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FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2023

Except for the assets and liabilities held for sale and the corresponding impairment described in Note 7, there were no assets and liabilities measured at fair value on a nonrecurring basis. The following tables summarize the Company’s assets and liabilities measured at fair value on a recurring basis. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:


		December 31, 2023
(in thousands)	Balance Sheet Location	Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	Cash and cash equivalents	$	163,194	$	—	$	—
Restricted cash	Restricted cash	152,068		—		—

Convertible loans	Other assets	—		—		4,115
Investments in equity securities	Other assets	3,409		—		—
Investment in GLPI partnership	Other assets	—		14,146		—


Derivative assets designated as hedging instruments:
Interest rate contracts	Prepaid expenses and other current assets	—		5,356		—

Cross currency swaps	Prepaid expenses and other current assets	—		4,174		—
Cross currency swaps	Other assets	—		6,477		—
Total derivative assets at fair value		—		16,007		—
Total assets		$	318,671	$	30,153	$	4,115
Liabilities:
Contingent consideration	Other long-term liabilities	$	—	$	—	$	58,580
Derivative liabilities not designated as hedging instruments:
Sinclair Performance Warrants	Commercial rights liabilities	—		—		44,703

Derivative liabilities designated as hedging instruments:
Interest rate contracts	Other long-term liabilities	—		21,492		—
Cross currency swaps	Accrued liabilities	—		1,225		—
Cross currency swaps	Other long-term liabilities	—		29,376		—
Total derivative liabilities at fair value		—		52,093		44,703
Total liabilities		$	—	$	52,093	$	103,283


		December 31, 2022
(in thousands)	Balance Sheet Location	Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	Cash and cash equivalents	$	212,515	$	—	$	—
Restricted cash	Restricted cash	52,669		—		—
Convertible loans	Prepaid expenses and other current assets	657		—		—
Convertible loans	Other assets	—		—		10,212
Investments in equity securities	Other assets	2,395		—		—
Total assets		$	268,236	$	—	$	10,212
Liabilities:
Contingent consideration	Accrued liabilities	$	—	$	—	$	8,220
Derivatives not designated as hedging instruments:
Sinclair Performance Warrants	Commercial rights liabilities	—		—		36,987
Total liabilities		$	—	$	—	$	45,207

There were no transfers made among the three levels in the fair value hierarchy for the years ended December 31, 2023 and 2022.

The following table summarizes the changes in fair value of the Company’s Level 3 assets and liabilities:


( in thousands)	Sinclair Performance Warrants		Contingent Consideration		Convertible Loans		Total
Balance as of December 31, 2021	$	69,564	$	34,931	$	2,025	$	106,520
Additions in the period (acquisition fair value)	—		—		3,777		3,777
Reductions in the period	—		(15,862)		—		(15,862)
Change in fair value	(32,577)		(10,849)		4,410		(39,016)
Balance as of December 31, 2022	36,987		8,220		10,212		55,419
Additions in the period (acquisition fair value)	—		58,580		1,667		60,247
Reductions in the period	—		(9,292)		(3,500)		(12,792)
Change in fair value	7,716		1,072		(4,264)		4,524
Balance as of December 31, 2023	$	44,703	$	58,580	$	4,115	$	107,398

The gains (losses) recognized in the consolidated statements of operations for derivatives not designated as hedging instruments during the years ended December 31, 2023, 2022 and 2021 are as follows:


	Consolidated Statements of Operations Location	Year Ended December 31,
(in thousands)		2023		2022		2021
Foreign exchange forward contracts	Other non-operating income (expense), net	$	—	$	—	$	(20,882)
Sinclair Performance Warrants	Other non-operating income (expense), net	(7,716)		32,577		18,555
Sinclair Options	Other non-operating income (expense), net	—		—		(1,526)

Interest Rate Contracts and Cross Currency Swaps

The fair values of interest rate and cross currency swap contract assets and liabilities are classified within Level 2 of the fair value hierarchy as the valuation inputs are based on estimates using currency spot and forward rates and standard pricing models that consider the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments. These standard pricing models utilize inputs that are derived from or corroborated by observable market data such as interest rate yield curves as well as currency spot and forward rates. Changes in the fair value of these contracts are reported as a component of other comprehensive income (loss).

Foreign Exchange Forward Contracts

The foreign exchange forward contracts are accounted for as derivative assets and liabilities and are classified within Level 2 of the fair value hierarchy as the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets, such as currency spot and forward rates. Gains (losses) recognized in earnings resulting from the change in fair value are reported within “Other non-operating income, net” on the consolidated statements of operations.

Sinclair Performance Warrants

Sinclair Performance Warrants are accounted for as a derivative instrument classified as a liability within Level 3 of the hierarchy as the warrants are not traded in active markets and are subject to certain assumptions and estimates made by management related to the probability of meeting performance milestones. These assumptions and the probability of meeting performance targets may have a significant impact on the value of the warrant. The Performance Warrants are valued using an option pricing model, considering the Company’s estimated probabilities of achieving the performance milestones for each tranche. Inputs to this valuation approach include volatility between 40% and 67%, risk free rates between 3.84% and 4.79%, the Company’s common stock price for each period and expected terms between 1.5 and 6.3 years. The fair value is recorded within “Commercial rights liabilities” of the consolidated balance sheets.

Sinclair Options

Sinclair Options are accounted for as an equity classified instrument under ASC 815. The fair value of the options are based on a Black-Scholes model using Level 2 inputs, including volatility rates, risk free rates, the Company’s common stock price and expected term. The fair value of the Options was $59.7 million as of December 31, 2023 and 2022, and is recorded within “Additional paid-in-capital” in the consolidated balance sheets.

Contingent consideration

Contingent consideration related to acquisitions is recorded at fair value as a liability on the acquisition date and subsequently remeasured at each reporting date, based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The remeasurements are based primarily on the expected probability of achievement of the contingency targets which are subject to management’s estimates. These changes in fair value are recognized within “Other, non-operating expenses, net” of the consolidated statements of operations.

In connection with the acquisitions of SportCaller and Monkey Knife Fight (“MKF”) in the first quarter of 2021, the Company recorded contingent consideration of $58.7 million. During the first quarter of 2022, the Company settled contingent consideration of $15.9 million, comprised of 393,778 immediately exercisable penny warrants, 107,832 shares of Bally’s Corporation common stock and $0.1 million in cash. During the second quarter of 2023, the Company settled the remaining contingent consideration of $9.3 million, comprised of 386,926 immediately exercisable penny warrants, 103,656 shares of Bally’s Corporation common stock and a de minimis payment in cash, all in satisfaction of contingencies related to the respective acquisition agreements.

In connection with the acquisition of Bally’s Golf Links on September 12, 2023, the Company recorded contingent consideration at fair value of $58.6 million. Refer to Note 6 “Business Combinations” for further information.

Convertible loans

The Company has certain agreements with vendors to provide a portfolio of games to its customers. Pursuant to these agreements, the Company has issued loans to its vendors and has an option to convert the loans to shares of the vendors’ equity, exercisable within a specified time period. The Company recorded the short-term portion of the instruments within “Prepaid expenses and other current assets” and the long-term portion of the instruments within “Other assets” at their fair value. The fair value of the loans to vendors with share prices quoted on active markets are classified within Level 1 of the hierarchy and the fair value of the loans to vendors with share values based on unobservable inputs are classified within Level 3 of the hierarchy, both with changes to fair value included within “Other non-operating expenses, net” of the consolidated statements of operations.

Investment in equity securities

The Company has a long term investment in an unconsolidated entity which it accounts for under the equity method of accounting. The Company has elected the fair value option allowed by ASC 825, Financial Instruments, with respect to this investment. Under the fair value option, the investment is remeasured at fair value at each reporting period through earnings. The Company measures fair value using quoted prices in active markets that are classified within Level 1 of the hierarchy, with changes to fair value included within “Other non-operating expenses, net” of the consolidated statements of operations.

Investment in GLPI Partnership

The Company holds a limited partnership interest in GLP Capital, L.P., the operating partnership of GLPI. The investment is reported at fair value based on Level 2 inputs, with changes to fair value included within “Other non-operating expenses, net” of the consolidated statements of operations.

Long-term debt

The fair value of the Company’s Term Loan Facility and senior notes are estimated based on quoted prices in active markets and are classified as Level 1 measurements. The fair value of the Revolving Credit Facility approximates its carrying amount as it is revolving, variable rate debt, and is also classified as a Level 1 measurement. In the table below, the carrying amounts of the Company’s long-term debt is net of debt issuance costs and debt discounts. Refer to Note 16 “Long-Term Debt” for further information.


	December 31, 2023				December 31, 2022
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term Loan Facility	$	1,871,330	$	1,888,100	$	1,884,082	$	1,872,238


5.625% Senior Notes due 2029	736,447		596,250		734,497		555,000
5.875% Senior Notes due 2031	719,858		570,544		732,976		529,905

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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