Good morning and welcome to the Bally’s Fourth Quarter 2020 Year End Earnings Conference Call. [Operator Instructions] I’d now turn the call over to Craig Eaton, Executive Vice President and General Counsel. Please go ahead.

Good morning, everyone and thank you for joining us on today’s call. By now, you should have received a copy of our Q4 and full year 2020 earnings release issued earlier this morning. If you haven’t, the earnings release and presentation that accompanies this call are available in the Investor Relations section of our website at www.ballys.com under the News and Events and Presentations tabs. With me on today’s call are George Papanier, our President and CEO; Steve Capp, our Chief Financial Officer; Marc Crisafulli, our Executive Vice President of Strategy and Operations; Phil Juliano, our Marketing Officer; Joe McGrail, our Chief Accounting Officer; and Adi Dhandhania, our Vice President of Strategic Transactions and Interactive Development. Before we begin, we would like to remind everyone that comments made by management today will contain forward-looking statements. These forward-looking statements include plans, expectations, estimates and projections that involve significant risks and uncertainties. These risks are discussed in the company’s earnings release and SEC filings. Actual results may differ materially from the results discussed in these forward-looking statements. During today’s call, management will refer to certain non-GAAP financial measures. Reconciliations to the most comparable GAAP financial measures are included in the schedules contained in our earnings release. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to project special charges with certain expenses. Today’s call is also being broadcast live on our investor site and will be available for replay shortly after the completion of this call. I will now turn the call over to George. George?

Well, thank you, Craig. Good morning, everyone and thanks very much for joining us. We are extremely excited to take this time to recap the fourth quarter and 2020 as a whole and provide some additional color on several of the recent announcements that we have made. Since our last call, we have continued to make significant progress across our strategic growth initiatives. We have a lot to discuss. So we’ll get right into it. I want to start by commenting on incredible and transformative year 2020 was for our company through the various strategic acquisitions and partnerships that we have announced, we continued our evolution from a single property operator in Rhode Island to a leading national player with soon to be 15 casino properties across 11 states, and a significant mobile and online presence. Our primary goal is to continue to work to become the premier, truly integrated omnichannel U.S. gaming company with a B2B2C business model, and we feel that we have taken the necessary steps to best position the company to achieve that target. To start, we have continued to adapt and adjust to what are very dynamic and unpredictable market conditions as a result of the COVID-19 pandemic. For a period of time this year, all of our properties were shutdown in accordance with CDC guidelines. We took this time to evaluate our operations, and we believe that many of the efficiencies we were able to realize as a result of the shutdown are sustainable over the long-term and will result in improved profitability for our properties going forward. While we had been operating at some level with still limited capacity across our entire properties in the third and early fourth quarter, the second wave of COVID restrictions forced us to close our Twin River…

Thanks, George and good morning everyone. Of the many exciting projects and initiatives that George mentioned, I want to focus first on our newly formed Bally’s Interactive division. As we announced on November 18, in conjunction with our acquisition of Bet.Works, Bally’s is forming two distinct operating divisions, Bally’s Casinos, which will be comprised of our physical gaming and entertainment properties; and Bally’s Interactive, which will include new and exciting contracts for sports betting and iGaming. Since this announcement, we have made significant progress towards launching our interactive division, even as we await a regulatory approval for the Bet.Works acquisition, which we currently expect will be in the second quarter. As George mentioned, on January 18, we announced the acquisition of Monkey Knife Fight, the fastest growing daily fantasy sports site in North America in an all-stock transaction. After the closing of this transaction, which we expect will happen later this month, Monkey Knife Fight will provide our Interactive division with market-leading fantasy sports content and a brand whose player database can be developed and leveraged to support the launch of our sports betting and iGaming operations. Daily Fantasy is a high-growth element in what is a rapidly expanding industry and adds another layer of differentiation to our omni-channel approach. Additionally, on February 8, we completed the acquisition of SportCaller, a leading global B2B free-to-play game provider. SportCaller will enable us to launch our own suite of free-to-play games this year and will generate excitement for our Bally Bet sports betting app, which we anticipate launching in the second quarter. SportCaller will also expand our geographic presence internationally as they have more than 100 games in over 20 languages and over 30 sports across 37 countries. The addition of these two platforms serves as the foundation of our Interactive division,…

Marc, thank you. First, just a bit of a deeper dive into our results from the fourth quarter, as George mentioned, we were forced to close our two Rhode Island properties in December. This 3-week shutdown adversely impacted gross gaming revenue for the quarter as numbers were off by approximately 80% in December year-over-year. That’s a pretty big hit. When compared to our strong October performance, the closure impacted our results by approximately $8 million to $9 million of EBITDA just in Rhode Island. However, with this shutdown now behind us, as George mentioned, there are some very strong signs of new strength starting so far in Q1. However, our Southeast and West segments were once again particularly strong performers for the quarter even with the hurricane disruption, George noted, with Hurricane Zeta. Shreveport, which acquisition closed on December 23, was actually a contributor, providing nearly $1 million of adjusted EBITDA in our 8 days of ownership at the end of the year. Also, as mentioned by George, we also acquired Bally’s Atlantic City in the fourth quarter. Historically, the second and third quarters are the strongest quarters due to increased visitation and traffic in the spring and summer months, which we expect to help offset some of the softness we experienced in the fourth quarter following the closing of that acquisition. Net income in the fourth quarter of 2020 on a GAAP basis was $20.2 million, an increase of $6.9 million from net income of $13.4 million in the fourth quarter last year. Income in the quarter was impacted by several large one-time non-operating charges and income items. Notably, bargain purchase gains totaling $63.9 million which were recorded on the company’s Q4 2020 acquisitions of Bally’s Atlantic City and Eldorado Shreveport; a noncash charge associated with the accounting for…

Well, thank you Steve. 2020 was truly a pivotal year for Bally’s and we were very excited about what’s in store for 2021 and beyond. With that, I will now ask the operator to open it up for questions.

[Operator Instructions] Your first question comes from the line of Barry Jonas with Truist Securities.

Hey, guys. Good morning. I just wanted to start with Interactive can you talk about sort of timing before we will see a full launch? And once we are up and running, how should we think about the ramp?

Thanks, Barry. I am going to turn this over to Marc.

Good morning, Barry. So what you should think about in terms of Interactive for us is as you saw in the release, we are now going to close on Bet.Works. It looks like it will be towards the end of the second quarter of the year. And so we will focus on ramping up in the states that they are in first. So, there are four of them. It’s New Jersey, Colorado, Iowa and Indiana and we will be targeting getting all of those rolling in the second half of 2021.

Okay, great. And then once you are up and running is this sort of – what are sort of expectations in terms of how you will build up market share? Do you think you will kind of hit the ground running or more of a slower pace?

Look, it’s a little hard to tell right now until we get it closed and up and running, but obviously, we want to make sure we are building it properly for the long-term. So we have to see how those initial launches go and then we will start to layer in additional states beyond that. So you can expect a pretty ambitious program through 2022 as we bring all of those assets online.

Great. And then just with Sinclair, can you just maybe help us understand how you think about risks around cord cutting, maybe just walk through sort of the streaming or interactive strategy beyond just TV?

Yes. So let me just take a step back on Sinclair. I think it’s helpful. Look, Sinclair is the largest owner of sports rights in America. Over time, we believe it will grow and it will make sense for a scaled player to negotiate on behalf of the industry. As the sports industry recovers from COVID and as we start having a full calendar of sports, we expect a recovery and think of the RSNs that Sinclair has as an important component for us to execute our vision. When we did our deal with Sinclair, the diamond bonds were trading at a significant discount, and we structured the deal accordingly to plan for a contingency across other assets owned by Sinclair. Look, we are pleased with the commitment of our partner and have a plan to capitalize on the gamification opportunity with all of their assets. Furthermore, as you may be aware, we signed our deal with the parent company and still believe that there is significant opportunity to capture value. Barry, you can anticipate are starting to rollout all of the platform renaming in the second quarter, it will start early second quarter and we are pretty excited about how that’s going to work.

Great, thanks. Thanks so much.

Your next question comes from the line of Jordan Bender with Macquarie.

Thanks for taking my question. On the call you hosted following the Sinclair and Bet.Works partnerships, you felt comfortable with the conservative 10% market share. With the NHL, Monkey Knife Fight and SportCaller, do you see upside to that 10% number on a run rate basis?

I’m going to leave that with Marc.

Yes, we’re not going to make any change to how we’re thinking about it right now. These are all moves that we had anticipated. Obviously, Monkey Knife Fight and SportCaller weren’t specific moves, but they are all part of our broader strategy to make sure we have all of the different products that we need to offer a full suite of options to our customers. So I wouldn’t anticipate any changes in how we’re thinking about things right now. We’re just continuing to build out our strategy to make sure we control technology and have all the products we need so that we can innovate and bring everything to life. So I wouldn’t be making any changes on any of that yet.

Okay. And then turning to the Virginia Casino, can you talk about possible financing for the project, would you be open to using a REIT? And then what is the ideal opco/propco structure for the total company? Thank you.

Steve, do you want to handle that?

Yes. Let me take the second one first. In terms of optimal opco/propco, listen, we don’t have a number in mind necessarily. We intend to be opportunistic in the use of our unencumbered real estate on a go-forward basis. Look, we’re not going to – I don’t think we’re going to embrace the 100% opco model anytime soon. Rather, we’ll use real estate selectively here and there so that a portion of the real estate portfolio is used for financing purposes. We think a more moderate approach there in – combined with the traditional – more traditional capital structure makes a bit more sense. And one of the reasons for that, quite frankly, is when you look at the credit markets, we believe that a portfolio that’s grounded in real assets is relatively more attractive to the secured and the unsecured credit markets alike and that over time, will provide returns in terms of cost of capital that makes sense in that regard. So very moderate on that side and then – sorry, what was the – repeat the question on Virginia, again, once more, would you please?

Yes. You kind of covered it there. I was just asking on the possible financing behind that project?

Yes. Listen, that one and Pennsylvania, as a matter of fact, we’re kind of eyes wide open right now. In projects that are jointly owned, sometimes it’s just cleaner to kind of straight project finance those. So you might see an off-balance sheet financing there, depending on credit markets, project financing market conditions kind of come and go, but given common – given multiple ownership or I should say, non-wholly-owned ownership there, we might look to straight project finance one or both of those. Your question about REITs remains a possibility. And then, of course, there is always a possibility of bringing it on balance sheet and doing it that way. So we are kind of looking at those three angles on both of those properties, as a matter of fact.

Okay. And then one more here, I don’t know if I missed it. Do you give a CapEx – growth CapEx number for the year, I know there is a couple of moving parts with some of these projects?

Well, we mentioned for the year we might spend upwards of about $25 million – look, it all depends on markets reopening post-COVID, of course. So don’t quote us on this, but our expectations are, we might spend upwards of $25 million to $30 million in Atlantic City kind of towards the back end of the year, again, depending on COVID limitations being lifted. We do intend to break ground in Kansas City in the kind of the May-June time frame. That’s a $40 million project. You’ll probably see a good portion of that $40 million spent this year. And then as Marc outlined regarding the Lincoln, that CapEx is dependent upon the legislature passing the IGT contract for us. And so that’s a bit of a binary kind of go, no-go on that project. But we expect that will get done in the next month or two, as mentioned and so probably in the neighborhood of $20 million to $30 million of CapEx later this year at that project as well. That’s about it for the growth project CapEx on the brick-and-mortar side for 2021.

Perfect. Thanks for all the answers. I’ll pass it off.

Thank you.

Your next question comes from the line of Brett Andress with KeyBanc Capital.

Hi, good morning.

Hi, Brett.

Marc, hoping you could – good morning – hoping Marc, you would show little bit more light on the timing of the rollout of the 4 states. I think you said the second half, but is that something before football season? Just any more details on what you expect there?

Yes. Look, you’ll definitely see some before football season. But until we actually get the acquisition of Bet.Works closed, it’s really hard to get into that level of granularity. We’re obviously working on things already. So you would expect to see at least some of them open before football season, and we’ll have more of an update for you once we get the closing done of Bet.Works.

Got it. Okay. And then as you think about Monkey Knife Fight, one, how quickly can you start to leverage that business once you close it on the RSN ecosystem there? And then secondly, how does that business in SportCaller fit into the bigger free-to-play customer acquisition strategy? Maybe what I’m trying to get at is, more specifically, how additive do you think these products could be to that $40 million database?

So it’s a good question. I’m going to turn this over to my colleague, Adi Dhandhania, who’s our VP of Strategy and Interactive, and he can provide a little more color on that for you.

Sure. Thank you for the question. So as it relates to Monkey Knife Fight, we feel pretty optimistic that we have a pathway to use their content and leverage their content across Sinclair’s assets, be it on the digital side and/or doing something with them on the linear side as well. As it relates to SportCaller and Monkey Knife Fight and how we think about the database is, look, for us, this is a top of funnel opportunity. When we think about free-to-play in SportCaller, it helps us build that top of funnel customer database that we could eventually convert to real money sports betting. What DFS and Monkey Knife Fight had offer to us is the opportunity to build the database in states we don’t currently operate in or are not legalized. And what we’ve seen with peers in our industry is, that’s a great way to cross over and sell to the real money platform. So we have now a massive portfolio that has a free-to-play DFS, if someone wants to use skill and then you have real money sports betting just to convert the funnel and get them onto the Bally’s bet platform.

Got it. Okay. And then if I could squeeze one more. It does seem like the casino business improved here, January, February. Just hoping you could put some numbers around that, maybe more focused on Rhode Island or any property you want to highlight? If you just give us any sense of maybe property level margins here, just trying to frame up some kind of 1Q kind of margin run rate for the business as things start to reopen?

Steve, do you have – are we that granular with numbers in January, February? I know we are talking top line.

Yes. Look, we’re not ready to let go much granularity there, George. Look, what we’ve got for you at this point is kind of the overarching commentary that the market indications and our preliminary book closings have the business turning around rather handsomely in January and February. But stay tuned, more detail, love to come later, but we’re feeling very good about the strength of the business so far this quarter.

And I’ll just add one thing to that. We are maintaining the improvement in margins that we’ve seen coming out of the reopening for the most part. So we’re happy – we’re glad to see that.

Alright. Thanks for the color.

Thanks for the questions.

Your next question comes from the line of John DeCree with Union Gaming.

Good morning everyone. Thanks for taking my questions. If I could try one more time at asking the last question perhaps a little differently, Steve or George, not sure if you can provide a little bit more anecdotal color when you think about the reopening of Rhode Island relative to the reopening earlier in 2020, any comparison and similarity? Is it has consumer demand been similar on return? Obviously, some seasonality might be in play there, but if you can kind of compare it to the last opening or reopening?

It’s much – well, we’re focused on Rhode Island, it significantly improved over the reopening right after COVID. And it’s actually been the strongest so far quarter of the year, I’ll say. So – and you could just look at top line in the state once we came out of the 21-day closure. January continued the trend of October, but actually a little bit better. And in February, other than the impact of weather, because we had that kind of train event of weather through that 10-day period of time, the trend for the days that were not impacted by weather in February were consistent with the trend line in January. So we’re feeling good about that.

Yes. John, this is anecdotal, but it appears that George’s comments are supported by an increasing level of comfort with our customer base around the vaccine, and we’re seeing – we’re just seeing stronger numbers.

Thanks, Steve. That’s great additional color. I appreciate that. And if I could ask one question on plans for future market access, you have kind of taken two approaches so far, I think one market access agreement and then announced a project in Pennsylvania as well as Richmond, which appears to be kind of a stand-alone investment. But when you think about going forward, can you talk a little bit about the strategy of market access? Will you look to do more kind of asset-light market access agreements? Could we see some more opportunistic M&A on the land-based side? And in addition to kind of how you will approach it, any sense of timing or how ambitious you might want to be in adding states, realizing that maybe it’s a back half of the year where you really start to launch and already have a couple of states to go. So your strategy on market access going forward and how aggressively you will pursue selling out the map?

Sure. So we’re going to continue to be opportunistic. We’ll always continue to look for avenues of access for sports betting and iGaming through bricks-and-mortar as well as what you mentioned, the license applications to open states. So there is opportunity there. And in addition to that, we’re going to continue to look for complementary technologies, platforms that we could add that will complement sports betting and iGaming. A good example of that is the acquisitions of Monkey Knife Fight and then SportCaller, so yes, we’re going to – the opportunity is there, we’re looking for access, and we’re going to try and capitalize on that.

Thanks, George. Thanks everyone and congratulations on a very busy and successful year.

Thank you.

Thanks, John. Appreciate it.

Your next question comes from the line of Jeff Stantial with Stifel.

Hey, great, thanks. Good morning everyone. So you completed the rebrand to the Bally’s back in early November. Just curious, now you’re in a couple of months in, do you have any updated thoughts on how you plan to leverage the brand moving forward? Have you done any survey work on kind of brand awareness with your database or anything like that? Just anything you could share there would be helpful?

Sure. So Marc, I’m going to pass this over to you.

Yes, happy to do it. Yes. Look, we’ve made a lot of progress since we announced the acquisition in November. We are almost done with all of our work, and you can expect in the second quarter to start to see significant heavy activity around rebranding most of our assets. On the land-based side, we’re getting ready to launch the renaming of the Fox Sports assets that Sinclair has into Bally’s Sports. So we’re pretty excited about that. It’s all moving along pretty nicely. If you can just kind of monitor things over the next 60 days, you’ll start to see the tangible progress from it.

Okay. Great, thanks. Helpful. And then just switching gears over to the Interactive side, look, we talk a lot about the omni-channel approach and kind of that synergistic impact of offering both retail and online gaming in a given market. And I know it’s – I realize it’s still early days here as we are coming up on the app rollout. But I wanted to just get your thoughts on how you see that advantage playing out relative to call it your strictly online peers? Any parameters you could provide around that would be helpful, whether in terms of expectations around relative ADTs and markets with versus without online and cross-selling opportunities, to and from the casino, really anything you have there would be helpful?

That’s a really loaded question, and so I’ll turn it over to Adi, and he’ll try and touch on some parts of it.

Sure. Thank you for the question. I think, look, the way to think about this is we have a multi-pronged approach. So you’re right, we have casino databases in states we operate our own casino. So we will be marketing to that database. The other thing to think about is the relationship with Sinclair gives us access to a variety of assets, right? We touched on the Regional Sports Networks, which will be renamed to Bally’s Sports net going forward. We also have access to their broadcast TV stations that penetrate roughly 70% of the U.S. households. We also get tennis channels and multi-platform assets such as stadium and OTT platforms. So thinking about all of the different assets that we have with our database and the reach and distribution we get from Sinclair, you can expect us to come up with integrated content and gamified content as we rollout our Bally’s bet platform.

Okay. Great, thanks, that’s helpful. Appreciate the color everyone.

Thanks, Jeff.

Your next question comes from the line of Lance Vitanza with Cowen.

Hi. Thanks for taking the questions. Maybe just one on the bricks-and-mortar business and then one on the interactive side if I can, on the first question, on Slide 16, in your deck, you have the post-COVID pro forma EBITDA run rate of $331 million. I think you’ve had that out there before. But my question is, could you bridge from the $300 million pro forma number in 2019 to the $331 million post-COVID? I mean they are both pro forma. So I assume it’s not the additional properties. So is that just – well, I’ll let you tell me what that is? Thanks.

Yes, Steve, could you handle that? Yes.

Yes. Lance, what’s the first number you look at? You’re looking at 2019...

The $300 million going to a post-COVID run rate of $331 million.

Yes. Listen, the ‘19 number was all of those properties, historically, to the extent we had that – to the extent we had that data, more of an actual representation in a pre-COVID environment and so we used that as the starting point or the step off point, if you will, for a post-COVID pro forma management expectation. Included in that $331 million, Lance, there is the impact of some of the CapEx initiatives that we have talked about on this call, but not all of them because some of them are a little longer in the tooth, if you will. So hence our commentary that, that number is – we consider that to be kind of middle of the road. Meaning that there is upside in this portfolio, we believe, in a post-COVID world, well into the mid-$300s million on a post-CapEx basis?

And I guess, is it fair to assume that some of that improvement is also just from – George, you talked about being able to maintain – or maybe it was usually – you talked about being able to maintaining the margin improvements even as the traffic comes back as we put some distance between COVID?

Yes. Well some of those. George commented on this in his comments earlier. Not necessarily all of them, Lance, because, look, when the – in a post-COVID world, assuming competitiveness starts to ramp up again, we’re likely to see some pressure on the marketing spend. But as it relates to labor savings and other cost initiatives we’ve gotten smarter about, yes, we intend to carry those forward.

Okay, thanks. And then just on the interactive side. I don’t know that I’ve ever seen a company in top so much in such a short period of time in terms of all of the partnerships and acquisitions that you’ve announced. As you think about going forward from here, should we expect additional acquisitions or partnerships or do you think you’ve got the right asset mix at this time? We’ve certainly gotten to a point where we sort of pause on that part of the growth?

Lance, I touched on that a little bit earlier. So yes, we’re going to continue to look for complementary technologies and platforms. So anything that we feel is going to complement our efforts for sports betting. And ultimately, iGaming will continue to bring on and into the company.

So full speed ahead there.

Yes.

Okay, great. With respect to the Bet.Works piece, initially that was expected to close in the first quarter. Now it sounds like it’s the end of the second quarter. Just wondering why the delay? And is there anything we should be concerned about given that delay, either from a regulatory or a diligence standpoint?

Marc, do you want to handle that?

Yes. Yes, absolutely, no concern at all. Nothing has changed. We’re just going through the regulatory process. That’s going very smoothly. We’re really – we’re just focused on Indiana right now. That’s kind of the last place we need to get done. And in the Indiana Gaming Commission, they have a lot of things going on. They have been wonderful to work with, but they meet only once a quarter. And this has essentially been lumped in for approval it appears with our acquisition of the Tropicana Evansville. So we’re kind of targeting the June, Indiana Gaming Commission session to have both considered at the same time.

Thanks very much. Appreciate it.

Thanks, Lance.

We have reached the allotted time for questions. I will now turn the floor back over to George Papanier for any additional or closing remarks.

Well, thank you, everyone. We’re looking forward to continuing into an impressive 2021. And I want to thank you for joining our call today.

This concludes today’s Bally’s fourth quarter 2020 earnings call. Please disconnect your lines at this time, and have a wonderful day.