Bally's Corp

17. STOCKHOLDERS’ EQUITY

Capital Return Program

The Company has a Board of Directors approved capital return program under which the Company may expend a total of up to

$700 million for share repurchases and payment of dividends. Future share repurchases may be effected in various ways, which

could include open-market or private repurchase transactions, accelerated stock repurchase programs, tender offers or other

transactions. The amount, timing and terms of any return of capital transaction will be determined based on prevailing market

conditions and other factors. There is no fixed time period to complete share repurchases. As of December 31, 2025

(Successor),$95.5 million was available for use under the capital return program.

There was no repurchase activity during theperiod from February 8, 2025 to December 31, 2025 (Successor), period from

January 1, 2025 to February 7, 2025 (Predecessor) or year ended December 31,2024 (Predecessor).

No cash dividends were paid during theperiod from February 8, 2025 to December 31, 2025 (Successor), period from January

1, 2025 to February 7, 2025 (Predecessor) or year ended December 31,2024 (Predecessor). As of December 31, 2025

(Successor), the Company does not intend to pay dividends on its common stock for the foreseeable future. Any future

determinations regarding the Company’s dividend policies will be at the discretion of the Board and will depend on then-

current conditions, including the Company’s financial condition, results of operations, contractual restrictions, capital and

regulatory requirements and other factors the Board deems relevant.

Preferred Stock

The Company has authorized the issuance of up to 10 million shares of$0.01 par value preferred stock. As of December 31,

2025 (Successor) and 2024 (Predecessor), no shares of preferred stock have been issued.

Shares Outstanding

As of December 31,2025 (Successor), the Company had 48,524,809 common shares issued and outstanding. The Company

issued warrants, options and other contingent consideration in acquisitions and strategic partnerships that are expected to result

in the issuance of common shares in future periods resulting from the exercise of warrants and options or the achievement of

certain performance targets. These incremental shares are summarized below:

Accumulated Other Comprehensive Loss

The following table reflects the change in accumulated other comprehensive loss by component:

(1)Reclassifications from accumulated other comprehensive (loss) income during the year ended December 31, 2024 (Predecessor) to earnings includes the

foreign currency translation adjustment of$(4.7) million released related to the Company’s sale of the Carved-Out Business (refer to Note 3 “Related

Party Transactions” for further information).

(2)Reclassifications from accumulated other comprehensive (loss) income during the year ended December 31, 2024 (Predecessor) to earnings includes

$9.1 million released as a result of de-designating a EUR-GBP cross currency swap related to the Company’s sale of the Carved-Out Business (refer to

Note 3 “Related Party Transactions” for further information).

(3)As of December 31, 2025 (Successor), approximately$16.9 million of existing gains and losses are estimated to be reclassified into earnings within the

next 12 months.

18. INCOME TAXES

The components of income (loss) before taxes are as follows:

The components of the provision (benefit) for income taxes are as follows:

A reconciliation of the provision for income taxes to the amount computed by applying the 21% US federal income tax rate to

income (loss) before income taxes after the adoption of ASU 2023-09 is as follows:

(1)The state and local jurisdictions that contribute to the majority of the tax effect in this category for theperiod from February 8, 2025 to December 31,

2025 (Successor) include Delaware, Illinois, Louisiana, Mississippi, Missouri, Kansas City (Missouri), and Pennsylvania.

(2)The state and local jurisdictions that contribute to the majority of the tax effect in this category for theperiod from January 1, 2025 to February 7, 2025

(Predecessor) include Rhode Island, Illinois and Indiana.

A reconciliation of the effective rate to the statutory US federal tax rate before the adoption of ASU 2023-09 is as follows:

Significant components of the Company’s deferred income taxes are as follows:

The Company does not reinvest undistributed earnings, and accordingly, the Company has determined that no deferred tax

liability is required for undistributed foreign earnings as of December 31, 2025 (Successor) and 2024 (Predecessor). In addition,

the Company has recorded a deferred tax liability to other comprehensive income related to the translation of the financial

statements of foreign subsidiaries as of December 31, 2025 (Successor) and will continue to monitor for future changes.

The Company’s deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets

and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company will only recognize

a deferred tax asset when, based on available evidence, realization is more likely than not. The Company has assessed its

deferred tax liabilities arising from taxable temporary differences and has concluded such liabilities are not a sufficient source

of income for the realization of deferred tax assets, including indefinite life taxable temporary differences which offset, subject

to limitation, deferred tax assets with unlimited carry overs, such as the Section 163(j) interest limitation. Accordingly, a$275.1

million and$234.6 million valuation allowance has been established as of December 31, 2025 (Successor) and 2024

As of December 31, 2025 (Successor) there was$217.3 million of federal net operating carryforwards subject to a section 382

limitation with an unlimited carryforward period, and$590.1 million of state net operating loss carryforwards, which expire at

various dates through 2045.

The Internal Revenue Code (IRC) Section 382 provides for a limitation of the annual use of net operating loss and tax credit

carryforwards following certain ownership changes (as defined by the IRC Section 382) that limits the Company’s ability to

utilize these carryforwards prior to expiration. Section 382 can also apply when we acquire subsidiaries with net operating loss

carryforwards, as there may be limitations on the use of acquired net operating losses against our taxable income.

From time to time, the Company may be subject to audits covering a variety of tax matters by taxing authorities in any taxing

jurisdiction where the Company conducts business. While the Company believes that the tax returns filed and tax positions

taken are supportable and accurate, some tax authorities may not agree with the positions taken. As of December 31, 2025

(Successor), there was$20.6 million tax contingency accruals and deferred tax asset reductions for uncertain tax positions, of

which$18.1 million would impact the effective tax rate, if recognized. This can give rise to tax uncertainties which, upon audit,

may not be resolved in the Company’s favor. A reconciliation of the beginning and ending balances of the gross liability for

uncertain tax positions is as follows (in thousands):

The Company records interest and penalties related to uncertain tax positions as a component of the income tax provision

(benefit). The Company has reserved interest and penalties on uncertain tax positions of$0.8 million as of December 31, 2025

(Successor). The Company has reserved interest and penalties on uncertain tax positions of$1.0 million as of December 31,

2024 (Predecessor). The Company has recorded a$0.2 million benefit for interest on uncertain tax positions on the consolidated

statements of operations for theperiod from February 8, 2025 to December 31, 2025 (Successor). The Company has recorded a

$0.3 million provision for interest on uncertain tax positions on the consolidated statements of operations for the year ended

December 31, 2024 (Predecessor).

The Company and its subsidiaries file tax returns in several jurisdictions including the US and various US state and foreign

jurisdictions. The Company remains subject to examination for US federal income tax purposes for the years ended December

31, 2015 through 2025 (Successor), as a result of a 2020 net operating loss carryback claim. The Company remains subject to

examination for state and foreign income tax purposes for the years ended December 31, 2014 through 2025. The Company

settled the appeal of its audit by the State of Colorado during theperiod from February 8, 2025 to December 31, 2025

(Successor). In addition, the disallowance of a loss carryforward generated in a period outside of the normal statute of

limitations is generally open until the statute of limitations expires in the year of the utilization of the loss.

Income taxes paid, net of refunds received were as follows:

During the period from January 1, 2025 to February 7, 2025 (Predecessor), cash received from income tax refunds was$0.1 million in the

State of Delaware.

Cash received from income tax refunds, net of cash paid was$2.2 million during the year ended December 31, 2024

(Predecessor).

19. COMMITMENTS AND CONTINGENCIES

Litigation

The Company is a party to other various legal and administrative proceedings which have arisen in the ordinary course of its

business. Estimated losses are accrued for these proceedings when the loss is probable and can be estimated. The current

liability for the estimated losses associated with these proceedings is not material to the Company’s consolidated financial

condition and those estimated losses are not expected to have a material impact on results of operations. Although the Company

maintains what it believes is adequate insurance coverage to mitigate the risk of loss pertaining to covered matters, legal and

administrative proceedings can be costly, time-consuming and unpredictable.

Although no assurance can be given, the Company does not believe that the final outcome of these matters, including costs to

defend itself in such matters, will have a material adverse effect on the company’s consolidated financial statements. Further, no

assurance can be given that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from

such matters.

New York Conveyance Agreement

On November 17, 2025, the Company entered into a Conveyance Agreement (the “Conveyance Agreement”) with the City of

New York (the “City”) and Bally’s New York Operating Company, LLC, a Delaware limited liability company and a

subsidiary of the Company (“Bally’s New York”). Pursuant to the Conveyance Agreement, the City agreed to (i) dispose of

certain parkland property interests to Bally’s New York (the “Development Parcel”), (ii) alienate certain parkland in order to

grant Bally’s New York a non-exclusive easement over such lands for purposes of accessing the Development Parcel and (iii)

discontinue certain lands as parkland and alienate and transfer jurisdiction of such lands to the City’s Department of

Transportation for use as public roadways (the “Ring Road Parcel”) to facilitate access to the Development Parcel and so the

Development Parcel may be used by the Company for a gaming facility.

The closing of the transactions contemplated by the Conveyance Agreement occurred in February 2026 and was contingent

upon, among other things, (i) Bally’s New York’s agreement to (a) make certain capital improvements to Ferry Point Park in

the Bronx, NY with a fair market value of approximately$161 million and (b) to deliver security instrumentsto the City to

secure the performance and completion of such capital improvements, (ii) the Company being awarded a downstate gaming

facility license from the New York State Gaming Commission, (iii) payment by Bally’s New York to the City’s Department of

Parks & Recreation of an administrative fee in the amount of$1 million, (iv) Bally’s New York’s agreement to pay for all costs

and expenses for the development and mapping of the Ring Road Parcel and (v) Bally’s New York’s payment of real property

transfer taxes with respect to the transactions contemplated by the Conveyance Agreement.

New York Gaming License Commitments

In December 2025, the Company was awarded one of New York State’s three downstate commercial casino licenses for its

planned Bally’s Bronx project, requiring the Company to pay a$500 million license fee, which was paid in the first quarter of

2026, as well as post a bond or cash deposit equal to 5% of the total project investment. The Company must also implement its

community benefit commitments, including periodic public reporting, and engage an independent Compliance Monitoring

Team approved by the New York State Gaming Commission to oversee regulatory, anti‑money‑laundering, and

community‑benefit compliance.

Capital Expenditure Commitments

Bally’s Twin River - Pursuant to the terms of the Regulatory Agreement in Rhode Island, the Company is committed to invest

$100 million in its Rhode Island properties over the term of the master contract through June 30, 2043, including an expansion

and the addition of new amenities at Bally’s Twin River. As of December 31, 2025 (Successor), approximately$40.5 million of

the commitment remains.

Bally’s Chicago - Pursuant to the Host Community Agreement with the City of Chicago, the Company’s indirect subsidiary is

required to spend at least$1.34 billion on the design, construction and outfitting of the temporary casino and the permanent

resort and casino. The actual cost of the development may exceed this minimum capital investment requirement. In addition,

land acquisition costs and financing costs, among other types of costs, are not counted toward meeting this requirement. As of

December 31, 2025 (Successor), approximately$800.0 million of this commitment remains.

Bally’s New York - As noted above pursuant to the Conveyance Agreement, Bally’s New York must spend$161 million in

capital improvements to Ferry Point Park to be completed within 7 years after closing.

City of Chicago Guaranty

In connection with the Host Community Agreement, entered into by Bally’s Chicago Operating Company, LLC (the

“Developer”), a wholly-owned indirect subsidiary of the Company, the Company provided the City of Chicago with a

performance guaranty whereby the Company agreed to have and maintain available financial resources in an amount reasonably

sufficient to allow the Developer to complete its obligations under the Host Community Agreement. In addition, upon notice

from the City of Chicago that the Developer has failed to perform various obligations under the Host Community Agreement,

the Company has agreed to indemnify the City of Chicago against any and all liability, claim or reasonable and documented

expense the City of Chicago may suffer or incur by reason of any nonperformance of any of the Developer’s obligations.

Bally’s Chicago Casino Fees

Under the Illinois Gambling Act, the Company will be responsible to pay the Illinois Gaming Board a reconciliation fee

payment three years after the date operations commenced (in a temporary or permanent facility) in an amount equal to 75% of

the adjusted gross receipt (“AGR”) for the most lucrative 12-month period of operations, minus the amount equal to the initial

payment per gaming position paid.

Performance and other bonds

Certain contracts require the Company to provide a surety bond as a guarantee of performance for the benefit of customers.

These bonds give beneficiaries the right to obtain payment and/or performance from the issuer of the bond if certain specified

events occur. In the case of performance bonds, such events include the Company’s failure to perform its required obligations

under the applicable contracts. In general, the Company would only be liable for these guarantees in the event of breach of its

obligations and failure to perform under each applicable contract, which the Company determined is not probable. Accordingly,

no liability has been recorded as of December 31, 2025 (Successor) and 2024 (Predecessor) related to these bonds.

Sponsorship Commitments

As of December 31, 2025 (Successor), the Company has entered into multiple sponsorship agreements with various

professional sports leagues and teams. These agreements commit a total of$114.9 million through 2036 and grant the Company

rights to use official league marks for branding and promotions, among other benefits.

Interactive Technology Commitments

The Company has certain multi-year agreements with its various market access and content providers, as well as its online

sports betting platform partners, that require the Company to pay variable fees based on revenue, with minimum annual

guarantees. As of December 31, 2025 (Successor), the cumulative minimum obligation committed in these agreements is$32.1

million through 2029.

Collective Bargaining Agreements

As of December 31, 2025 (Successor), the Company had approximately 11,700 employees. A large number of our employees at

our Casinos & Resorts properties within several US states are represented by a labor union and are subject to collective

bargaining agreements with us. As of December 31, 2025 (Successor), the Company had 36 collective bargaining agreements

covering approximately 3,679 employees. All collective bargaining agreements are in good standing and most have been

renegotiated with terms between three andfive years. There can be no assurance that we will be able to extend or enter into

replacement agreements. If the Company is able to extend or enter into repl acement agreements, there can be no assurance as to

whether the terms will be on comparable terms to the existing agreements.