SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of the Company, its majority-owned subsidiaries and entities the Company identifies as variable interest entities (“VIEs”), of which the Company is determined to be the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year’s presentation. The financial statements of our foreign subsidiaries are translated into US Dollars (“USD”) using exchange rates in effect at period-end for assets and liabilities and average exchange rates during each reporting period for results of operations. Adjustments resulting from financial statement translations are reflected as a separate component of accumulated other comprehensive income (loss). Foreign currency transaction gains and losses are included in net income (loss). The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (the “SEC”) for interim financial information, including the instructions to Form 10-Q and Rule 10-01 of the SEC’s Regulation S-X. Accordingly, certain information and note disclosures normally required in complete financial statements prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. In the Company’s opinion, these condensed consolidated financial statements include all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. We have made estimates and judgments affecting the amounts reported in our condensed consolidated financial statements and the accompanying notes. The actual results that we experience may differ materially from our estimates. As described in Note 1, “General Information”, the Company completed the Merger with Queen on February 7, 2025 (the “Closing”), with Queen surviving the Merger as a wholly-owned subsidiary of the Company. The Parent and its affiliates maintained a controlling financial interest, as defined by ASC 810, in Queen before and after the Merger, and in the Company upon consummation of the Merger. The Merger with Queen was accounted for as a transaction between entities under common control because the Parent and its affiliates contributed a wholly owned subsidiary into the Company, which became a controlled subsidiary of the Parent and its affiliates upon consummation of the merger. The Company has elected to push down its Parent’s basis in its net assets into its unaudited condensed consolidated financial statements, and as a result, unless the context otherwise requires, the “Company,” for periods prior to the Closing refers to Bally’s (“Predecessor”), and for the periods after the Closing refers to the combined Company of Bally’s and Queen (“Successor” or the “Company”). As a result of the Merger, the results of operations, financial position and cash flows of the Predecessor and the Successor are not directly comparable. As Bally’s was deemed to be the predecessor entity, the historical financial statements of Bally’s became the historical financial statements of the combined Company, upon the consummation of the Merger. As a result, the financial statements included in this report reflect (i) the historical operating results of Bally’s prior to the Merger and (ii) the combined results of the Company following the Closing. The accompanying unaudited condensed consolidated financial statements include a Predecessor period, which includes the period through February 7, 2025 concurrent with the Merger, and a Successor period from February 8, 2025 through June 30, 2025. A black line between the Successor and Predecessor periods has been placed in the condensed consolidated financial statements and in the tables to the notes to the condensed consolidated financial statements to highlight the lack of comparability between these two periods. Queen is a regional gaming, hospitality and entertainment company that owns and operates four casinos across three states. The Merger expands the Company’s Casinos & Resorts geographic footprint and enhances the Company’s development pipeline, which aligns with the Company’s broader strategic initiatives. Certain adjustments have been made to Queen’s historical carrying values to conform accounting policies with the Company, with any such adjustments being recorded to equity. The preliminary purchase price of Queen is estimated based on the fair value of all existing and outstanding shares of Queen that were exchanged for shares of Company common stock, with the net effect of the transaction being charged to equity. The preliminary purchase price of Queen and adjustment to equity resulting from the merger consists of the following:
For the three months ended June 30, 2025 (Successor) and period from February 8, 2025 to June 30, 2025 (Successor), revenue for Queen was $61.3 million and $96.0 million, respectively and net income was $41.8 million and $54.8 million, respectively. Equity Method Investments In 2025, following the Queen merger, the Company has an investment in Intralot S.A. Integrated Lottery Systems and Services (“Intralot”), a Greek publicly listed company on the Athens Stock Exchange, that supplies integrated gaming and transaction processing systems, game content, sports betting management and interactive gaming services to the state-licensed gaming and lottery organizations worldwide. The total initial investment represented approximately 26.86% of the outstanding shares of Intralot. During the three months ended June 30, 2025 (Successor), an existing loan receivable was settled by payment to the Company in 34.3 million shares of Intralot. On June 30, 2025, the Company also purchased 4.8 million additional shares of Intralot for €1.06 per share. Both of these transactions brought the Company’s total investment in Intralot up to 33.34% of the outstanding shares of Intralot. The investment is accounted for as an equity method investment under the fair value option as the Company believes this best depicts the economics of the investment. In 2024, the Company completed the sale of portions of its international interactive business in Asia and certain other international markets in its International Interactive reportable segment (the “Carved-Out Business”) to a company (the “Buyer”) formed by members of management of the Carved-Out Business. In connection with the disposition, the Company acquired penny warrants that represent a 19.99% fully diluted interest in the Buyer, for approximately $1.9 million. The Company accounts for this interest as an equity method investment. The Company also has other investments in unconsolidated subsidiaries, which are accounted for using equity method accounting. The Company records its share of net income or loss and changes in fair value for equity method investments accounted for under the fair value option within Other non-operating income (expense), net in the condensed consolidated statements of operations. Refer to Note 4 “Consolidated Financial Information” for further information. Variable Interest Entities The Company evaluates entities for which control is achieved through means other than voting rights to determine if it is the primary beneficiary of a VIE. An entity is a VIE if it has any of the following characteristics (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support (ii) equity holders, as a group, lack the characteristics of a controlling financial interest or (iii) the entity is structured with non-substantive voting rights. The primary beneficiary of the VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The Company consolidates its investment in a VIE when it determines that it is its primary beneficiary. In determining whether it is the primary beneficiary of the VIE, the Company considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities and significance of the Company’s investment and other means of participation in the VIE’s expected profits/losses. Significant judgments related to these determinations include estimates about the current and future fair values and performance of assets held by these VIEs and general market conditions. Management has analyzed and concluded that a trust that was established in connection with the disposal of the Asia Interactive Business, is a VIE that will be consolidated based on the applicable criteria. As of June 30, 2025 (Successor) and December 31, 2024 (Predecessor), consolidated VIEs had total assets of $286.9 million and $263.9 million, respectively, and total liabilities of $33.4 million and $27.9 million, respectively. Consolidated VIEs had total revenue of $7.0 million and $46.5 million for the three months ended June 30, 2025 (Successor) and June 30, 2024 (Predecessor), respectively, and total revenue of $11.9 million, $3.7 million and $108.4 million for the period from February 8, 2025 to June 30, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the six months ended June 30, 2024 (Predecessor), respectively. The Company may change its original assessment of a VIE upon subsequent events such as the modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposition of all or a portion of an interest held by the primary beneficiary. The Company performs this analysis on an ongoing basis. Non-controlling interest In the first quarter of 2025, Bally’s Chicago, Inc., a consolidated subsidiary of the Company, successfully completed a private placement (the “Private Placement”), whereby shares of Class A-1, A-2, A-3 and A-4 were issued to third parties for total consideration of $12.4 million, net of $0.8 million of issuance costs. Based on the shares issued in the private placement the Company has a de minimus non-controlling interest in Bally’s Chicago, Inc. as of June 30, 2025 (Successor). Net income attributable to non-controlling interest was de minimus for the three and six months ended June 30, 2025 (Successor). The Star Entertainment Group Investment On April 7, 2025, the Company entered into a Binding Term Sheet with The Star Entertainment Group Limited (“The Star”), an ASX-listed company, to invest up to A$300.0 million in a multi-tranche issuance of convertible notes and subordinated debt (the “Investment”). On April 8, 2025, The Star announced a commitment from its largest shareholder, Investment Holdings Pty, to subscribe for A$100.0 million of the Investment, reducing the Company’s commitment to A$200.0 million. On April 9, 2025, the Company funded A$66.7 million, consisting of Tranche 1A convertible notes of A$22.2 million (the “Convertible Notes”) and subordinated debt with a principal amount of A$44.4 million. Additionally, on May 23, 2025, the Company and The Star entered into a Subscription Agreement and a Subordination Deed Poll in favor of certain The Star’s senior lenders. Following shareholder approval obtained on June 25, 2025, the Company funded an additional principal amount of A$66.7 million in subordinated debt on June 27, 2025 (together with the A$44.4 million, the “Subordinated Notes”). As of June 30, 2025, the outstanding principal balance on the Subordinated Notes and Convertible Notes were A$111.1 million and A$22.2 million, respectively. The remainder of the Company’s A$66.7 million commitment is expected to be funded upon regulatory approval of the Investment (the “Forward Obligation”). Separately, upon such approval, the Subordinated Notes will settle into the Convertible Notes on a cashless basis. Both the Convertible Notes and Subordinated Notes mature on July 2, 2029, and bear interest at an annual rate of 9%, paid in-kind and compounded quarterly. The Star may elect to settle accrued interest in cash or by issuing its ordinary shares. The Company can convert the principal amount of the Convertible Notes into ordinary shares of The Star at any time once regulatory approval has been received at a conversion price of A$0.08 per share. The Company accounts for the instruments funded to date, along with the embedded derivatives associated with their conversion and redemption features, by utilizing the fair value option under ASC 825, Financial Instruments, as the Company believes this best depicts the economics of the investment. Refer to Note 12 “Fair Value Measurements” for further information. Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents includes cash balances and highly liquid investments with an original maturity of three months or less. Restricted cash includes player deposits, payment service provider deposits, and VLT and table games related cash payables to certain states where we operate, which are unavailable for the Company’s use. Accounts Receivable, Net Accounts receivable, net consists of the following:
__________________________________ (1) Represents the Company’s share of VLT and table games revenue for Bally’s Twin River and Bally’s Tiverton due from the State of Rhode Island and for Bally’s Dover from the State of Delaware. Deferred Payables In order to execute on its strategy of improving working capital efficiency, the Company will, from time to time, participate in trade finance or deferred payable initiatives, including programs that may securitize or accelerate liquidity realized from receivables, or alternatively extend trade terms with certain suppliers or vendors. In certain cases, where the Company is not able to extend payment terms directly with suppliers or vendors, the Company will consider deferred payable solutions that simulate such trade term extensions. These solutions generally involve entering into exchange agreements with intermediary institutions who will make payments to the supplier or vendor within the original terms on behalf of the Company, in exchange for a new bill with terms that conform to the Company’s payment policy of net 90 days. The Company will then pay the new bill to the intermediary institutions, inclusive of any embedded premium, which the Company records as Interest expense, net, within three months or less. Amounts outstanding under these deferred payable arrangements were $94.7 million and $72.8 million as of June 30, 2025 (Successor) and December 31, 2024 (Predecessor), respectively, and are included in Accrued and other current liabilities on the condensed consolidated balance sheets. For the three months ended June 30, 2025 (Successor) and June 30, 2024 (Predecessor), the Company borrowed $92.2 million and $60.1 million, respectively under these deferred payable arrangements. For the period from February 8, 2025 to June 30, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the six months ended June 30, 2024 (Predecessor), the Company borrowed $106.1 million, $79.6 million and $102.3 million, respectively, under these deferred payable arrangements. For the three months ended June 30, 2025 (Successor) and June 30, 2024 (Predecessor), the Company repaid $96.5 million and $41.5 million, respectively. For the period from February 8, 2025 to June 30, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the six months ended June 30, 2024 (Predecessor) the Company repaid $101.5 million and $68.5 million and $41.5 million, respectively. For the three months ended June 30, 2025 (Successor) and June 30, 2024 (Predecessor), the Company incurred $2.2 million and $1.4 million, respectively, of interest expense under these arrangements. For the period from February 8, 2025 to June 30, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the six months ended June 30, 2024 (Predecessor), the Company incurred $3.8 million, $0.5 million and 2.2 million, respectively, of interest expense under these arrangements. Gaming Expenses Gaming expenses include, among other things, payroll costs and expenses associated with the operation of VLTs, slots and table games, including gaming taxes payable to jurisdictions in which the Company operates outside of Rhode Island and Delaware, and certain marketing costs directly associated with the Company’s iGaming products and services. Gaming expenses also include racing expenses comprised of payroll costs, off track betting (“OTB”) commissions and other expenses associated with the operation of live racing and simulcasting. Advertising Expense The Company expenses advertising costs as incurred. Advertising expenses, including production and agency fees of campaigns, for the three months ended June 30, 2025 (Successor) and June 30, 2024 (Predecessor) was $2.7 million and $4.0 million, respectively. Advertising expenses, including production and agency fees of campaign, for the period from February 8, 2025 to June 30, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the six months ended June 30, 2024 (Predecessor) was $4.1 million, $0.9 million, and $9.6 million respectively. The above advertising expenses are included in General and administrative on the condensed consolidated statements of operations. Additionally, the Company incurred certain advertising and marketing costs directly associated with the Company’s iGaming products and services of $31.5 million $47.0 million for the three months ended June 30, 2025 (Successor) and June 30, 2024 (Predecessor), respectively and $49.6 million, $12.6 million and $93.2 million during the period from February 8, 2025 to June 30, 2025 (Successor), period from January 1, 2025 to February 7, 2025 (Predecessor), and the six months ended June 30, 2024 (Predecessor), respectively. These costs are included within Gaming expenses in the condensed consolidated statements of operations. Share-Based Compensation The Company recognized total share-based compensation expense of $2.4 million and $4.5 million for the three months ended June 30, 2025 (Successor) and June 30, 2024 (Predecessor), and $5.1 million, $2.0 million and $7.5 million for the period from February 8, 2025 to June 30, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the six months ended June 30, 2024 (Predecessor), respectively. The total income tax benefit for share-based compensation arrangements was $0.6 million and $1.2 million for the three months ended June 30, 2025 (Successor) and June 30, 2024 (Predecessor), and $1.3 million, $0.5 million and $2.0 million for the period from February 8, 2025 to June 30, 2025 (Successor) the period from January 1, 2025 to February 7, 2025 (Predecessor), and the six months ended June 30, 2024 (Predecessor), respectively. Strategic Partnership - Sinclair Broadcast Group In 2020, the Company and Sinclair Broadcast Group, Inc. (“Sinclair”) entered into the Framework Agreement, providing for a long-term strategic relationship between Sinclair and the Company. Under the Framework Agreement, the Company issued to Sinclair warrants to purchase up to 4,915,726 shares of the Company at an exercise price of $0.01 per share (“the Penny Warrants”), a warrant to purchase up to 3,279,337 shares of the Company at an exercise price of $0.01 per share, subject to the achievement of various performance metrics (the “Performance Warrants”), and an option to purchase up to 1,639,669 additional shares, in four tranches with purchase prices ranging from $30.00 to $45.00 per share, exercisable over a seven-year period beginning in November 2024 (the “Options”). Additionally, the Company is required to share 60% of the tax benefits it realizes from the Penny Warrants, Options, Performance Warrants and other related payments. Changes in the estimate of the tax benefit to be realized and tax rates in effect at the time, among other changes, was treated as an adjustment to the intangible asset. In connection with the Queen merger, as of February 7, 2025, all outstanding Performance Warrants became immediately exercisable at a price of $0.01 per share and the Options were returned to the Company in exchange for 384,536 penny warrants. The Performance Warrants were reclassified from liability to equity as of February 7, 2025. Refer to Note 12 “Fair Value Measurements” for more information. Provision for Income Taxes During the three months ended June 30, 2025 (Successor) and June 30, 2024 (Predecessor), the Company recorded a provision for income tax of $185.4 million and a benefit of $1.5 million, respectively. For the period from February 8, 2025 to June 30, 2025 (Successor), the period from January 1, 2025 to February 7, 2025 (Predecessor) and the six months ended June 30, 2024 (Predecessor), the Company recorded a provision of $88.3 million, $0.7 million and $29.9 million, respectively. The effective tax rate for three months ended June 30, 2025 (Successor) and June 30, 2024 (Predecessor) was (431.3)% and 2.4%, respectively. The effective tax rate for the period from February 8, 2025 to June 30, 2025 (Successor), period from January 1, 2025 to February 7, 2025 (Predecessor), and the six months ended June 30, 2024 (Predecessor) was (83.7)%, (1.3)%, and (14.6)%, respectively. As of June 30, 2025 (Successor), the Company projects an annual tax provision relative to its pre-tax loss in the US due to the valuation allowance on interest, and a tax provision internationally relative to its pre-tax income, which results in a combined (99.0)% annual effective tax rate, as the combined pre-tax income by jurisdiction is minimized.
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