Bally's CorpBALY
Bally's Corp Leases Disclosure
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 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 $1.62 billion and $1.20 billion as of December 31, 2024 and 2023, respectively, and right of use assets of $1.54 billion and $1.16 billion as of December 31, 2024 and 2023, respectively, which were included in the consolidated balance sheets.
GLPI Leases
As of December 31, 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 No.1”) with GLPI. All GLPI leases are accounted for as operating leases within the provisions of ASC 842, over the lease term or until a re-assessment event occurs. The Master Lease No.1 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 December 31, 2024.
In addition to the properties under the Master Lease No.1 explained above, the Company also entered into a lease with GLPI for the land associated with Tropicana Las Vegas. This lease has an initial term of 50 years (with a maximum term of 99 years with renewal options) at annual rent of $10.5 million, subject to minimum 1% annual escalation or greater escalation dependent on CPI. In 2024, 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 increasing annual rent by $4.1 million, subject to a minimum 1% annual increase or greater based on CPI, for a total modified annual rent of $14.6 million. 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. The renewal options are not reasonably certain of exercise as of December 31, 2024.
In 2024, the Company completed the sale lease-back transaction of certain real property interests underlying Bally’s Kansas City and Bally’s Shreveport to GLPI for $394.8 million under the terms of a new master lease agreement (the “Master Lease No.2”), with an initial term of 15 years, including four, five-year options to renew and minimum annual payments of $32.2 million, subject to minimum 1% annual escalation or greater escalation dependent on CPI. 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. The renewal options are not reasonably certain of exercise as of December 31, 2024. Under the terms of the Master Lease No.2, the Company assigned its rights and obligations related to existing ground leases underlying the Bally’s Kansas City and Bally’s Shreveport properties to GLPI, while remaining responsible to GLPI for rent under these leases as additional charges. This resulted in the termination of the previous right of use assets and lease liabilities related to the land leases and a gain of $26.4 million. In connection with the sale of the Bally’s Kansas City and Bally’s Shreveport assets, the Company recorded a gain of $209.8 million representing the difference in the transaction price and the derecognition of assets. These gains are reflected as “Gain from sale-leaseback, net” in the consolidated statements of operations.
Components of the Company’s lease costs during the years ended December 31, 2024, 2023 and 2022 were as follows:
| Year Ended December 31, | |||||||||||||||||
| (in thousands) | 2024 | 2023 | 2022 | ||||||||||||||
Operating lease expense(1) | |||||||||||||||||
| Operating lease cost | $ | 157,829 | $ | 148,375 | $ | 75,675 | |||||||||||
| Variable lease cost | 12,121 | 10,360 | 8,386 | ||||||||||||||
| Operating lease expense | 169,950 | 158,735 | 84,061 | ||||||||||||||
| Short-term lease expense | 22,871 | 13,249 | 17,536 | ||||||||||||||
Total operating lease expense | $ | 192,821 | $ | 171,984 | $ | 101,597 | |||||||||||
Gain on sale lease-back, net(2)(3) | $ | 86,254 | $ | 374,321 | $ | 50,766 | |||||||||||
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(1) Included within “General and administrative” in the Consolidated Statements of Operations
(2) Included within “Gain on sale-leaseback, net” in the Consolidated Statements of Operations.
(3) Gain on sale-leaseback, net is related to Bally’s Kansas City, Bally’s Shreveport and the Company’s Bally’s Chicago project during the year ended December 31, 2024, the Hard Rock Biloxi and Bally’s Tiverton properties during the year ended December 31, 2023, and Bally’s Quad Cities and Bally’s Black Hawk (“Bally's Black Hawk”) during the year ended December 31, 2022.
Supplemental cash flow and other information related to operating leases for the year ended December 31, 2024 and 2023, are as follows:
| Year Ended December 31, | |||||||||||||||||
| ($ in thousands) | 2024 | 2023 | 2022 | ||||||||||||||
| Cash paid for amounts included in the lease liability - operating cash flows from operating leases | $ | 145,891 | $ | 132,871 | $ | 68,689 | |||||||||||
| Right of use assets obtained in exchange for operating lease liabilities | $ | 495,747 | $ | 406,043 | $ | 341,747 | |||||||||||
| Derecognition of financing obligation | $ | (200,000) | $ | — | $ | — | |||||||||||
| December 31, 2024 | December 31, 2023 | ||||||||||
| Weighted average remaining lease term | 26.2 years | 17.6 years | |||||||||
| Weighted average discount rate | 8.5 | % | 7.5 | % | |||||||
As of December 31, 2024, future minimum lease payments under noncancelable operating leases are as follows:
| (in thousands) | |||||
| 2025 | $ | 199,690 | |||
| 2026 | 200,068 | ||||
| 2027 | 194,964 | ||||
| 2028 | 197,307 | ||||
| 2029 | 197,857 | ||||
| Thereafter | 3,868,745 | ||||
| Total lease payments | 4,858,631 | ||||
| Less: present value discount | (3,238,325) | ||||
| Lease obligations | $ | 1,620,306 | |||
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 is 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 has 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 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 over the lease term. Bally’s Chicago made cash payments, and recorded corresponding interest expense, of $12.4 million, $17.4 million and $2.0 million during the years ended December 31, 2024, 2023 and 2022, respectively.
In the third quarter of 2024, GLP, an affiliate of GLPI, 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 consolidated balance sheets. As a result of the lease modification, a $150.0 million offset in “Gain on sale-leaseback, net” was recorded in the consolidated statements of operations during the year ended December 31, 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 which includes the funding to complete the construction of Bally’s Chicago’s permanent casino. On September 11, 2024, GLP completed its acquisition of the land on which we will build the permanent casino (as provided in the Binding Term Sheet), and we entered into an amendment to the existing land lease with GLP (as the new landlord) to reflect certain provision of the Binding Term Sheet. The Binding Term Sheet further provides that GLPI will enter into a new master lease agreement with Bally’s Chicago Operating Company, LLC (“Chicago MLA”). The amended ground lease with GLP includes, and the Chicago MLA will include, 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 will be for 15 years with renewal options to be agreed upon by the parties.
Lessor
The Company leases its hotel rooms to patrons and records the corresponding lessor revenue in “” within our consolidated statements of operations. For the years ended December 31, 2024, 2023, and 2022, the Company recognized $148.7 million, $200.7 million and $153.8 million of lessor revenues related to the rental of hotel rooms, respectively. Hotel leasing arrangements vary in duration, but are short-term in nature.
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.