Good morning and welcome to the Bally’s First 2021 Earnings Conference Call. All participants’ lines have been placed in listen-only mode to prevent any backgrounds noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] I will 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 Q1 earnings release, which we 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, his I our President and Chief Executive Officer; Steve Capp, our Chief Financial Officer; Phil Juliano, our Executive Vice President, Casino Operations and Chief Marketing Officer and Adi Dhandhania, our Senior Vice President of Strategic and Interactive. 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. In addition, 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 within 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’ll now turn the call over to George. George?

Thanks, Good morning, everyone and thanks very much for joining us on a Monday morning. We're extremely excited to take this time to recap a very successful first quarter and provide some additional color on several recent announcements that we've made. I'd like to begin by addressing the significant progress being made in response to the COVID-19 pandemic. We're encouraged by the rate and effectiveness of vaccinations, as well as with the loosening of capacity restrictions and other COVID-19 protocols. We're very much looking forward to continue to safely welcome back our loyal patrons for properties across the country. I’ll also like to take a moment to highlight the incredible efforts of our more than 6000 outstanding employees, have gone above and beyond over the past year to help us not just weather the impact of the pandemic, but to truly thrive and grow as a company despite a challenging operating environment. We greatly appreciate their efforts which serve as the foundation of our success. As reopening process continues to progress across our brick and mortar locations, we are approaching historical operating levels and we're confident that we'll continue to benefit from a strong rebound in demand. Now turning to our first quarter results, the first quarter results reflected encouraging performance as the momentum that began in the third quarter last year, which was temporarily slowed by second wave of COVID restrictions in Q4 to gain traction. So much so that we achieve record adjusted EBITDA of over $50 million for the quarter. Black [ph] positions closed in 2020 helped drive positive results, it is important to note that same store property level EBITDA exceeded our first quarter 2020 performance by more than 80%. We're also pleased to report that adjusted EBITDA margins for the quarter were 27.2%, representing an…

Thanks, George. And good morning, everyone. Since our last call, we've outlined - we've continued to make excellent progress developing and diversifying our Interactive business. I'd like to begin with an update on the overall platform, starting with Bet.Works, that will serve as the anchor asset for the Bally's Interactive division and underpin our mobile sportsbook launches. While we're still awaiting regulatory approval for the acquisition, which we expect will occur next month, we are actively working towards officially launching our Bally Bet.Works sportsbook in our first market Colorado by the end of the month. In addition, the team is working on a roadmap for at least three additional state launches throughout the course of the year. While the focus this year would be to get our product launched with very limited marketing, it will allow us to test and deploy our new product features, along with media integrated across broadcast TV stations, and our recently rebranded Bally sports RSNs. Following these initial launches, we expect we will begin to layer in additional states throughout 2022, while positioning us well in key markets to take advantage of a full sports calendar. In addition to Bet.Works, we've been strategic and acquiring complementary platforms with recent additions of Monkey Knife Fight, the fastest growing daily fantasy sports platform in North America, and SportCaller, a leading global B2B free-to-play game provider. Monkey Knife Fight provides us with market leading fantasy sports content and a brand whose flair database will be developed and leveraged to support the launch of our Bet.Works [ph] platform. SportCaller will enable us to launch our own suite of free-to-play games this year for interactivity within the newly launched Bally sports app, and of Bally sports RSNs. These top of funnel opportunities will allow us to acquire new players at…

Thanks, Adi. I want to start with a quick update on our cash and liquidity. We ended the quarter with cash on hand of right about $150 million. We did recently increase our revolver from $250 million to $325 million, and at the end of the quarter we had $75 million funded under the revolver, the remaining availability is $250 million. That gives us total liquidity of just over $400 million. In addition, we generated cash flow from operations a little over $25 million in the quarter. On the CapEx front. Our approach to maintenance and growth capital investment will continue to be focused and disciplined. For Q1 total CapEx invested was $50 million [ph] of which $7 million was maintenance. That non-maintenance amount the $8 million included just over $4 million of Hurricane damage rebuild at Biloxi, which was covered by insurance proceeds received. On April 20th, we completed our public equity offering of 12.65 million common shares at a price of $55 per share. Total shares issued included 1.6 5 million shares from the full exercise of an over allotment option, proceeds from this offering net of the underwriting discount was $671 million. In addition to that equity raise, we also announced a sale of 909,000 warrants to Sinclair broadcasting for $50 million. We have applied the net proceeds from these equity raises to pre-fund our anticipated combination with Gamesys. With regards to that combination, and as we've said along the way, we intend to maintain optionality as it relates to the ultimate sources of funding and closing capital structure. As part of this process, we continue to discuss a private offering of equity linked securities with a potential strategic investor who made an unsolicited offer some weeks ago. Bear in mind, moderate leverage and abundant liquidity have enabled us to be opportunistic and acquiring assets, securing related financing and growing the company. And so we won't be changing course on those priorities moving forward with Gamesys. As George mentioned, we also announced the expansion of our relationship with GLPI, through the proposed acquisition of the Tropicana Las Vegas. This is our second transaction with GLPI. And once completed, will result in five of our properties being leased from GLPI. While we do remain committed to outright ownership of a good portion of our real estate portfolio, this transaction is another example of our continuing to execute on an opportunistic basis. And of course, we're acquiring an asset on the strip in a debt-free manner with no cash out of pocket. Another recently announced M&A comp new to strip suggests our transaction is a good one. And with that, I'll turn it back to George.

Thanks, Steve. Well, that concludes our prepared remarks for this morning. I will now ask the operator to open it up for questions.

Thank you. [Operator Instructions] Our first question comes from the line of John DeCree of Union Gaming.

Thanks for taking my questions. I had one on Gamesys to start. I think in the prepared remarks, you've discussed possibly getting Bet.Works up and going sooner than perhaps closing. And given the Gamesys is a B2B provider licensed in New Jersey, not sure how UK takeover laws would affect your launch. But could they get started and getting licensed in some of your other states? And could you get started as a B2B relationship in making some progress on the iGaming front as well?

Sure. Adi, why don't you take that?

Sure. Hey, John, thanks for the question. So yeah, look, we are working with our colleagues at Gamesys. They're already licensed, as you mentioned in New Jersey. New Jersey is on our roadmap for states we will be launching and we really looking to partner with them for a launch in New Jersey.

Is there any other states that you could get started on or would the focus just be - just be New Jersey for now?

This is Craig Eaton. Hi, John. Short answer is, no. The transaction needs to be approved regulatorily in multiple states. Obviously Gamesys could on their own get an approval, but we're in that, you know, we're in that transaction phase right now. That being said, we hope to close this strip. We're aggressively pursuing this transaction close.

That's helpful, clarity. And maybe one for Steve, on the financing package, as you kind of rounded out the prepared remarks and talk about your flexibility. You know, we've kind of gotten a lot of questions over the last couple of weeks, as to what that flexibility might look like. And, you know, we see your kind of cash flow generation are model through the back half of the year, as well as Gamesys. So I was wondering if you could help give us a little color on how some of that flexibility might play out in terms of financing, you obviously have GLPI in your back pocket and a possible strategic investor. But as you think about some of the levers that you have to pull between now and potentially closing? That might be helpful.

Yeah. John, look, as you know, we're under 2.7 disclosure rules under UK Takeover Code, we can't go into a whole lot. I can tell you we continue to emphasize the optionality moving forward. Look, there are a lot of moving variables, right, including and the closing date LTM EBITDA. Our business is, as George commented, specifically, in March, but even for the whole quarter of Q1 and continuing into, you know, through April, our businesses is rebounding with considerable strength. Gamesys has reported recent results of similar strength. So the denominator in the cash flow leverage equation is an important piece of the puzzle, right? Because at the closing date that LTM EBITDA will dictate how much leverage we are willing to put on the company. Also cash flow - free cash flow generation, which is a function of that same denominator of LTM EBITDA will be important from sources of funding perspective as well. Look, as well, John, Adi commented about the IGT deal. Well, the IGT deal if it gets passed in Rhode Island, did provide more flexibility to us and our capital structure at the closing date of Gamesys as well. So, you know, the variables floating around are numerous. And that's why we've been talking about optionality. Look, the good news is, the credit markets remain very strong. And we'll need those to consummate the acquisition. And so we're keeping a very close eye there as well. But look, John, it'll be up to about optionality for us and getting the right capital structure with moderate leverage, which we've always maintained. And that'll be our focus, as we look to close the transaction.

Thanks, Steve. Optionality is good. And get the tough ones out early. I'll hop back in the queue. Thanks, everyone.

Thanks, John. Appreciate it.

Thanks, John.

Your next question comes from a line of David Katz of Jefferies.

Hi. This is Cassandra [ph] asking on behalf of David. So I know that there are other things that you would probably need to get market access to, how do kind of balance acquiring properties versus taking ownership.

So I missed the last part. Hi, Cassandra, I missed the last part of your questions.

So in terms of gaining more in market access to state, how do you balance acquiring properties or seeking kind of strategic partnerships with existing operators there?

Sure. So this is more along the lines of sports betting and iGaming. So Adi, I'm going to pass it over to you and talk a little bit about not only kind of relationships, but also, you know, we're looking to enter states right now that have more of an open process, and not necessarily related to access. So we're taking advantage of that as well. But Adi, I turn it over to you?

Cassandra, thank you for the question. Yes, look, we're actively looking at states and regulations as they evolve and legislation as it evolves in different states. As you may have noted, we were able to secure market access both in Virginia and Iowa, two states where we don't have physical casino properties, and a wave of new states are enacting legislation as we speak. And lot of what we're noticing is, states are not tethering these skins and they're open for folks to apply. And we are in those discussions and conversations and monitoring it very closely. Our goal is to get into as many states as possible, and we're aggressively working on that.

Got it. Appreciate it. And if I may add another one. So in terms of cost of customer acquisitions, we've heard other operators provide like various some data points indicating where they are, some like, between like 102 to 600, we've heard. Where do you think you fall on that spectrum?

So I'm going to pass this over to Adi. But I'll just I'll just comment that we have because of the significant portfolio regional assets, we have 50 million people in our database. So the conversion rate of those customers we feel will be a lot less, But I’ll turn the rest of that over to Adi.

Sure. Cassandra, look, we've talked about this at length that we have built very significant top of funnel opportunities. We obviously haven't launched yet, so we don't have explicit guidance as to what the numbers are or will be just yet. But everything we've amassed today from our free-to-play offering to DFS, ultimately converting to our Bally's bet sports betting platform positions us well to have a lower customer acquisition cost and will be seen in the industry, along with the point that George just made around the conversion and cross selling of the casino database. In addition to this, I think it's important to know that our reach through Sinclair and all the different assets they have, both on broadcast TV side, the RSM side, along with the tennis channel stadium and Stir [ph] the OTT platforms, position us extremely well in the marketplace to capture different segments of the population, and target them as we think about customer acquisition in the markets we launch.

Great, thank you very much.

Your next question comes from the line of Barry Jonas of Truist Securities.

Good morning. This is actually Matt Cole [ph] in for Barry. Thanks for taking the question. The two quick ones. Given all the recent deals, how are you guys thinking about for M&A here? Is this more of a focus on land, interactive or anything else you would highlight at this point?

Sure, I'll take that. Well, obviously, we've been very active. We'll continue to be opportunistic. But we're also going to be disciplined as we've been historically. We have a track record of acquiring pro forma of sub seven times multiples, and we're going to continue to look for assets that we feel have upside, as well as give us access to sports betting and potentially iGaming markets. And as Adi mentioned earlier, you know, assets that compliment or sports gaming, or sports betting and iGaming initiatives like Bally fantasy sports and free to play acquisitions, which we just closed on.

And then I had follow up here, just you know, beyond the just branding side of it, I think about how you expect to integrate sports betting or iGaming with a sports watching experience? And how do we think about the key differentiators?

Sure. Adi, do you want to take that?

Sure. So look, just outside of branding, I think it's important that we think about the integrations we get. So if you look at what we announced with Sinclair recently to our MOU, we also have the ability to program non-game windows with content that we think would cross sell well, and or help create our brand when it relates to our sports betting product or any product that the Bally's ecosystem would have. But even with our current deal, we have exclusive rights to the integrations on the RSNs where we have market access, and those integrations from free-game, in-game, post-game, branding, et cetera, that allow us to target our audience with new content offering that helps us gamify the content and keep them coming back and have them stay engaged with us.

That’s it. helpful. Thank you.

Thanks, Matt.

[Operator Instructions] Your next question comes from line of Jeff Stantial of Stifel.

Hey, this actually Jackson Gibb on for Jeff Stantial. Thanks for taking my questions. I wanted to start on the brick and mortar side of the business. I think what everybody's kind of trying to figure out this quarter is how much of the strengths being witnessed in March and April, are truly sustainable versus one-time, given the environment. You called out lack of alternative, entertainment options in the release. But you know, there's also stimulus out there and pent up demand. How do you guys view consumer behavior shifting as we get into the second half of the year? And on the cost side of the business? What do you feel most confident can stay out versus what you would you - what we should expect to come back in? As things sort of normalize a bit?

Sure, I'll take that. Hey, Jackson. So you know, we're certainly benefiting from providing an environment in which your customer feels safe. There's still, as you said, limited amount of entertainment options. But we view it long term that we're going to benefit from the specific considerable exposure that we're getting to a younger demographic, that really, from our perspective, realizes that our facilities - our facilities really provide a lot of entertainment options - a lot of entertainment options. You know, and you had mentioned, and what we're starting to see now, that's even fueling this growth that we're starting to see a return of our older demographic, I'd mentioned earlier, 65 and older, well, that's still substantially less than what we've seen, historically. So we see a lot of upside still, from that perspective. As far as margins are concerned, we’re experiencing about 500 basis points improvement on historical levels, pre-COVID levels. And we really feel that, because we really, were forced to shut down, that allowed us to re-evaluate how we operate. And as we built back to the volumes of business that we're now seeing, we're able to do that more efficiently as a result of that, that we're seeing margins effectively starting to stick from our perspective. We're seeing that in labor. We're seeing that in some cases in marketing. So we think a good portion of this improvement will remain long term. And it just really depends on how other operators or our competitors really react from a marketing perspective. And hopefully, they had a lot, they learned as well as much as we did during this period. And we’ll be rational going forward.

Okay, great. That's super helpful. So for the follow up, I just wanted to switch gears to the online business. So as you think about the marketing and some of the development costs that it's going to take to get to a competitive level, market share here in the United States, should we expect the interaction - the interactive division to be EBITDA negative for significant period of time starting out? Or should we expect some of the more mature Gamesys international operations to compensate or sort of offset the ramp to profitability here in the United States? Just curious how you're thinking about the dynamic between those two?

I'll start and I'll pass it over to Adi. You know, as we said earlier, we're limited to what we can say as a result of the UK Code 2.7 disclosure. But I can tell you, aside from access to Europe, and associated free cash flow that Gamesys does now, it gives us a proven iGaming platform, which we feel is complimentary to our Bet.Works sports betting platform, and it's going to obviously put us in a lead position to capitalize on existing and future expansions of iGaming in the US. And we're looking forward to that. As far as – Adi why don’t you take the B2B from Bet.Works, as well as kind of give a little idea of how we're going to launch in the US.

Sure. Happy to do that. And thanks for the question. Look, I think, we would like to point you to is that we have been very thoughtful in our acquisition and building of the Interactive business. There are certain advantages we have that we think will help us reduce our reliance on heavy marketing spend compared to peers and competitors in the space. One being that we have our own market access in most states. We also have our own proprietary technology stack. And third, we have significant content and media footprint that gives us the impressions that we need to attract an audience. And more importantly, we have the ability to program content on the RSNs where there are millions of viewers today of sports - sports viewers today that we get engaged with and interact with through our content that we put on there.

Got you. All right. Thanks for the detail there. That's it for me.

Your next question comes from a line of Brett Andress of KeyBanc Capital Markets.

Hey. Good morning, guys.

Good morning, Brett.

In terms off the app - good morning. In terms of the app rollout, it still seems like we're going to get the four states by football season this year. But you mentioned additional states in the 2022. So maybe some more clarity on 2022. I mean, how many states could you get or are you targeting before, you know, the Superbowl or March Madness next year?

Adi, do you want to handle that?

Yeah. Thanks for the questions. Look, I think we talked about in our prepared remarks that we will be launching Colorado, which is a first market by the end of the month. We have a current roadmap for at least three more states this year. And we plan to, obviously launch those three states. And if possible, launch more states. Our goal this year, is to get our product out, get it tested with limited marketing, but more importantly, test the integrations that we get across broadcast TV stations, and RSN. So that would position us well, for 2022. So you should think about 2022, as a year where we have the full sports calendar. We would have multiple markets launched in ‘21, that we could expand upon in ‘22. And we would add additional states as either they open up or from our portfolio of market access that we currently hold.

Yeah, okay. Thank you for that clarity. And then just on Atlantic City, I think it did $6.5 of negative EBITDA in the quarter, is there any way to help us with how that property did in March and April, maybe so we can get some kind of better run rate there?

Sure, I'll handle that. So you know, obviously, we actually rushed to acquire this property [indiscernible] before 2020, 2021. So we closed on it kind of earlier than we probably should have, because it really is a seasonal business, in Atlantic City, but we wanted to get going with the integration of that property, as well as to - as well as the pursues sports betting and iGaming opportunities there. So, you know, we've – I mentioned the decoupling from the Caesars system, that through that TSA arrangement, there was probably the, one of the tougher transitions of a property that we have, everything else went really smoothly. So you know, we just - we needed to kind of roll out of that. And we just implemented our marketing calendar in mid February there. So we're now starting to see the benefits of that, particularly in March, and still is not the season until you really get into the summer season, the summer season there. So, we're looking to bring it to profitability in the second quarter, which was always our plan, which was really related to really starting to enter into the summer season. And then as you know, in that market, the third quarter is really where you make the majority of your free cash flow. We feel comfortable there. And I have still Giuliana [ph] who is on line, so if you want to add anything to that still from a marketing perspective, that may be helpful.

Thanks, George. Yeah, we see the momentum happening, the programs are maturing, the customers are responding. The capital is being prepared. We're telling the story about the capital that is to come and be finished, we'll open up a restaurant, which is a branded restaurant that we've Jerry Longo's Meatballs & Martinis will open that in about a week, followed by another restaurant in July, which will be a three meal restaurant up on sixth level. So those things have to happen. Customers need to see that. We'll start our – the renovations of our rooms, in August and some people would say why, why August? Well, because we - the sooner we get the rooms renovated, the better we'll do. And we're also enhancing our player development staff. We have some new priorities coming on board and new hires coming on board. And so I like the momentum. We're moving in the right direction. And we're also taking a deep dive into expenses and making sure that we find every opportunity to enhance the bottom line.

All right. Thanks, guys.

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

Hi, good morning. This is Jonathan filling in for Lance. So my first question is, to what extent does the beam [ph] consensus estimates reflect the inclusion of properties and in the first quarter of ’21?

So, Steve, you want to handle that. I talked a little bit about same store and the improvement but the - but we added some properties in 2021 that were not comparable in 2020.

I actually missed the question. Would you…

Yeah, sure. So the - you know, to what extent is the consensus beating the consensus reflect the inclusion of properties that were acquired during the first quarter?

Well, I think I think consensus was inclusive, generally inclusive of those properties because just because we - that information was pretty well known. So we consider those to be one in the same, but look we - George commented this in his initial comments that the same store - the same store beat year-over-year was up 80% and consensus doesn't really break we're going to break that down if you will. So listen, the beat was significant on same store, the newly acquired properties holding into the portfolio have – that we just comment about Bally's AC, but across the portfolio even the brand new properties in the portfolio have ramped up nicely in this - you know as the vaccinations for COVID take hold and we have approach more of a stabilized post-COVID environment. We're seeing strength even in the new properties, some setting records in their all time performance. So strength across the portfolio of Bally's AC is the outlier at the moment. We've talked about that, but portfolio shaping up very well.

Got a. And a follow up from me, its just regarding the OST [ph] market [indiscernible] Like how should we look about with regards to the market share with Bally you know, like should it be like the big form owning 90% share and then Bally and others buying for the remaining or like how are you guys viewing the market share?

We certainly - I'm going to turn this over to Adi. If he want to give granular, I don't know that we do at this point in time. But we're certainly as you can see, you know, we've assembled the third largest portfolio of casino assets in the US. We own technology stack. We have the Bally's brand. We talked about the significant media relationship with Sinclair. It really the number one portfolio live sports rights that we recently added Bally fantasy sports and like the Monkey Knife Fight and free to play. And in Gamesys, is complete, as far as key technology and personnel. So we feel that we're extremely well positioned. And we're positioning ourselves to be a leader in that space.

And I'll echo what George just mentioned, look, we think that we will be a major player in the space. We are having similar conversations to the ones you pointed out. Obviously Arizona has an important market and he referenced the Diamondbacks. As you may know, in Arizona, we have three RSNs to the Sinclair relationship. All three of them are Bally sports branded, Bally sports, Arizona today. And we are looking into team relationships and partnerships, as legislation evolves, and skins are tethered to teams and are open. So in every market where there's an opportunity for us to partner with our Bally sports colleagues, we are partnering with them and are going direct based on what the legislation allows us to do.

Got it. Just the last one for me, before I get back to queue is, just once again the commentary about debating [ph] in Richmond, Virginia, we thought that you guys had done a tremendous amount of work, just kind of wondering, like, I guess get a sense of what happened there.

Well, we certainly are not in the minds of who the people on the committee. We entered into the process a little late. So we were a little disadvantage from that perspective. There's other parties that were on the ground a lot longer, particularly parties that are doing business in and around that market. But certainly, we felt we had the best economics for the city, as well as the state, we had the best location with the best infrastructure that can be felt to drive the most business to that market. And, you know, it just was, it was a decision that they made. And we're not going to get into the specifics of that. But, you know, we put our best foot forward and we felt really good about what we provided through the RFP process.

Thank you at this time, there are no further questions. I now turn the call George Papanier for any additional or closing comments.

Sure. Well, thank you, operator. You know, again, I wanted to thank you for joining us on today's call. And for what has been a very successful first quarter. And as we look forward to continuing this momentum into the second quarter.

This does conclude today’s Bally’s first quarter 2021 earnings call. Please disconnect your lines at this time and have a wonderful day.