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LEASES
 9 Months Ended
Sep. 30, 2024
Leases [Abstract]  
LEASES LEASES
Operating Leases

The Company is committed under various operating lease agreements for real estate and property used in operations. Certain leases include various renewal options which are included in the lease term when the Company has determined it is reasonably certain of exercising the options. Certain of these leases include percentage rent payments based on property revenues and/or rent escalation provisions determined by increases in the consumer price index (“CPI”). These percentage rent and escalation provisions are treated as variable lease payments and recognized as lease expense in the period in which the obligation for those payments are incurred. Discount rates used to determine the present value of the lease payments are based on the Company’s incremental borrowing rate commensurate with the term of the lease.

The Company had total operating lease liabilities of $1.37 billion and $1.20 billion as of September 30, 2024 and December 31, 2023, respectively, and right of use assets of $1.26 billion and $1.16 billion as of September 30, 2024 and December 31, 2023, respectively, which were included in the condensed consolidated balance sheets.

GLPI Leases

As of September 30, 2024, the Company’s Bally’s Evansville, Bally’s Dover, Bally’s Quad Cities, Bally’s Black Hawk, Bally’s Tiverton and Hard Rock Biloxi properties are leased under the terms of a master lease agreement (the “Master Lease”) with GLPI. All GLPI leases are accounted for as operating leases within the provisions of ASC 842, Leases (“ASC 842”), over the lease term or until a re-assessment event occurs. The Master Lease has an initial term of 15 years and includes four, five-year options to renew and requires combined minimum annual payments of $100.5 million, subject to minimum 1% annual escalation or greater escalation dependent on CPI. The renewal options are not reasonably certain of exercise as of September 30, 2024.

On January 3, 2023, the Company completed a transaction with GLP Capital, L.P (“GLP”)., an affiliate of GLPI, related to the land and real estate assets of Bally’s Tiverton and Hard Rock Biloxi for total consideration of $625.4 million. The transaction was structured as a tax-free capital contribution and a substantial portion of the proceeds was used to reduce the Company’s debt. These properties were added to the Master Lease, increasing minimum annual payments by $48.5 million. During the nine months ended September 30, 2023, the Company recorded a gain of $374.3 million representing the difference in the transaction price and the derecognition of assets. This gain is reflected as “Loss (gain) on sale-leaseback, net” in the condensed consolidated statements of operations.

In addition to the properties under the Master Lease explained above, the Company leases land associated with Tropicana Las Vegas under a ground lease established with GLPI in 2022. This lease has an initial term of 50 years, with the possibility of extending up to 99 years through renewal options. Annual rent under the lease is $10.5 million, subject to minimum 1% annual escalation or greater escalation dependent on CPI. As of September 30, 2024, the renewal options are not considered reasonably certain to be exercised. During the third quarter, the Company modified the lease and GLPI paid $48.6 million to the Company to fund the demolition of the building at the Tropicana Las Vegas site in exchange for an increase in annual rent of $4.1 million, also subject to a minimum 1% annual increase or greater based on CPI. This lease modification did not change the lease classification. The cash received is treated as a lessor incentive, leading to an adjustment in the Right of Use asset for the total funding amount. Upon modification, the Lease Liability and Right of Use asset were adjusted to reflect the present value of the increased future lease payment.
Components of lease expense, included within “General and administrative” in the condensed consolidated statements of operations, for operating leases during the three and nine months ended September 30, 2024 and 2023 are as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands)2024202320242023
Operating leases:
Operating lease cost$38,847 $37,695 $113,135 $111,470 
Variable lease cost3,216 2,668 8,825 7,503 
Operating lease expense42,063 40,363 121,960 118,973 
Short-term lease expense5,950 3,642 17,438 9,753 
Total lease expense$48,013 $44,005 $139,398 $128,726 

Supplemental cash flow and other information related to operating leases for the three and nine months ended September 30, 2024 and 2023 are as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
(in thousands)2024202320242023
Cash paid for amounts included in the lease liability - operating cash flows from operating leases$33,686 $32,552 $98,191 $97,544 
Right of use assets obtained in exchange for operating lease liabilities$192,085 $1,748 $192,716 $405,407 
Derecognition of financing obligation$(200,000)$— $(200,000)$— 

September 30, 2024
December 31, 2023
Weighted average remaining lease term28.7 years17.6 years
Weighted average discount rate8.3 %7.5 %
As of September 30, 2024, future minimum lease payments under noncancelable operating leases are as follows:
(in thousands)September 30, 2024
Remaining 2024$45,280 
2025163,500 
2026163,310 
2027157,982 
2028160,063 
Thereafter3,476,622 
Total lease payments4,166,757 
Less: present value discount(2,798,523)
Lease obligations$1,368,234 

Future minimum lease payments disclosed in the table above include $87.7 million related to extension options that are reasonably certain of being exercised. The table above does not include $6.5 million of payments for leases signed but not yet commenced as of September 30, 2024.
Financing Obligation

Bally’s Chicago Operating Company, LLC., an indirect wholly-owned subsidiary of the Company, entered into a ground lease for the land on which Bally’s Chicago will be built, which was accounted for as a financing obligation in accordance with ASC 470, Debt, as the transaction did not qualify as a sale under ASC 842. The lease commenced November 18, 2022 and had a 99-year term followed by ten separate 20-year renewals at the Company’s option.

The Company recorded land within “Property and equipment, net” of $200.0 million with a corresponding liability within “Long-term portion of financing obligation” of $200.0 million on its condensed consolidated balance sheets as of December 31, 2023. All lease payments were recorded as interest expense and there was no reduction to the financing obligation. Bally’s Chicago made cash payments, and recorded corresponding interest expense of $3.1 million and $4.3 million during the three months ended September 30, 2024 and 2023, respectively, and $12.4 million and $13.0 million during the nine months ended September 30, 2024 and 2023, respectively.

In the third quarter of 2024, GLP acquired the real estate underlying the Bally’s Chicago project, for which the Company was subject to the financing obligation, and assumed the existing lease. The lease with GLP was amended in the third quarter, creating a lease modification event whereby the land components previously classified as a financing obligation were reassessed and now classified as an operating lease. This change was due to the transfer of control of the land asset from the Company to the lessor, which permitted sale recognition in accordance with ASC 842. As a result of this reassessment, the Company derecognized $350.0 million from “Property and equipment, net” related to the land asset and $200.0 million from the “Long-term portion of financing obligation” within our Condensed Consolidated Balance Sheets. As a result of the lease modification, a $150.0 million offset in “Loss (gain) on sale-leaseback, net” was recorded within the Condensed Consolidated Statements of Operations for the three and nine months ending September 30, 2024.

Pending Lease Transactions

On July 11, 2024, the Company entered into a Binding Term Sheet to form a strategic construction and financing arrangement with GLP, an affiliate of GLPI, which includes the funding to complete the construction of Bally’s Chicago’s permanent casino. GLP will amend the existing land lease through a new master lease agreement with Bally’s Chicago Operating Company, LLC (“Chicago MLA”). The Chicago MLA includes annual rent of $20 million, subject to customary escalation provisions. The Chicago MLA also provides up to $940 million in construction financing, subject to conditions and approvals. The Company will pay additional rent under the Chicago MLA based on a 8.5% capitalization rate on funded amounts. The initial lease term for the Chicago MLA is 15 years with renewal options to be agreed upon by the parties.

The Company will also sell and lease back from GLP its properties in Kansas City and Shreveport for $395 million, with initial annual rent of $32.2 million, subject to escalation. In addition, the Company plans to sell and lease back its Bally’s Twin River property to GLP by the end of 2026 for $735 million, with initial annual rent of $58.8 million. GLP has the right to call this transaction starting October 2026. All such transactions are subject to required regulatory approvals.

Lessor

The Company leases its hotel rooms to patrons and records the corresponding lessor revenue in Non-gaming revenue within our condensed consolidated statements of operations. The Company had lessor revenues related to the rental of hotel rooms of $41.7 million and $56.7 million for the three months ended September 30, 2024 and 2023, respectively, and $118.0 million and $155.5 million for the nine months ended September 30, 2024 and 2023, respectively. Hotel leasing arrangements vary in duration, but are short-term in nature.