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ACQUISITIONS | 3 Months Ended
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Jun. 30, 2022
Business Combinations [Abstract] |
ACQUISITIONS | ACQUISITIONS Recent Acquisitions The Company accounted for all of the following 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. The purchase price allocation for Gamesys and certain of the Bally’s Interactive Acquisitions, as defined below, are 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 assets acquired and liabilities assumed. The Company recorded transaction costs related to its recent and pending acquisitions of $8.5 million and $13.0 million during the three and six months ended June 30, 2022, respectively, and $18.4 million and $30.7 million during the three and six months ended June 30, 2021. These costs are included in “Acquisition, integration and restructuring” in the condensed consolidated statements of operations. Refer to Note 11 “Acquisition, Integration and Restructuring” for further information. Bally’s Lake Tahoe Casino Resort On April 6, 2021, the Company acquired Bally’s Lake Tahoe in Lake Tahoe, Nevada from Eldorado Resorts, Inc. (“Eldorado”) and certain of its affiliates for $14.2 million, payable in cash one year from the closing date and subject to customary post-closing adjustments. The deferred purchase price is included within “Accrued liabilities” of the condensed consolidated balance sheet as of December 31, 2021 and was paid in April 2022. The identifiable intangible assets recorded in connection with the closing of the Bally’s Lake Tahoe acquisition include gaming licenses of $5.2 million with an indefinite life and a trade name of $0.2 million, which was amortized on a straight-line basis over its estimated useful life of approximately six months. The fair value of the identifiable intangible assets acquired was determined by using an income approach. The following table summarizes the consideration paid and the fair values of the assets acquired and liabilities assumed in connection with the acquisition of Bally’s Lake Tahoe on April 6, 2021:
| As of April 6, 2021
(in thousands) | Preliminary as of December 31, 2021 |  | Year to Date Adjustments |  | Final
Total current assets | $ | 4,683 |  |  | $ | — |  |  | $ | 4,683 |
Property and equipment, net | 6,361 |  |  | — |  |  | 6,361 |
Right of use assets, net | 57,017 |  |  | — |  |  | 57,017 |
Intangible assets, net | 5,430 |  |  | — |  |  | 5,430 |
Accounts payable and accrued liabilities | (3,402) |  |  | (144) |  |  | (3,546) |
Lease liabilities | (52,927) |  |  | — |  |  | (52,927) |
Other long-term liabilities | (941) |  |  | 37 |  |  | (904) |
Net assets acquired | 16,221 |  |  | (107) |  |  | 16,114 |
Bargain purchase gain | (2,049) |  |  | 107 |  |  | (1,942) |
Total purchase price | $ | 14,172 |  |  | $ | — |  |  | $ | 14,172 |
During the year ended December 31, 2021, the Company recorded a bargain purchase gain of $2.0 million based on the preliminary purchase price allocation as the fair value of the assets acquired and liabilities assumed exceeded the purchase price consideration. During the six months ended June 30, 2022, based on the final purchase price allocation, an adjustment of $0.1 million was recorded reducing the bargain purchase gain to $1.9 million. The original agreement to acquire Bally’s Lake Tahoe from Eldorado was made concurrently with the agreement of Bally’s Shreveport and the Company believes that it was able to acquire Bally’s Lake Tahoe for less than fair value as a result of a distressed sale whereby Eldorado was required by the Federal Trade Commission to divest the properties prior to its merger with Caesars coupled with the timing of the agreement to purchase which was in the middle of COVID-19 related shutdowns of casinos in the US. Bally’s Evansville On June 3, 2021, the Company completed the acquisition of the Bally’s Evansville casino operations from Caesars. The total purchase price was $139.7 million. Cash paid by the Company at closing, net of $9.4 million cash acquired, was $130.4 million, excluding transaction costs. In connection with the acquisition of the Bally’s Evansville casino operations, the Company entered into a sale-leaseback arrangement with an affiliate of GLPI for the Bally’s Dover property. Refer to Note 13 “Leases” for further information. The identifiable intangible assets recorded in connection with the closing of the Bally’s Evansville acquisition include gaming licenses of $153.6 million with an indefinite life and rated player relationships of $0.6 million which are being amortized on a straight-line basis over an estimated useful life of approximately eight years. The fair value of the identifiable intangible assets acquired was determined by using an income approach. The following table summarizes the consideration paid and the fair values of the assets acquired and liabilities assumed in connection with the acquisition of Bally’s Evansville on June 3, 2021. There were no purchase accounting adjustments recorded during the six months ended June 30, 2022.
|  |  |  |  | As of June 3, 2021
(in thousands) |  |  |  |  | Final
Cash and cash equivalents |  |  |  |  | $ | 9,355 |
Accounts receivable, net |  |  |  |  | 1,474 |
Inventory and prepaid expenses and other current assets |  |  |  |  | 1,202 |
Property and equipment, net |  |  |  |  | 12,325 |
Right of use assets, net |  |  |  |  | 285,772 |
Intangible assets, net |  |  |  |  | 154,210 |
Other assets |  |  |  |  | 468 |
Accounts payable and accrued liabilities |  |  |  |  | (10,927) |
Lease liabilities |  |  |  |  | (285,772) |
Deferred tax liability |  |  |  |  | (7,233) |
Other long-term liabilities |  |  |  |  | (310) |
Net assets acquired |  |  |  |  | 160,564 |
Bargain purchase gain |  |  |  |  | (20,856) |
Total purchase price |  |  |  |  | $ | 139,708 |
The fair value of the assets acquired and liabilities assumed exceeded the purchase price consideration and therefore, a bargain purchase gain of $20.9 million was recorded during the year ended December 31, 2021. The Company believes it was able to acquire Bally’s Evansville for less than fair value as a result of a distressed sale prior to Eldorado’s merger with Caesars, as noted above, coupled with the timing of the agreement to purchase which was in the middle of COVID-19 related shutdowns of casinos in the US. Bally’s Quad Cities Casino & Hotel On June 14, 2021, the Company completed its acquisition of Bally’s Quad Cities in Rock Island, Illinois. Pursuant to the terms of the Equity Purchase Agreement, the Company acquired all of the outstanding equity securities of The Rock Island Boatworks, Inc., for a purchase price of $118.9 million in cash. Cash paid by the Company, net of $2.9 million cash acquired and the $4.0 million deposit paid in the third quarter of 2020, was $112.0 million, excluding transaction costs. The identifiable intangible assets recorded in connection with the closing of the Bally’s Quad Cities acquisition include gaming licenses of $30.3 million with an indefinite life, as well as rated player relationships and a trade name of $0.7 million and $0.2 million, respectively, which are being amortized on a straight-line basis over their estimated useful lives of approximately nine years and four months, respectively. The fair value of the identifiable intangible assets acquired was determined by using an income approach. Goodwill recognized is deductible for local tax purposes and has been assigned as of the acquisition date to the Company’s Casinos & Resorts reportable segment, which includes the reporting unit expected to benefit from the synergies of the acquisition. Qualitative factors that contribute to the recognition of goodwill include an organized workforce and expected synergies from integrating the property into the Company’s casino portfolio and future development of its omni-channel strategy. The following table summarizes the consideration paid and the fair values of the assets acquired and liabilities assumed in connection with the Bally’s Quad Cities acquisition on June 14, 2021.
| As of June 14, 2021
(in thousands) | Preliminary as of December 31, 2021 |  | Year to Date Adjustments |  | Final
Cash and cash equivalents | $ | 2,933 |  |  | $ | — |  |  | $ | 2,933 |
Accounts receivable, net | 2,986 |  |  | — |  |  | 2,986 |
Inventory and prepaid expenses and other current assets | 798 |  |  | — |  |  | 798 |
Property and equipment, net | 73,135 |  |  | — |  |  | 73,135 |
Intangible assets, net | 31,180 |  |  | — |  |  | 31,180 |
Goodwill | 14,593 |  |  | (1,285) |  |  | 13,308 |
Total current liabilities | (6,697) |  |  | 1,285 |  |  | (5,412) |
Total purchase price | $ | 118,928 |  |  | $ | — |  |  | $ | 118,928 |
North America Interactive Acquisitions SportCaller - On February 5, 2021, the Company acquired SportCaller for total consideration of $42.6 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 US Dollar (“USD”) to Euro exchange ratio of 0.8334). Monkey Knife Fight - On March 23, 2021, the Company acquired Fantasy Sports Shark, LLC (d/b/a/ Monkey Knife Fight) for total consideration of $118.6 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. The Company paid cash of $22.4 million, net of cash acquired, for SportCaller and MKF. Total non-cash consideration transferred for SportCaller and MKF was $135.3 million, which included $58.7 million of the fair value of contingent consideration as of the SportCaller and MKF acquisition dates. Refer to Note 9 “Fair Value Measurements” for further information. Bally’s Interactive - On May 28, 2021, the Company acquired Bally’s Interactive, formerly Bet.Works Corp., for total consideration of $192.1 million, which consisted of $70.4 million in cash, net of cash acquired, and 2,084,765 of the Company’s common shares, subject in each case to customary adjustments. The shareholders of Bally’s Interactive will not transfer any shares of Company common stock received prior to June 1, 2022 and, for the following 12 months, may transfer only up to 1% of the Company’s common stock per every 90 days. AVP - On July 12, 2021, the Company acquired AVP, a premier professional beach volleyball organization and host of the longest-running domestic beach volleyball tour in the US, for $10.0 million in cash. Telescope - On August 12, 2021, the Company acquired an 84.16% controlling interest in Telescope, a leading provider of real-time audience engagement solutions for live events, gamified second screen experiences and interactive livestreams, for $25.9 million in cash, net of cash acquired. The remaining 15.84% of Telescope is owned by certain selling shareholders and is reported as a non-controlling interest. The non-controlling interest is convertible into shares of Bally’s common stock based on a fixed exchange ratio share-settlement feature, valued using the Company’s common stock price, and is classified as permanent equity. Earnings attributable to the non-controlling interest are not material for the three and six months ended June 30, 2022. Degree 53 - On October 25, 2021, the Company acquired Degree 53, a UK-based creative agency that specializes in multi-channel website and personalized mobile app and software development for the online gambling and sports industries, for $7.8 million in cash, net of cash acquired. The identifiable intangible assets recorded in connection with the closing of SportCaller, MKF, Bally’s Interactive, AVP, Telescope and Degree 53 (collectively the “North America Interactive Acquisitions”) include customer relationships of $41.5 million, which are being amortized over estimated useful lives between three and ten years, developed software of $122.4 million, which is being amortized over estimated useful lives between three and ten years, and trade names of $3.1 million, which are being amortized over estimated useful lives between ten and 15 years. Total goodwill recorded in connection with the North America Interactive Acquisitions was $250.7 million. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill, which consist primarily of benefits from acquiring a talented technology workforce and management team experienced in the online gaming industry, and securing buyer-specific synergies expected to contribute to the Company’s omni-channel strategy which are expected to increase revenue and profits within the Company’s North America Interactive reportable segment. Goodwill of the Bally’s Interactive Acquisitions has been assigned as of the acquisition date to the Company’s North America Interactive reportable segment. The following table summarizes the consideration paid and the fair values of the assets acquired and liabilities assumed in connection with the North America Interactive Acquisitions.
(in thousands) | As of June 30, 2022(1)
Cash and cash equivalents | $ | 8,689 |
Accounts receivable, net | 4,498 |
Prepaid expenses and other current assets | 3,104 |
Property and equipment, net | 596 |
Intangible assets, net | 167,075 |
Goodwill | 250,730 |
Total current liabilities | (14,787) |
Deferred tax liability | (15,811) |
Acquired non-controlling interest | (3,760) |
Net investment in the North America Interactive Acquisitions | $ | 400,334 |
__________________________________ (1) As of June 30, 2022, the purchase price allocations of AVP, Telescope and Degree 53 are preliminary and are final for Bally’s Interactive, SportCaller and MKF. During the three and six months ended June 30, 2022, the Company recorded purchase accounting adjustments for the North America Interactive Acquisitions, increasing both goodwill and accrued liabilities by $0.2 million. Gamesys Acquisition On October 1, 2021, the Company completed the acquisition of Gamesys. Total consideration was $2.60 billion, which consisted of $2.08 billion paid in cash and 9,773,537 shares of Bally’s common stock. Cash paid by the Company at closing, net of cash received of $183.3 million and a $10.3 million post-acquisition expense, explained below, was $1.90 billion, excluding transaction costs. The identifiable intangible assets recorded in connection with the closing of the Gamesys acquisition are based on preliminary valuations and primarily include customer relationships of $980.2 million and developed technology of $282.0 million, both of which are being amortized over seven years, and trade names of $249.8 million, which have indefinite lives. Total goodwill of $1.68 billion represents the excess purchase price over the preliminary fair value of the assets acquired and liabilities assumed. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets apart from goodwill, which consist primarily of benefits from acquiring a talented technology workforce and management team experienced in the online gaming industry. Goodwill associated with the Gamesys acquisition is assigned as of the acquisition date to the Company’s International Interactive and North America Interactive reportable segments in the amounts of $1.64 billion and $33.3 million respectively, which include the reporting units expected to benefit from the synergies arising from the acquisition. The assignment of goodwill to reporting units is based upon preliminary valuations subject to change throughout the measurement period. Goodwill recognized is not deductible for local tax purposes. In connection with the acquisition of Gamesys, certain unvested and outstanding equity options held by Gamesys employees were discretionarily accelerated and vested by the Gamesys Board of Directors, requiring allocation of the fair value of post-acquisition service to purchase consideration, with the remainder allocated to non-recurring post-acquisition expense. The fair value of $36.4 million was attributed to pre-acquisition service and included in consideration transferred. In the fourth quarter of 2021, the fair value of $10.3 million, attributable to post-acquisition expense was recorded within “Advertising, general, and administrative” expense in the consolidated statements of operations. 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 Gamesys as of October 1, 2021.
(in thousands) | Preliminary as of December 31, 2021 |  | Year to Date Adjustments |  | Preliminary as of June 30, 2022
Cash and cash equivalents and restricted cash | $ | 183,306 |  |  | $ | — |  |  | $ | 183,306 |
Accounts receivable, net | 35,851 |  |  | — |  |  | 35,851 |
Prepaid expenses and other current assets | 27,876 |  |  | 542 |  |  | 28,418 |
Property and equipment, net | 15,230 |  |  | — |  |  | 15,230 |
Right of use assets, net | 14,185 |  |  | — |  |  | 14,185 |
Goodwill | 1,678,476 |  |  | (542) |  |  | 1,677,934 |
Intangible assets, net | 1,513,023 |  |  | — |  |  | 1,513,023 |
Other assets | 17,668 |  |  | — |  |  | 17,668 |
Accounts payable | (47,881) |  |  | — |  |  | (47,881) |
Accrued income taxes | (40,250) |  |  | — |  |  | (40,250) |
Accrued liabilities | (177,109) |  |  | — |  |  | (177,109) |
Long-term debt, net | (456,469) |  |  | — |  |  | (456,469) |
Lease liabilities | (14,185) |  |  | — |  |  | (14,185) |
Deferred tax liability | (143,924) |  |  | — |  |  | (143,924) |
Other long-term liabilities | (6,680) |  |  | — |  |  | (6,680) |
Total purchase price | $ | 2,599,117 |  |  | $ | — |  |  | $ | 2,599,117 |
Pending Acquisitions Tropicana Las Vegas On April 13, 2021, the Company agreed to purchase the Tropicana Las Vegas Hotel and Casino in Las Vegas, Nevada (“Tropicana Las Vegas”) from GLPI valued at approximately $300 million. The purchase price for the Tropicana property’s non-land assets is $150.0 million. In addition, the Company agreed to lease the land underlying the Tropicana property from GLPI for an initial term of 50 years at an annual rent of $10.5 million, subject to increases over time. The Company expects to complete the acquisition of Tropicana Las Vegas during the year ended December 31, 2022.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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