided.

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.

14

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Beginning in the third quarter of 2020, the Company changed its reportable segments to better align with its strategic growth initiatives in light of recent and pending acquisitions. Refer to Note 14 “Segment Reporting” for further information. The following tables provide a disaggregation of revenue by segment:
(in thousands)Rhode IslandMid-AtlanticSoutheastWestOtherTotal
Three Months Ended March 31, 2021
Gaming$44,380 $32,295 $52,201 $24,033 $ $152,909 
Racing200 816   1,353 2,369 
Hotel 6,692 6,367   13,059 
Food and beverage2,734 6,793 4,559 1,402 12 15,500 
Other3,366 1,758 1,448 707 1,150 8,429 
Total revenue$50,680 $48,354 $64,575 $26,142 $2,515 $192,266 
Three Months Ended March 31, 2020
Gaming$43,459 $11,871 $16,718 $3,788 $ $75,836 
Racing503 636   1,818 2,957 
Hotel1,227 2,590 3,829   7,646 
Food and beverage6,250 4,676 3,824 566  15,316 
Other4,840 1,313 1,111 109 20 7,393 
Total revenue$56,279 $21,086 $25,482 $4,463 $1,838 $109,148 

Revenue included in operations from SportCaller, from the date of its acquisition, February 5, 2021, through March 31, 2021, and MKF from the date of its acquisition, March 23, 2021, through March 31, 2021 are reported in “Other” as of March 31, 2021, as they are immaterial operating segments. Refer to Note 4. “Acquisitions” for further information.

The Company’s receivables related to contracts with customers are primarily comprised of marker balances and other amounts due from gaming activities, amounts due for hotel stays, and amounts due from tracks and off track betting (“OTB”) locations. The Company’s receivables related to contracts with customers were $20.4 million and $12.0 million as of March 31, 2021 and December 31, 2020, respectively. The Company has the following liabilities related to contracts with customers: liabilities for loyalty programs, deposits made in advance for goods and services yet to be provided, and unpaid wagers. All of the contract liabilities are short-term in nature. 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. Certain properties extended pre-COVID-19 tier statuses and/or extended earnings dates for tiered status programs. Additionally, certain properties temporarily suspended periodic purges of unused loyalty points. The Company’s contract liabilities related to loyalty programs were $15.0 million and $15.5 million as of March 31, 2021 and December 31, 2020, respectively, and are included as “Accrued liabilities” in the condensed consolidated balance sheets. The Company recognized $2.8 million and $2.1 million of revenue related to loyalty program redemptions for the three months ended March 31, 2021 and 2020, respectively.

Advance deposits are typically for future banquet events and to reserve hotel rooms. These deposits are usually received weeks or months in advance of the event or hotel stay. The Company’s contract liabilities related to deposits from customers were $3.0 million and $1.0 million as of March 31, 2021 and December 31, 2020, respectively, and are included as “Accrued liabilities” in the condensed consolidated balance sheets.

Unpaid wagers include unpaid pari-mutuel tickets and unpaid sports bet tickets. Unpaid pari-mutuel tickets not claimed within 12 months by the customer who earned them are escheated to the state. The Company’s contract liabilities related to unpaid wagers were $3.8 million and $0.9 million as of March 31, 2021 and December 31, 2020, respectively, and are included as “Accrued liabilities” in the condensed consolidated balance sheets.

15

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

4.    ACQUISITIONS

Recent Acquisitions

The Company accounted for all of the following recent acquisitions as business combinations using the acquisition method with Bally’s as the accounting acquirer in accordance with ASC 805. Under this method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed of the acquiree based upon their estimated fair values at the acquisition date. The fair value of the identifiable intangible assets acquired are determined by using an income approach. Significant assumptions utilized in the income approach are based on company-specific information and projections, which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance.

Black Hawk Casinos

On January 23, 2020, the Company acquired a subsidiary of Affinity Gaming (“Affinity”) that owns three casino properties located in Black Hawk, Colorado: Golden Gates, Golden Gulch and Mardi Gras (the “Black Hawk Casinos”).

The total consideration paid by the Company in connection with the Black Hawk Casinos acquisition was approximately $53.8 million, or $50.5 million net of cash acquired, excluding transaction costs. The Company incurred transaction costs related to this acquisition of $0.6 million during the three months ended March 31, 2020. There were no costs incurred during the three months ended March 31, 2021. These costs are included in “Acquisition, integration and restructuring” in the condensed consolidated statements of operations.

The identifiable intangible assets recorded in connection with the closing of the Black Hawk acquisition include trademarks of $2.1 million and rated player relationships of $0.6 million, which are being amortized on a straight-line basis over estimated useful lives of approximately 10 years and six years, respectively. The Company also recorded an intangible asset related to gaming licenses of $3.3 million, with an indefinite life. However, in connection with the impairment testing discussed in Note 5 “Goodwill and Intangible Assets”, this asset was deemed fully impaired and its value was written down to zero as of March 31, 2020.

Revenue included in operations from the Black Hawk Casinos, from the date of their acquisition on January 23, 2020 through March 31, 2020 and for the three months ended March 31, 2021 was $4.5 million and $5.1 million, respectively.

Casino KC and Casino Vicksburg

On July 1, 2020, the Company completed its acquisition of the operations and real estate of Casino KC and Casino Vicksburg from affiliates of Caesars.

The total consideration paid by the Company in connection with the acquisition was approximately $229.9 million, or $225.5 million net of cash acquired, excluding transaction costs. The Company recorded transaction costs related to the acquisition of Casino KC and Casino Vicksburg of $0.4 million during the three months ended March 31, 2020. There were no costs incurred during the three months ended March 31, 2021. These costs are included in “Acquisition, integration and restructuring” in the condensed consolidated statements of operations.

The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed as of July 1, 2020 in connection with the acquisition. There were no purchase accounting adjustments recorded during the three months ended March 31, 2021. The purchase price allocation is preliminary and will be finalized when valuations are complete and final assessments of the fair value of other acquired assets and assumed liabilities are completed. There can be no assurance that such finalizations will not result in material changes from the preliminary purchase price allocations. The Company’s estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date), as the Company finalizes the valuations of certain tangible and intangible asset acquired and liabilities assumed.

16

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Preliminary as of March 31, 2021
Cash$4,362 
Accounts receivable582 
Inventory164 
Prepaid expenses and other assets686 
Property and equipment60,865 
Right of use asset10,315 
Intangible assets138,160 
Other assets117 
Goodwill53,896 
Accounts payable(614)
Accrued and other current liabilities(3,912)
Lease obligations(34,452)
Other long-term liabilities(306)
Total purchase price$229,863 

Revenue and net income included in operations from Casino KC and Casino Vicksburg for the three months ended March 31, 2021 was $27.4 million and $5.6 million, respectively.

Bally’s Atlantic City

On November 18, 2020, the Company completed its acquisition of Bally’s Atlantic City from Caesars. In connection with the Bally’s Atlantic City acquisition, the Company paid cash of approximately $24.7 million at closing, or $16.1 million net of cash acquired, excluding transaction costs. The Company recorded a liability of $2.0 million for a net working capital adjustment which was reflected in “Accrued liabilities” in the condensed consolidated balance sheets as of December 31, 2020. The amount was paid in full during the three months ended March 31, 2021.

In connection with the approval of the Company’s interim gaming license in the state of New Jersey, the Company committed to the New Jersey Casino Control Commission to spend $90.0 million in capital expenditures over a span of five years to refurbish and upgrade the property’s facilities and expand its amenities. In connection with this commitment, the Company reached an agreement with Caesars, whereby Caesars would reimburse the Company for $30.0 million of the capital expenditure commitment by December 31, 2021. This commitment was accounted for as a contingent consideration asset under ASC 805 and was recognized at its present value as of the acquisition date, which was determined to be $27.7 million, as it represents consideration due back from the seller in connection with a business combination, and is included in “Prepaid expenses and other assets” in the condensed consolidated balance sheets. This contingent consideration asset resulted in an adjusted purchase price of $(0.9) million.

The Company recorded acquisition costs related to the acquisition of Bally’s Atlantic City of $0.9 million and $0.6 million during the three months ended March 31, 2021 and 2020, respectively. These costs are included in “Acquisition, integration and restructuring” in the condensed consolidated statements of operations.

The identifiable intangible assets recorded in connection with the closing of the Bally’s Atlantic City acquisition based on preliminary valuations include rated player relationships of $0.9 million and hotel and conference pre-bookings of $0.2 million, which are being amortized on a straight-line basis over estimated useful lives of approximately eight years and three years, respectively. The Company determined that the value of and intangible asset related to gaming licenses was de minimus, primarily due to the previously mentioned capital expenditure commitment required to obtain the license. The preliminary fair value of the identifiable intangible assets acquired was determined by using a cost approach and an income approach for the rater player relationships and pre-bookings, respectively.

17

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition of Bally’s Atlantic City on November 18, 2020. There were no purchase accounting adjustments recorded during the three months ended March 31, 2021. Due to the fact that the transaction only recently closed, the purchase price allocation is preliminary and will be finalized when valuations are complete and final assessments of the fair value of other acquired assets and assumed liabilities are completed. There can be no assurance that such finalizations will not result in material changes from the preliminary purchase price allocations. The Company’s estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date), as the Company finalizes the valuations of certain tangible and intangible asset acquired and liabilities assumed.

Preliminary as of March 31, 2021
Cash$8,651 
Accounts receivable1,122 
Inventory721 
Prepaid expenses and other assets1,402 
Property and equipment40,898 
Intangible assets1,120 
Accounts payable(3,131)
Accrued and other current liabilities(7,983)
Deferred income tax liabilities(11,132)
Net assets acquired31,668 
Bargain purchase gain(32,595)
Total purchase price$(927)

Based on the preliminary purchase price allocation, the fair value of the assets acquired and liabilities assumed exceed the purchase price consideration and therefore, a bargain purchase gain of $32.6 million was recorded during the year ended December 31, 2020. The Company believes that it was able to acquire the net assets of Bally’s Atlantic City for less than fair value as a result of a capital expenditure requirement imposed on the Company by the New Jersey Casino Control Commission, which would have been imposed on the seller had they not divested the property.

Revenue included in operations from Bally’s Atlantic City for the three months ended March 31, 2021 was $25.7 million.

Eldorado Resort Casino Shreveport

On December 23, 2020, the Company completed its acquisition of Eldorado Resort Casino Shreveport in Shreveport, Louisiana (“Shreveport”). The total purchase price was approximately $137.2 million. Cash paid by the Company at closing, net of $5.0 million cash acquired and offset by a receivable of $0.8 million resulting from a networking capital adjustment, was $133.1 million, excluding transaction costs. The Company recorded acquisition costs related to the acquisition of Shreveport of $0.7 million and $0.1 million during the three months ended March 31, 2021 and 2020, respectively. These costs are included in “Acquisition, integration and restructuring” in the condensed consolidated statements of operations.

The identifiable intangible assets recorded in connection with the closing of the Shreveport acquisition based on preliminary valuations include gaming licenses of $57.7 million with an indefinite life and rated player relationships of $0.4 million, which is being amortized on a straight-line basis over estimated useful lives of approximately eight years. The preliminary fair value of the identifiable intangible assets acquired was determined by using an income approach.

18

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition of Shreveport on December 23, 2020. There were no purchase accounting adjustments recorded during the three months ended March 31, 2021. Due to the fact that the transaction only recently closed, the purchase price allocation is preliminary and will be finalized when valuations are complete and final assessments of the fair value of other acquired assets and assumed liabilities are completed. There can be no assurance that such finalizations will not result in material changes from the preliminary purchase price allocations. The Company’s estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date), as the Company finalizes the valuations of certain tangible and intangible asset acquired and liabilities assumed.
Preliminary as of March 31, 2021
Cash$4,980 
Accounts receivable1,936 
Inventory495 
Prepaid expenses and other assets245 
Property and equipment125,822 
Right of use asset9,260 
Intangible assets58,140 
Other assets403 
Accounts payable(931)
Accrued and other current liabilities(5,207)
Lease obligations(14,540)
Deferred income tax liabilities(11,457)
Other long-term liabilities(680)
Net assets acquired168,466 
Bargain purchase gain(31,276)
Total purchase price$137,190 


Based on the preliminary purchase price allocation, the fair value of the assets acquired and liabilities assumed exceed the purchase price consideration and therefore, a bargain purchase gain of $31.3 million was recorded during the year ended December 31, 2020. The Company believes that it was able to acquire the net assets of Shreveport for less than fair value as a result of a distressed sale whereby Eldorado was required by the Federal Trade Commission to divest the Shreveport property prior to its merger with Caesars coupled with the timing of the agreement to purchase which was in the middle of COVID related shutdowns of casinos in the United States.

Revenue and net income included in operations from Shreveport for the three months ended March 31, 2021 was $25.5 million and $4.9 million, respectively.

Interactive Acquisitions

On February 5, 2021, the Company acquired Horses Mouth Limited (“SportCaller”) for total consideration of $42.4 million including $24.0 million in cash, and 221,391 of the Company’s common shares at closing, pending adjustment, and up to $12.0 million in value of additional shares if SportCaller meets certain post-closing performance targets (calculated based on a $USD to Euro exchange ratio of 0.8334).

On March 23, 2021, the Company acquired Fantasy Sports Shark, LLC d/b/a/ Monkey Knife Fight for total consideration of $119.0 million including (1) immediately exercisable penny warrants to purchase up to 984,446 of the Company’s common shares (subject to adjustment) at closing and (2) contingent penny warrants to purchase up to 787,557 additional Company common shares, half of which are issuable on each of the first and second anniversary of closing. The contingency relates to MKF’s continued operations in jurisdictions in which it operates at closing at future dates.

19

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Company paid cash of $22.7 million, net of cash acquired, for SportCaller and MKF during the three months ended March 31, 2021. Total non-cash consideration transferred for SportCaller and MKF was $135.4 million, which included $58.7 million of the fair value of contingent consideration as of the SportCaller and MKF acquisition dates. After the acquisition dates and until the contingencies are resolved, the fair value of contingent consideration payable is adjusted each reporting period through earnings based primarily on the expected probability of achievement of the contingency targets and the Company’s stock price. During the three months ended March 31, 2021, the fair value of the contingent consideration payable increased by $3.1 million, which was reported in “Other, net” in the condensed consolidated statements of operations.

The identifiable intangible assets recorded in connection with the closing of SportCaller and MKF based on preliminary valuations include customer relationships of $27.9 million, which are being amortized over their estimated useful lives of approximately five and ten years for SportCaller and MKF, respectively, developed software of $24.1 million, which is being amortized over their estimated useful lives of approximately six and three years for SportCaller and MKF, respectively, and tradenames of $5.1 million, which are being amortized over their estimated useful lives of approximately ten and 15 years for SportCaller and MKF, respectively. Total goodwill recorded recorded in connection with these acquisitions was $102.8 million.

The Company recorded acquisition costs related to the acquisitions of SportCaller and MKF of $2.8 million during the three months ended March 31, 2021. These costs are included in “Acquisition, integration and restructuring” in the condensed consolidated statements of operations.

Revenue included in operations from SportCaller, from its date of acquisition on February 5, 2021, and MKF, from its date of acquisition on March 23, 2021, through March 31, 2021 was $1.1 million.

Acquisition After Quarter End

On April 6, 2021, the Company acquired MontBleu Resort Casino & Spa in Lake Tahoe, Nevada from Eldorado and certain of its affiliates for $15.0 million, payable one year from the closing date and subject to customary post-closing adjustments. The acquisition is subject to receipt of required state regulatory approvals and satisfaction of other customary closing conditions.

The Company will account for the acquisition of MontBleu as a business combination using the acquisition method with Bally’s as the accounting acquirer in accordance with ASC 805. Under this method of accounting, the purchase price will be allocated to MontBleu’s assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date. Due to the fact that this transaction only recently closed, the preliminary purchase price allocation is not complete however, it is estimated that the Company will record intangible assets from the acquisition of approximately $7.5 million to $10.0 million. Additionally, it is estimated that the fair value of the assets acquired and liabilities assumed will exceed the purchase price consideration and therefore, the Company does not expect there to be any goodwill associated with this transaction and expects to record a bargain purchase gain of approximately $4.0 million to $6.0 million.

Pending Acquisitions

Jumer’s Casino & Hotel

On September 30, 2020, the Company entered into an agreement with Delaware North Companies Gaming & Entertainment, Inc. to acquire Jumer’s Casino & Hotel (“Jumer’s”) in Rock Island, Illinois for a purchase price of $120 million in cash, subject to customary post-closing adjustments. The transaction is expected to close in the second quarter of 2021, subject to receipt of required state regulatory approvals and satisfaction of other customary closing conditions. The Company paid a deposit of $4.0 million related to this transaction during the third quarter of 2020, $2.0 million of which is nonrefundable.

Tropicana Evansville

On October 27, 2020, the Company and certain affiliates entered into an agreement with Caesars and certain of its affiliates to acquire the operations of Tropicana Evansville casino for $140.0 million, subject to customary post-closing adjustments.

20

BALLY’S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

In connection with the acquisition of the Tropicana Evansville casino operations, an affiliate of Gaming & Leisure Properties, Inc. (“GLPI”) has agreed to acquire the real estate associated with the Tropicana Evansville Casino from the seller for $340 million and lease it back to the Company for $28.0 million per year, subject to escalation. GLPI has also agreed to acquire the real estate associated with our Dover Downs casino for $144.0 million and lease it back to the Company for $12.0 million per year, subject to escalation. Both leases are governed by a master lease agreement with GLPI which has an initial term of 15 years and includes four, five-year options.

Consummation of the Company’s proposed acquisition of the Tropicana Evansville is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals for the purchase of the casino by the Company. The Company’s obligation to sell the Dover Downs real estate to GLPI is conditioned on, among other things, satisfaction of the conditions to the Company’s obligation to close on its acquisition of the Tropicana Evansville. The Company’s obligation to consummate the acquisition of the Tropicana Evansville is not conditioned on the closing of the sale of the Dover Downs real estate to GLPI.

Bet.Works

On November 18, 2020, the Company and Bet.Works Corp. (“Bet.Works”) entered into a definitive agreement pursuant to which the Company will acquire Bet.Works for $62.5 million in cash and