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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 September 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 001-38850
blys_lg_rgb_pos_210420.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 FilerAccelerated 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 October 27, 2023, the number of shares of the registrant’s $0.01 par value common stock outstanding was 45,622,485.
For additional information regarding the Company’s shares outstanding, refer to Note 18 “Stockholders’ Equity.”



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)
September 30,
2023
December 31,
2022
Assets 
Cash and cash equivalents$178,526 $212,515 
Restricted cash119,311 52,669 
Accounts receivable, net73,373 71,673 
Inventory14,994 14,191 
Tax receivable16,268 53,771 
Prepaid expenses and other current assets142,492 100,717 
Assets held for sale5,588 17,177 
Total current assets550,552 522,713 
Property and equipment, net1,191,756 1,202,102 
Right of use assets, net1,171,948 808,926 
Goodwill1,866,310 1,746,202 
Intangible assets, net2,010,112 1,961,938 
Deferred tax asset28,532 25,544 
Other assets110,163 32,688 
Total assets$6,929,373 $6,300,113 
Liabilities and Stockholders’ Equity
Current portion of long-term debt$19,450 $19,450 
Current portion of lease liabilities48,936 32,929 
Accounts payable211,906 70,071 
Accrued income taxes79,139 56,012 
Accrued liabilities481,855 573,931 
Liabilities related to assets held for sale1,400 3,409 
Total current liabilities842,686 755,802 
Long-term debt, net 3,425,496 3,469,105 
Long-term portion of financing obligation200,000 200,000 
Long-term portion of lease liabilities1,163,970 803,212 
Deferred tax liability217,330 138,017 
Commercial rights liabilities92,357 109,807 
Other long-term liabilities90,467 17,923 
Total liabilities6,032,306 5,493,866 
Commitments and contingencies (Note 19)
Stockholders’ equity:
Common stock ($0.01 par value, 200,000,000 shares authorized; 45,616,627 and 46,670,057 shares issued; 45,616,627 and 46,670,057 shares outstanding)
456 466 
Preferred stock ($0.01 par value; 10,000,000 shares authorized; no shares outstanding)
  
Additional paid-in-capital1,600,115 1,636,366 
Treasury stock, at cost  
Accumulated deficit(412,628)(535,373)
Accumulated other comprehensive loss(291,304)(295,640)
Total Bally’s Corporation stockholders’ equity896,639 805,819 
Non-controlling interest428 428 
Total stockholders’ equity897,067 806,247 
Total liabilities and stockholders’ equity$6,929,373 $6,300,113 
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 September 30,Nine Months Ended September 30,
 2023202220232022
Revenue:  
Gaming$508,895 $465,733 $1,489,086 $1,384,523 
Non-gaming123,582 112,516 348,317 294,493 
Total revenue632,477 578,249 1,837,403 1,679,016 
Operating (income) costs and expenses:
Gaming229,131 197,196 665,731 620,459 
Non-gaming58,041 53,494 162,661 140,515 
General and administrative230,582 200,044 732,147 579,800 
Gain from sale-leaseback, net  (374,321)(50,766)
Depreciation and amortization77,487 73,853 231,235 227,507 
Total operating costs and expenses595,241 524,587 1,417,453 1,517,515 
Income from operations37,236 53,662 419,950 161,501 
Other income (expense):
Interest expense, net(70,630)(53,572)(200,987)(145,085)
Other non-operating income, net15,528 1,640 24,949 46,563 
Total other income (expense), net(55,102)(51,932)(176,038)(98,522)
(Loss) income before income taxes(17,866)1,730 243,912 62,979 
Provision for income taxes43,936 1,137 153,029 996 
Net (loss) income$(61,802)$593 $90,883 $61,983 
Basic (loss) earnings per share$(1.15)$0.01 $1.68 $1.05 
Weighted average common shares outstanding - basic53,580 57,020 53,961 59,170 
Diluted (loss) earnings per share$(1.15)$0.01 $1.67 $1.05 
Weighted average common shares outstanding - diluted53,580 57,062 54,276 59,238 
See accompanying notes to condensed consolidated financial statements.
4

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


Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net (loss) income$(61,802)$593 $90,883 $61,983 
Other comprehensive (loss) income:
Foreign currency translation adjustments(89,166)(213,193)1,532 (483,548)
Net unrealized derivative gain on cash flow hedges, net of tax2,593  2,593  
Net unrealized derivative gain on net investment hedges, net of tax211  211  
Other comprehensive (loss) income(86,362)(213,193)4,336 (483,548)
Total comprehensive (loss) income$(148,164)$(212,600)$95,219 $(421,565)



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
(Deficit) Earnings
Accumulated Other Comprehensive LossNon-controlling InterestTotal Stockholders’
Equity
 Shares OutstandingAmount
Balance as of December 31, 202246,670,057 $466 $1,636,366 $ $(535,373)$(295,640)$428 $806,247 
Issuance of restricted stock and other stock awards124,050 1 (1,332)— — — — (1,331)
Share-based compensation— — 6,040 — — — — 6,040 
Retirement of treasury shares— (10)(35,987)19,753 16,244 — —  
Share repurchases(1,026,343)— — (19,753)— — — (19,753)
Other comprehensive income— — — — — 52,073 — 52,073 
Net income— — — — 178,336 — — 178,336 
Balance as of March 31, 202345,767,764 $457 $1,605,087 $ $(340,793)$(243,567)$428 $1,021,612 
Issuance of restricted stock and other stock awards125,842 1 (495)529 — — — 35 
Share-based compensation— — 6,290 — — — — 6,290 
Retirement of treasury shares— (7)(25,279)10,176 14,805 — — (305)
Share repurchases(748,502)— — (10,705)— — — (10,705)
Issuance of MKF penny warrants— — 7,371 — — — — 7,371 
Penny warrants exercised377,253 4 — — — — — 4 
Settlement of consideration to SportCaller103,656 1 1,883 — — — — 1,884 
Other comprehensive income— — — — — 38,625 — 38,625 
Net loss— — — — (25,651)— — (25,651)
Balance as of June 30, 202345,626,013 $456 $1,594,857 $ $(351,639)$(204,942)$428 $1,039,160 
Issuance of restricted stock and other stock awards31,065 — (180)— — — — (180)
Share-based compensation— — 6,257 — — — — 6,257 
Retirement of treasury shares—  (1,420)601 813 — — (6)
Settlement of consideration - Bally’s Interactive(40,451)— 601 (601)— — — — 
Other comprehensive loss— — — — — (86,362)— (86,362)
Net loss— — — — (61,802)— — (61,802)
Balance as of September 30, 202345,616,627 $456 $1,600,115 $ $(412,628)$(291,304)$428 $897,067 

6

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

 Common StockAdditional
Paid-in Capital
Treasury
Stock
Retained
(Deficit) Earnings
Accumulated Other Comprehensive LossNon-controlling InterestTotal Stockholders’
Equity
 Shares OutstandingAmount
Balance as of December 31, 202152,254,477 $530 $1,849,068 $(29,166)$(181,581)$(26,809)$3,760 $1,615,802 
Issuance of restricted stock and other stock awards122,849 1 (2,534)— — — — (2,533)
Share-based compensation— — 5,095 — — — — 5,095 
Stock options exercised20,000 — 86 — — — — 86 
Penny warrants exercised383,934 4 — — — — — 4 
Retirement of treasury shares— (11)(35,200)42,454 (7,243)— —  
Share repurchases(350,616)— — (13,288)— — — (13,288)
Issuance of MKF penny warrants— — 12,010 — — — — 12,010 
Settlement of consideration to SportCaller107,832 1 3,699 — — — — 3,700 
Other comprehensive loss— — — — — (71,542)— (71,542)
Net income— — — — 1,889 — — 1,889 
Balance as of March 31, 202252,538,476 $525 $1,832,224 $ $(186,935)$(98,351)$3,760 $1,551,223 
Issuance of restricted stock38,775 — (308)— — — — (308)
Share-based compensation— — 6,322 — — — — 6,322 
Other comprehensive loss— — — — — (198,813)— (198,813)
Net income— — — — 59,501 — — 59,501 
Balance as of June 30, 202252,577,251 $525 $1,838,238 $ $(127,434)$(297,164)$3,760 $1,417,925 
Issuance of restricted stock14,239  (41)— — — — (41)
Share-based compensation— — 6,715 — — — — 6,715 
Retirement of treasury shares— (54)(187,677)119,254 68,477 — —  
Share repurchases (including tender offer)(5,368,334)— — (119,254)— — — (119,254)
Conversion of non-controlling interest - Telescope64,145 1 3,187 — — — (3,188) 
Other comprehensive loss— — — — — (213,193)— (213,193)
Net income— — — — 593 — — 593 
Balance as of September 30, 202247,287,301 $472 $1,660,422 $ $(58,364)$(510,357)$572 $1,092,745 
See accompanying notes to condensed consolidated financial statements.
7

BALLY’S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended September 30,
(in thousands)20232022
Cash flows from operating activities:  
Net income $90,883 $61,983 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization231,235 227,507 
Non-cash lease expense42,835 22,938 
Share-based compensation18,587 18,132 
Impairment charges9,653  
Amortization of debt discount and debt issuance costs8,482 8,122 
Gain from insurance recoveries (1,263)
Gain on sale-leaseback(374,321)(50,766)
Gain on extinguishment of debt(4,044) 
Deferred income taxes59,774 (42,848)
Loss (gain) on assets and liabilities measured at fair value12 (437)
Gain on equity method investments(5,344) 
Change in value of commercial rights liabilities(11,967)(33,448)
Change in contingent consideration payable1,024 (10,386)
Adjustment on bargain purchase 107 
Foreign exchange gain(2,512)(2,227)
Other operating activities8,021 5,309 
Changes in operating assets and liabilities46,041 22,593 
Net cash provided by operating activities118,359 225,316 
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired(93,451)(146,484)
Proceeds from sale-leaseback411,000 150,000 
Advance deposit in connection with sale-leaseback transactions 200,000 
Capital expenditures(266,231)(167,363)
Insurance proceeds 1,265 
Cash paid for internally developed software(35,903)(45,785)
Acquisition of gaming licenses(10,150)(53,030)
Purchase of equity securities (3,175)
Other intangible asset acquisitions (1,825)
Other investing activities(7,512)(3,058)
Net cash used in investing activities(2,247)(69,455)
Cash flows from financing activities:
Issuance of long-term debt198,000 335,000 
Repayments of long-term debt(245,208)(359,588)
Payment of deferred consideration (30,025)
Share repurchases (30,458)(132,542)
Other financing activities(1,894)(2,793)
Net cash used in financing activities(79,560)(189,948)
Effect of foreign currency on cash and cash equivalents(2,251)(20,622)
Change in cash and cash equivalents and restricted cash held for sale(1,648) 
Net change in cash and cash equivalents and restricted cash32,653 (54,709)
Cash and cash equivalents and restricted cash, beginning of period265,184 274,840 
Cash and cash equivalents and restricted cash, end of period$297,837 $220,131 
8

BALLY’S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended September 30,
(in thousands)20232022
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized$196,975 $164,379 
Cash received from income tax refunds, net of cash paid15,842 (39,497)
Non-cash investing and financing activities:
Unpaid property and equipment$24,608 $16,784 
Bally’s Chicago - land development liability46,802  
Bally’s Chicago - gaming license payable135,250  
Investment in GLP Capital, L.P.14,412  
Investment in RI Joint Venture17,832  
Unpaid internally developed software1,769  
Net purchase consideration for acquisitions55,933  
Non-controlling interest (3,188)



September 30,December 31,
Reconciliation of cash and cash equivalents and restricted cash:20232022
Cash and cash equivalents$178,526 $212,515 
Restricted cash119,311 52,669 
Total cash and cash equivalents and restricted cash$297,837 $265,184 

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 & ResortsLocationTypeBuilt/Acquired
Bally’s Twin River Lincoln Casino Resort (“Bally’s Twin River”)
Lincoln, Rhode IslandCasino and Resort2004
Bally’s Arapahoe Park
Aurora, ColoradoRacetrack/OTB Site2004
Hard Rock Hotel & Casino Biloxi (“Hard Rock Biloxi”)(2)
Biloxi, MississippiCasino and Resort2014
Bally’s Tiverton Casino & Hotel (“Bally’s Tiverton”)(2)
Tiverton, Rhode IslandCasino and Hotel2018
Bally’s Dover Casino Resort (“Bally’s Dover”)(2)
Dover, DelawareCasino, Resort and Raceway2019
Bally’s Black Hawk(1)(2)
Black Hawk, ColoradoThree Casinos2020
Bally’s Kansas City Casino (“Bally’s Kansas City”)
Kansas City, MissouriCasino2020
Bally’s Vicksburg Casino (“Bally’s Vicksburg”)
Vicksburg, MississippiCasino and Hotel2020
Bally’s Atlantic City Casino Resort (“Bally’s Atlantic City”)
Atlantic City, New JerseyCasino and Resort2020
Bally’s Shreveport Casino & Hotel (“Bally’s Shreveport”)
Shreveport, LouisianaCasino and Hotel2020
Bally’s Lake Tahoe Casino Resort (“Bally’s Lake Tahoe”)
Lake Tahoe, NevadaCasino and Resort2021
Bally’s Evansville Casino & Hotel (“Bally’s Evansville”)(2)
Evansville, IndianaCasino and Hotel2021
Bally’s Quad Cities Casino & Hotel (“Bally’s Quad Cities”)(2)
Rock Island, IllinoisCasino and Hotel2021
Tropicana Las Vegas Casino and Resort (“Tropicana Las Vegas”)(2)
Las Vegas, NevadaCasino and Resort2022
Bally’s Chicago Casino (“Bally’s Chicago”)(3)
Chicago, IllinoisCasino2023
Bally’s Golf Links at Ferry Point (“Bally’s Golf Links”)Bronx, New YorkGolf Course2023
__________________________________
(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.

The Company’s International Interactive reportable segment primarily includes the interactive activities in Europe and Asia of Gamesys Group Ltd. (“Gamesys”), an iCasino and online bingo platform provider and operator.

The North America Interactive reportable segment includes a portfolio of sports betting, iGaming and free-to-play gaming brands and the North American operations of Gamesys.

Refer to Note 20 “Segment Reporting” for further information.


2.    SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, its majority-owned subsidiaries and entities the Company identifies as variable interest entities (“VIEs”), of which the Company is determined to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year’s presentation. The financial statements of our foreign subsidiaries are translated into US Dollars (“USD”) using exchange rates in effect at period-end for assets and liabilities and average exchange rates during each reporting period for results of operations. Adjustments resulting from financial statement translations are reflected as a separate component of accumulated other comprehensive income (loss). Foreign currency transaction gains and losses are included in net income (loss).

10

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, 2022. Except for the change in the segment profit and loss measure as disclosed in Note 20 “Segment Reporting,” 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, 2022.

We have made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes. The actual results that we experience may differ materially from our estimates.

Equity Method Investments

On January 1, 2023, the Company and International Game Technology PLC (“IGT”) contributed certain tangible assets and leases to Rhode Island VLT Company, LLC (“RIVLT”) in exchange for equity interests of RIVLT. The Company contributed video lottery terminals (“VLTs”) and player tracking equipment to the joint venture for a 40% equity interest of RIVLT. The 40% ownership in the joint venture qualifies for equity method accounting. In addition to this joint venture, the Company also has other investments in unconsolidated subsidiaries, which are accounted for using equity method accounting. The Company records its share of net income or loss within “Other non-operating income, net” in the condensed consolidated statements of operations. For the three and nine months ended September 30, 2023, the Company recorded a gain on equity method investments of $2.3 million and $5.3 million, respectively.

Variable Interest Entities

The Company evaluates entities for which control is achieved through means other than voting rights to determine if it is the primary beneficiary of a VIE. An entity is a VIE if it has any of the following characteristics (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support (ii) equity holders, as a group, lack the characteristics of a controlling financial interest or (iii) the entity is structured with non-substantive voting rights. The primary beneficiary of the VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company consolidates its investment in a VIE when it determines that it is its primary beneficiary.

In determining whether it is the primary beneficiary of the VIE, the Company considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities and significance of the Company’s investment and other means of participation in the VIE’s expected profits/losses. Significant judgments related to these determinations include estimates about the current and future fair values and performance of assets held by these VIEs and general market conditions.

Management has analyzed and concluded that Breckenridge Curacao B.V. (“Breckenridge”) is a VIE because it does not have sufficient equity investment at risk. The Company has determined that it is the primary beneficiary and consolidates the VIE because (a) although the Company does not control all decisions of Breckenridge, the Company has the power to direct the activities of Breckenridge that most significantly impact its economic performance through various contracts with the entity and (b) the nature of these agreements between Breckenridge and the Company provides the Company with the obligation to absorb losses and the right to receive benefits based on fees that are based upon off-market rates and commensurate to the level of services provided. The Company receives significant benefits in the form of fees that are not at market and commensurate to the level of services provided. As a result, the Company consolidates all of the assets, liabilities and results of operations of Breckenridge and its subsidiaries in the accompanying condensed consolidated financial statements. As of September 30, 2023 and December 31, 2022, Breckenridge had total assets of $148.7 million and $93.4 million, respectively, and total liabilities of $81.1 million and $77.1 million, respectively. Breckenridge had revenues of $71.5 million and $232.0 million for the three and nine months ended September 30, 2023, respectively, and $68.9 million and $229.7 million for the three and nine months ended September 30, 2022, respectively.

11

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

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

Cash and Cash Equivalents and Restricted Cash

Cash and cash equivalents includes cash balances and highly liquid investments with an original maturity of three months or less. Restricted cash includes cash collateral in connection with amounts due to the Chicago Tribune (refer to Note 9 “Property and Equipment”), player deposits, payment service provider deposits, and Video Lottery Terminal (“VLT”) and table games related cash payable to certain states where we operate, which are unavailable for the Company’s use.

Accounts Receivable, Net

Accounts receivable, net consists of the following:
September 30,December 31,
(in thousands)20232022
Amounts due from Rhode Island and Delaware(1)
$15,018 $15,865 
Gaming receivables20,105 19,065 
Non-gaming receivables44,052 42,532 
Accounts receivable79,175 77,462 
Less: Allowance for doubtful accounts(5,802)(5,789)
Accounts receivable, net$73,373 $71,673 
__________________________________
(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 from the State of Delaware for Bally’s Dover.

Gaming Expenses

Gaming expenses include, among other things, payroll costs and expenses associated with the operation of VLTs, slots and table games, including gaming taxes payable to jurisdictions in which the Company operates outside of Rhode Island and Delaware, and marketing costs directly associated with the Company’s iGaming products and services. These marketing expenses are included within Gaming expenses in the condensed consolidated statements of operations and were $43.6 million and $36.9 million for the three months ended September 30, 2023 and 2022, respectively, and $137.3 million and $139.4 million for the nine months ended September 30, 2023 and 2022, respectively. Gaming expenses also include racing expenses comprised of payroll costs, off track betting (“OTB”) commissions and other expenses associated with the operation of live racing and simulcasting.

Advertising Expense

The Company expenses advertising costs as incurred. For the three and nine months ended September 30, 2023, advertising expense was $5.6 million and $14.2 million, respectively. For the three and nine months ended September 30, 2022, advertising expense was $9.1 million and $24.0 million, respectively. Advertising costs are included in “General and administrative” on the condensed consolidated statements of operations.

Earnings (Loss) Per Share

Basic earnings (loss) per common share is calculated in accordance with Accounting Standards Codification (“ASC”) 260, Earnings Per Share, which requires entities that have issued securities other than common stock that participate in dividends with common stock (“participating securities”) to apply the two-class method to compute basic earnings (loss) per common share. The two-class method is an earnings allocation method under which basic earnings (loss) per common share is calculated for each class of common stock and participating security as if all such earnings had been distributed during the period. To calculate basic earnings (loss) per share, the earnings allocated to common shares is divided by the weighted average number of common shares outstanding, contingently issuable warrants and RSUs, RSAs and PSUs for which no future service is required as a condition to the delivery of the underlying common stock (collectively, basic shares).

12

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

Comprehensive (Loss) Income

Comprehensive (loss) income includes changes in equity that result from transactions and economic events from non-owner sources. Comprehensive (loss) income consists of net (loss) income, changes in defined benefit pension plan, net of tax, foreign currency translation adjustments and unrealized gains (losses) relating to cash flow and net investment hedges.

Fair Value Measurements

Fair value is determined using the principles of ASC 820, Fair Value Measurement. Fair value is described as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes and defines the inputs to valuation techniques as follows:

Level 1: Observable quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2: Inputs are observable for the asset or liability either directly or through corroboration with observable market data.
Level 3: Unobservable inputs.

The inputs used to measure the fair value of an asset or a liability are categorized within levels of the fair value hierarchy. The fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the measurement.

Derivative Instruments Designated as Hedging Instruments

Cross Currency Swaps - The Company uses fixed-to-fixed cross-currency swap agreements to hedge its exposure to adverse foreign currency exchange rate movements for its foreign operations. The Company has elected the spot method for designating these contracts as net investment hedges. These derivative arrangements qualify as net investment hedges under ASC 815, Derivatives and Hedging (“ASC 815”), with the gain or loss resulting from changes in the spot value of the derivative reported in other comprehensive income with amounts reclassified out of other comprehensive income into earnings when the hedged net investment is either sold or substantially liquidated. Refer to Note 11 “Derivative Instruments” for further information.

Interest Rate Swaps - The Company uses interest rate derivatives to hedge its exposure to variability in cash flows on its floating-rate debt to add stability to interest expense and manage its exposure to interest rate movements. The Company’s interest rate swaps are designated as cash flow hedges under ASC 815, with changes in the fair value reported in other comprehensive income and reclassified into “Interest expense, net” in the condensed consolidated statements of operations in the same period in which the hedged interest payments associated with the Company’s borrowings are recorded. Refer to Note 11 “Derivative Instruments” for further information.

Strategic Partnership - Sinclair Broadcast Group

In 2020, the Company and Sinclair Broadcast Group, Inc. (“Sinclair”) entered into a Framework Agreement (the “Framework Agreement”), which provides for a long-term strategic relationship between Sinclair and the Company. Under the Framework Agreement, the Company pays annual fees in cash, issued warrants and options and agreed to share tax benefits and received naming, integration and other rights, including access to Sinclair’s Tennis Channel, Stadium Sports Network and STIRR streaming service. Under a Commercial Agreement (the “Commercial Agreement”) contemplated by the Framework Agreement, the Company is required to pay annual fees to Diamond Sports Group (“Diamond”), a Sinclair subsidiary, for naming rights over Diamond’s regional sports networks and other consideration which escalate annually and total $88.0 million over a 10-year term.

The Company accounted for this relationship as an asset acquisition in accordance with the “Acquisition of Assets Rather Than a Business” subsections of ASC 805-50, Business Combinations—Related Issues, using a cost accumulation model. The total intangible asset (“Commercial rights intangible asset”) represents the present value of the naming rights fees and other consideration, including the fair value of the warrants and options, and an estimate of the tax-sharing payments, each explained below. The Commercial rights intangible asset, net of accumulated amortization, was $231.2 million and $255.6 million as of September 30, 2023 and December 31, 2022, respectively. Amortization was $7.7 million and $8.2 million for the three months ended September 30, 2023 and 2022, respectively, and $23.2 million and $25.0 million for the nine months ended September 30, 2023 and 2022, respectively. Refer to Note 10 “Goodwill and Intangible Assets” for further information.

13

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

The present value of the naming rights fees was recorded as part of intangible assets, with a corresponding liability, which will be accreted through interest expense over the life of the naming arrangement. The total value of the liability as of September 30, 2023 and December 31, 2022 was $58.1 million and $59.3 million, respectively. The short-term portion of the liability, which was $7.5 million and $6.0 million as of September 30, 2023 and December 31, 2022, respectively, is recorded within “Accrued liabilities” and the long-term portion of the liability, which was $50.6 million and $53.3 million as of September 30, 2023 and December 31 2022, respectively, is reflected as “Commercial rights liability” in our condensed consolidated balance sheets. Accretion expense reported in “Interest expense, net” in our condensed consolidated statements of operations was $1.1 million for the three months ended September 30, 2023 and 2022, and $3.3 million for the nine months ended September 30, 2023 and 2022.

Under the Framework Agreement, 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 Penny Warrants and Options are equity classified instruments under ASC 815. The fair value of the Penny Warrants approximates the fair value of the underlying shares and was $150.4 million on November 18, 2020 at issuance, and was recorded to “Additional paid-in-capital” in the condensed consolidated balance sheets, with an offset to the Commercial rights intangible asset. The Company recorded $59.7 million, related to the Options, as of September 30, 2023 and December 31, 2022, and is included within “Additional paid-in-capital” in the condensed consolidated balance sheets.

The Performance Warrants are accounted for as a derivative liability because the underlying performance metrics represent an adjustment to the settlement amount that is not indexed to the Company’s own stock and thus equity classification is precluded under ASC 815. Refer to Note 12 “Fair Value Measurements” for further information.

Under the Framework Agreement, the Company agreed to share 60% of the tax benefits it realizes from the Penny Warrants, Options, Performance Warrants and other related payments. Changes in the estimate of the tax benefit to be realized and tax rates in effect at the time, among other changes, are treated as an adjustment to the intangible asset. The liability for these obligations was $16.6 million and $19.4 million as of September 30, 2023 and December 31, 2022, respectively, and is reflected in our condensed consolidated balance sheets. The change in value of the liability is included in “Other non-operating expenses, net” in our condensed consolidated statements of operations.

Provision for Income Taxes

During the nine months ended September 30, 2023 and 2022, the Company recorded a provision for income tax of $153.0 million, at an effective year to date tax rate of 62.7% and a provision for income tax of $1.0 million, at an effective year to date tax rate of 1.6%, respectively. The 2023 year to date effective tax rate was higher than the US federal statutory tax rate of 21%, largely due to an increase in the valuation allowance and a tax liability for a discrete item related to the deferred gain on sale leaseback transactions in Mississippi and Rhode Island. The 2022 year to date effective tax rate was lower than the US federal statutory tax rate of 21%, largely due to a tax benefit recorded in foreign jurisdictions during the year, offset by a discrete item related to the gain on sale leaseback transactions in Colorado and Illinois.


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

3.    CONSOLIDATED FINANCIAL INFORMATION

General and Administrative Expense

Amounts included in General and administrative for the three and nine months ended September 30, 2023 and 2022 were as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2023202220232022
Advertising, general and administrative$210,576 $190,762 $655,341 $555,126 
Acquisition and integration costs19,595 9,282 46,480 24,674 
Restructuring 411  20,673  
Impairment charges  9,653  
Total general and administrative$230,582 $200,044 $732,147 $579,800 

Other Non-Operating Income (Expense)

Amounts included in Other non-operating income, net for the three and nine months ended September 30, 2023 and 2022 were as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2023202220232022
Change in value of commercial rights liabilities$4,676 $37 $11,967 $33,448 
Gain on equity method investments2,254  5,344  
Gain on extinguishment of debt  4,044  
Foreign exchange gain8,459 253 2,512 2,248 
Other, net139 1,350 1,082 10,867 
Total other non-operating income, net$15,528 $1,640 $24,949 $46,563 


4.    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this update address diversity in practice and inconsistency related to recognition of an acquired contract liability and the effect of payment terms on subsequent revenue recognition for the acquirer. This update is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years, with early adoption permitted. The Company’s adoption of this ASU in the first quarter of 2023 did not have a material impact to its condensed consolidated financial statements.

In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The amendments in this update defer the sunset date of Topic 848, which applies to entities which have transactions that reference LIBOR or other reference rates which are expected to be discontinued due to reference rate reform, until December 31, 2024. The Company’s adoption of this ASU in the second quarter of 2023 did not have a material impact to its condensed consolidated financial statements.


15

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

5.    REVENUE RECOGNITION

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, which requires companies to recognize revenue in a way that depicts the transfer of promised goods or services. In addition, the standard requires more detailed disclosures to enable readers of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. 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.

The Company determines revenue recognition through the following steps:
Identify the contract, or contracts, with the customer;
Identify the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to performance obligations in the contract; and
Recognize revenue when or as the Company satisfies performance obligations by transferring the promised goods or services.

The amount of revenue recognized by the Company is measured at the transaction price or the amount of consideration that the Company expects to receive through satisfaction of the identified performance obligations.

Retail gaming, online gaming and sports betting revenue, each as described below, contain two performance obligations. Retail gaming transactions 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. 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. Revenue is recognized at the conclusion of each contest, wager or wagering game hand. Incentives can be used across online gaming products. The Company allocates a portion of the transaction price to certain customer incentives that create material future customer rights and are a separate performance obligation. 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. 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.

The transaction price for a gaming wagering contract is the difference between gaming wins and losses, not the total amount wagered. 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. The transaction price for hotel, food, beverage, retail, entertainment and other is the net amount collected from the customer for such goods and services. Hotel, food, beverage, 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.

The following contains a description of each of the Company’s revenue streams:

Gaming Revenue

Retail Gaming

The Company recognizes retail gaming revenue as the net win from gaming activities, which is the difference between gaming inflows and outflows, not the total amount wagered. Progressive jackpots are estimated and recognized as revenue at the time the obligation to pay the jackpot is established. Gaming revenues are recognized net of certain cash and free play incentives.

16

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 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. 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 performance obligation related to loyalty program incentives are deferred and recognized as revenue upon redemption by the customer. The amount associated with gaming wagers is recognized at the point the wager occurs, as it is settled immediately.

Gaming revenue includes the share of VLT revenue for Bally’s Twin River and Bally’s Tiverton, in each case, as determined by each property’s respective master VLT contracts with the State of Rhode Island. Bally’s Twin River is entitled to a 28.85% share of VLT revenue on the initial 3,002 units and a 26.00% share on VLT revenue generated from units in excess of 3,002 units. Bally’s Tiverton is entitled to receive a percentage of VLT revenue that is equivalent to the percentage received by Bally’s Twin River. From July 1, 2021 through December 31, 2022, Bally’s Twin River and Bally’s Tiverton were entitled to an additional 7.00% share of revenue, as the Technology Provider, on VLTs owned by the Company. Beginning on January 1, 2023, the Company contributed all of its VLT assets to the Rhode Island Joint Venture and the Rhode Island Joint Venture, as the sole Technology Provider, is now entitled to that additional 7% of VLT revenue.

Gaming revenue also includes Bally’s Twin River’s and Bally’s Tiverton’s share of table games revenue. Bally’s Twin River and Bally’s Tiverton each were entitled to an 83.5% share of table games revenue generated as of September 30, 2023 and 2022. Revenue is recognized when the wager is settled, 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 Bally’s Dover’s share of revenue as determined under the Delaware State Lottery Code from the date of its acquisition. Bally’s Dover 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 September 30, 2023 and 2022, Bally’s Dover was entitled to an approximate 42% share of VLT revenue and 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 includes casino revenue of the Company’s other properties which is the aggregate net difference between gaming wins and losses, with deferred revenue recognized for prepaid deposits by customers prior to play, 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.

Online Gaming

The Company’s online gaming operates similarly to land-based casinos, generating revenue from player wagers net of payouts and incentives awarded to players.

Online gaming revenue includes the online bingo and casino revenue of Gamesys since the date of acquisition, beginning October 1, 2021. The revenue is earned from operating online bingo and casino websites, which consists of the difference between total amounts wagered by players less winnings payable to players, bonuses allocated and jackpot contributions. Online gaming revenue is recognized at the point in time when the player completes a gaming session and payout occurs. There is no significant degree of uncertainty involved in quantifying the amount of gaming revenue earned, including bonuses, jackpot contributions and loyalty points. Bonuses, jackpot contributions and loyalty points are measured at fair value at each reporting date.

17

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

Sports Betting

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. Sports betting revenue is generated through built-in theoretical margins in each sports wagering opportunity offered to players. Revenue is recognized as total wagers net of payouts made and incentives awarded to players.

The Company has entered into several multi-year agreements with third-party operators for online sports betting and iGaming market access in several jurisdictions 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 gaming 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 nine months ended September 30, 2023 and 2022. Deferred revenue associated with third-party operators for online sports betting and iGaming market access was $3.8 million and $4.1 million as of September 30, 2023 and December 31, 2022, respectively, and is included in “Accrued liabilities” and “Other long-term liabilities” in the condensed consolidated balance sheets.

All other revenues, including market access and B2B service revenue generated by the International Interactive and North America Interactive reportable segments, are recognized at the time the goods are sold or the service is provided.

Racing

Racing revenue includes several of our casinos and resorts’ share of wagering from live racing and the import of simulcast signals. Racing revenue is recognized upon completion of the wager based upon 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 reduction to racing revenue.

Non-gaming Revenue

Non-gaming revenue consists of hotel, food, beverage, retail, entertainment and other revenue. Hotel revenue is recognized when the customer obtains control through occupancy of the room over the 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. The estimated standalone selling price of hotel rooms is determined based on observable prices. The standalone selling price of food, beverage, retail, entertainment and other goods and services are determined based upon the actual retail prices charged to customers for those items. Cancellation fees for hotel and meeting space services are recognized upon cancellation by the customer and are included in Non-gaming revenue within our condensed consolidated statements of operations. Non-gaming revenue also includes revenues from the operations of Bally’s Golf Links.

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 and nine months ended September 30, 2023 and 2022:
 Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)2023202220232022
Hotel$26,367 $24,840 $72,925 $60,165 
Food and beverage21,604 16,670 60,901 51,436 
Retail, entertainment and other3,185 6,773 8,196 11,559 
 $51,156 $48,283 $142,022 $123,160 
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.

18

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

The following tables provide a disaggregation of revenue by segment (in thousands):
Three Months Ended September 30, 2023Casinos & ResortsInternational InteractiveNorth America InteractiveTotal
Gaming$245,687 $240,577 $22,631 $508,895 
Non-gaming:
Hotel56,728   56,728 
Food and beverage39,438   39,438 
Retail, entertainment and other17,173 3,307 6,936 27,416 
Total non-gaming revenue113,339 3,307 6,936 123,582 
Total revenue$359,026 $243,884 $29,567 $632,477 
Three Months Ended September 30, 2022
Gaming$237,951 $217,215 $10,567 $465,733 
Non-gaming:
Hotel45,675   45,675 
Food and beverage31,724   31,724 
Retail, entertainment and other13,190 10,364 11,563