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Pahrump casinos: We own and operate three Our Maryland Casino Resort segment is comprised of our AAA Four Diamond Award® winning Rocky Gap Illinois due to inactivity. In October 2018, we received a conditional license to operate in slot machines. brand campaigns when appropriate. designated gaming areas. In addition, all of our team members are required to complete annual training on responsible gaming. distributed gaming platform. distributed gaming business. prospects. Furthermore, if additional gaming laws or regulations are adopted, these regulations could impose additional restrictions or costs that could have a significant adverse effect on us and our business. For additional information, operations” securities” condition” advertising. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Changes to any of the laws, rules, regulations or ordinances to which we are subject, new laws or regulations, or material differences in interpretations by courts or governmental authorities could have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, each restaurant we operate must obtain a food service license from local authorities. Failure to comply with such regulations could cause our licenses to be revoked or our related July 31, 2023. an annual basis. Report. Our business may be adversely affected by economic conditions, acts of terrorism, natural disasters, severe weather, contagious diseases and other factors affecting discretionary consumer spending, any of which could have a material adverse effect on our business. develop or expand gaming properties in markets located more closely to our customer base (particularly Native American casinos located in operations, and prospects. The casino, hotel and hospitality industry is capital intensive and we may not be able to finance development, expansion and renovation projects, which could put us at a competitive disadvantage. us, we would be required to sever our relationship with that person. Furthermore, such gaming authorities may require us to terminate the employment of any person who refuses to file appropriate applications. Either result could have a material adverse effect on our business, operations and prospects. caused, the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time that they occurred, as well as incur liability to third parties impacted by such contamination. The presence of contamination, or failure to remediate it properly, may adversely affect our ability to use, sell or rent property. As we acquire additional casino, resort and tavern properties, In addition, each restaurant we operate must obtain a food service license from local authorities. Failure to comply with such regulations could cause our licenses to be revoked or our related The loss or suspension of any liquor or food service license could have a material adverse effect on our business, financial condition, results of operations and prospects. forces beyond our control may also limit the scope of the insurance coverage we can obtain or our ability to obtain coverage at reasonable rates. As a result, we may not be successful in obtaining insurance without increases in cost or decreases in coverage levels. In addition, in the event of a major casualty, the insurance coverage we carry may not be sufficient to pay the full market value or replacement cost of our lost investment or in some cases could result in certain losses being totally uninsured. As a result, we could lose some or all of the capital we have invested in a property, as well as the anticipated future revenue from the property, and we could remain obligated for debt or other financial obligations related to the property, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. In addition to the damage caused to our property by a casualty loss (such as fire, natural disasters, acts of war or terrorism), we may suffer business disruption as a result of these events or be subject to claims by third parties injured or harmed. While we carry business interruption insurance and general liability insurance, this insurance may not be adequate to cover all losses in such event. price due to the long duration of severe drought experienced in Las Vegas and other potential causes of water shortage. Our reputation and business could be materially harmed as a result of data breaches, data theft, unauthorized access or hacking. •changes in local or regional economic conditions and unemployment rates; •changes in local and state laws and regulations, including gaming laws and regulations; •changes in the local or regional competitive environment; and •adverse weather conditions and natural disasters (including weather or road conditions that limit access to our properties). of the applicable chain store or finding of suitability, subject to limited exceptions for “institutional investors” that hold a company’s voting securities for investment purposes only. volatile. •changes in general or local economic or market conditions; •quarterly variations in operating results; •strategic developments by us or our competitors; •developments in our relationships with our customers, distributors and suppliers; •regulatory developments or any breach, revocation or loss of any gaming license; •changes in our revenues, expense levels or profitability; •changes in financial estimates and recommendations by securities analysts; and •failure to meet the expectations of securities analysts. time. We may also issue additional shares of common stock to finance future acquisitions through the use of equity. For example, we issued approximately 0.9 million shares of our common stock in connection with our acquisition of Edgewater Gaming, LLC and Colorado Belle Gaming, LLC in January 2019, and approximately 4.0 million shares of our common stock in connection with •permit our Board of Directors to increase its own size and fill the resulting vacancies; •authorize the issuance of “blank check” preferred stock that our Board of Directors could issue to increase the number of outstanding shares to discourage a takeover attempt; and •permit shareholder action by written consent only if the consent is signed by all shareholders entitled to notice of a meeting. First Second Third Fourth Quarter Quarter Quarter Quarter 2017 High $ 14.31 $ 22.18 $ 26.33 $ 34.75 Low 10.60 12.90 19.41 23.58 2016 High $ 10.90 $ 13.49 $ 14.07 $ 13.00 Low 9.50 10.41 11.19 8.65 “GDEN.” As of repurchase program may be suspended or discontinued at any time without prior notice. The For the Year Ended or As of: December 31, December 31, December 31, December 28, December 29, 2017(1) 2016(2) 2015(3) 2014(4) 2013 (In millions, except per share amounts) Results of Continuing Operations: Net revenues $ 510 $ 403 $ 177 $ 55 $ 39 Income (loss) from operations $ 15 $ 13 $ 18 $ (24 ) $ 13 Net Income (loss) $ 2 $ 16 $ 25 $ (25 ) $ 19 Net income (loss) per share — basic $ 0.09 $ 0.74 $ 1.45 $ (1.86 ) $ 1.41 Net income (loss) per share — diluted $ 0.09 $ 0.73 $ 1.43 $ (1.86 ) $ 1.40 Balance Sheet: Cash and cash equivalents $ 91 $ 47 $ 69 $ 35 $ 38 Total assets $ 1,365 $ 419 $ 379 $ 122 $ 147 Total long-term liabilities $ 966 $ 172 $ 143 $ 9 $ 10 Shareholders’ equity $ 321 $ 209 $ 210 $ 108 $ 132 We conduct our business through Year Ended December 31, (In thousands) 2017 2016 2015 Net revenues by segment Casinos $ 179,175 $ 97,132 $ 73,245 Distributed Gaming 330,050 305,792 103,610 Corporate and other 583 280 187 Total net revenues 509,808 403,204 177,042 Operating expenses by segment Casinos 86,050 51,533 40,520 Distributed Gaming 257,050 238,788 80,340 Corporate and other 641 11 9 Total operating expenses 343,741 290,332 120,869 Selling, general and administrative 103,523 68,155 38,708 Depreciation and amortization 40,786 27,506 10,798 Gain on disposition of notes receivable — — (23,590 ) Acquisition and merger expenses 5,041 614 11,525 Preopening expenses 1,632 2,471 421 Executive severance and sign-on bonuses 1,142 1,037 — Gain on revaluation of contingent consideration (1,719 ) — — Other operating, net 284 54 (52 ) Total expenses 494,430 390,169 158,679 Income from operations 15,378 13,035 18,363 Non-operating expense, net (21,128 ) (1,060 ) (3,812 ) Income tax benefit 7,921 4,325 9,969 Net income $ 2,171 $ 16,300 $ 24,520 other operating expenses, respectively. The number of concert events hosted at our our Maryland Casino Resort. Adjusted EBITDA by Reportable Segment Year Ended December 31, (In thousands) 2017 2016 2015 Adjusted EBITDA $ 72,915 $ 48,595 $ 18,274 Acquisition and merger expenses (5,041 ) (614 ) (11,525 ) Share-based compensation (8,754 ) (3,878 ) (809 ) Disposition of notes receivable — — 23,590 Depreciation and amortization (40,786 ) (27,506 ) (10,798 ) Gain on revaluation of contingent consideration 1,719 — — Preopening expenses (1,632 ) (2,471 ) (421 ) Class action litigation expenses (1,617 ) — — Executive severance and sign-on bonuses (1,142 ) (1,037 ) — Other operating, net (284 ) (54 ) 52 Income from operations 15,378 13,035 18,363 Non-operating income (expense) Interest expense, net (19,598 ) (6,454 ) (2,728 ) Loss on extinguishment of debt (1,708 ) — (1,174 ) Gain on change in fair value of derivative 178 — — Gain on sale of land held for sale — 4,525 — Other, net ��� 869 90 Total non-operating expense, net (21,128 ) (1,060 ) (3,812 ) Income (loss) before income tax benefit (5,750 ) 11,975 14,551 Income tax benefit 7,921 4,325 9,969 Net income $ 2,171 $ 16,300 $ 24,520 As of December 31, 2022, we had borrowing availability of $240 million under our Revolving Credit Facility (refer to “ flows and Revolving Credit Facility. 2018 2019 2020 2021 2022 Thereafter (In thousands) First Lien Facility $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 760,000 Second Lien Term Loan — — — — — 200,000 Interest on long-term debt (1) 52,961 52,591 52,219 51,852 51,491 107,680 Maryland DNR lease(2) 425 425 425 425 425 12,998 Gold Town Casino leases(3) 628 636 642 649 535 16,085 Space lease agreements 28,038 27,006 7,373 3,652 1,737 703 Related party leases 1,559 1,535 1,535 1,535 1,536 6,097 Other operating leases (4) 11,168 10,452 10,293 9,498 8,468 53,345 Notes payable and capital lease obligations(5) 1,759 1,177 1,111 465 143 2,343 $ 104,538 $ 101,822 $ 81,598 $ 76,076 $ 72,335 $ 1,159,251 calculate the present value of future. Facility (refer to REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM December 31, 2017 2016 ASSETS Current assets Cash and cash equivalents $ 90,579 $ 46,898 Accounts receivable, net 14,692 6,697 Income taxes receivable 218 2,340 Prepaid expenses 19,397 9,761 Inventories 5,594 2,605 Other 2,599 1,346 Total current assets 133,079 69,647 Property and equipment, net 895,241 137,581 Goodwill 158,134 105,655 Intangible assets, net 157,692 98,603 Deferred income taxes 7,787 — Other assets 13,242 7,592 Total assets $ 1,365,175 $ 419,078 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current portion of long-term debt $ 9,759 $ 15,752 Accounts payable 19,470 11,739 Accrued taxes, other than income taxes 6,664 3,024 Accrued payroll and related 22,570 3,478 Accrued liabilities 19,295 3,846 Total current liabilities 77,758 37,839 Long-term debt, net 963,200 167,690 Deferred income taxes — 38 Other long-term obligations 3,226 4,085 Total liabilities 1,044,184 209,652 Commitments and contingencies (Note 14) Shareholders' equity Common stock, $.01 par value; authorized 100,000 shares; 26,413 and 22,232 common shares issued and outstanding, respectively 264 223 Additional paid-in capital 399,510 290,157 Accumulated deficit (78,783 ) (80,954 ) Total shareholders' equity 320,991 209,426 Total liabilities and shareholders' equity $ 1,365,175 $ 419,078 Year Ended December 31, 2017 2016 2015 Revenues Gaming $ 414,353 $ 346,039 $ 148,447 Food and beverage 79,765 58,659 25,584 Rooms 24,165 7,853 6,814 Other operating 20,393 11,844 5,079 Gross revenues 538,676 424,395 185,924 Less: Promotional allowances (28,868 ) (21,191 ) (8,882 ) Net revenues 509,808 403,204 177,042 Expenses Gaming 280,121 250,791 98,268 Food and beverage 47,956 32,639 19,373 Rooms 8,899 1,336 968 Other operating 6,765 5,566 2,260 Selling, general and administrative 103,523 68,155 38,708 Depreciation and amortization 40,786 27,506 10,798 Disposition of notes receivable — — (23,590 ) Acquisition and merger expenses 5,041 614 11,525 Preopening expenses 1,632 2,471 421 Executive severance and sign-on bonuses 1,142 1,037 — Gain on revaluation of contingent consideration (1,719 ) — — Other operating, net 284 54 (52 ) Total expenses 494,430 390,169 158,679 Income from operations 15,378 13,035 18,363 Non-operating income (expense) Interest expense, net (19,598 ) (6,454 ) (2,728 ) Loss on extinguishment of debt (1,708 ) — (1,174 ) Gain on change in fair value of derivative 178 — — Gain on sale of land held for sale — 4,525 — Other, net — 869 90 Total non-operating expense, net (21,128 ) (1,060 ) (3,812 ) Income (loss) before income tax benefit (5,750 ) 11,975 14,551 Income tax benefit 7,921 4,325 9,969 Net income 2,171 16,300 24,520 Other comprehensive income — — 22 Comprehensive income $ 2,171 $ 16,300 $ 24,542 Weighted-average common shares outstanding Basic 23,105 22,135 16,878 Dilutive impact of stock options and restricted stock units 1,555 319 225 Diluted 24,660 22,454 17,103 Net income per share Basic $ 0.09 $ 0.74 $ 1.45 Diluted $ 0.09 $ 0.73 $ 1.43 Accumulated Additional Other Total Common stock Paid-In Comprehensive Accumulated Shareholders' Shares Amount Capital Loss Deficit Equity Balances, December 28, 2014 13,389 $ 134 $ 205,749 $ (22 ) $ (98,245 ) $ 107,616 Proceeds from issuance of stock on options exercised 25 — 168 — — 168 Effect of share-based compensation — — 809 — — 809 Other comprehensive income — — — 22 — 22 Effect of merger 8,454 85 77,265 — — 77,350 Net income — — — — 24,520 24,520 Balances, December 31, 2015 21,868 219 283,991 — (73,725 ) 210,485 Proceeds from issuance of stock on options exercised 314 3 1,789 — — 1,792 Effect of share-based compensation — — 3,878 — — 3,878 Share issuance related to business combination 50 1 499 — — 500 Special dividend ($1.71 per share) — — — — (23,529 ) (23,529 ) Net income — — — — 16,300 16,300 Balances, December 31, 2016 22,232 223 290,157 — (80,954 ) 209,426 Proceeds from issuance of stock on options exercised 135 1 168 — — 169 Effect of share-based compensation — — 8,754 — — 8,754 Tax benefit from share-based compensation — — (1,015 ) — — (1,015 ) Share issuance related to business combination 4,046 40 101,446 — — 101,486 Net income — — — — 2,171 2,171 Balances, December 31, 2017 26,413 $ 264 $ 399,510 $ — $ (78,783 ) $ 320,991 Year Ended December 31, 2017 2016 2015 Cash flows from operating activities Net income $ 2,171 $ 16,300 $ 24,520 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 40,786 27,506 10,798 Amortization of debt issuance costs and discounts on debt 1,593 732 525 Accretion and amortization of discounts and premiums on short-term investments — — 240 Share-based compensation 8,754 3,878 809 Loss on disposal of property and equipment 441 54 303 Gain on revaluation of contingent consideration (1,719 ) — — Loss (gain) on extinguishment of debt 1,708 (18 ) 1,174 Gain on change in fair value of derivative (178 ) — — Gain on sale of land held for sale — (4,525 ) — Gain on sale of notes receivable — — (23,590 ) Impairments and other losses — — 357 Deferred income taxes (7,825 ) (4,325 ) (10,216 ) Other operating activities — (49 ) — Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (1,593 ) (3,151 ) 1,033 Income taxes receivable 2,121 (262 ) 77 Prepaid expenses 74 (3,810 ) 2,035 Inventories and other current assets (568 ) 102 371 Other assets (2,056 ) — — Accounts payable and other accrued expenses (22,606 ) 1,580 900 Accrued taxes, other than income taxes 511 2,193 6 Other liabilities 488 1,190 — Net cash provided by operating activities 22,102 37,395 9,342 Cash flows from investing activities Purchase of property and equipment (29,463 ) (30,634 ) (7,946 ) Acquisition of businesses, net of cash acquired (724,473 ) (41,273 ) 25,539 Asset purchase (2,220 ) — — Proceeds from disposal of property and equipment — 2,985 4,413 Purchase of short-term investments — — (25,137 ) Proceeds from maturities of short-term investments — — 35,175 Proceeds from sale of short-term investments — — 36,182 Collection on notes receivable — — 23,590 Other investing activities (31 ) (2,198 ) (1,767 ) Net cash provided by (used in) investing activities (756,187 ) (71,120 ) 90,049 Year Ended December 31, 2017 2016 2015 Cash flows from financing activities Proceeds from term loans 969,000 40,000 145,000 Repayments of term loans (150,000 ) (8,500 ) (204,560 ) Borrowings on revolving credit facility 6,000 5,000 — Repayments of revolving credit facility (36,000 ) — — Repayments of notes payable (3,334 ) (2,061 ) — Payments for debt issuance costs (4,035 ) (500 ) (2,803 ) Purchase of derivative instrument (3,152 ) — — Proceeds from leased equipment obligation 743 — — Principal payments under capital leases (610 ) (756 ) — Proceeds from issuance of common stock 169 1,792 168 Tax withholding on share-based payments (1,015 ) — — Dividends paid — (23,529 ) — Warrant repurchase — — (3,435 ) Net cash provided by (used in) financing activities 777,766 11,446 (65,630 ) Cash and cash equivalents Net increase (decrease) for the period 43,681 (22,279 ) 33,761 Balance, beginning of period 46,898 69,177 35,416 Balance, end of period $ 90,579 $ 46,898 $ 69,177 Supplemental cash flow disclosures Cash paid for interest $ 14,143 $ 5,721 $ 2,321 Cash paid (received) for income taxes, net (84 ) 260 170 Non-cash investing and financing activities Payables incurred for capital expenditures $ 1,849 $ — $ — Notes payable issued for property and equipment 717 721 2,838 Assets acquired under capital lease obligations 2,758 2,726 — Common stock issued in connection with acquisition 101,486 500 77,350 The accompanying notes are an integral part of these consolidated financial statements. where applicable. These reclassifications had no effect on previously reported net income. Historically, the Company’s estimated allowance for credit losses has been consistent with such losses. Furniture and equipment 3 - 15 years Leasehold improvements 2 - 15 years fair value. or in exchange for points earned under the Company’s True Rewards® loyalty program. met. threshold a tax position is required to meet before being recognized in the financial statements. For the year ended December 31, 2022, diluted net income per share excluded the weighted average effect of 150,384 shares of common stock. No shares of common stock related to time-based and performance-based restricted stock units were anti-dilutive for the year ended December 31, 2021 and for the year ended December 31, 2020, the amount of potential common share equivalents excluded from the computation was 915,025. or disclosures. (In thousands) Amount Cash consideration $ 787,581 Fair value of common stock issued to ACEP Holdings 101,486 Total purchase price $ 889,067 (In thousands) Amount Current assets $ 83,079 Property and equipment 754,581 Other noncurrent assets 264 Intangible assets 66,140 Goodwill 52,479 Liabilities (67,476 ) Total assets acquired, net of liabilities assumed $ 889,067 Remaining Amount Assigned Useful Life (Years) (In thousands) Land Not applicable $ 106,800 Land improvements 15 6,240 Building and improvements 45 607,698 Furniture, fixtures and equipment 3-4 32,829 Construction in process Not applicable 1,014 Total property and equipment $ 754,581 Remaining Amount Assigned Useful Life (Years) (In thousands) Trade names Indefinite $ 34,510 Players loyalty programs 3 26,850 Leasehold interest 3-80 3,110 In-place lease value 3-4 1,670 Total intangible assets $ 66,140 Year Ended December 31, 2017 2016 (In thousands, except per share data) Pro forma combined net revenues $ 843,484 $ 794,265 Pro forma combined net income 23,107 28,338 Pro forma combined net income per share: Basic $ 0.88 $ 1.08 Diluted 0.83 1.07 Weighted-average common shares outstanding: Basic 26,342 26,181 Diluted 27,897 26,500 Pre-Merger Value of Lakes Lakes % Pre-Merger Value of Sartini Gaming Sartini Gaming % Total Post-Closing Shares(1) Total Shares Issued in Connection with Merger(2) $ 134,615,083 62.6% $ 80,523,753 37.4% 22,592,260 8,453,565 (In thousands) Amount Cash $ 25,539 Other current assets 14,830 Property and equipment 83,173 Intangible assets 80,460 Goodwill 97,462 Current liabilities (13,245 ) Warrant liability (3,435 ) Debt (190,587 ) Deferred tax liability (14,576 ) Other long-term liabilities (2,217 ) Total purchase price $ 77,404 Remaining Amount Assigned Useful Life (Years) (In thousands) Land Not applicable $ 12,470 Land improvements 5-14 4,030 Building and improvements 19-25 21,310 Leasehold improvements 1-28 20,793 Furniture, fixtures and equipment 1-11 21,935 Construction in process Not applicable 2,635 Total property and equipment $ 83,173 Remaining Amount Assigned Useful Life (Years) (In thousands) Trade names Indefinite $ 12,200 Player relationships 8-14 7,300 Customer relationships 13-16 59,200 Gaming licenses Indefinite 960 Other intangible assets 2-10 800 Total intangible assets $ 80,460 Note 4 – Property and Equipment December 31, (In thousands) 2017 2016 Land $ 121,081 $ 12,470 Building and site improvements 705,266 77,515 Furniture and equipment 125,339 75,740 Construction in process 6,972 5,246 Property and equipment 958,658 170,971 Less: Accumulated depreciation (63,417 ) (33,390 ) Property and equipment, net $ 895,241 $ 137,581 (In thousands) Casinos Distributed Gaming Total Goodwill Balance, January 1, 2016 $ 17,080 $ 79,208 $ 96,288 Goodwill acquired during the year — 8,193 8,193 Acquired goodwill adjusted during the year (9,284 ) 10,458 1,174 Balance, December 31, 2016 7,796 97,859 105,655 Goodwill acquired during the year 52,479 — 52,479 Balance, December 31, 2017 $ 60,275 $ 97,859 $ 158,134 December 31, 2017 Weighted- Gross Average Life Carrying Cumulative Intangible (In thousands) Remaining Value Amortization Assets, Net Indefinite-lived intangible assets Gaming licenses Indefinite $ 960 $ — $ 960 Trade names Indefinite 46,710 — 46,710 Other Indefinite 185 — 185 47,855 — 47,855 Amortizing intangible assets Customer relationships 12.1 years 80,320 (12,524 ) 67,796 Player relationships 4.2 years 34,150 (3,045 ) 31,105 Gaming license 10.3 years 2,100 (648 ) 1,452 Non-compete agreements 3.0 years 6,000 (2,395 ) 3,605 Leasehold interest 65.7 years 3,110 (32 ) 3,078 In-place lease value 3.3 years 1,670 (81 ) 1,589 Other 8.2 years 1,769 (557 ) 1,212 129,119 (19,282 ) 109,837 Balance, December 31, 2017 $ 176,974 $ (19,282 ) $ 157,692 December 31, 2016 Weighted- Gross Average Life Carrying Cumulative Intangible (In thousands) Remaining Value Amortization Assets, Net Indefinite-lived intangible assets Gaming licenses Indefinite $ 960 $ — $ 960 Trade names Indefinite 12,200 — 12,200 Other Indefinite 110 — 110 13,270 — 13,270 Amortizing intangible assets Customer relationships 13.2 years 78,100 (6,932 ) 71,168 Player relationships 10.4 years 7,300 (910 ) 6,390 Gaming license 11.4 years 2,100 (508 ) 1,592 Non-compete agreements 4.0 years 6,000 (1,168 ) 4,832 Other 9.5 years 1,648 (297 ) 1,351 95,148 (9,815 ) 85,333 Balance, December 31, 2016 $ 108,418 $ (9,815 ) $ 98,603 Gap. (In thousands) 2018 2019 2020 2021 2022 Thereafter Estimated amortization expense $ 17,562 $ 17,562 $ 15,923 $ 7,023 $ 6,624 $ 45,143 December 31, (In thousands) 2017 2016 Gaming liabilities $ 11,123 $ 1,479 Interest 1,770 9 Other accrued liabilities 6,402 2,358 Total accrued liabilities $ 19,295 $ 3,846 Revolving Credit Facility was available to the Company. 4.85% for the year ended December 31, 2022. and Related Loss on Debt Extinguishment and Modification 2024 is Financial and Other Covenants Unsecured Notes December 31, (In thousands) 2017 2016 Term loans $ 1,000,000 $ 150,000 Revolving credit facility — 30,000 Capital lease obligations 5,839 1,970 Notes payable 1,159 3,777 Total long-term debt 1,006,998 185,747 Less unamortized discount (30,122 ) — Less unamortized debt issuance costs (3,917 ) (2,305 ) 972,959 183,442 Less current maturities (9,759 ) (15,752 ) Long-term debt, net $ 963,200 $ 167,690 Scheduled Principal Payments of Long-Term Debt (In thousands) For the year ending December 31, 2018 $ 9,759 2019 9,177 2020 9,111 2021 8,465 2022 8,143 Thereafter 962,343 Total outstanding principal of long-term debt $ 1,006,998 Year Ended December 31, (In thousands) 2017 2016 2015 Food and beverage $ 23,886 $ 18,324 $ 6,633 Rooms 3,790 2,263 2,035 Other 1,192 604 214 Total promotional allowances $ 28,868 $ 21,191 $ 8,882 Year Ended December 31, (In thousands) 2017 2016 2015 Food and beverage $ 21,007 $ 15,201 $ 2,263 Rooms 1,451 818 608 Other 413 367 205 Total estimated cost of promotional allowances $ 22,871 $ 16,386 $ 3,076 On August 27, 2015, the Board of Directors of the Company approved the Golden Entertainment, Inc. 2015 Incentive Award Plan (the “2015 Plan”), which was approved by the Company’s shareholders at the Company’s 2016 annual meeting. The 2015 Plan authorizes the issuance of stock options, restricted stock, restricted stock units, annual increase on January 1, Weighted- Average Aggregate Stock Remaining Weighted- Intrinsic Options Term Average Value Outstanding (in years) Exercise Price (in thousands) Outstanding at January 1, 2017 3,402,481 7.9 $ 9.02 Granted 1,124,542 $ 15.88 Exercised (22,989 ) $ 7.36 Cancelled (128,105 ) $ 11.36 Outstanding at December 31, 2017 4,375,929 7.4 $ 10.73 $ 95,937 Vested at December 31, 2017 1,851,799 6.5 $ 7.99 $ 45,705 Exercisable at December 31, 2017 388,040 0.8 $ 4.33 $ 10,989 •Expected dividend yield — As the Company has not historically paid dividends, with the exception of the Special Dividend, the dividend rate variable used in the Black-Scholes model is zero. •Risk-free interest rate — The risk-free interest rate assumption is based on the U.S. Treasury yield curve in effect at the time of grant and with maturities consistent with the expected term of options. •Expected term — The expected term of employee stock options represents the weighted-average period that the stock options are expected to remain outstanding. It is based upon the Company’s experience as to the average historical term of option grants that were exercised, canceled or forfeited. Management believes historical data is reasonably representative of future exercise behavior. •Expected volatility — The volatility assumption is based on the historical actual volatility of the Company’s stock. Management concluded there were no factors identified which were unusual and which would distort the volatility Year Ended December 31, 2017 2016 2015 Expected dividend yield — — — Risk-free interest rate 2.21 – 2.47% 1.43 – 2.40% 2.18 – 2.36% Expected term (in years) 10 10 10 Expected volatility 29.07 – 34.43% 24.03 – 26.95% 27.24 – 27.60% The following table summarizes the Company’s RSU activity: Total Restricted Weighted Fair Value Stock Average of Shares Units Grant Date Vested Outstanding Fair Value (in thousands) Outstanding at January 1, 2016 — — Granted 141,296 $ 12.57 Outstanding at December 31, 2016 141,296 $ 12.57 Granted 62,791 $ 27.87 Vested (111,660 ) $ 12.57 $ 2,556 Cancelled (29,636 ) $ 12.57 Outstanding at December 31, 2017 62,791 $ 27.87 Year Ended December 31, (In thousands) 2017 2016 2015 Stock options $ 5,135 $ 3,717 $ 809 Restricted stock units 3,619 161 — Total share-based compensation costs $ 8,754 $ 3,878 $ 809 2022. Year Ended December 31, (In thousands) 2017 2016 2015 Current: Federal $ (91 ) $ — $ 247 State (5 ) — — Total current tax benefit (provision) (96 ) — 247 Deferred: Federal $ (7,456 ) $ (4,091 ) $ (8,939 ) State (369 ) (234 ) (1,277 ) Total deferred tax benefit (7,825 ) (4,325 ) (10,216 ) Income tax benefit $ (7,921 ) $ (4,325 ) $ (9,969 ) Reconciliation of the statutory federal income tax rate to the Company’s actual rate based on income (loss) before income tax Year Ended December 31, 2017 2016 2015 Statutory federal tax rate 35 % 35 % 35 % State income taxes, net of federal income taxes 2.0 2.0 6.9 State tax credit — (45.9 ) — State rate adjustment — 2.1 — Permanent tax differences – Merger expenses — — 11.4 Permanent tax differences – investment in unconsolidated investee — — 9.8 Permanent tax differences – executive compensation (12.5 ) — — Permanent tax differences – other (17.0 ) 2.4 1.4 Purchase price allocation adjustment – Merger — 3.7 — Change in valuation allowance 193.5 (34.8 ) (131.1 ) FICA credit generated 11.8 (4.7 ) — Impact of Tax Cuts and Jobs Act (74.6 ) — — Other, net (0.4 ) 4.1 (1.8 ) Effective tax rate 137.8 % -36.1 % -68.4 % December 31, (In thousands) 2017 2016 Current: Accruals and reserves $ 4,348 $ 1,144 Share-based compensation expense 2,532 2,366 Development costs — 5 Alternative minimum tax credit carryforward 1,483 1,468 General business credit carryforward 1,126 481 State tax credits 5,500 5,500 Net operating loss carryforwards 17,350 28,025 Other 701 1,065 33,040 40,054 Valuation allowances (6,983 ) (18,109 ) $ 26,057 $ 21,945 Deferred tax liabilities: Prepaid services (884 ) (1,034 ) Amortization of intangible assets (14,304 ) (20,024 ) Depreciation of fixed assets (3,082 ) (925 ) (18,270 ) (21,983 ) Net deferred tax assets (liabilities) $ 7,787 $ (38 ) As of December 31, Additionally, the Company had deferred tax assets of 2020, respectively, to its defined contribution employee savings plan. The Company’s contributions vest over a five-year period. •Assets contributed to multiemployer plans by one employer may be used to provide benefits to employees of other participating employers; •If a participating employer stops contributing to a multiemployer plan, the unfunded obligations of the multiemployer plan may be required to be borne by the remaining participating employers; and •If an entity chooses to stop participating in some of its multiemployer plans, the entity may be required to pay those plans an amount based on the underfunded status of those plans, referred to as a “withdrawal liability.” FIR/RP Expiration Date Pension Protection Status Of Collective- Zone Status (1) Pending/ Surcharge Bargaining Multiemployer Pension Plans EIN/Plan Number 2016 2015 Implemented Imposed Agreement Central Pension Fund of the IUOE and Participating Employers 36-6052390-001 Green Green No No 3/31/2018 and 3/31/2020 Southern Nevada Culinary and Bartenders Pension Plan 88-6016617-001 Green Green No No 5/31/2018 Year End (In thousands) December 31, 2017 Multiemployer pension plans Operating Engineers Local 501 Security Fund $ 165 Southern Nevada Culinary and Bartenders Pension Plan 453 Other pension plans 45 Total contributions $ 663 Multiemployer benefit plans (excluding pension plans) HEREIU Welfare Fund $ 1,691 All other 2 Total contributions $ 1,693 •Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. •Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. •Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions. Lessee (In thousands) For the year ending December 31, 2018 $ 4,137 2019 2,953 2020 1,764 2021 911 2022 102 Thereafter — Total $ 9,867 Year Ended December 31, (In thousands) 2017 2016 2015 Space lease agreements $ 37,061 $ 40,848 $ 16,032 Related party leases 2,035 2,429 1,108 Other operating leases 13,447 11,784 4,619 Total rent expense $ 52,543 $ 55,061 $ 21,759 For the year ending December 31, (In thousands) 2018 2019 2020 2021 2022 Thereafter Total Space lease agreements $ 28,038 $ 27,006 $ 7,373 $ 3,652 $ 1,737 $ 703 $ 68,509 Related party leases 1,559 1,535 1,535 1,535 1,536 6,097 13,797 Other operating leases 12,221 11,513 11,360 10,572 9,428 82,428 137,522 Total minimum operating lease payments $ 41,818 $ 40,054 $ 20,268 $ 15,759 $ 12,701 $ 89,228 $ 219,828 The current and measuring lease revenue, which is recorded in “Other revenue” in the Company’s consolidated statements of operations. For the year ending December 31, (In thousands) 2018 2019 2020 2021 2022 Thereafter Total Furniture and equipment $ 1,087 $ 1,140 $ 1,028 $ 439 $ 85 $ 6,306 $ 10,085 Building 150 150 150 150 163 1,588 2,351 Less: Amounts representing interest (319 ) (254 ) (188 ) (145 ) (128 ) (5,563 ) (6,597 ) Total obligations under capital leases $ 918 $ 1,036 $ 990 $ 444 $ 120 $ 2,331 $ 5,839 Company. years ended December 31, 2022 and 2021 and $0.1 million for the year ended December 31, 2020. Additionally, the lease agreement includes a right of first refusal for additional space on the second floor of the building. 2021. local customers who generally live within a five-mile radius. The Company’s Year Ended December 31, 2017 (In thousands) Casinos Distributed Gaming Corporate and Other Consolidated Net revenues $ 179,175 $ 330,050 $ 583 $ 509,808 Adjusted EBITDA 50,979 48,890 (26,954 ) 72,915 Acquisition expenses — — (5,041 ) (5,041 ) Share-based compensation — — (8,754 ) (8,754 ) Gain on revaluation of contingent consideration — 1,719 — 1,719 Preopening expenses — (1,234 ) (398 ) (1,632 ) Class action litigation expenses — — (1,617 ) (1,617 ) Executive severance and sign-on bonuses (636 ) — (506 ) (1,142 ) Other operating, net (377 ) (174 ) 267 (284 ) Depreciation and amortization (19,544 ) (19,601 ) (1,641 ) (40,786 ) Income (loss) from operations 30,422 29,600 (44,644 ) 15,378 Non-operating income (expense) Interest expense, net 16 (390 ) (19,224 ) (19,598 ) Loss on extinguishment of debt — — (1,708 ) (1,708 ) Gain on change in fair value of derivative — — 178 178 Total non-operating income (expense), net 16 (390 ) (20,754 ) (21,128 ) Income (loss) before income tax benefit 30,438 29,210 (65,398 ) (5,750 ) Income tax benefit — — 7,921 7,921 Net income (loss) $ 30,438 $ 29,210 $ (57,477 ) $ 2,171 Year Ended December 31, 2016 (In thousands) Casinos Distributed Gaming Corporate and Other Consolidated Net revenues $ 97,132 $ 305,792 $ 280 $ 403,204 Adjusted EBITDA 23,571 43,555 (18,531 ) 48,595 Merger expenses — — (614 ) (614 ) Share-based compensation — — (3,878 ) (3,878 ) Loss (gain) on disposal of property and equipment (94 ) 40 — (54 ) Preopening expenses — (2,179 ) (292 ) (2,471 ) Executive severance and sign-on bonuses — — (1,037 ) (1,037 ) Depreciation and amortization (7,351 ) (18,889 ) (1,266 ) (27,506 ) Income (loss) from operations 16,126 22,527 (25,618 ) 13,035 Non-operating income (expense) Interest expense, net (9 ) (144 ) (6,301 ) (6,454 ) Gain on sale of land held for sale — — 4,525 4,525 Other, net — — 869 869 Total non-operating expense, net (9 ) (144 ) (907 ) (1,060 ) Income (loss) before income tax benefit (provision) 16,117 22,383 (26,525 ) 11,975 Income tax benefit (provision) — (60 ) 4,385 4,325 Net income (loss) $ 16,117 $ 22,323 $ (22,140 ) $ 16,300 Year Ended December 31, 2015 (In thousands) Casinos Distributed Gaming (1) Corporate and Other Eliminations Consolidated Net revenues $ 73,245 $ 103,610 $ 1,985 $ (1,798 ) $ 177,042 - Adjusted EBITDA 14,390 14,254 (10,370 ) — 18,274 Merger expenses — — (11,525 ) — (11,525 ) Disposition of notes receivable — — 23,590 — 23,590 Share-based compensation — — (809 ) — (809 ) Loss on disposal of property and equipment (8 ) — (8 ) — (16 ) Gain on sale of investment — — 750 — 750 Impairments and other losses — — (682 ) — (682 ) Preopening expenses — (380 ) (41 ) — (421 ) Depreciation and amortization (4,928 ) (5,315 ) (555 ) — (10,798 ) Income from operations 9,454 8,559 350 — 18,363 Non-operating income (expense) Interest expense, net (626 ) (68 ) (2,034 ) — (2,728 ) Loss on extinguishment of debt (1,174 ) — — — (1,174 ) Other, net (1,798 ) 1 1,887 — 90 Total non-operating expense, net (3,598 ) (67 ) (147 ) — (3,812 ) Income before income tax benefit 5,856 8,492 203 — 14,551 Income tax benefit — — 9,969 — 9,969 Net income $ 5,856 $ 8,492 $ 10,172 $ — $ 24,520 The Company’s assets by segment consisted of the following amounts: (In thousands) Casinos Distributed Gaming Corporate and Other Consolidated Balance at December 31, 2017 $ 1,039,025 $ 298,453 $ 27,697 $ 1,365,175 Balance at December 31, 2016 $ 108,418 $ 294,822 $ 15,838 $ 419,078 (In thousands) Casinos Distributed Gaming Corporate and Other Consolidated For the year ended December 31, 2017 $ 9,665 $ 18,011 $ 1,787 $ 29,463 For the year ended December 31, 2016 $ 10,267 $ 17,730 $ 2,637 $ 30,634 For the year ended December 31, 2015 $ 2,594 $ 4,595 $ 757 $ 7,946 (1)Capital expenditures Year ended December 31, 2017 First Second Third Fourth (1) (In thousands, except per share amounts) Net revenues $ 106,646 $ 110,493 $ 108,322 $ 184,347 Income from operations 5,318 2,578 2,389 5,093 Net income (loss) 5,342 1,713 8,555 (13,439 ) Basic income (loss) per share $ 0.24 $ 0.08 $ 0.38 $ (0.53 ) Diluted income (loss) per share (4) $ 0.23 $ 0.07 $ 0.36 $ (0.53 ) Year ended December 31, 2016 First (2) Second (3) Third Fourth (In thousands, except per share amounts) Net revenues $ 91,034 $ 102,558 $ 104,226 $ 105,386 Income from operations 3,737 5,051 2,752 1,495 Net income 2,239 2,800 1,302 9,959 Basic income per share $ 0.10 $ 0.13 $ 0.06 $ 0.45 Diluted income per share $ 0.10 $ 0.12 $ 0.06 $ 0.44 Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The effectiveness of our internal control over financial reporting as ofDecember 31, The following table provides certain information as of December 31, Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column) Plan Category 2015 Plan(1) 3,730,254 $ 11.24 109,263 2007 Plan 645,675 7.73 — Total 4,375,929 $ 10.73 109,263 Incorporated by Reference Filed or Furnished Herewith Exhibit Number Exhibit Description Form File No. Exhibit Filing Date 2.1 8-K 000-24993 2.1 1/26/2015 2.1.1 8-K 000-24993 2.1 6/4/2015 2.2 8-K 000-24993 2.1 6/12/2017 3.1 Amended and Restated Articles of Incorporation of Golden Entertainment, Inc. 8-K 000-24993 3.1 8/4/2015 3.2 Fifth Amended and Restated Bylaws of Golden Entertainment, Inc. 8-K 000-24993 3.2 8/4/2015 10.1 8-K 000-24993 10.3 10/23/2017 10.2 8-K 000-24993 10.4 10/23/2017 10.3 8-K 000-24993 10.2 8/9/2012 10.4 8-K 000-24993 10.2 8/4/2015 Incorporated by Reference Filed or Furnished Herewith Exhibit Number Exhibit Description Form File No. Exhibit Filing Date 10.5 8-K 000-24993 10.1 10/23/2017 10.6 8-K 000-24993 10.2 1/26/2015 10.7 8-K 000-24993 10.2 10/23/2017 10.8 8-K 000-24993 10.4 8/4/2015 10.9 8-K 000-24993 10.3 8/4/2015 10.10# 8-K 000-24993 10.1 10/5/2015 10.10.1# 10-K 000-24993 10.11.1 3/14/2016 10.11# 8-K 000-24993 10.2 10/5/2015 10.11.1# 10-K 000-24993 10.12.1 3/14/2016 10.11.2# 10-K 000-24993 10.11.2 3/16/2017 10.12# 8-K 000-24993 10.2 11/17/2016 10.12.1# 10-K 000-24993 10.12.1 3/16/2017 Filed or Furnished Herewith Exhibit Exhibit Description Form File No. Exhibit Filing Date 8-K 000-24993 11/17/2016 10-K 000-24993 3/ 10-K 000-24993 10.15 3/16/2017 000-24993 DEF 14A 000-24993 Appendix D 6/24/2009 10-K 000-24993 10.16.1 3/14/2016 10-K 000-24993 10.16.2 3/14/2016 8-K 000-24993 10.5 11/17/2016 8-K 000-24993 10.1 9/2/2015 8-K 000-24993 10.2 9/2/2015 8-K 000-24993 10.4 11/17/2016 000-24993 23.1 31.1 31.2 32.1 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Calculation Definition Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document # Management contract or compensatory plan or arrangement in which one or more executive officers or directors participates By: Chief Executive Officer Chairman of the Board and Chief Executive Officer /s/ CHARLES H. PROTELL Charles H. Protell (Principal Financial Officer) /s/ Senior Vice President of (Principal Accounting Officer) /s/ Director /s/ Director /s/ MARK A. LIPPARELLI Director Mark A. Lipparelli /s/ Director /s/ TERRENCE L. WRIGHT Director Terrence L. Wright Balance at Beginning of Period Increase Decrease Balance at End of Period Deferred income tax valuation allowance: Year Ended December 31, 2017 $ 18,109 $ — $ (11,126 ) $ 6,983 Year Ended December 28, 2016 25,593 — (7,484 ) 18,109 Year Ended December 29, 2015 44,700 — (19,107 ) 25,593 on Form 10-K, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended or the Exchange Act.(the “Exchange Act”). Forward-looking statements can generally be identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “potential,” “seek,” “should,” “think,” “will,” “would” and similar expressions. expressions, or they may use future dates. In addition, forward-looking statements include statements regarding cost savings, synergies, growth opportunitiesthe Rocky Gap Transactions (defined below), including the anticipated timing of the closing of the transactions and satisfaction of regulatory and other financial and operating benefits of our acquisition of American Casino & Entertainment Properties LLC (“American”) and our other acquisitions;conditions; our strategies, objectives, business opportunities and plans for future expansion, developments or acquisitions; anticipated future growth and trends in our business or key markets; projections of future financial condition, operating results, income, capital expenditures, costs or other financial items; anticipated regulatory and legislative changes; and other characterizations of future events or circumstances as well as other statements that are not statements of historical fact. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. These forward-looking statements are subject to assumptions, risks and uncertainties that may change at any time, and readers are therefore cautioned that actual results could differ materially from those expressed in any forward-looking statements. Factors that could cause our actual results to differ materially include: our abilityrisks and uncertainties related to realize the anticipated cost savings, synergies and other benefitsRocky Gap Transactions, including the failure to obtain, or delays in obtaining, required regulatory approvals or clearances; the failure to satisfy any of our acquisition of American and our other acquisitions, and integration risks relatingthe closing conditions to such transactions;the Rocky Gap Transactions on a timely basis or at all; changes in national, regional and local economic and market conditions; legislative and regulatory matters (including the cost of compliance or failure to comply with applicable laws and regulations); increases in gaming taxes and fees in the jurisdictions in which we operate; litigation; increased competition; our ability to renew our distributed gaming contracts; reliance on key personnel (including our Chief Executive Officer, President and Chief OperatingFinancial Officer, and Chief Strategy and FinancialOperating Officer); the level of our indebtedness and our ability to comply with covenants in our debt instruments; the uncertainty of the extent, duration and effects of the COVID-19 pandemic and the response of governments; terrorist incidents; natural disasters; severe weather conditions (including weather or road conditions that limit access to our properties); the effects of environmental and structural building conditions; the effects of disruptions to our information technology and other systems and infrastructure; factors affecting the gaming, entertainment and hospitality industries generally, generally; and other factors identified under the heading “Risk“Risk Factors” in Part I, Item 1A of this report,Annual Report, or appearing elsewhere in this report and in our other filings with the Securities and Exchange Commission (“SEC”). Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the filing date of this report. We undertake no obligation to revise or update any forward-looking statements for any reason.ITEM 1.SS. Jones Boulevard, Las Vegas, Nevada 89118, and our telephone number at that location is (702) 893-7777.Business resort casino operations and distributed gaming operations (including tavern gaming in our wholly-ownedbranded taverns).We conduct our business through two reportable operating segments: Casinos and Distributed Gaming. In our Casinos segment, we own and operate eight resort casinos, seven Our portfolio includes ten casino properties located in Nevada and one in Maryland. Four of our Nevada resort casino properties were added to our casino portfolio in October 2017 as a result of our acquisition of American, as further described below. Our Distributed Gaming segment involvesdistributed gaming operations involve the installation, maintenance and operation of slotsslot machines and amusement devices in non-casino locations such as grocery stores,restaurants, bars, taverns, convenience stores, liquor stores restaurants, bars and tavernsgrocery stores in Nevada and Montana, and the operation of wholly-ownedMontana. We also operate branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area. Financial information regarding our reporting segments is included in Note 16, Segment Information, in the accompanying consolidated financial statements.In January 2018, subsequent to fiscal year end, we completed an underwritten public offering in which certain of our shareholders resold an aggregate of 6.5 million shares of our common stock, and we sold 975,000 newly issued shares of our common stock pursuant to the exercise in full of the underwriters’ over-allotment option to purchase additional shares. Our net proceeds from the offering were approximately $25.3 million after deducting underwriting discounts and offering expenses. We expect to use these net proceeds for general corporate purposes, which may include, among other things, capital expenditures, opportunistic acquisitions or working capital.AcquisitionsOctober 20, 2017, we completed the acquisition of all of the outstanding equity interests of American from its former equity holders (the “American Acquisition”) for aggregate consideration consisting of $781.0 million in cash (subject to certain post-closing adjustments pursuant to the purchase agreement) and the issuance by us of 4,046,494 shares of our common stock to W2007/ACEP Holdings, LLC (“ACEP Holdings”), a former American equity holder. Pursuant to the post-closing adjustment provisions in the purchase agreement, the cash portion of the consideration paid in the American Acquisition was subsequently increased to $787.6 million. The American Acquisition added four Nevada resort casino properties to our casino portfolio, including the Stratosphere Casino, Hotel & Tower (the “Stratosphere”) in Las Vegas. The results of operations of American and its subsidiaries have been included in our results subsequent to that date. See Note 3, Merger and Acquisitions, in the accompanying consolidated financial statements for additional information. In connection with the closing of the American Acquisition,August 24, 2022, we entered into two new creditdefinitive agreements with respect to a $900.0 million senior secured first lien credit facility (consisting of $800.0 million in term loans and a $100.0 million revolving credit facility, which was undrawn at closing) and a $200.0 million senior secured second lien term loan facility. We used the net proceeds from the borrowings under these facilities at the closing primarily to fund the cash purchase price in the American Acquisition (a portion of which was used to repay American’s then outstanding senior secured indebtedness), to refinance our outstanding senior secured indebtedness under our then-existing senior secured credit facility, and to pay certain transaction fees and expenses. See Note 7, Debt, in the accompanying consolidated financial statements for a discussion of the new credit agreements and associated refinancing.In January 2016, we completed the acquisition of approximately 1,100 slots from a distributed gaming operator in Montana, as well as certain other non-gaming assets and the right to operate within certain locations (the “Initial Montana Acquisition”). Additionally, in April 2016, we completed the acquisition of approximately 1,800 slots from a second distributed gaming operator in Montana, as well as amusement devices and other non-gaming assets andthe right to operate within certain locations (the “Second Montana Acquisition” and, together with the Initial Montana Acquisition, the “Montana Acquisitions”). The results of operations of the distributed gaming businesses acquired in the Montana Acquisitions have been included in our results subsequent to their respective acquisition dates. See Note 3, Merger and Acquisitions, in the accompanying consolidated financial statements for additional information.On July 31, 2015, we acquired Sartini Gaming, Inc. (“Sartini Gaming”) through the merger of a wholly-owned subsidiary of Golden with and into Sartini Gaming, with Sartini Gaming surviving as a wholly-owned subsidiary of Golden (the “Merger”). The results of operations of Sartini Gaming and its subsidiaries have been included in our results subsequent to that date.CasinosWe own and operate eight resort casino properties in Nevada and Maryland, comprising the Stratosphere, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder in Las Vegas, Nevada, the Aquarius Casino Resort (the “Aquarius”) in Laughlin, Nevada, the Pahrump Nugget Hotel Casino (“Pahrump Nugget”), Gold Town Casino and Lakeside Casino & RV Park in Pahrump, Nevada, and thesell Rocky Gap Casino Resort (“Rocky Gap”) to Century Casinos, Inc. (“Century”) and VICI Properties, L.P. (“VICI”), an affiliate of VICI Properties Inc., for aggregate considerationFlintstone, Maryland.cash (subject to adjustment based on Rocky Gap’s working capital and cage cash at closing), subject to the conditions and terms set forth therein, and VICI agreed to acquire the real estate assets relating to Rocky Gap from us for $203.9 million in cash, subject to the conditions and terms set forth therein. The Rocky Gap Transactions are required by their terms to close concurrently and we expect the Rocky Gap Transactions to close during the second quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and closing conditions.Stratospherefollowing table sets forth certain information regarding our operations by reportable segment as of December 31, 2022 (certain amenities at our casino properties may remain closed or operate in a limited capacity as a result of the impact of the COVID-19 pandemic):Location Casino Space (Sq. ft.) Slot Machines Table Games Hotel Rooms The STRAT Hotel, Casino & SkyPod (“The STRAT”) Las Vegas, NV 80,000 724 41 2,429 Aquarius Casino Resort (“Aquarius”) Laughlin, NV 69,750 1,106 29 1,906 Edgewater Hotel & Casino Resort (“Edgewater”) Laughlin, NV 57,457 630 13 1,052 Laughlin, NV — — — — Nevada Locals Casinos Arizona Charlie’s Boulder Las Vegas, NV 41,969 624 — 303 Arizona Charlie’s Decatur Las Vegas, NV 67,360 719 10 259 Gold Town Casino Pahrump, NV 10,000 185 — — Lakeside Casino & RV Park Pahrump, NV 11,009 174 — — Pahrump Nugget Hotel Casino (“Pahrump Nugget”) Pahrump, NV 22,528 337 9 69 Maryland Casino Resort Rocky Gap Flintstone, MD 25,447 630 16 198 Nevada Taverns 64 branded tavern locations Nevada — 1,018 — – Distributed Gaming Nevada distributed gaming Nevada — 7,011 — – Montana distributed gaming Montana — 3,632 — – Totals 385,520 16,790 118 6,216 StratosphereSTRAT is our premier casino resort property, located on Las Vegas BlvdBoulevard on the north end of the Las Vegas Strip. A gaming and entertainment complex, the StratosphereThe STRAT comprises the iconic Stratosphere Tower, a casino, a hotel and a retail center. As of December 31, 2017, the Stratosphere featurediconic SkyPod, which includes indoor and outdoor observation decks, thrill rides and the SkyJump attraction. In addition to hotel rooms, gaming and sportsbook facilities in an 80,000 sq. ft.square foot casino, and offered nearly 2,430 hotel rooms, 748 slots, 42 table games, a race and sports book, 15The STRAT offers ten restaurants, two rooftop pools, a fitness center, retail shops and entertainment facilities.Arizona Charlie’sLaughlin casinos: Our Arizona Charlie’s DecaturWe own and Arizona Charlie’s Boulderoperate three casino properties primarily serve local Las Vegas patrons, and provide an alternative experience to the Las Vegas Strip. Our Arizona Charlie’s Decatur casino property is located four miles west of the Las Vegas Strip in the heavily populated west Las Vegas area, and is easily accessible from US Route 95, a major highway in Las Vegas. Our Arizona Charlie’s Boulder casino property is located on Boulder Highway, in an established retail and residential neighborhood in the eastern metropolitan area of Las Vegas. The property is easily accessible from I-515, the primary east/west highway in Las Vegas. As of December 31, 2017, our Arizona Charlie’s Decatur casino offered approximately 260 hotel rooms and a total of 1,037 slots, seven table games, race and sports books, six restaurants, and an approximately 300-seat bingo parlor, and our Arizona Charlie’s Boulder casino offered approximately 300 hotel rooms and a total of 839 slots, seven table games, race and sports books, four restaurants, and an approximately 450-seat bingo parlor. Our Arizona Charlie’s Boulder casino also offers an RV park with approximately 220 RV hook-up sites.Aquarius: The Aquarius is locatedresorts in Laughlin, Nevada, which is located approximately 90 miles from Las Vegas on the western riverbankbank of the Colorado River. In addition to hotel rooms, gaming and sportsbook facilities, the Aquarius has nine restaurants and the Edgewater offers six restaurants. The Aquarius catersEdgewater also offers dedicated entertainmenttogenerated from slot machine play.traveling from Arizona and Southern California, as well as customers from Nevada seekingprovide an alternative experience to the Las Vegas experience. As of December 31, 2017, the Aquarius had approximately 1,900Strip. In addition to hotel rooms, gaming, sportsbook and offered 1,232 slots, 33 table gamesbingo facilities, Arizona Charlie’s Boulder offers five restaurants and tenan RV park with 221 RV hook-up sites and Arizona Charlie’s Decatur offers five restaurants.casinoscasino properties in Pahrump, Nevada, the gateway to Death Valley National Park,which is located approximately 60 miles from Las Vegas.Vegas and is a gateway to Death Valley National Park. In addition to gaming, sportsbook and bingo facilities at our Pahrump casino properties, Pahrump Nugget is our largest property in Pahrump, Nevada. As of December 31, 2017, Pahrump Nugget offered approximately 70offers hotel rooms, 419 slots, eight table games, a race and sports book, an approximately 200-seat bingo facilitybowling center and a bowling center. As of December 31, 2017, our Gold Town Casino offered 226 slots5,200 square foot banquet and an approximately 100-seat bingo facility,event center, and our Lakeside Casino & RV Park offered 188 slots and approximately 160offers 159 RV hook-up sites.: casino resort, which is geographically disparate from our Nevada properties, operates in a separate regulatory jurisdiction and has only a limited number of hotel rooms compared to our Nevada Casino Resorts. Rocky Gap caters to a regional drive-in customer base traveling from mid-Atlantic areas (i.e., Maryland, Virginia, Washington DC, Pennsylvania and West Virginia). Rocky Gap is situated on approximately 270 acres in the Rocky Gap State Park in Maryland, which we lease from the Maryland Department of Natural Resources (the “Maryland DNR”) under a 40-year operating ground lease expiring in 2052 (plus a 20-year option renewal)renewal option). As of December 31, 2017,In addition to hotel rooms and gaming, Rocky Gap offered 665 slots, 17 table games, two casino bars, three restaurants,offers a spafull range of amenities, including various food and the onlybeverage outlets, a Jack Nicklaus signature golf course, in Maryland. Rocky Gap is a AAA Four Diamond Award® winning resort with approximately 200 hotel rooms, as well asspa and pool and an event and conference center.
On August 24, 2022, we entered into definitive agreements to sell Rocky Gap for aggregate consideration of $260.0 million. The Rocky Gap Transactions are required by their terms to close concurrently and we expect the Rocky Gap Transactions to close during the second quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and closing conditions.Distributed GamingNevada Taverns segment involvesis comprised of branded tavern locations, where we control the installation, maintenancefood and operation of slots and amusement devices in non-casino locations suchbeverage operations as grocery stores, convenience stores, liquor stores, restaurants, bars and taverns in Nevada and Montana. In addition, we operate wholly-ownedwell as the slot machines located within the tavern. Our branded taverns with slots, which targetoffer a casual, upscale environment catering to local patrons primarilyoffering superior food, craft beer and other alcoholic beverages, and are typically limited to 15 slot machines. Most of our branded taverns are located in the greater Las Vegas, Nevada metropolitan area.area and cater to local patrons seeking more convenient entertainment establishments than traditional casino properties. Our tavern patrons are typically younger than traditional casino customers, which diversifies our customer demographic. Our tavern brands include PT’s Pub, PT’s Gold, PT’s Ranch, Sean Patrick’s, Sierra Gold and SG Bar. As of December 31, 2022, we owned and operated 64 branded taverns, which offered a total of over 1,000 onsite slot machines. We also holdcontinue to look for opportunities to pursue additional tavern openings and acquisitions.gaming terminal operator license for distributed gaming in Illinois.poker machines. Distributed Gaming operations cater to local residents with high frequency visitation to these locations. We place our slotsslot machines and amusement devices in locations where we believe they will receive maximum customer traffic, generally neartraffic.store’s entrance. As of December 31, 2017,video gaming terminal operator in Illinois. In October 2022, we surrendered our distributedvideo gaming operations comprised approximately 10,900 slotsterminal operator license in over 1,000 locations.slotsslot machines and no other forms of gaming activity. The gaming area in these business locations is typically small, and in many instances, segregated from the primary business area, including the use of alcoves in grocery stores and drug stores and installation of slotsslot machines into the physical bar (also known as “bar top” slots)slot machines) in bars and taverns. Such segregation provides greater oversight and supervision of the slots.slot machines. Under Montana law, distributed gaming operations are limited to business locations licensed to sell alcoholic beverages for on-premises consumption only, with such locations generally restricted to offering a maximum of 20 slots.threetwo types of slot placement contracts as part of our distributed gaming business: space lease revenue shareagreements and participation agreements. Under space lease agreements, we pay a fixed monthly rental fee for the right to install, maintain and operate our slotsslot machines at a business location.location and we are the sole holder of the applicable gaming license that allows us to operate such slot machines. Under revenue shareparticipation agreements, we pay the business location retains a percentage of the gaming revenue generated from our slots placed atslot machines, and as a result both the business location rather than a fixed monthly rental fee. With regard to both space lease and revenue share agreements, we hold the applicable gaming license to conduct gaming at the location (although revenue share locationsGolden are required to obtain separate regulatory approval to receivehold a percentage of thestate-issued gaming revenue). Under participation agreements, the business location holds the applicable gaming license and retains a percentage of the gaming revenue that it generates from our slots.license. In Montana, our slot and amusement device placement contracts are all revenue shareparticipation agreements.Our wholly-owned branded taverns offer a casual, upscale environment catering to local patrons offering superior food, craft beer and other alcoholic beverages, and typically include 15 onsite slots. As of December 31, 2017, we operated 57 wholly-owned branded taverns, which offered a total of over 920 onsite slots. Most of our taverns are located in the greater Las Vegas, Nevada metropolitan area and cater to local patrons seeking more convenient entertainment establishments than traditional casino properties. Our tavern brands include PT’s Gold, PT’s Pub, Sierra Gold, Sean Patrick’s, PT’s Place, PT’s Ranch, PT’s Brewing Company, Sierra Junction and SG Bar. We also opened our first brewery in Las Vegas, PT’s Brewing Company, during the first quarter of 2016 to produce craft beer for our taverns and casinos.CasinosOur Nevada resort casinos are located in Las Vegas, Laughlin and Pahrump, Nevada, and include the Stratosphere casino property located on the north end of the Las Vegas Strip. Accordingly, wecasino properties to both the locals marketdestination experience that may include rooms, entertainment, dining and tourist traffic, targeting the value-driven customer.attractions. We seek to attract local residents toadvertise through various media channels, including television, radio, outdoor, digital, social media and public relations.casinos throughLocals Casinos targets the local communities in which these properties operate with an emphasis on the gaming experience, casino promotions and dining. The advertising is geared towards enhancinga local play, including dining offerings at our casino restaurantsaudience and promotions of our bowlingtypically includes radio, outdoor, digital and bingo amenities. Promotional programssocial media with television used occasionally for out-of-market patrons focus primarily on our iconic Stratosphere casino property, our newly remodeled hotel rooms at Pahrump Nuggetpromotional messaging and our award-winning recreational vehicle park surrounding a lake at the Lakeside Casino & RV Park. A portion of Rocky Gap’s business is also arranged through group sales and bus coach wholesalers.Our casino sales and marketing efforts also include various rewards and loyalty programs designed to encourage repeat business at our resort casino properties. At our Las Vegas and Laughlin casinos in Nevada, we offer the ace|PLAY® rewards program. At our Pahrump, Nevada casinos, we offer the Gold Mine RewardsTM loyalty program. The close proximitycustomer base of our Pahrump casino properties allows us to leverage the convenience of a one-card player rewards system, where reward pointsNevada Taverns and other benefits can be earned and redeemed across all three of our Pahrump casinos via a single card. At Rocky Gap, we offer the Rewards ClubTM loyalty program. Depending on the program, members of our rewards programs may earn points based on gaming activity and amounts spent on rooms, food, beverage and resort activities, which points may be redeemable for complimentary slot play, food, beverages and hotel rooms, among other items. As of December 31, 2017, we had approximately 700,000 active players in our marketing database, providing cross-marketing opportunities across our resort casino and distributed gaming platform.Distributed GamingWe conduct our operations in our Distributed Gaming segment in Nevada and Montana. Our Distributed Gaming customer basesegments is primarily comprised of the third party distributed gaming customers with whom we enter into slot and amusement device placement contracts for the installation, maintenance and operation of slots and amusement devices at non-casino locations, the primarily local patrons thatwho frequent our branded taverns and use our slotsslot machines and amusement devices in such locations and the primarily local patrons of our wholly-owned branded taverns.contracted third-party locations. We seek to place our slotsslot machines and amusement devices in strategic, high-traffic areas, including in our branded taverns, and the majority of our marketing efforts are focused on maximizing profitability from a high-frequency, convenience-driven customer basebase.the counties in which we operate. also seek to capitalize on repeat visitation through the use of our True Rewards loyalty programs, suchprogram. We offer our True Rewards loyalty program at all ten of our casino properties, as well as at all of our Golden Rewards® promotional program for our wholly-owned branded taverns.taverns and other participating distributed gaming locations. Members of our GoldenTrue Rewards programsloyalty program earn points based on playgaming activity and amounts spent on the purchase of food and beverage whichpurchases at our casino properties, branded taverns and participating distributed gaming locations. Loyalty points are redeemable for complimentary slot play, promotional table game chips, food and beverages and other items. grocery gift cards. All points earned in the loyalty program roll up into a single account balance which is redeemable at over 140 participating locations.Brand equity is also leveragedAs of December 31, 2022, we had nearly 656,000 active players in our taverns through the number ofmarketing database, providing us with an avenue to drive customer engagement and cross-marketing opportunities across our branded tavern locations located throughout the greater Las Vegas, Nevada metropolitan area. Our advertising initiatives include both traditionalcasino and non-traditional channels such as direct mail, email, radio, print, television, social media, search engine optimization and static/dynamic billboards.Our policy is toresort casino properties, customer rewards and loyalty programs and wholly-ownedbranded taverns. In addition, we have also registered or applied to register numerous other trademarks in various jurisdictions in the United States in connection with our properties, facilities and development projects. We also hold a patent in the United States related to player tracking systems.Sale of Jamul Tribe Promissory NoteOn December 9, 2015, we sold our $60.0 million subordinated promissory note (the “Jamul Note”) from the Jamul Indian Village (the “Jamul Tribe”) to a subsidiary of Penn National Gaming, Inc. (“Penn National”) for $24.0 million in cash. Under the terms of the January 2015 merger agreement with Sartini Gaming (the “Merger Agreement”) and subject to applicable law, we agreed that the proceeds received from the sale of the Jamul Note, net of related costs, would be distributed in a special cash dividend to our shareholders holding shares as of the record date for such dividend (other than shareholders that had waived their right to receive such dividend in connection with the Merger). On June 17, 2016, our Board of Directors approved and declared the special dividend to the eligible shareholders of record on the close of business on June 30, 2016 (the “Record Date”) of cash in the aggregate amount of approximately $23.5 million (the “Special Dividend”), which was paid on July 14, 2016. The
Competition$1.71 per share amount of the Special Dividend was calculated by dividing the aggregate amount of the Special Dividend by 13,759,374 outstanding shares of common stock held by eligible shareholders on the Record Date (rounded down to the nearest whole cent per share).In connection with the special dividend and in accordance with our equity incentive plans approved by our shareholders, equitable anti-dilutive adjustments were made to the exercise prices of outstanding stock options to purchase shares of our common stock in order to preserve the value of such stock options following the Special Dividend. Accordingly, effective as of the close of business on the dividend payment date of July 14, 2016, the exercise price of each stock option under our equity incentive plans outstanding on the Record Date was reduced by $1.71 per share. See Note 9, Share-Based Compensation, in the accompanying consolidated financial statements for information on our anti-dilutive adjustments to the outstanding stock options.Competitionresort casino, tavern and distributed gaming industries are highly competitive. Our resort casino business competes with numerous casinos and casino-hotels of varying quality and size in our markets. We also compete with other non-gaming resorts and vacation destinations, and with various other casino and other entertainment businesses. The casino entertainment business is characterized by competitors that vary considerably in their size, quality of facilities, number of operations, brand identities, marketing and growth strategies, financial strength and capabilities, level of amenities, management talent and geographic diversity. Many of our regional and national competitors have greater brand recognition and significantly greater resources than we have. Their greater resources may also provide them with the ability to expand operations in the future.California)California and Arizona). The expansion of casino gaming in or near any geographic area from which we attract or expect to attract a significant number of our customers, including legalized casino gaming in neighboring states and on Native American land, could have a significant adverse effect on our business, financial condition, results of operations and prospects.businesses,operations, we face direct competition for our space lease, revenue share and participation locations from others involved in the distributed gaming business, as well as substantial competition for customers from other operators of casinos, hotels, taverns and other entertainment venues. Many of our regional and national competitors have greater brand recognition and significantly greater resources than we have. Their greater resources may also provide them with the ability to expand operationsvenues, as well as from others involved in the future. in both of our segments we face ever-increasing competition from online gaming, including mobile gaming applications for smart phones and tablet computers, state-sponsored lotteries, card clubs, sports books, fantasy sports websites and other forms of legalized gaming. Various forms of internet gaming have been approved in Nevada, and legislation permitting internet gaming has been proposed by the federal government and other states. The expansion of internet gaming in Nevada and other jurisdictions could result in significant additional competition for our operations.see “Part I, Item 1A. Risk Factors—refer to the risk factor entitled operations.”articlesArticles of incorporationIncorporation require our shareholders to cooperate with gaming authorities in such investigations and permit us to redeem the securities held by any shareholder whose holding of shares of our capital stock may result, in the judgment of our boardBoard of directors,Directors, in our failure to obtain or our loss of any license or franchise from any governmental agency held by us to conduct any portion of our business. If any gaming authority determines that a person is unsuitable to own our securities, then, under the applicable gaming laws and regulations, we can be sanctioned, including the loss of our privileged licenses or approvals, if, without the prior approval of the applicable gaming authority, we conduct certain business with the unsuitable person. For additional information, see “Part I, Item 1A. Risk Factors—refer to the risk factor entitled “Our shareholders are subject to extensive governmentgovernmental regulation and, if a shareholder is found unsuitable by a gaming authority, that shareholder would not be able to beneficially own our common stock directly or indirectly. Our shareholders may also be required to provide information that is requiredrequested by gaming authorities and we have the right, under certain circumstances, to redeem a shareholder’s securities; we may be forced to use our cash or incur debt to fund redemption of our securities.”see “Part I, Item 1A. Risk Factors—refer to the risk factor entitled “Changes to gaming tax laws could increase our cost of doing business and have a material adverse effect on our financial condition.”such as the casino properties we acquired in the American Acquisition, we may not know the full level of exposure that we may have undertaken despite appropriate due diligence. We endeavor to maintain compliance with environmental laws, but from time to time, current or historical operations on or adjacent to, our properties may have resulted or may result in noncompliance with environmental laws or liability for cleanup pursuant to environmental laws. In that regard, we may incur costs for cleaning up contamination relating to historical uses of certain of our properties. In February and April 2017, several former employees filed two separate purported class action lawsuits against us and on behalf of similarly situated individuals employed by us in Nevada. The lawsuits allege that we violated certain Nevada labor laws, including payment of an hourly wage below the statutory minimum wage without providing a qualified health insurance plan and an associated failure to pay proper overtime compensation. For additional information, please see Part I, Item 3 of this Annual Report on Form 10-K under the heading “Legal Proceedings.” From time to time, state and federal lawmakers have increased the minimum wage. It is difficult to predict when such increases may take place. Any such change to the minimum wage could have a material adverse effect on our business, financial condition, results of operations and prospects.The manufacturesale of alcoholic beverages iscasino properties to apply to a highly regulatedstate authority and, taxed business. Our brewery operations at PT’s Brewing Company in Las Vegas, Nevada require federal, state, and local licenses, permits and approvals. Our restaurant and on-site brewery at PT’s Brewing Company operate pursuantcertain locations, county or municipal authority for a license or permit to exceptions to the “tied house” laws, which in Nevada generally prohibit a manufacturer or supplier of brewery products from engaging in the business of wholesaling and prevent a wholesaler from engaging, directly or indirectly, in retail sales. Our brewery operations are subject to more restrictive regulations and increased taxation by federal, state and local governmental entities than are those of non-alcohol related beverage businesses. Federal, state and local laws and regulations govern the production and distribution of beer, including permitting, licensing, trade practices, labeling, advertising, marketing, distributor relationships and related matters. Federal, state and local governmental entities also levy various taxes, license fees, and other similar charges and may require bonds to ensure compliance with applicable laws and regulations. Failure to comply with applicable federal, state or local laws and regulations could result in higher taxes, penalties, fees, and suspension or revocation of permits, licenses or approvals and could have a material adverse effect on our business, financial condition, results of operations and prospects. From time to time, local and state lawmakers, as well as special interest groups, have proposed legislation that would increase the federal and/or state excise tax on alcoholic beverages or certain types ofsell alcoholic beverages. If adopted, such measures could affect some or all of our proprietary craft beer production. If federal or state excise taxes are increased, we may have to raise prices to maintain our current profit margins. Higher taxes may reduce overall demand for beer, thus negatively impacting sales of our beer. Further federal or state regulation may be forthcoming that could further restrict the distribution and sale of alcohol products. Any material increase in taxes or fees, or the adoption of additional taxes or fees or regulations, could have a material adverse effect on our business, financial condition, results of operations and prospects.restaurant business or businesses to be forced to cease operations. Moreover, state liquor laws may prevent the expansion of restaurant operations into certain markets.Casinos and Distributed Gaming segmentsbusinesses are affected by seasonal factors, including holidays, weather and travel conditions. Our casinoscasino properties, branded taverns and distributed gaming businesses in Nevada have historically experienced lower revenues during the summer as a result of fewer tourists due to higher temperatures, as well as increased vacation activity by local residents. Rocky Gap typically experiences higher revenues during summer months and may be significantly adversely impacted by inclement weather during winter months. Our Nevada branded taverns and distributed gaming operations typically experience higher revenues during the fall which corresponds with several professional sports seasons. Our Montana distributed gaming operations typically experience higher revenues during the fallwinter due to the inclement weather in the state and less opportunity for outdoor activities, in addition to the impact from professional sports seasons.seasons during the fall. While other factors like unemployment levels, market competition and the diversification of our business may either offset or magnify seasonal effects, some seasonality is likely to continue, which could result in significant fluctuation in our quarterly operating results.Employees2017,2022, we employed over 6,400 team members, which is a 2% increase from December 31, 2021 when we had approximately 6,9106,300 employees. Our efforts to re-staff since the COVID-19 closures contributed to the increase in team members in 2022.2,00041.0% of management roles held by women. Average rate of pay for female salaried employees falls within 10% of the overall average pay for male employees in the same category.resort casino properties from time to time. We historicallybelieve we have had good relationships with the unions representing our employees, and believe thatincluding those represented by unions.employee relationsemployees are good.At the Stratosphere,covered by three collective bargaining agreements cover our employees.agreements. Our collective bargaining agreement with the International Union of Operating Engineers, Local 501, AFL-CIO, as extended, expired on March 31, 2022, and we are in the process of negotiating an extension of the agreement. Our collective bargaining agreement with the Professional, Clerical and Miscellaneous Employees, Teamsters Local Union 986 (Valet and Warehouse) expires on March 31, 2018.2024. Our collective2018. Our collective bargaining agreement with the International Union of Operating Engineers, Local 501, AFL-CIO expires on March 31, 2018.At the Aquarius, four collective bargaining agreements cover our employees. Our collective bargaining agreement with the International Union of Operating Engineers, Local 501, AFL-CIO expires on March 31, 2020. Our collective bargaining agreement2023. We are also in negotiations with the International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artist and Allied Crafts of the United States, Its Territoriesits territories and Canada, Local 720, Las Vegas, NevadaNevada.November 30, 2022.February 28, 2025. Our collective bargaining agreement with the United Steelworkers of America, as extended, expires on April 1, 2018.March 31, 2023. Our collective bargaining agreement with the Security, Police,International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists and Fire ProfessionalAllied Crafts of the United States, Its Territories and Canada, Local 720, Las Vegas, Nevada expired on November 30, 2022, and we are in the process of negotiating an extension of the agreement.February 28, 2021.2019.2023.
Data Privacy and CybersecuritySet forth belowinformation concerning our executive officers, and their ages as of December 31, 2017.performed routinely throughout the year. Additional training is performed for those with remote work capabilities.NameAgePositionBlake L. Sartini58Chairman of the Board, President and Chief Executive OfficerStephen A. Arcana53Executive Vice President and Chief Operating OfficerCharles H. Protell43Executive Vice President, Chief Strategy Officer and Chief Financial OfficerSean T. Higgins53Executive Vice President of Governmental Affairs and Chief Legal OfficerEdward W. Martin, III53Executive Vice President, Chief Administrative OfficerBlake L. Sartini II32Senior Vice President of Distributed GamingGary A. Vecchiarelli40Senior Vice President of Finance and AccountingBlake L. Sartini joined Golden as ChairmanMembers of the Audit Committee of our Board Presidentof Directors receive regular updates on cybersecurity matters, including metrics, investments, and capabilities.The General Counsel, Chief ExecutiveTechnology Officer, in July 2015 in connectionand key information technology team members from the security, compliance, and vendor management office meet on a bi-weekly basis to discuss the results of our cybersecurity and privacy matters and to evaluate new technologies from a security, operational, and regulatory perspective prior to their implementation.the Merger. Priorany updates communicated to the Merger, Mr. Sartini served as the presidentleadership team. Our information technology senior leadership and chief executive officer of Sartini Gaming from its formationkey management team members perform tabletop exercises at least annually in January 2012, and as the founder and chief executive officer of Golden Gaming, LLC (“Golden Gaming”), which he founded in 2001. Priororder to establishing Golden Gaming, Mr. Sartini served in various management and executive positions with Station Casinos, LLC, including executive vice president and chief operating officer. Mr. Sartini also served as a director of Station Casinos, LLC from 1993 until 2001. Mr. Sartini is a memberbe prepared for execution of the Universitydefined incident response plan.Las Vegas Foundation’s Board of Trustees and was appointed toCalifornia, Massachusetts, New York, etc.). In addition, the Nevada Gaming Policy Committee in March 2014 by the Governor of Nevada. Mr. Sartini received a bachelor of science degree in business administration from the University of Nevada, Las Vegas.Stephen A. Arcana joined Golden as Executive Vice PresidentControl Board issues information technology internal control standards, which we use to evaluate our internal and Chief Operating Officer in July 2015 in connection with the Merger. Prior to the Merger, Mr. Arcana served as the chief operating officer for Golden Gaming from August 2003 until the closing of the Merger. From November 1995 to March 2003, Mr. Arcana held several executive positions with Station Casinos, LLC. Prior to joining Station Casinos, LLC, Mr. Arcana held a variety of hotel operations and food and beverage positions over a ten-year period with the Sands Hotel in Atlantic City, New Jersey. Mr. Arcana received a bachelor of science degree in hotel and restaurant management from Widener University School of Hotel and Restaurant Management in Chester, Pennsylvania.Charles H. Protell joined Golden as Executive Vice President, Chief Strategy Officer and Chief Financial Officer in November 2016. Prior to joining Golden, Mr. Protell served as managing director at Macquarie Capital’s investment banking group since May 2011, and as co-founder and a managing director at REGAL Capital Advisors from January 2009 until its acquisition by Macquarie Capital in May 2011. Prior to co-founding REGAL Capital Advisors, Mr. Protell held various investment banking roles at Credit Suisse, Deutsche Bank and CIBC World Markets. Mr. Protell received a bachelor of science degree in commerce from the University of Virginia.Sean T. Higgins joined Golden as Senior Vice Presidentof Government Affairs and Business Development in March 2016 and was promoted to Executive Vice President of Governmental Affairs and Business Development and Chief Legal Officer in October 2016. Prior to joining Golden, Mr. Higgins served as principal of STH Strategies, a firm he founded in early 2015. From August 2011 to January 2015, Mr. Higgins was managing principal of Porter Gordon Silver Communications, a full-service government affairs and business strategic consulting firm. From July 2010 to January 2015, Mr. Higgins was a partner in the law firm of Gordon Silver. Prior to that, Mr. Higgins spent 17 years as general counsel and head of government affairs for a multijurisdictional gaming company. Mr. Higgins received his law degree from Santa Clara University School of Law and his undergraduate degree in business administration from Southern Methodist University. He is licensed to practice law in the state of Nevada.Edward W. Martin, III joined Golden as Executive Vice President, Chief Administrative Officerin October 2017 in connection with the American Acquisition. Prior to joining Golden, Mr. Martin served as the chief operating officer, chief financial officer, treasurer and a member of the board of directors of American from September 2008 to October 2017. Prior to joining American, Mr. Martin held senior level finance, strategic planning, and development positions with Station Casinos, LLC, Silverton Casino, LLC, and Maloof Companies. From 1999 to 2011, Mr. Martin was a member of the board of directors of Nevada First Bank and its successor, the Bank of Nevada, theNevada affiliate of Western Alliance Bancorporation (NYSE:WAL), and also served as chairman of theexternal audit committee and as a member of the regulatory oversight committee. Mr. Martin currently servesprocedures on the board of directors of The Centech Group, a position he has held since 2013, a provider of network and telecom systems and solutions. Mr. Martin also serves as a member of the Board of Trustees of the College Savings Plans of Nevada, a position he has held since 2010. Mr. Martin received a bachelor of business administration degree from The University of Texas at Austin and attended the Owen Graduate School of Management at Vanderbilt University.Blake L. Sartini II joined Golden as Senior Vice President of Distributed Gaming in July 2015 in connection with the Merger. In his current position, he oversees all distributed gaming operations in Nevada and Montana, as well as the Nevada tavern locations operating under the brand names PT’s, Sierra Gold, SG Bar and Sean Patrick’s. From January 2010 until the Merger, Mr. Sartini II served in various roles with Sartini Gaming, including as Vice President of Operations for Golden Route Operations, LLC (“GRO”), a subsidiary of Sartini Gaming, from September 2014 until the Merger, as assistant director for GRO from January 2012 to September 2014, and as a marketing manager from January 2010 to January 2012. Prior to joining Sartini Gaming, Mr. Sartini II served as senior business associate with the Ultimate Fighting Championship for its international event operations and talent relations in the United Kingdom. Mr. Sartini II received a bachelor of science degree in business administration from Chapman University in Orange, California.Gary A. Vecchiarelli joined Golden as Senior Vice President of Finance and Accounting in January 2017. From May 2012 to December 2016, Mr. Vecchiarelli served as chief financial officer of Galaxy Gaming, Inc., a public company that develops, manufactures and distributes casino table games and wagering platforms. Prior to that, Mr. Vecchiarelli spent most of his career working in public accounting including as audit manager for BDO USA, LLP and audit supervisor for McGladrey & Pullen, LLP. Mr. Vecchiarelli received a bachelor of science degree in business administration in accounting from California State University at San Jose. Mr. Vecchiarelli was President of Financial Executives International, Las Vegas Chapter in 2017 and has resided on its board of directors since 2012. Mr. Vecchiarelli is a member of the American Institute of Certified Public Accountants and maintains active CPA licenses in California and Nevada.Securities Exchange Act, of 1934, as amended, and the rules and regulations promulgated thereunder. Copies of these documents are also available to our shareholders upon written request to our Chief Financial Officer at 6595 SS. Jones Boulevard, Las Vegas, Nevada 89118. Information on the website does not constitute part of this Annual Report on Form 10-K. In addition, any materials filed with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.ITEM 1A. on Form 10-K in evaluating our business and prospects. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also materially adversely impact ouron Form 10-K, including the information in “Management’sPart II, Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of this Annual Report on Form 10-K,Operations, as well as our consolidated financial statements and the related notes.Any failurenotes included in successfully integrate our businessesBusiness and businesses we acquire, including the American business, could materially adversely affect our business, and we may not realize the full benefits of the American Acquisition or our other strategic acquisitions.Our ability to realize the anticipated benefits of our strategic acquisitions, including our acquisition of American in October 2017 and our acquisition of Montana distributed gaming businesses in 2016, will depend, to a large extent, on our ability to successfully integrate our businesses with the businesses we acquire. Integrating and coordinating the operations and personnel of multiple businesses and managing the expansion in the scope of our operations and financial systems involves complex operational, technological and personnel-related challenges. The potential difficulties, and resulting costs and delays, relating to the integration of our business with our strategic acquisitions include:the difficulty in integrating newly acquired businesses and operations in an efficient and effective manner;the challenges in achieving strategic objectives, cost savings and other benefits expected from acquisitions;the diversion of management’s attention from day-to-day operations;additional demands on management related to the increased size and scope of our company following significant acquisitions, such as the American Acquisition;the assimilation of employees and the integration of different business cultures;challenges in attracting and retaining key personnel;the need to integrate information, accounting, finance, sales, billing, payroll and regulatory compliance systems;challenges in keeping existing customers and obtaining new customers; andchallenges in combining product offerings and sales and marketing activities.There is no assurance that we will successfully or cost-effectively integrate our businesses with the businesses we acquire, and the costs of achieving systems integration may substantially exceed our current estimates. The integration of the recently acquired American business into our own operations in particular will be time consuming and presents financial, managerial and operational challenges. Issues that arise during this process may divert management’s attention away from our day-to-day operations, and any difficulties encountered in the integration process could cause internal disruption in general, which could adversely impact our relationships with customers, suppliers, employees and other constituencies. Combining our different systems, technology, networks and business practices could be more difficult and time consuming than we anticipated, and could result in additional unanticipated expenses. Our combined results of operations could also be adversely affected by any issues we discover that were attributable to American’s operations that arose before the acquisition. Moreover, as non-public companies at the time of our acquisition, neither American nor our other recent strategic acquisitions had to comply with the requirements of the Sarbanes-Oxley Act of 2002 for internal control over financial reporting and other procedures. Bringing the legacy systems for these businesses into compliance with those requirements may cause us to incur substantial additional expense.In addition, the integration process may cause an interruption of, or loss of momentum in, the activities of our combined business. If management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer and our results of operations and financial condition may be harmed. Even if our businesses are successfully integrated, we may not realize the full benefits of the American Acquisition or our other strategic acquisitions, including anticipated synergies, cost savings or growth opportunities, within the expected timeframes or at all. In addition, we have incurred, and may incur additional, significant integration and restructuring expenses to realize synergies. However, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These expenses could, particularly in the near term, exceed the savings that we expect to achieve from elimination of duplicative expenses and the realization of economies of scale and cost savings. Although we expect that the realization of efficiencies related to the integration of the businesses may offset incremental transaction-related and restructuring costs over time, we cannot give any assurance that this net benefit will be achieved in the near term, or at all. Any of these matters could materially adversely affect our businesses or harm our financial condition, results of operations and prospects. both of our business segments and may lose market share.resort casino, tavern and distributed gaming industries are highly competitive. Our resort casino business competesproperties compete with numerous casinos and casino-hotels of varying quality and size in our markets. We also compete with other non-gaming resorts and vacation destinations, and with various other casino and other entertainment businesses. The casino entertainment business is characterized by competitors that vary considerably in their size, quality of facilities, number of operations, brand identities, marketing and growth strategies, financial strength and capabilities, level of amenities, management talent and geographic diversity. Many of our regional and national competitors have greater brand recognition and significantly greater resources than we have. Their greater resources may also provide them with the ability to expand operations in the future.California)California and Arizona). The expansion of casino gaming in or near any geographic area from which we attract or expect to attract a significant number of our customers, including legalized casino gaming in neighboring states and on Native American land, could have a significant adverse effect on our business, financial condition, and results of operations.businesses,operations, we face direct competition for our space lease, revenue share and participation locations from others involved in the distributed gaming business, as well as substantial competition for customers from other operators of casinos, hotels, taverns and other entertainment venues. venues, as well as from others involved in the distributed gaming business. in both of our segments we face ever-increasing competition from online gaming, including mobile gaming applications for smart phones and tablet computers, state-sponsored lotteries, card clubs, sports books, fantasy sports websites and other forms of legalized gaming. Various forms of internet gaming have been approved in Nevada, and legislation permitting internet gaming has been proposed by the federal government and other states. The expansion of internet gaming in Nevada and other jurisdictions could result in significant additional competition for our operations.We incurred significant indebtedness in connection with the American Acquisition and our significant indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations.We incurred significant indebtedness in connection with the American Acquisition and the associated refinancing of our former senior secured credit facility. As of December 31, 2017, the total principal amount of our senior secured indebtedness, excluding unamortized debt issuance costs, was $1.0 billion. As a result of the increases in our outstanding debt, demands on our cash resources have increased. The increased level of debt could, among other things:require us to dedicate a larger portion of our cash flow from operations to the servicing and repayment of our debt, thereby reducing funds available for working capital, capital expenditures and acquisitions, and other general corporate requirements;limit our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements;limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;restrict our ability to make strategic acquisitions or dispositions or to exploit business opportunities;increase our vulnerability to general adverse economic and industry conditions and increases in interest rates;place us at a competitive disadvantage compared to our competitors that have less debt; andadversely affect our credit rating or the market price of our common stock.Any of these risks could impact our ability to fund our operations or limit our ability to expand our business, which could have a material adverse effect on our business, financial condition, results of operations and prospects.We may incur additional indebtedness, which could further increase the risks associated with our leverage.We may incur significant additional indebtedness in the future, which may include financing relating to capital expenditures, potential acquisitions or business expansion, working capital or general corporate purposes. The senior secured credit facilities that we entered into in connection with the closing of the American Acquisition included a $100.0 million senior secured revolving credit facility, which was undrawn at December 31, 2017. In addition, our senior secured credit facilities permit us, subject to specific limitations, to incur additional indebtedness. If new indebtedness is added to our current level of indebtedness, the related risks that we now face could intensify.We may not be able to generate sufficient cash flows to service all of our indebtedness and fund our operating expenses, working capital needs and capital expenditures, and we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.Our ability to make scheduled payments on or refinance our indebtedness will depend upon our future operating performance and our ability to generate cash flow in the future, which are subject to general economic, financial, business, competitive, legislative, regulatory and other factors that are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness or fund our other liquidity needs. If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investment and capital expenditures, dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, such alternative actions may not allow us to meet our scheduled debt service obligations. Our senior secured credit facilities restrict our ability to dispose of assets and use the proceeds from asset dispositions, and may also restrict our ability to raise debt or equity capital to repay or service our indebtedness. If we cannot make scheduled payments on our debt, we will be in default and, as a result, our lenders could declare all outstanding amounts to be due and payable, terminate or suspend their commitments to loan money and foreclose against the assets securing such debt, and we could be forced into bankruptcy or liquidation, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects and could result in you losing your investment in our company.Covenants in our debt instruments restrict our business and could limit our ability to implement our business plan.Our senior secured credit facilities contain, and any future debt instruments likely will contain, covenants that may restrict our ability to implement our business plan, finance future operations, respond to changing business and economic conditions, secure additional financing, and engage in opportunistic transactions, such as strategic acquisitions. Our senior secured credit facilities include covenants restricting, among other things, our ability to do the following:incur, assume or guarantee additional indebtedness;issue redeemable stock and preferred stock;grant or incur liens;sell or otherwise dispose of assets, including capital stock of subsidiaries;make loans and investments;pay dividends, make distributions, or redeem or repurchase capital stock;enter into transactions with affiliates; andconsolidate or merge with or into, or sell substantially all of our assets to, another person.In addition, our revolving credit facility contains a financial covenant applying a maximum net leverage ratio when borrowings under the facility exceed 30% of the total revolving commitment. Our senior secured credit facilities are secured by liens on substantially all of our and the subsidiary guarantors’ present and future assets (subject to certain exceptions).If we default under any of our senior secured credit facilities because of a covenant breach or otherwise, all outstanding amounts thereunder could become immediately due and payable. We cannot assure you that we will be able to comply with the covenants in our senior secured credit facilities or that any covenant violations will be waived. Any violation that is not waived could result in an event of default and, as a result, our lenders could declare all outstanding amounts to be due and payable, terminate or suspend their commitments to loan money and foreclose against the assets securing such debt, and we could be forced into bankruptcy or liquidation, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects and could result in you losing your investment in our company.replacement, from time to time, replacement of furniture, fixtures and equipment. We may also need to make capital expenditures to comply with applicable laws and regulations. Construction projects entail significant risks, which can substantially increase costs or delay completion of a project. Such risks include shortages of materials or skilled labor, unforeseen engineering, environmental or geological problems, work stoppages, weather interference and unanticipated cost increases. Most of these factors are beyond our control. In addition, difficulties or delays in obtaining any of the requisite licenses, permits or authorizations from regulatory authorities can increase the cost or delay the completion of an expansion or development. Significant budget overruns or delays with respect to expansion and development projects could materially adversely affect our results of operations.In addition, anyFor example, between May 2018 and December 31, 2021 we invested over $109 million in strategic renovations of The STRAT. Any such renovations and capital improvements usually generate little or no cash flow until the projects are completed. We may not be able to fund such projects solely from cash provided from operating activities. Consequently, we may have to rely upon the availability of debt or equity capital to fund renovations and capital improvements, and our ability to carry them out will be limited if we cannot obtain satisfactory debt or equity financing, which will depend on, among other things, market conditions. We cannot assure you that we will be able to obtain additional equity or debt financing on favorable terms or at all. Our failure to renovate and maintain our casino and branded tavern properties from time to time may put us at a competitive disadvantage to casinos or taverns offering more modern and better maintained facilities, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Recently, U.S. governmental authorities have evidenced an increased focus on compliance with anti-money laundering laws and regulations in the gaming industry. Any violation of anti-money laundering laws or regulations could have a material adverse effect on our business, financial condition, results of operations and prospects. Internal control policies and procedures and employee training and compliance programs that we have implemented to deter prohibited practices may not be effective in prohibiting our employees, contractors or agents from violating or circumventing our policies and the law. If we or our employees or agents fail to comply with applicable laws or our policies governing our operations, we may face investigations, prosecutions and other legal proceedings and actions which could result in civil penalties, administrative remedies and criminal sanctions. Any such government investigations, prosecutions or other legal proceedings or actions could have a material adverse effect on our business, financial condition, results of operations and prospects. such as the casino properties we acquired in the American Acquisition, we may not know the full level of exposure that we may have undertaken despite appropriate due diligence. We endeavor to maintain compliance with environmental laws, but from time to time, current or historical operations on or adjacent to, our properties may have resulted or may result in noncompliance with environmental laws or liability for cleanup pursuant to environmental laws. In that regard, we may incur costs for cleaning up contamination relating to historical uses of certain of our properties. In February and April 2017, several former employees filed two separate purported class action lawsuits against us and on behalf of similarly situated individuals employed by us in Nevada. The lawsuits allege that we violated certain Nevada labor laws, including payment of an hourly wage below the statutory minimum wage without providing a qualified health insurance plan and an associated failure to pay proper overtime compensation. For additional information, please see Part I, Item 3 of this Annual Report on Form 10-K under the heading “Legal Proceedings.” From time to time, state and federal lawmakers have increased the minimum wage. It is difficult to predict when such increases may take place. Any such change to the minimum wage could have a material adverse effect on our business, financial condition, results of operations and prospects.The manufacturesale of alcoholic beverages iscasino properties to apply to a highly regulatedstate authority and, taxed business. Our brewery operations at PT’s Brewing Company in Las Vegas, Nevada require federal, state, and local licenses, permits and approvals. Our restaurant and on-site brewery at PT’s Brewing Company operate pursuantcertain locations, county or municipal authority for a license or permit to exceptions to the “tied house” laws, which in Nevada generally prohibit a manufacturer or supplier of brewery products from engaging in the business of wholesaling and prevent a wholesaler from engaging, directly or indirectly, in retail sales. Our brewery operations are subject to more restrictive regulations and increased taxation by federal, state and local governmental entities than are those of non-alcohol related beverage businesses. Federal, state and local laws and regulations govern the production and distribution of beer, including permitting, licensing, trade practices, labeling, advertising, marketing, distributor relationships and related matters. Federal, state and local governmental entities also levy various taxes, license fees, and other similar charges and may require bonds to ensure compliance with applicable laws and regulations. Failure to comply with applicable federal, state or local laws and regulations could result in higher taxes, penalties, fees, and suspension or revocation of permits, licenses or approvals and could have a material adverse effect on our business, financial condition, results of operations and prospects. From time to time, local and state lawmakers, as well as special interest groups, have proposed legislation that would increase the federal and/or state excise tax on alcoholic beverages or certain types ofsell alcoholic beverages. If adopted, such measures could affect some or all of our proprietary craft beer production. If federal or state excise taxes are increased, we may have to raise prices to maintain our current profit margins. Higher taxes may reduce overall demand for beer, thus negatively impacting sales of our beer. Further federal or state regulation may be forthcoming that could further restrict the distribution and sale of alcohol products. Any material increase in taxes or fees, or the adoption of additional taxes or fees or regulations, could have a material adverse effect on our business, financial condition, results of operations and prospects.restaurant business or businesses to be forced to cease operations. Moreover, state liquor laws may prevent the expansion of restaurant operations into certain markets. in operation, with coverage features and insured limits that we believe are customary in their breadth and scope, each such policy has certain exclusions. Certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes, floods or terrorist acts, or certain liabilities may be uninsurable or too expensive to justify obtaining insurance. Marketprice.agreements. These agreements, which have staggered expirations over the next several years. Certain of our collective bargaining agreements have expired and we are in the process of negotiating extensions. We cannot ensure that, upon the expiration of existing collective bargaining agreements, new agreements will be reached without union action or that any such new agreements will be on terms satisfactory to us. The inability to negotiate and enter into a new collective bargaining agreementagreements on favorable terms could result in an increase in our operating expenses or covered employees could strike or engage in other collective behaviors. Any renegotiation of these and other labor agreements could significantly increase our costs for wages, healthcare, pension plans and other benefits, and could have a material adverse effect on the business of our casino properties and our financial condition, results of operations and prospects.disclosedexperienced breaches of their security, some of which have involved sophisticated and highly targeted attacks on their computer networks. While we have and will continue to implement network security measures and data protection safeguards, our servers and other computer systems are vulnerable to viruses, malicious software, hacking, break-ins or theft, data privacy or security breaches, third-party security breaches, employee error or malfeasance and similar events. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems, change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. IfFor example, in January 2021, we were affected by a ransomware cyber-attack that temporarily disrupted our access to certain information located on our network. Although we incurred some expenses with respect thereto, our financial information and business operations were not materially affected. We implemented a variety of measures to further enhance our cybersecurity protections and minimize the impact of any future cyber incidents. Nonetheless, if unauthorized parties gain access to our information technology and other systems, they may be able to misappropriate assets or sensitive information (such as personally identifiable information of our customers, business partners and employees), cause interruption in our operations, corruption of data or computers, or otherwise damage our reputation and business. In such circumstances, we may incur expenses to retrieve such data, could be held liable to our customers or other parties, or could be subject to regulatory or other actions for breaching privacy rules. Any compromise of our security could result in a loss of confidence in our security measures, and subject us to litigation, civil or criminal penalties, and negative publicity, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Further, if we are unable to comply with the security standards established by banks and the payment card industry, we may be subject to fines, restrictions, and expulsion from card acceptance programs, which could materially adversely affect our operations.slots,slot machines, table games, race and sports betting, and all other games we provide to our customers. We use the hold percentage as an indicator of a game’s performance against its expected outcome. Although each game generally performs within a defined statistical range of outcomes, actual outcomes may vary for any given period. The hold percentage and actual outcome on our games can be impacted by the level of a customer’s skill in a given game, errors made by our employees, the number of games played, faults within the computer programs that operate our slotsslot machines and the random nature of slot payouts. If our games perform below their expected range of outcomes, our cash flow, financial condition and results of operations may suffer.casinoscasino properties solely in Nevada and in Flintstone, Maryland, operate our branded taverns mostly in the greater Las Vegas, Nevada metropolitan area, and conduct our distributed gaming (including tavern gaming in our wholly-owned taverns) business solely in Nevada and Montana. Due to this geographic concentration, our results of operations and financial condition are subject to greater risks from changes in local and regional conditions, such as:
•a decline in the number of residents in or near, or visitors to, our properties;Some of our casino propertiesmost of our tavern propertiesdistributed gaming operations largely cater to the local markets and depend on the local marketslocals market for customers. Competition for local customers in Las Vegas in particular has historically beenis intense. Local competitive risks and our failure to attract a sufficient number of guests, gaming customers and other visitors in these locations could adversely affect our business. In addition, the number of visitors to our Nevada casino properties may be adversely affected by increased transportation costs, the number and frequency of flights into or out of Las Vegas, and capacity constraints of the interstate highways that connect our casino properties with the metropolitan areas in which our customers reside.casinoscasino properties, branded taverns and distributed gaming businesses in Nevada have historically experienced lower revenues during the summer as a result of fewer tourists due to higher temperatures, as well as increased vacation activity by local residents. Rocky Gap typically experiences higher revenues during summer months and may be significantly adversely impacted by inclement weather during winter months. Our Nevada branded taverns and distributed gaming operations typically experience highermonths due to the inclement weather in the state and less opportunity for outdoor activities, in addition to the impact from professional sports seasons.seasons during the fall. While other factors like unemployment levels, market competition and the diversification of our business may either offset or magnify seasonal effects, some seasonality is likely to continue, which could result in significant fluctuation in our quarterly operating results.Our success depends in part on our ability to acquire, enhance, and/or introduce successful gaming concepts and game content, and we may be unable to obtain slots or related technology from our third party suppliers on a timely, cost-effective basis.Our business is heavily dependent on revenue generated by the games, particularly slots, we offer to our customers. We source games and game content through third-party suppliers, and currently rely on a limited number of suppliers for our slots and related technology. We believe that creative and appealing game content, innovative game concepts and licensed brands produce more revenue for our casinos and other gaming locations and provide them with a competitive advantage, which in turn enhances our revenue and our ability to attract new business and to retain existing business. There can be no assurance that we will be able to sustain the acceptance of our existing game content or effectively obtain from third parties game content or licensed brands that will be widely accepted by our customers, or that we will be able to obtain slots or related technology on a cost-effective basis. There can be no assurance that our third party suppliers will be able to produce new creative and appealing game content, innovative game concepts, and licensed brands in the future that will be widely accepted by our customers. As a result, we may be forced to incur significant unanticipated costs to secure alternative third party suppliers or adjust our operations, which could have a material adverse effect on our business, financial condition, results of operations and prospects.businessoperations is dependent on our ability to renew our contractsagreements. the majority of our distributed gaming business under space lease revenue share and participation contractsagreements with third parties. ContractsAgreements with chain store and streetother third-party customers are renewable at the option of the ownerstreet account.a third party. As our distributed gaming contractsagreements expire, we are required to compete for renewals. If we are unable to renew a material portion of our space lease revenue share and participation contracts,agreements, this could have a material adverse effect on our business, financial condition, results of operations and prospects. We cannot assure you that our existing space lease, revenue share and participation contractsagreements will be renewed on reasonable or comparable terms, or at all.Our business and stock price may be adversely affected if our internal controls are not effective.We have previously reported material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis. As discussed in Part II, Item 9A, “Controls and Procedures,” the material weakness identified as of December 31, 2016 was that account reconciliations were not consistently prepared on a timely basis and subjected to proper review and written approval by a person not involved in their preparation. Based upon the remediation actions described in such section, management has concluded that such material weakness has been remediated as of December 31, 2017. Although we believe we have taken appropriate actions to remediate the control deficiencies we have identified and to strengthen our internal control over financial reporting, we cannot assure you that we will not discover other material weaknesses in the future. The existence of one or more internal control deficiencies could result in errors in our financial statements, and substantial costs and resources may be required to rectify internal control deficiencies. If we cannot produce reliable financial reports, investors could lose confidence in our reported financial information, the market price of our common stock could decline significantly, we may be unable to obtain additional financing to operate and expand our business, and our business, financial condition and prospects could be harmed.adversely determined,without merit, can be expensive to defend and could expose us to significant liabilities, damage our reputation and result in substantial losses.SeeRefer to “Note 13 — Commitments and Contingencies” in Part I,II, Item 38: Financial Statements and Supplemental Data of this Annual Report on Form 10-K under the heading “Legal Proceedings” for additional information. Certain litigation claims may not be covered entirely or at all by our insurance policies, or our insurance carriers may seek to deny coverage. In addition, litigation claims can be expensive to defend and may divert our attention from the operations of our businesses. Further, litigation involving visitors to our properties, even if without merit, can attract adverse media attention.OperatingFinancial Officer, and our Chief Strategy and FinancialOperating Officer. We believe our success depends to a significant degree on our ability to attract and retain highly skilled personnel. The competition for these types of personnel is intense and we compete with other potential employers for the services of our employees. As a result, we may not succeed in hiring and retaining the executives and other employees that we need. An inability to hire quality employees or the loss of key employees could have a material adverse effect on our business, financial condition, results of operations and prospects.
Inability to complete the sale of Rocky Gap could negatively impact our business, financial condition, results of operations or prospects.2017, after giving effect to the underwritten public offering that was completed in January 2018,2022, our executive officers and directors and entities affiliated with them would have owned, in the aggregate, approximately 34%23% of the outstanding shares of our common stock. Accordingly, these shareholders will be able to substantially influence all matters requiring approval by our shareholders, including the approval of mergers or other business combination transactions and the composition of our Board of Directors. This concentration of ownership may also delay, defer or even prevent a change in control of our company and would make some transactions more difficult or impossible without their support. Circumstances may arise in which the interests of these shareholders could conflict with the interests of our other shareholders.or the Gaming Commission,(the “Gaming Commission”) may be required to be found suitable if the Gaming Commission has reason to believe that his or her acquisition of that ownership, or his or her continued ownership in general, would be inconsistent with the declared public policy of Nevada, in the sole discretion of the Gaming Commission. Any person required by the Gaming Commission to be found suitable shall apply for a finding of suitability within 30 days after the Gaming Commission’s request that he or she should do so and, together with his or her application for suitability, deposit with the Nevada Gaming Control Board, or the Control Board, a sum of money which, in the sole discretion of the Control Board, will be adequate to pay the anticipated costs and charges incurred in the investigation and processing of that application for suitability, and deposit such additional sums as are required by the Control Board to pay final costs and charges.For example, underUnder Nevada gaming laws, any person who acquires or holds more than 5% of our voting power must report the acquisition or holding to the Gaming Commission. Except for certain pension or employee benefit plans, each person who acquires or holds the beneficial ownership of any amount of any class of voting power and who has the intent to engage in any “proscribed activity” shall (a) within 2 days after possession of such intent, notify the Chair of the Nevada Board in the manner prescribed by the Chair; (b) apply to the Gaming Commission for a finding of suitability within 30 days after notifying the Chair pursuant to paragraph (a); and (c) deposit with the Nevada Board the sum of money required by the Nevada Board to pay the anticipated costs and charges incurred in the investigation and processing of the application. “Proscribed activity” means: 1. An activity that necessitates a change or amendment to our corporate charter, bylaws, management, policies or operation of the Company; 2. An activity that materially influences or affects the affairs of the Company; or 3. Any other activity determined by the Gaming Commission to be inconsistent with holding voting securities for investment purposes. Nevada gaming regulations also require that beneficial owners of more than 10% of our voting power apply to the Gaming Commission for a finding of suitability within 30 days after the Chairman of the Nevada Board mails written notice requiring such filing. Further, an “institutional investor,” as defined in the Nevada gaming regulations, that acquires more than 10%, but not more than 25%, of our voting power may apply to the Gaming Commission for a waiver of such finding of suitability if such institutional investor holds our voting securities for investment purposes only.volatile, and you may lose some or all of your investment.statement with the SECstatements for the future sale of up to $150 million in aggregate amount of common stock, preferred stock, debt securities warrants and units and the resale of upother securities, pursuant to approximately 8.0 million shares of our common stock held by the selling securityholders named therein. Thewhich we may offer securities may be offeredfor sale from time to time, separately or together, directly by us or throughunderwriters, dealers or agents at amounts, prices, interest rates and other terms to be determined at the time of the offering. For example, in January 2018, certain of the named selling securityholders completed the resale of 6.5 million shares of our common stock and we completed the sale of 975,000 newly issued shares of our common stock in an underwritten public offering pursuant to this shelf registration statement.the American Acquisition in October 2017 (all of which shares were resold in the secondary public offering in January 2018), and approximately 8.5 million shares of our common stock in connection with the acquisition of Sartini GamingAmerican Casino and Entertainment Properties LLC in July 2015 (of which approximately 1.0 million shares were resold in the secondary public offering in January 2018).2017. In addition, a substantial number of shares of our common stock is reserved for issuance upon the exercise of stock options and other equity awards pursuant to our employee benefit plans. We cannot predict the size of future issuances of our common stock or the effect, if any, that future sales and issuances of shares of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock (including shares issued in connection with the acquisition of Sartini Gaming, upon the exercise of stock options and warrants or in connection with acquisition financing), or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock. In addition, these sales may be dilutive to existing shareholders.Our future results may differ materially from the unaudited pro forma financial results that we have disclosed.The pro forma financial results that we have disclosed with respect to the American Acquisition have been presented for illustrative purposes only, were based on various adjustments, assumptions and preliminary estimates and may not be an indication of our financial condition or results of operations following the American Acquisition for several reasons. Our actual financial condition and results of operations following the American Acquisition may not be consistent with, or evident from, these pro forma financial results. In addition, the assumptions used in preparing the pro forma financial results may not prove to be accurate, and other factors may affect our financial condition or results of operations following the American Acquisition. Any potential decline in our financial condition or results of operations may cause significant declines in our stock price.senior secured creditdebt facilities may discourage, delay or prevent a change in control or prevent an acquisition of our business at a premium price.senior secured credit facilities provideCredit Facility provides for an event of default upon the occurrence of certain specified change of control events.ITEM 1B.Company HeadquartersWe lease a 41,000 square foot buildingLas Vegas, Nevada, which houses our company headquarters and a portionPart I, Item 1: Business of which we have sub-leased. this Annual Report.lease for our office headquarters building is with a related party and expires on July 31, 2025. See Note 15, Related Party Transactions, in the accompanying consolidated financial statements forfollowing table provides further information on our transactions with related parties.CasinosStratosphere: We ownproperties and identifies the approximately 34 acres of land on which the Stratosphere is located (of which approximately 17 acres are undeveloped and reserved for future development).Arizona Charlie’s Decatur: We own the approximately 17 acres of land on which our Arizona Charlie’s Decatur casino property is located. In addition, we lease office, storage and laundry space for our Arizona Charlie’s Decatur casino property in an adjacent shopping center. The lease is with an unrelated party and expires in 2097.Arizona Charlie’s Boulder: We own the approximately 24 acres of land on which our Arizona Charlie’s Boulder casino property is located.Aquarius: We own the approximately 18 acres of land on which the Aquarius casino property is located (of which approximately 1.6 acres are undeveloped and reserved for future development).Pahrump Casinos: We own the approximately 40 acres of land on which Pahrump Nugget is located (of which approximately 20 acres are undeveloped and reserved for future development) and the approximately 35 acres of land on which our Lakeside Casino & RV Park is located. Our Gold Town Casino is located on four leased parcels of land, comprising approximately nine acres in the aggregate. Theproperties subject to leases are with unrelated third parties and have various expiration dates beginning in 2026 (for the parcel on which our main casino building is located, which we lease from a competitor), and we sublease approximately two of the acres to an unrelated third party.Rocky Gap: We lease the approximately 270 acres in the Rocky Gap State Park on which Rocky Gap is situated from the Maryland DNR pursuant to a 40-year operating ground lease. The lease expires in 2052, with an option to renew for an additional 20 years. We own the 170,000 square foot Rocky Gap building.All of our owned and leasedunderlying real property for our casino properties, along with substantially all of theestate assets of the casino properties, are subject to liens securing all of our obligations under our senior secured credit facilities (subject to receipt of certain approvals).Distributed GamingWe lease our 57 branded tavern locations under non-cancelable operating leases. As of December 31, 2017, the terms of our tavern leases ranged from one to 15 years, with various renewal options from one to 15 years. Four of our tavern locations were leased from related parties as of December 31, 2017. See Note 15, Related Party Transactions, in the accompanying consolidated financial statements for information on our transactions with related parties.
2022:ITEM 3.Name and Location Approximate Acres Notes Nevada Casino Resorts The STRAT (Las Vegas, NV) 34 Approximately 17 acres are undeveloped and reserved for future development, approximately 7 acres of which have been leased to a third party for development. Aquarius (Laughlin, NV) 18 Approximately 1.6 acres are undeveloped and reserved for future development. Edgewater (Laughlin, NV) 16 In addition, we lease approximately 20 acres of land for the Laughlin Event Center for our Laughlin casino properties. The lease is with an unrelated party and expires in 2027. Colorado Belle (Laughlin, NV) 22 The operations of this casino resort remain suspended. Nevada Locals Casinos Arizona Charlie’s Boulder (Las Vegas, NV) 24 Arizona Charlie’s Decatur (Las Vegas, NV) 17 We lease office, storage and laundry space for our Arizona Charlie’s Decatur in an adjacent shopping center. The lease is with an unrelated party and expires in 2097. Gold Town Casino (Pahrump, NV) 9 The casino property is located on four leased parcels of land. The leases are with unrelated third parties and have various expiration dates beginning in 2026 (for the parcel on which our main casino building is located, which we lease from a competitor), and we sublease approximately two of the acres to an unrelated third party. Lakeside Casino & RV Park (Pahrump, NV) 35 Pahrump Nugget (Pahrump, NV) 40 Approximately 20 acres are undeveloped and reserved for future development. Maryland Casino Resort Rocky Gap (Flintstone, MD) 270 Approximately 270 acres in the Rocky Gap State Park on which Rocky Gap is situated is leased from the Maryland DNR pursuant to a 40-year ground lease. The lease expires in 2052, with an option to renew for an additional 20 years. Nevada Taverns 64 branded tavern locations (Las Vegas, NV and Reno, NV) — All tavern locations are leased with lease terms ranging from 5 to 20 years, with various renewal options from 5 to 25 years. Corporate and Other Company headquarters (Las Vegas, NV) — Office and warehouse space (NV) — Office and warehouse space (MT) — From time to time, we are involved in a varietylawsuits, claims, investigations and otherour legal proceedings arisingis contained in the ordinary course of business, including proceedings concerning labor“Note 13 — Commitments and employment matters, personal injury claims, breach of contract claims, commercial disputes, business practices, intellectual property, taxContingencies” in Part II, Item 8: Financial Statements and other matters for which we have recorded $1.5 million for claims as of the dateSupplemental Data of this filing. Although lawsuits, claims, investigations and other legal proceedings are inherently uncertain and their results cannot be predicted with certainty, we believe that the resolution of our currently pending matters should not have a material adverse effect on our business, financial condition, results of operations or liquidity. Regardless of the outcome, legal proceedings can have an adverse impact on us because of defense costs, diversion of management resources and other factors. In addition, it is possible that an unfavorable resolution of one or more such proceedings could in the future materially and adversely affect our business, financial condition, results of operations or liquidity in a particular period.In February and April 2017, several former employees filed two separate purported class action lawsuits against us in the District Court of Clark County, Nevada, and on behalf of similarly situated individuals employed by us in the State of Nevada. The lawsuits allege we violated certain Nevada labor laws including payment of an hourly wage below the statutory minimum wage without providing a qualified health insurance plan and an associated failure to pay proper overtime compensation. The complaints seek, on behalf of the plaintiffs and members of the putative class, an unspecified amount of damages (including punitive damages), injunctive and equitable relief, and an award of attorneys’ fees, interest and costs. In the second half of 2017, we agreed to settle the first of these two cases, subject to court approval. The second case is in the discovery phase.In February 2018, a prior guest of the Stratosphere filed a purported class action complaint against us in the United States District Court, District of Nevada, on behalf of similarly situated individuals and entities that paid the Clark County Combined Transient Lodging Tax (“Tax”) on the portion of a resort fee that constitutes charges for Internet access, during the period of February 6, 2014 through the date the alleged conduct ceases. The lawsuit alleges that the Tax was charged in violation of the federal Internet Tax Freedom Act, which imposes a national moratorium on the taxation of Internet access by states and their political subdivisions, and seeks, on behalf of the plaintiff and the putative class, damages equal to the amount of the Tax collected on the Internet access component of the resort fee, injunctive relief, disgorgement, interest, fees and costs. We have not yet been served with the complaint. In the event, a complaint is served on us, we anticipate being accorded a stay to respond in connection with an agreement that other hotel casino operators have entered into with regard to case consolidation while the federal court reviews subject matter jurisdiction. This case is at an early stage in the proceedings, and we are therefore unable to make a reasonable estimate of the probable loss or range of losses, if any, that might arise from this matter.While legal proceedings are inherently unpredictable and no assurance can be given as to the ultimate outcome of any of the above matters, based on management’s current understanding of the relevant facts and circumstances, we believe that these proceedings should not have a material adverse effect on our financial position, results of operations or cash flows.ITEM 4.ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESNASDAQNasdaq Global Market under the ticker symbol GDEN. The following table sets forth, for the periods indicated, the high and low sales prices per share of our common stock as reported by NASDAQ:March 14, 2018,February 20, 2023, there were approximately 240270 shareholders of record of our common stock.Pursuant to the terms of the Merger Agreement, the proceeds received from the sale of the Jamul Note, net of related costs, were distributed on July 14, 2016 in a special dividend of cash in the aggregate amount of approximately $23.5 million to shareholders that held shares as of the Record Date for such dividend (other than shareholders that had waived their right to receive such dividend in connection with the Merger). See Note 3, Merger and Acquisitions, in the accompanying consolidated financial statements for additional information. net proceeds received from the sale of the Jamul Note,Sartini Gaming merger agreement, we have neither declared nor paid any cash dividends with respect to our common stock and thestock. The current policy of theour Board of Directors is to retain all future earnings, if any, for use in the operation and development of our business. The payment of any other cash dividends in the future will be at the discretion of theour Board of Directors and will depend upon such factors as our financial condition, results of operations, capital requirements, our general business condition, restrictions under our Credit Facility and Indenture and any other factors deemed relevant by theour Board of Directors. In addition, the termsour senior secured credit facilities restrict our abilityEquitydeclare or pay dividends on our common stock.No repurchasestime, we repurchase shares of our common stock were made duringpursuant to our $75 million share repurchase program authorized by our Board of Directors on November 1, 2022. There is no minimum number of shares that we are required to repurchase and the fourth quarter of 2017.Selected Financial Data presented below should be read in conjunction withrepurchase program is also subject to available liquidity, general market and economic conditions, alternate uses for the consolidated financial statementscapital and notes thereto included elsewhere in this Annual Report on Form 10-K,other factors (refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includedStock Incentive Plans” in Part II, Item 78: Financial Statements and Supplemental Data of this Annual Report for additional information regarding our share repurchase program). Share repurchases executed in May 2022 (under our previously authorized share repurchase program) and November 2022 included 210,000 shares and 263,418 shares, respectively, repurchased from a related party as discussed in “Note 14 — Related Party Transactions” in Part II, Item 8: Financial Statements and Supplemental Data. The rest of the repurchases were made through open market transactions. The following table presents our common stock purchases made pursuant to our share repurchase program for the year ended December 31, 2022:Total Number of Shares Purchased Average Price per Share Total Number of Shares Purchased as Part of a Publicly Announced Program Period January 1-31, 2022 — $ — — $ 39.4 February 1-28, 2022 — $ — — $ 39.4 March 1-31, 2022 268,791 $ 56.54 268,791 $ 24.2 April 1-30, 2022 — $ — — $ 24.2 May 1-31, 2022 211,100 $ 42.59 211,100 $ 41.0 (1) (2) June 1-30, 2022 303,900 $ 44.34 303,900 $ 27.5 July 1-31, 2022 — $ — — $ 27.5 August 1-31, 2022 — $ — — $ 27.5 September 1-30, 2022 — $ — — $ 27.5 (3) October 1-31, 2022 — $ — — $ 27.5 November 1-30, 2022 263,418 $ 41.35 263,418 $ 64.1 (4) December 1-31, 2022 65,479 $ 40.30 65,479 $ 61.5 Total 1,112,688 $ 46.01 1,112,688 $ 61.5 Form 10-K.Selected consolidated statementMay 3, 2022.operations dataour Board of Directors, at a price of $42.61 per share.consolidated balance sheet datathe Dow Jones US Gambling index, during the five years ended December 31, 2022. The graph plots the changes in value of an initial $100 investment over the indicated time period, assuming all dividends are derived from our consolidated financial statements.
reinvested. The stock price performance in this graph is not necessarily indicative of future stock price performance.(1)Our results for the year ended December 31, 2017 included the operating results of American from and after the closing date of the American Acquisition. We recorded approximately $76.3 million in net revenues and $5.6 million in net income from the operations of American for the year ended December 31, 2017. Income from operations for the year ended December 31, 2017 included approximately $1.6 million in preopening expenses related to American and tavern expansion, and $5.0 million in acquisition expenses related to the American Acquisition. Net income for the year ended December 31, 2017 included an income tax benefit of $7.9 million attributed primarily to a partial release of the valuation allowance on deferred tax assets and the impact of the Tax Cuts and Jobs Act.(2)Our results for the year ended December 31, 2016 included the operating results of the distributed gaming businesses acquired in the Montana Acquisitions from and after the closing dates of the respective transactions. We recorded approximately $47.0 million in net revenues and $1.6 million in net income from the operations of the Montana distributed gaming businesses for the year ended December 31, 2016. Income from operations for the year ended December 31, 2016 included approximately $2.5 million in preopening expenses related to the Montana distributed gaming businesses and tavern expansion, and a gain on sale of land held for sale of $4.5 million. Net income for the year ended December 31, 2016 included an income tax benefit of $4.3 million attributed primarily to a partial release of the valuation allowance on deferred tax assets. On July 14, 2016, a special dividend of cash in the aggregate amount of approximately $23.5 million was paid to shareholders of record as of the Record Date for such dividend (other than shareholders that had waived their right to receive such dividend in connection with the Merger). See Note 3, Merger and Acquisitions, in the accompanying consolidated financial statements for additional information.
Cumulative Total Returns - Year Ending December 31, 2017 2018 2019 2020 2021 2022 Golden Entertainment, Inc. $ 100.00 $ 49.07 $ 58.86 $ 60.92 $ 154.76 $ 114.55 NASDAQ Composite 100.00 96.13 129.97 186.70 226.63 151.61 Dow Jones US Gambling 100.00 67.36 96.55 85.49 74.51 55.50
The performance graph and the related chart and text should not be deemed filed or incorporated by reference into any other filing by us under the Securities Act of 1933, as amended or the Exchange Act of 1934, as amended except to the extent we specifically incorporate the performance graph by reference herein.(3)Our results for the year ended December 31, 2015 included the operating results of Sartini Gaming from and after August 1, 2015, following the consummation of the Merger. We recorded approximately $117.6 million in net revenues and $10.4 million in income from the operations of Sartini Gaming’s distributed gaming and casino businesses for the year ended December 31, 2015. Income from operations for the year ended December 31, 2015 included approximately $11.5 million in transaction-related expenses related to the Merger and net income included income tax benefit of approximately $10.0 million attributed primarily to the income tax benefit recorded from the release of a valuation allowance on deferred tax assets as a result of deferred tax liabilities assumed in the Merger. Our results for the year ended December 31, 2015 also reflected a gain of $23.6 million related to the disposition of the Jamul Note in December 2015.(4)Our results for the year ended December 28, 2014 reflected an impairment loss of $21.0 million related to the write-down of our then investment in Rock Ohio Ventures, LLC (“Rock Ohio Ventures”), a cost method investee.
ITEM 6. [RESERVED]Report on Form 10-K.Report. In addition to the historical information, certain statements in this discussion are forward-looking statements based on current expectations that involve risks and uncertainties. Actual results and the timing of certain events may differ significantly from those projected in such forward-looking statements. See Refer to “Forward-Looking Statements”Statements” in Part I of this Annual Report on Form 10-K for additional information regarding forward-looking statements.resort casino operations and distributed gaming operations (including tavern gaming in our wholly-ownedbranded taverns).twofive reportable operating segments: Nevada Casino Resorts, Nevada Locals Casinos, Maryland Casino Resort, Nevada Taverns, and Distributed Gaming. In ourwe own and operate eight resortis comprised of casino properties inthat cater to local customers who generally live within a five-mile radius, and typically have no or a limited number of hotel rooms and offer fewer food and beverage outlets or other amenities, with revenues primarily generated from slot machine play. Our Maryland Casino Resort segment is comprised of our Rocky Gap casino resort. Our Nevada and Maryland. Our Distributed GamingTaverns segment involvesis comprised of the installation, maintenance and operationoperations of slots and amusement devices in non-casino locations such as grocery stores, convenience stores, liquor stores, restaurants, bars and taverns in Nevada and Montana, and the operation of wholly-ownedour branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area.CasinosOn October 20, 2017, we completed the acquisition of all of the outstanding equity interests of American from its former equity holders for aggregate consideration consisting of $781.0 million in cash (subject to certain post-closing adjustments) and the issuance by us of 4,046,494 shares of our common stock to ACEP Holdings, a former American equity holder. Pursuant to the post-closing adjustment provisions in the purchase agreement, the cash portion of the consideration paid in the American Acquisition was subsequently increased to $787.6 million. The American Acquisition added four Nevada resort casino properties to our casino portfolio, including the Stratosphere in Las Vegas. The results of operations of American and its subsidiaries have been included in our results subsequent to that date. See Note 3, Merger and Acquisitions, in the accompanying consolidated financial statements for additional information.We own and operate eight resort casino properties in Nevada and Maryland, comprising the Stratosphere, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder in Las Vegas, Nevada, the Aquarius in Laughlin, Nevada, Pahrump Nugget, Gold Town Casino and Lakeside Casino & RV Park in Pahrump, Nevada, and Rocky Gap in Flintstone, Maryland.The Stratosphere: The Stratosphere is our premier casino property, located on Las Vegas Blvd on the north end of the Las Vegas Strip. A gaming and entertainment complex, the Stratosphere comprises the iconic Stratosphere Tower, a casino, a hotel and a retail center. As of December 31, 2017, the Stratosphere featured an 80,000 sq. ft. casino and offered nearly 2,430 hotel rooms, 748 slots, 42 table games, a race and sports book, 15 restaurants, two rooftop pools, a fitness center, retail shops and entertainment facilities.Arizona Charlie’s casinos: Our Arizona Charlie’s Decatur and Arizona Charlie’s Boulder casino properties primarily serve local Las Vegas patrons, and provide an alternative experience to the Las Vegas Strip. As of December 31, 2017, our Arizona Charlie’s Decatur casino offered approximately 260 hotel rooms and a total of 1,037 slots, seven table games, race and sports books, six restaurants, and an approximately 300-seat bingo parlor, and our Arizona Charlie’s Boulder casino offered approximately 300 hotel rooms and a total of 839 slots, seven table games, race and sports books, four restaurants, and an approximately 450-seat bingo parlor, as well as an RV park with approximately 220 RV hook-up sites.to the Las Vegas experience. As of December 31, 2017, the Aquarius had approximately 1,900 hotel rooms and offered 1,232 slots, 33 table games and ten restaurants.Pahrump casinos: We own and operate three casinos in Pahrump, Nevada, the gateway to Death Valley National Park, approximately 60 miles from Las Vegas. Pahrump Nugget is our largest property in Pahrump, Nevada. As of December 31, 2017, Pahrump Nugget offered approximately 70 hotel rooms, 419 slots, eight table games, a race and sports book, an approximately 200-seat bingo facility and a bowling center. As of December 31, 2017, our Gold Town Casino offered 226 slots and an approximately 100-seat bingo facility, and our Lakeside Casino & RV Park offered 188 slots and approximately 160 RV hook-up sites.Rocky Gap: Rocky Gap is situated on approximately 270 acres in the Rocky Gap State Park in Maryland, which we lease from the Maryland Department of Natural Resources under a 40-year operating ground lease expiring in 2052 (plus a 20-year option renewal). As of December 31, 2017, Rocky Gap offered 665 slots, 17 table games, two casino bars, three restaurants, a spa and the only Jack Nicklaus signature golf course in Maryland. Rocky Gap is a AAA Four Diamond Award® winning resort with approximately 200 hotel rooms, as well as an event and conference center.Distributed GamingOur Distributed Gaming segment involves the installation, maintenance and operation of slots and amusement devices in non-casino locations such as grocery stores, convenience stores, liquor stores, restaurants, bars and taverns in Nevada and Montana. In addition, we operate wholly-owned branded taverns with slots, which target local patrons, primarily in the greater Las Vegas, Nevada metropolitan area. We place our slots and amusement devices in locations where we believe they will receive maximum customer traffic, generally near a store’s entrance. As of December 31, 2017, our distributed gaming operations comprised approximately 10,900 slots in over 1,000 locations.Our wholly-owned branded taverns offer a casual, upscale environment catering to local patrons offering superior food, craft beer and other alcoholic beverages, and typically include 15 onsite slots. As of December 31, 2017, we operated 57 wholly-owned branded taverns, which offered a total of over 920 onsite slots. Most of our taverns are located in the greater Las Vegas, Nevada metropolitan area, and cater totargeting local patrons seeking more convenient entertainment establishments than traditional casino properties. Our tavern brands include PT’s Gold, PT’s Pub, Sierra Gold, Sean Patrick’s, PT’s Place, PT’s Ranch, PT’s Brewing Company, Sierra JunctionDistributed Gaming segment is comprised of the operation of slot machines and SG Bar. We also opened our first breweryamusement devices in Las Vegas, PT’s Brewing Company, during the first quarterover 1,000 third-party non-casino locations, such as restaurants, bars, taverns, convenience stores, liquor stores and grocery stores, across Nevada and Montana, with a limited number of 2016 to produce craft beer for our taverns and casinos.on Form 10-K for the year ended December 31, 2017.2022.Year Ended December 31, (In thousands) 2022 2021 2020 Revenues Gaming $ 760,906 $ 766,307 $ 476,753 Food and beverage 175,363 167,815 112,081 Rooms 122,324 109,802 71,411 Other 63,126 52,619 33,910 Total revenues 1,121,719 1,096,543 694,155 Expenses Gaming 428,984 416,197 275,041 Food and beverage 131,863 118,541 92,202 Rooms 56,414 48,632 39,935 Other operating 19,889 16,968 11,789 Selling, general and administrative 235,404 221,967 183,122 Depreciation and amortization 100,123 106,692 124,430 Loss on disposal of assets 934 1,260 803 Preopening expenses 161 246 308 Impairment of goodwill and intangible assets — — 33,964 Total expenses 973,772 930,503 761,594 Operating income (loss) 147,947 166,040 (67,439) Non-operating expense Other non-operating income — 60,000 — Interest expense, net (63,490) (62,853) (69,110) Loss on debt extinguishment and modification (1,590) (975) — Change in fair value of derivative — — (1) Total non-operating expense, net (65,080) (3,828) (69,111) Income (loss) before income tax provision 82,867 162,212 (136,550) Income tax provision (521) (436) (61) Net income (loss) $ 82,346 $ 161,776 $ (136,611) 20172022 Compared to Year Ended December 31, 2016Net 2021The $106.626%2%, increase in net revenuesrevenues for the year ended December 31, 2022 compared to the prior year resulted primarily from increases of $68.3$7.6 million, $12.5 million, and $21.1$10.5 million in food and beverage, rooms, and other revenues, respectively, as offset by a $5.4 million decrease in gaming revenues. The increase in food and beverage, rooms, and other revenues for the year ended December 31, 2022 compared to the prior year was driven primarily by an increase in occupancy and the average daily room rate of our hotel rooms during the first half of 2022 relative to the prior year and an overall increase in guest visitation following the lifting of COVID-19 mitigation measures and related operating restrictions during the summer of 2021 and the effect of government stimulus payments in 2021 and early 2022 on discretionary consumer spending. The $5.4 million decrease in gaming revenues for the year ended December 31, 2022 was primarily attributable to the stabilization of demand in 2022 compared to the pent-up demand for gaming experienced in the prior year following the lifting of COVID-19 mitigation measures and related operating restrictions. In addition, our patrons typically engaged in less discretionary spending in 2022 due to the impact of macroeconomic conditions.revenues, respectively, as well as the inclusion of net revenues of American from rooms,after October 20, 2017. $82.0 million, or 84%, increase in net revenues related to our Casinos segment resulted primarily from increases of $49.3 million and $16.3 million in “same-store” gaming and room revenues, respectively, as well as the inclusion of net revenues from the resort casino properties we acquired in the American Acquisition from and after October 20, 2017. Additionally, net revenues from Rocky Gap increased $4.0 million due to greater parking capacity to accommodate peak demand days and marketing enhancements that better cater to our gaming customers.The $24.3 million, or 8%, increase in net revenues related to our Distributed Gaming segment resulted primarily from five new taverns in the Las Vegas Valley during 2017, as well as a full year of revenues from the five taverns we opened in 2016. Additionally, net revenues in 2017 included a full year of revenues from the Montana distributed gaming businesses we acquired in January and April 2016.Operating ExpensesThe $53.4 million, or 18%, increase in operating expenses resultedfor the year ended December 31, 2022 was primarily from increasesdriven by higher labor costs and cost of $29.3 million and $15.3 million in gaming expenses and food and beverage expenses, respectively, the inclusion of a full year ofoperating expense from the Montana distributed gaming businesses we acquired in January and April 2016,goods incurred, as well resort casino properties acquiredincrease in the American Acquisition on October 20, 2017. $35.4$13.4 million, or 52%6%, increase in selling, general and administrative (“SG&A”) expenses resultedfor the year ended December 31, 2022 compared to the prior year was primarily from increasesattributable to the increase in share-based compensation ($5.1 millionpayroll and $3.6 millionrelated expenses as well as an increase in costs related to stock optionsutilities and restricted stock units, respectively), salaries and bonus ($3.3 million),maintenance contracts. SG&A expenses are comprised of marketing and advertising, ($0.9 million)utilities, building rent, maintenance contracts, corporate office overhead, information technology, legal, accounting, third-party service providers, executive compensation, share-based compensation, payroll expenses and buildingpayroll taxes.rent ($1.7 million), which were partially offset by aAmortizationprofessional fees ($1.2 million). Additionally,depreciation and amortization expenses of $6.6 million, or 6%, for the increases reflectedyear ended December 31, 2022 compared to the inclusion of $23.6 million in SG&Aprior year was primarily related to long-lived assets acquired in connection with the American fromCasino and after October 20, 2017,Entertainment Properties LLC acquisition being fully depreciated and amortized. In addition, as welldiscussed in “Note 3 — Assets Held for Sale” in Part I, Item 1: Financial Statements, in connection with our entry into definitive agreements for the sale of Rocky Gap, the assets related to Rocky Gap were classified as held for sale as of September 30, 2022 and we ceased recording depreciation and amortization of the opening of five new tavernslong-lived assets included in the Las Vegas Valley in 2017.Within our Casinos segment, SG&A expenses increased $20.3 million, or 93%, resulting primarilysale from the inclusiondate of SG&Aexecution of the definitive agreements on August 24, 2022.American fromsales of used gaming equipment by our Nevada Taverns segment and after October 20, 2017. The majoritydisposals of property and equipment by our casino properties located in Nevada. Loss on disposal of assets in the SG&A expenses in this segment comprised marketingamount of $1.3 million for the year ended December 31, 2021 was primarily related to disposals of property and advertising, building and rent expense, bonus and payroll taxes. SG&A expenses at Rocky Gap did not change significantly year-over-year.Withinequipment by our Distributed Gaming segment SG&A expenses increased $0.7 million or 3%, primarily due to the openingand sales of five new taverns in the Las Vegas Valley in 2017, the inclusion of a full year of SG&A from the Montana distributedused gaming businesses we acquired in January and April 2016, and the opening of five taverns in 2016, partially offsetequipment by a decrease year-over-year in professional fees and equipment rental. The majority of SG&A expenses in this segment comprised payroll taxes, building and rent expense, professional fees and equipment rental.Corporate-level SG&A increased $14.6 million, or 64% primarily due to an increase of $1.3 million in professional fees and $3.6 million in payroll and related expenses, and the inclusion of $3.2 million of corporate-level SG&A related to American from and after October 20, 2017.Acquisition and Merger ExpensesAcquisition and merger expenses during 2017 primarily related to the American Acquisition, and during 2016 primarily related to the Merger. Acquisition and merger expenses consisted primarily of financial advisor, legal, accounting and consulting costs.incurred. Non-capital costs associated with the opening of tavern and casino locations are also expensed as preopening expenses as incurred.During 2017, preopening expenses related primarily to costs incurred in the opening of new tavern locations in the Las Vegas Valley. During 2016, preopening expenses related primarily to costs incurred in connection with the Montana Acquisitions and the opening of newbranded tavern locations in the Las Vegas Valley.Depreciation and AmortizationDepreciation increased $11.1 million, or 55%, due primarily to depreciation of the assets acquired in the American Acquisition,casino locations as well as a full year of depreciation on assets acquired in the Montana Acquisitions.Amortization of intangibles increased $2.2, or 30%, primarily to intangible assets acquired in the American Acquisitionfood and the Montana Acquisitions.Non-operating expense, net increased $20.1 million, primarily due to a $13.1 million increase in interest expense from the substantially higher level of indebtedness under the new senior secured credit facilities we entered into in October 2017, partially offset by a gain on change in fair value of derivative of $0.2 million. Non-operating expense, net in 2017 also included $1.7 million related to a loss on extinguishment of debt.Income TaxesIncome tax benefitbeverage and other venues within our casino locations. 2017 was approximately $7.92022 primarily related to new branded tavern openings within our Nevada Taverns segment and opening of new venues within our Nevada Casino Resorts segment. Preopening expenses for the year ended December 31, 2021 primarily related to our planned expansion into new markets for our Distributed Gaming segment.onrelated to deferred tax assets, excess tax deductions related to the exercise of stock options, and the impactlimitation of tax deductions on executive compensation under the Tax Cuts and Jobs Act. IncomeInternal Revenue Code Section 162(m). The effective income tax benefit forrate for the year ended December 31, 20162021 was approximately $4.3 million, attributable primarily to a partial release of the valuation allowance on deferred tax assets. The effective tax rate was 137.8% for the year ended December 31, 2017, 0.27%, which differed from the federal tax rate of 35% due21% primarily to the partial release of the valuation allowance, along with the impact of the Tax Cuts and Jobs Act. The effective tax rate for the year ended December 31, 2016 was (36.1) %, which differed from the federal tax rate of 35% due to changes in the valuation allowance on deferred tax assets.As of December 31, 2017, we evaluated all available positive and negative evidence related to our ability to utilize our deferred tax assets. We considered the expected future book income (losses), taxable loss carryforward potential and other factors in reaching the conclusion that some of the deferred tax assets were expected to be realized, and that therefore, the valuation allowance against the deferred tax assets required adjustment.Year Ended December 31, 2016 Compared to Year Ended December 31, 2015Net RevenuesThe $226.2 million, or 128%, increase in net revenues resulted primarily from the inclusion in 2016 of a full year of net revenues related to the distributed gaming and casino businesses acquired on July 31, 2015 in the Merger (compared to five months of the prior year period), as well as the addition of the distributed gaming businesses acquired in the Montana Acquisitions in the first half of 2016.The $23.9 million, or 33%, increase in net revenues related to our Casinos segment resulted primarily from the inclusion of a full year of net revenues from the casino businesses acquired in the Merger (compared to five months of the prior year period). The casino properties acquired in the Merger contributed net revenues of $34.3 million during the year ended December 31, 2016 compared to $14.0 million during the prior year period. Additionally, net revenues from Rocky Gap increased $3.7 million, reflecting our expansion of parking capacity to accommodate peak demand days, the addition of approximately 31 slots to the casino floor, and marketing enhancements to better cater to our gaming customers.The $202.2 million, or 195%, increase in net revenues related to our Distributed Gaming segment resulted primarily from the inclusion of a full year of net revenues from the distributed gaming businesses acquired in the Merger in 2016, as well as net revenues from the distributed gaming businesses acquired in the Montana Acquisitions during the first half of 2016. The Montana Acquisitions added approximately $47.0 million in net revenues in 2016 from approximately 2,900 slots and over 1,000 amusement games across approximately 300 locations. The net revenues related to our Distributed Gaming segment during 2015 related solely to Sartini Gaming’s distributed gaming business for the five months subsequent to the completion of the Merger.Operating ExpensesThe $169.5 million, or 140%, increase in operating expenses resulted primarily from the inclusion of a full year of operating expenses related to the distributed gaming and casino businesses acquired in the Merger (compared to five months of the prior year period), and operating expenses from the distributed gaming businesses acquired in the Montana Acquisitions, which were completed during the first half of 2016. The increase in operating expenses in our Casinos segment in 2016 was related primarily to the inclusion of a full year of gaming, food and beverage and other operating expenses at our Pahrump, Nevada casinos acquired in the Merger. The increase in operatingexpenses related to our Distributed Gaming segment in 2016 was a result of the inclusion of a full year of gaming, food and beverage, rooms and other operating expenses at our taverns and third party locations.Selling, General and Administrative ExpensesThe $29.4 million, or 76%, increase in SG&A expenses resulted primarily from the inclusion of a full year of SG&A expenses related to the distributed gaming and casino businesses acquired on July 31, 2015 in the Merger, as well as the addition of the distributed gaming businesses acquired during the first half of 2016 in the Montana Acquisitions. For the year ended December 31, 2016, SG&A expenses included payroll and related expenses of $26.4 million (including share-based compensation of $3.9 million), marketing and advertising expenses of $3.5 million, building and rent expense of $15.7 million and professional fees of $5.9 million. Share-based compensation expense increased during the year ended December 31, 2016 due primarily to $0.9 million of additional expense related to the 1,494,475 stock options and 141,296 restricted stock units granted during the year (including reversal of expense for forfeitures), $0.5 million in incremental expense related to the acceleration of unvested stock options related to terminated employees and $0.9 million of incremental expense recorded for the equitable anti-dilutive adjustments made to the exercise prices of outstanding vested and unvested stock options during the period in accordance with our equity incentive plans. For the year ended December 31, 2015, SG&A expenses included payroll and related expenses of $16.0 million (including share-based compensation), marketing and advertising expenses of $3.4 million, building and rent expense of $10.3 million and professional fees of $3.6 million. For the year ended December 31, 2016, corporate-level SG&A was $19.8 million compared to $11.4 million in the prior year period.Within our Casinos segment, SG&A expenses were $22.0 million for the year ended December 31, 2016 compared to $18.3 million for the prior year period. The increase in 2016 resulted primarily from the completion of the Merger on July 31, 2015, which resulted in the inclusion of a full year of SG&A expenses related to Sartini Gaming’s Pahrump casinos for the year ended December 31, 2016 (compared to five months of the prior year period). The majority of the SG&A expense at our Pahrump casinos was derived from payroll and related costs, building and rent expense, and promotions for our customers. SG&A expenses at Rocky Gap casino were $13.7 million for the year ended December 31, 2016 compared to $16.4 million for the prior year period. The decrease in SG&A expenses at Rocky Gap was a result of cost reduction efforts in marketing and advertising, building expenses, and payroll and related costs.Within our Distributed Gaming segment, SG&A expenses were $23.4 million for the year ended December 31, 2016 compared to $9.0 million for the prior year period. The increase in 2016 resulted primarily from the completion of the Merger on July 31, 2015, which resulted in the inclusion of a full year of SG&A expenses related to Sartini Gaming’s distributed gaming businesses for the year ended December 31, 2016 (compared to five months of the prior year period), as well as SG&A expenses related to the distributed gaming businesses acquired in the Montana Acquisitions, which were consummated during the first half of 2016. SG&A expenses related to the Montana Acquisitions were approximately $0.8 million due primarily to building and rent expense, as well as professional fees. The majority of the segment’s SG&A expense was derived from insurance and payroll and related costs, as well as building and rent expense specifically at the taverns. The addition of five new taverns during 2016 accounted for incremental SG&A expense for the Distributed Gaming segment compared to the prior year.Merger ExpensesWe incurred approximately $0.6 million in transaction-related costs associated with the Merger and our obligations under the Merger Agreement during the year ended December 31, 2016 compared to $11.5 million during the prior year period. Merger expenses consisted primarily of financial advisor, legal, accounting and consulting costs.Preopening ExpensesDuring the year ended December 31, 2016, preopening expenses were $2.5 million, which related primarily to costs incurred in connection with the Montana Acquisitions and new tavern locations in Las Vegas, Nevada. During the year ended December 31, 2015, preopening expenses were $0.4 million in connection with new tavern locations in Las Vegas, Nevada.Depreciation increased $11.7 million, or 138%, due primarily to depreciation of the assets acquired pursuant to the Merger, as well as assets acquired in the Montana Acquisitions. Amortization of intangibles increased $5.0 million, or 217%, related primarily to intangible assets acquired in the Merger and the Montana Acquisitions,.Non-Operating Expense, NetNon-operating expense, net was $1.1 million for the year ended December 31, 2016 compared to $3.8 million for the prior year period. The decrease in non-operating expense, net, was driven primarily by a $3.7 million increase in interest expense in 2016 compared to the prior year period, related to our entering into a new senior secured credit facility in July 31, 2015 in connection with the Merger and the incurrence of indebtedness thereunder, offset by a gain on sale of land held for sale of $4.5 million. Non-operating expense, net for 2015 included $1.2 million related to a loss on extinguishment of debt.Income TaxesIncome tax benefit for the year ended December 31, 2016 was approximately $4.3 million, attributed primarily to a partial release of the valuation allowance on deferred tax assets. The release was the result of positive evidence that we will more likely than not be able to utilize some of our deferred tax assets. Income tax benefit for the year ended December 31, 2015 was approximately $10.0 million, primarily related to the partial release of the valuation allowance on deferred tax assets resulting from the assumption of a $14.7 million net deferred tax liability generated from intangible assets acquired in the Merger. Our effective tax rate was (36.1) % for the year ended December 31, 2016, which differed from the federal tax rate of 35% due to the releasechange in valuation allowanceallowance.fourth quarter of 2016. Our effective tax rate was (68.4)%provision for the year ended December 31, 2015, which differed from the federal tax rate of 35% due to the $10.2 million release of the valuation allowanceincome taxes.the limitation of the income tax benefit due to the uncertainty of its future realization.As of December 31, 2016, we evaluated all available positive and negative evidence related to our ability to utilize our deferred tax assets. We considered the expected future book income (losses), taxable loss carryforward potential and other factors in reaching the conclusion that some of the deferred tax assets were expected to be realized, and that therefore, the valuation allowance against the deferred tax assets required adjustment.Non-GAAP Measuresa measure we believebecause it is appropriate to provide meaningful comparison with,the primary metric used by our chief operating decision makers and to enhance an overall understanding of,investors in measuring both our past financial performance and prospects for the future. We believefuture expectations of performance. Adjusted EBITDA provides useful information to both management and investorsthe users of our financial statements by excluding specific expenses and gains that we believe are not indicative of our core operating results. Further,Furthermore, our annual performance plan used to determine compensation for our executive officers and employees is tied to the Adjusted EBITDA metric. It is also a measure of operating performance used by management, as well as industry analysts, to evaluate operations and operating performance and is widely used in the gaming industry. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. In addition, other companies in our industry may calculate Adjusted EBITDA differently than we do. A reconciliation of net income (loss) to Adjusted EBITDA is provided in the table below.acquisition and merger expenses, share-based compensation expenses, executive severance and sign-on bonuses, gain on revaluation of contingent consideration, class action litigation expenses, gain/or loss on disposal of property and equipment or investments, gain on change in fair value of derivative, loss on extinguishment of debt and impairmentsassets, share-based compensation expenses, non-cash lease expense, and other gains and losses.non-cash charges that are deemed to be not indicative of our core operating results, calculated before corporate overhead (which is not allocated to each reportable segment).Adjusted EBITDA to net income (loss): to Adjusted EBITDA:Year Ended December 31, (In thousands) 2022 2021 2020 Revenues Nevada Casino Resorts $ 406,950 $ 389,712 $ 250,643 Nevada Locals Casinos 157,514 159,855 113,031 Maryland Casino Resort 78,010 78,155 51,636 Nevada Taverns 109,965 110,170 64,041 Distributed Gaming 365,472 357,414 214,215 Corporate and other 3,808 1,237 589 Total Revenues $ 1,121,719 $ 1,096,543 $ 694,155 Adjusted EBITDA Nevada Casino Resorts $ 135,104 $ 149,077 $ 57,462 Nevada Locals Casinos 75,848 80,005 45,610 Maryland Casino Resort 25,383 26,697 15,094 Nevada Taverns 37,610 39,762 10,086 Distributed Gaming 44,021 47,514 16,866 Corporate and other (50,886) (51,337) (34,861) Total Adjusted EBITDA $ 267,080 $ 291,718 $ 110,257 Net income (loss) $ 82,346 $ 161,776 $ (136,611) Adjustments Other non-operating income — (60,000) — Depreciation and amortization 100,123 106,692 124,430 Non-cash lease expense 165 762 1,344 Share-based compensation 13,433 14,401 9,637 Loss on disposal of assets 934 1,260 803 Loss on debt extinguishment and modification 1,590 975 — 161 246 533 Severance expenses 378 228 3,710 Impairment of goodwill and intangible assets — — 33,964 Other, net 3,939 2,089 3,275 Interest expense, net 63,490 62,853 69,110 Change in fair value of derivative — — 1 Income tax provision 521 436 61 Adjusted EBITDA $ 267,080 $ 291,718 $ 110,257 2017,2022, we had $90.6$142.0 million in cash and cash equivalents and no short-term investments.equivalents. We currently believe that our cash and cash equivalents, cash flows from operations and borrowing availability under our $240 million revolving credit facility (the “Revolving Credit Facility”) will be sufficient to meet our capital requirements during the next 12 months.in bothby our Casinos and Distributed Gaming segmentsoperations to be adversely affected. In January 2018, the SEC declared effective our universal shelf registration statement with the SECfuture saleyears ended December 31, 2022, 2021 and 2020, respectively. The $145.6 million, or 49%, decrease in operating cash flows in 2022 compared to 2021 primarily related to a decrease of up to $150$18.1 million, or 11%, in operating income, and the timing of working capital spending. The year ended December 31, 2021 also included the impact of $60.0 million in aggregate amountnon-operating income related to our agreement with William Hill providing for certain payments arising from the acquisition of common stock, preferred stock, debt securities, warrantsWilliam Hill by Caesars Entertainment, Inc. as discussed in “Note 13 — Commitments and unitsContingencies” in Part II, Item 8: Financial Statements and Supplemental Data of this Annual Report. The $259.1 million, or 706%, increase in operating cash flows for the resaleyear ended December 31, 2021 compared to 2020 was primarily attributable to a full year of upoperations in 2021, whereas in the prior year our operations were subject to approximately 8.0mandatory property closure requirements commencing in March 2020 resulting from the COVID-19 pandemic. In addition, net cash provided by operating activities for the year ended December 31, 2021 reflects a $60 million sharespayment received in the third quarter of our common stock held by the selling security holders named therein. The securities may be offered2021 from time to time, separately or together, directly by us or through underwriters, dealers or agents at amounts, prices, interest rates and other terms to be determined at the time of the offering.In January 2018, subsequent to fiscal year end, we completed an underwritten public offeringCaesars Entertainment, Inc. pursuant to our universal shelf registration statement,agreement with William Hill discussed above.which certaininvesting activities was $51.3 million, $28.9 million and $35.9 million for the years ended December 31, 2022, 2021 and 2020, respectively. The $22.4 million, or 77%, increase in net cash used in investing activities in 2022 compared to 2021 related to the increase in our capital expenditures. The $7.0 million, or 19%, decrease in net cash used in investing activities for the year ended December 31, 2021 compared to 2020 reflected management’s continued focus on preservation of our shareholders resold an aggregateliquidity and deferral of 6.5material capital expenditures in light of the COVID-19 pandemic.shares$149.9 million and $9.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. The $27.5 million, or 18%, increase in net cash used in financing activities in 2022our common stock,outstanding term loan borrowings with a principal amount of $75.0 million, a $39.5 million repurchase in principal amount of 2026 Unsecured Notes in open market transactions, and we sold 975,000 newly issued shares$51.2 million in repurchases of our common stock pursuant to the exerciseshare repurchase program, followed by payments of tax withholding on option exercises and the vesting of RSUs. The $140.9 million, or 1566%, increase in full of the underwriters’ over-allotment option to purchase additional shares. Our net proceeds from the offering were approximately $25.3 million after deducting underwriting discounts and offering expenses. We expect to use these net proceeds for general corporate purposes, which may include, among other things, capital expenditures, opportunistic acquisitions or working capital.Net cash provided by operating activities was $22.1 million for the year ended December 31, 2017, compared to $37.4 million for the prior year period, which decrease was primarily due to the flow-through effect of lower revenues and timing of working capital spending. Operating cash flows increased $28.1 million in 2016 compared to 2015 primarily due to the flow-through effect of higher revenues, as well as the timing of working capital spending.Net cash used in investing activities was $756.2 million for the year ended December 31, 2017, which included a cash outflow of $724.5 million for the American Acquisition and $29.5 million for capital expenditures. Net cash used in investing activities in 2016 included cash used in the Montana Acquisitions and capital expenditures. In 2015, net cash provided by investing activities was $90.0 million and related primarily to the cash acquired in the Merger, partially offset by the net purchase, maturity and sales of short-term investments.Net cash provided by financing activities was $777.8 million for the year ended December 31, 2017, compared to net cash provided by financing activities of $11.4 million for the prior year period. Net cash provided by financing activities in 2017 reflected borrowings of $789.0 million under our new senior secured credit facilities net of repayments under our previous senior secured credit facility. Net cash provided by financing activities in the prior year reflected net borrowings of $36.5 million under our then-existing senior secured credit facility, partly offset by the $23.5 million Special Dividend paid in July 2016. Net cash used in financing activities in 2015 reflected net repayments of $59.6 million under our then-existing senior secured credit facilities, debt issuance costs of $2.8 million and $3.4 million2021 compared to 2020 primarily related to the repurchaseprepayment of warrants related to the Merger.Senior Secured Credit FacilitiesAs of December 31, 2017, our senior secured credit facilities consisted of a $900.0 million senior secured first lien credit facility (consisting of $800.0 million in term loans and a $100.0 million revolving credit facility) with JPMorgan Chase Bank, N.A. (as administrative agent and collateral agent), the lenders party thereto and the other entities party thereto (the “First Lien Facility”), and a $200.0 million senior secured second lien term loan facility with Credit Suisse AG, Cayman Islands Branch (as administrative agent and collateral agent), the lenders party thereto and the other entities party thereto (the “Second Lien Term Loan” and, together with the First Lien Facility, the “Credit Facilities”). As of December 31, 2017, $800.0 million and $200.0 million ofoutstanding term loan borrowings were outstanding underwith a principal amount of $122.0 million, $10.6 million in open market repurchases of our First Liencommon stock pursuant to the share repurchase program, repayments of notes payable and finance leases, and tax withholding on option exercises and the vesting of RSUs. We also paid $0.7 million for debt modification costs and fees in connection with the increase of the size and extension of the maturity date for our Revolving Credit Facility.Second Lien Term Loan, respectively, there were no lettersIndenture refer to “Note 7 — Long-Term Debt” in Part II, Item 8: Financial Statements and Supplemental Data of credit outstanding under the First Lien Facility, and our revolving credit facility was undrawn, leaving borrowing availability under the revolving credit facility as of December 31, 2017 of $100.0 million.Borrowings under each of the Credit Facilities bear interest, at our option, at either (1) a base rate equal to the greatest of the federal funds rate plus 0.50%, the applicable administrative agent’s prime rate as announcedthis Annual Report.the LIBOR rate for a one-month interest period plus 1.00%, subject to a floor of 1.75% (with respect to the term loans) or 1.00% (with respect to borrowings under the revolving credit facility) or (2) the LIBOR rate for thein private transactions in accordance with applicable interest period, subject to a floor of 0.75% (with respect to the term loans only), plus in each case, an applicable margin. The applicable margin for the term loans under the First Lien Facility is 2.00% for base rate loanssecurities laws and 3.00% for LIBOR rate loans. The applicable margin for borrowings under the revolving credit facility under the First Lien Facility ranges from 1.50% to 2.00% for base rate loansregulations and 2.50% to 3.00% for LIBOR rate loans, based on our net leverage ratio. The applicable margin for the Second Lien Term Loan is 6.00% for base rate loans and 7.00% for LIBOR rate loans. The commitment fee for the revolving credit facility is payable quarterly at a rate of between 0.375% and 0.50%, depending on our net leverage ratio, and is accrued based on the average daily unused amount of the available revolving commitment. As of December 31, 2017, the weighted-average effective interest rate on our outstanding borrowings under the Credit Facilities was approximately 5.1%.The revolving credit facility under the First Lien Facility matures on October 20, 2022, and the term loans under the First Lien Facility mature on October 20, 2024. The term loans under the First Lien Facility must be repaid in 27 quarterly installments of $2.0 million each, which commence in March 2018, followed by a final installment of $746.0 million at maturity. The term loans under the Second Lien Term Loan must be repaid in full at maturity on October 20, 2025.Borrowings under each of the Credit Facilities are guaranteed by each of our existing and future wholly-owned domestic subsidiaries (other than certain insignificant or unrestricted subsidiaries), and are secured by substantially all of the present and future assets of Golden and our subsidiary guarantors (subject to certain exceptions).Under the Credit Facilities, we and our restricted subsidiaries are subject to certain limitations,other legal requirements, including limitations on our respective ability to: incur additional debt, grant liens, sell assets, make certain investments, pay dividends and make certain other restricted payments. In addition, we will be required to pay down the term loans under the Credit Facilities under certain circumstances if we or our restricted subsidiaries issue debt, sell assets, receive certain extraordinary receipts or generate excess cash flow (subject to exceptions). The revolving credit facility under the First Lien Facility contains a financial covenant regarding a maximum net leverage ratio that applies when borrowings under the revolving credit facility exceed 30% of the total revolving commitment. The Credit Facilities also prohibit the occurrence of a change of control, which includes the acquisition of beneficial ownership of 50% or more of our capital stock (other than by certain permitted holders, which include, among others, Blake L. Sartini, Lyle A. Berman, Neil I. Sell and certain affiliated entities). If we default under the Credit Facilities due to a covenant breach or otherwise, the lenders may be entitled to, among other things, require the immediate repayment of all outstanding amounts and sell our assets to satisfy the obligations thereunder. We were in compliance with our financial covenants under the Credit Facilities asfinance agreements. There is no minimum number of December 31, 2017.Former Senior Secured Credit FacilityIn connection with the American Acquisitionshares that we are required to repurchase and the entry into the Credit Facilities,repurchase program may be suspended or discontinued at any time without prior notice. Refer to October 2017 we repaid all principal amounts outstanding underPart II, Item 8: Financial Statements and Supplemental Data and “Share Repurchase Program and Issuer Purchase of Equity” in Part II, Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities of this Annual Report for additional information regarding our former credit agreement with Capital One, National Association (as administrative agent)share repurchase program and the lenders named therein (the “Former Credit Agreement”), which amounted to approximately $173.4 million, together with accrued interest. As a result of the repayment and discharge of the Former Credit Facility, we recognized a loss on extinguishment of debt of $1.7 million during the year ended December 31, 2017.Sale of Jamul Tribe Promissory NoteOn December 9, 2015, we sold our $60.0 million Jamul Note to a subsidiary of Penn National for approximately $24.0 million in cash. We had previously determined the fair value of the Jamul Note to be zero as of December 28, 2014. Under the terms of the Merger Agreement and subject to applicable law, we agreed that the proceeds received from the sale of the Jamul Note, net of related costs, would be distributed in a special cash dividendcommon stock purchases made pursuant to our shareholders holding shares as of the record date for such dividend (other than shareholders that had waived their right to receive such dividend in connection with the Merger). Under the terms of the Merger Agreement, Sartini Gaming’s former sole shareholder, for itself and any related party transferees of its shares, waived their right to receive such dividend with respect to their shares (which totaled 7,996,393 shares in the aggregate). Also in connection with the Merger, holders of an additional 457,172 shares waived their right to receive such dividend. On June 17, 2016, our Board of Directors approved and declared the Special Dividend to the eligible shareholders of record on the close of business on the Record Date of June 30, 2016 of cash in the aggregate amount of approximately $23.5 million, which was paid on July 14, 2016. The $1.71 per share amount of the Special Dividend was calculated by dividing the aggregate amount of the Special Dividend by 13,759,374 outstanding shares of common stock held by eligible shareholders on the close of business on the Record Date (rounded down to the nearest whole cent per share).In connection with the Special Dividend and in accordance with our equity incentive plans approved by our shareholders, equitable anti-dilutive adjustments were made to the exercise prices of outstanding stock options to purchase shares of our common stock in order to preserve the value of such stock options following the Special Dividend. Accordingly, effective as of the close of business on the dividend payment date of July 14, 2016, the exercise price of each stock option under our equity incentive plans outstanding on the Record Date was reduced by $1.71 per share. See Note 9, Share-Based Compensation, in the accompanying consolidated financial statements for information on our anti-dilutive adjustments to the outstanding stock options.We currently believe that our cash and cash equivalents, cash flows from operations and borrowing availability under our revolving credit facility will be sufficient to meet our capital requirements for the next twelve months. Any additional financing that is needed may not be available to us or, if available, may not be on terms favorable to us. revolving credit facility and operating cash flows.2017:
2022:(1)To the extent that applicable interest rates are variable and ultimate amounts borrowed under the Credit Facilities may fluctuate, amounts reflected represent estimated interest payments on our current outstanding balances based on interest rates at December 31, 2017 until maturity. Includes interest on notes payable.(2)In 2012, we entered into a 40-year operating ground lease with the Maryland DNR for approximately 270 acres in the Rocky Gap State Park in which Rocky Gap is situated. The lease expires in 2052, with an option to renew for an additional 20 years. Rent payments under the lease include variable amounts based on Rocky Gap gaming revenue and surcharges on amounts billed to and collected from guests. See Note 13, Leases, in the accompanying consolidated financial statements for information regarding the lease.2023 2024 2025 2026 2027 Thereafter Total (In thousands) Term Loan $ — $ 575,000 $ — $ — $ — $ — $ 575,000 2026 Unsecured Notes — — — 335,461 — — 335,461 Notes payable 90 — — — — — 90 68,073 57,448 25,579 8,526 — — 159,626 50,372 43,268 26,378 16,933 12,755 54,674 204,380 521 227 200 200 214 3,213 4,575 922 500 500 500 500 3,734 6,656 $ 119,978 $ 676,443 $ 52,657 $ 361,620 $ 13,469 $ 61,621 $ 1,285,788
(1)Represents estimated interest payments on our outstanding term loan borrowings under our Credit Facility based on interest rates as of December 31, 2022 until maturity, as well as interest on our 2026 Unsecured Notes and notes payable.(3)We lease the approximately nine acres of land on which our Gold Town Casino is located from several unrelated parties.(4)We lease taverns, equipment and vehicles under noncancelable operating leases. The terms of the tavern leases range from one to 15 years, with various renewal options from one to 15 years.
(2)Includes total operating lease interest obligations of $40.2 million.(5)Relates to notes payable on equipment purchases and previous tavern acquisitions and our capital lease obligations, including total capital lease interest obligations of $6.6 million.
(3)Includes total finance lease interest obligations of $2.4 million.markets.markets from time to time. Such expansions will be influenced and determined by a number of factors, which may include licensing availability and approval, suitable investment opportunities and availability of acceptable financing. Investigation and pursuit of such opportunities may require us to make substantial investments or incur substantial costs, which we may fund through cash flows from operations or borrowing availability under our revolving credit facility.Revolving Credit Facility. To the extent such sources of funds are not sufficient, we may also seek to raise such additional funds through public or private equity or debt financings or from other sources. No assurance can be given that additional financing will be available or that, if available, such financing will be obtainable on terms favorable to us. Moreover, we can provide no assurances that the investigation or pursuit of an opportunity will result in a completed transaction.On an ongoing basis, we evaluateThe SEC has defined critical accounting policies as those that are most important to the presentation of the financial position and results of operations, and which require management to make its most difficult and subjective judgments, often as a result of the need to make estimates about matters that are inherently uncertain. We have identified our critical accounting policies that meet this definition below. Other key accounting policies that involve the use of estimates, judgments, and assumptions are discussed in “Note 2 — Summary of Significant Accounting Policies” in Part II, Item 8: Financial Statements and Supplemental Data of this Annual Report. We believe that our estimates and judgments, including those related toassumptions are reasonable, based upon information presently available; however, actual results may differ from these estimates under different assumptions or conditions.applicationvalue of the acquisition method of accounting, long-lived assets,our goodwill and indefinite-lived intangible assets revenue recognitionwas $158.4 million and promotional allowances, income taxes$46.8 million, respectively. As discussed in “Note 5 — Goodwill and share-based compensation expenses. We base our estimatesIntangible Assets” in Part II, Item 8: Financial Statements and judgments on historical experience and on various other factorsSupplemental Data of this Annual Report, we concluded that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.The following represent our accounting policies that involve the more significant judgments and estimates used in the preparationthere was no impairment of our consolidated financial statements. See Note 2, Summary of Significant Accounting Policies, in the accompanying consolidated financial statements for information regarding our significant accounting policies.Application of the Acquisition Method of AccountingThe application of the acquisition method of accounting for business combinations requires the use of significant estimatesgoodwill and assumptions in the determination of the fair value of assets acquired and liabilities assumed in order to appropriately allocate the purchase price consideration between assets that are depreciated and amortized from goodwill. Accounting for acquisitions requires that assets acquired and liabilities assumed be recorded at their respective fair values as of the date of acquisition. The fair values of identifiable intangible assets are estimated using both the cost approach and an income approach, including the excess earnings, relief from royalty, cost savings method and the with-and-without methods. This requires our management to make significant estimates in determining the fair values, including market participant assumptions, projected financial information, estimates of expected cash flows, brand recognition, customer attrition rates and discount rates. Given the need for such significant judgments, we may engage the assistance of independent valuation firms. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill.Our estimates of the fair values of assets acquired and liabilities assumed are based upon assumptions believed to be reasonable, but are inherently unpredictable and uncertain. During the measurement period, which is up to one year from the acquisition date, we may record measurement period adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Transaction costs are expensed as incurred in our consolidated statement of operations.On October 20, 2017, we acquired American. We have applied the acquisition method of accounting to this transaction. Our estimation of the fair value of the assets acquired and liabilities assumed as of the date of the transaction was determined based on certain valuations and analyses that we have yet to finalize, and accordingly, the assets acquired and liabilities assumed in the American Acquisition are subject to adjustment once we complete such analyses. We may record adjustments to the carrying value of the assets acquired and liabilities assumed with a corresponding offset to goodwill during the applicable measurement period, which can be up to one year from the date of the consummation of the acquisition. See Note 3, Merger and Acquisitions, in the accompanying consolidated financial statements for information regarding the American Acquisition.Our long-lived assets were carried at $895.2 million as of December 31, 2017, comprising 65.6% of2022 and 2021. For the year ended December 31, 2020, we recorded impairment charges to our consolidated total assets. We evaluate the carrying value of long-lived assets whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. If triggering events are identified, we then compare the estimated undiscounted future cash flows of such assets to the carrying value of the assets. Any such assets are not impaired if the undiscounted future cash flows exceed their carrying value. If the carrying value exceeds the undiscounted future cash flows, then an impairment charge is recorded, typically measured using a discounted cash flow model, which is based on the estimated future results of the relevant reporting unit discounted using our weighted-average cost of capitalgoodwill and market indicators of terminal year free cash flow multiples.A long-lived asset must be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Examples include a significant adverse change in the extent or manner in which we use the asset, a change in its physical condition, or an unexpected change in financial performance.We reconsider changes in circumstances on a frequent basis, as well as whenever a triggering event related to potential impairment has occurred. There are three generally accepted approaches available in developing an opinion of value: the cost, sales comparison and income approaches. We generally consider each of these approaches in developing a recommendation of the fair value of the asset; however, the reliability of each approach is dependent upon the availability and comparability of the market data uncovered, as well as the decision-making criteria used by market participants when evaluating an asset. We will bifurcate our investment and apply the most indicative approach to overall fair valuation, or in some cases, a weighted analysis of any or all of these methods. Given the need for significant judgements in conducting such valuations, we may engage the assistance of independent valuation firms.Goodwill and Indefinite-Lived Intangible AssetsWe review indefinite-lived intangible assets of $27.1 million and $6.9 million, respectively.ourthe fourth quarter of each year, and whenever events or changes in circumstances indicate the carrying amount may not be recoverable. We can opt to perform a qualitative assessment to test a reporting unit’s goodwill for impairment or we can directly perform the two-step impairment test. Based on the qualitative assessment, if we determine that the fair value of a reporting unitit is more likely than not (i.e.,that impairment may have occurred. When performing testing for impairment, we either conduct a likelihood of more than 50 percent) to be less than its carrying amount, the two-step impairment test will be performed.In the first step of the impairment test, the current fair value of each reporting unit is estimated using a discounted cash flow model which is then compared to the carrying value of each reporting unit. If the carrying amount of a reporting unit exceeds its fair value in step 1 of the impairment test, then step 2 of the impairment test is performedqualitative assessment to determine whether it is more likely than not that the implied fair valueasset is impaired, or elect to bypass this qualitative assessment and perform a quantitative test. Under the qualitative assessment, we consider both positive and negative factors, including macroeconomic conditions, industry events, financial performance and other changes, and make a determination of goodwill forwhether it is more likely than not that reporting unit. If the implied fair value of goodwill is less than the goodwill allocated for that reporting unit, an impairment loss is recognized.We consider our Nevada and Montana gaming licenses as indefinite-lived intangible assets that do not require amortization based on our future expectations to operate our gaming facilities indefinitely as well as our historical experience in renewing these intangible assets at minimal cost. We consider our trade names related to our Nevada casinos and taverns as indefinite-lived intangible assets that do not require amortization based on our future expectations to operate our casinos and taverns indefinitely under these trade names. Rather, these intangible assets are tested annually for impairment, or more frequently if indicators of impairment exist, by comparing the fair value of the recorded assets to theirits carrying amount. If, after assessing the carrying amount exceeds their fair value, an impairment lossqualitative factors, we determine that it is recognized. We complete our testing of our intangible assets prior to assessing our goodwill for possible impairment.The evaluation of goodwill and indefinite-lived intangible assets requiresmore likely than not the use of estimates about future operating results of each reporting unit to determineasset is impaired, we then perform a quantitative test in which the estimated fair value of the reporting unit is compared with its carrying amount, including goodwill. The fair value of our trade names is estimated using the income approach to valuation at each of our reporting units. the indefinite-lived intangible assets. We mustassets requires management to make variouscritical estimates, judgments and assumptions, and estimates in performing our impairment testing. The implied fair value includes estimates ofsuch as: the valuation methodology, the estimated future cash flows (including an allocationfor each of our projected rental obligationreporting units, the discount rate used to our reporting units) that are based on reasonable and supportable assumptions which represent our best estimatesthesuch cash flows, expectedour current valuation multiple and multiples of comparable publicly traded companies, and royalty rate to result from the usebe applied to valuation of the assets including their eventual disposition. Changes in estimates, increases in our cost of capital, reductions in transaction multiples, changes in operating and capital expenditure assumptions or applicationtrade names. Application of alternative assumptionsestimates and definitionsassumptions could produce significantly different results. Futureresults, especially with regards to estimated future cash flow estimatesflows, as they are, by their nature, subjective and actual results may differ materially from oursuch estimates. If our ongoingCash flow estimates of future cash flows are not met, we may have to record impairment charges in future accounting periods. Our estimates of cash flowsunpredictable and inherently uncertain, since they are based on the current regulatory, political and economic climates, recent operating information and budgets of the various properties where we conduct operations. Theseprojections. Such estimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, or othercompetition, events affecting various forms of travel and access to our properties.Forecastedproperties,(based on our annual operating plan as determinedare not met or if there are changes in significant assumptions and judgments used in the fourth quarter) canestimation process, including the discount rate and market multiple, we may have to record impairment charges in the future.significantly impacted byrecoverable, suspension of this casino resort property’s operations qualified as an indicator that impairment may exist related to our long-lived assets at Colorado Belle. As discussed in “Note 4 — Property and Equipment” in Part II, Item 8: Financial Statements and Supplemental Data of this Annual Report, the local economy in which our reporting units operate. For example, increases in unemployment rates canresults of interim and annual assessments conducted during the year did not result in decreased customer visitations and/or lower customer spend per visit. In addition,an impairment of the impact of new legislation which approves gaming in nearby jurisdictions or further expands gaming in jurisdictions where our reporting units currently operate can result in opportunities for us to expand our operations. However, it also has the impact of increasing competition for our established properties which generally will have a negative effect on those locations’ profitability once competitors become established, as some erosion of revenues occurs absent an overall increase in customer visitations. Lastly, increases in gaming taxes approved by state regulatory bodies can negatively impact forecasted cash flows.Assumptions and estimates about future cash flow levels and multiples by individual reporting units are complex and subjective. They are sensitive to changes in underlying assumptions and can be affected by a variety of factors, including external factors, such as industry, geopolitical and economic trends, and internal factors, such as changes in our business strategy, which may reallocate capital and resources to different or new opportunities which management believes will enhance our overall value but may be to the detriment of an individual reporting unit. Our annual goodwill impairment analysis, performed using the qualitative assessment optionlong-lived assets at Colorado Belle as of and for the first day of the fourth quarter of the yearyears ended December 31, 2017, resulted in2022 and 2021.conclusion that it was more likely than not thatlong-lived asset is evaluated by comparing the fair valueestimated future cash flows of our reporting units exceeded their respectivethe asset, on an undiscounted basis, to its carrying values. As a result, we concluded thatamount. If the two-step goodwillundiscounted estimated future cash flows exceed the carrying amount, no impairment test was not necessary. Additionally, none of our reporting units incurred goodwill impairment charges during 2016.is indicated. If the undiscounted estimated future operating results of our reporting unitscash flows do not meet current expectations, it could causeexceed the carrying values of our reporting units to exceed their fair values in future periods, potentially resulting in a goodwillamount, impairment charge.Revenue Recognition and Promotional AllowancesWe generally enter into three types of slot and amusement device placement contracts as part of our distributed gaming business: space lease, revenue share and participation agreements. Under space lease agreements, we pay a fixed monthly rental fee for the right to install, maintain and operate our slots at a business location. Under revenue share agreements, we pay the business location a percentage of the gaming revenue generated from our slots placed at the location, rather than a fixed monthly rental fee. With regard to both space lease and revenue share agreements, we hold the applicable gaming license to conduct gaming at the location (although revenue share locations are required to obtain separate regulatory approval to receive a percentage of the gaming revenue). Under participation agreements, the business location holds the applicable gaming license and retains a percentage of the gaming revenue that it generates from our slots. In Montana, our slot and amusement device placement contracts are all revenue share agreements.Gaming revenue, which is defined as the difference between gaming wins and losses, is recognized as wins and losses occur from gaming activities. The retail value of rooms, food and beverage, and other services furnished to customers without charge, including coupons for discounts when redeemed, is included in gross revenues and then deducted as a promotional allowance. The estimated cost of providing such promotional allowances is included in gaming expenses.Food, beverage, and retail revenues are recorded at the time of sale. Room revenue is recorded at the time of occupancy. Sales taxes and surcharges collected from customers and remitted to governmental authorities are presentedbased on a net basis. Accounts receivable deemed uncollectible are charged off through a provision for uncollectible accounts.The determination of our income tax-related account balances requires the exercise of significant judgment by management. Accordingly, we determine deferred tax assets and liabilities based upon the difference between the financial statementasset’s estimated fair value and tax basisits carrying amount. To estimate fair values, we generally use market comparables, when available, or a discounted cash flow model. The estimation of assetsfair value utilizing a discounted cash flow model requires management to make critical estimates, judgments and liabilities using enacted taxassumptions with regards to estimated future cash flows, including future growth rates, in effect for the year in which the differencesoperating margins, economic and business conditions, and discount rate, as they are, expected to affect taxable income. Management assesses the likelihood that deferred tax assets will be recoveredby their nature, subjective and actual results may differ materially from future taxable incomesuch estimates. Cash flow estimates are unpredictable and establishes a valuation allowance when management believes recovery is not likely.We record estimated penalties and interest related to income tax matters, includinginherently uncertain, tax positions, if any, as a component of income tax expense.Share-Based Compensation ExpenseWe have various share-based compensation programs, which provide for equity awards such as stock options and restricted stock units. We use the straight-line method to recognize compensation expense associated with share-based awardssince they are based on the fair value on the datecurrent regulatory, political and economic climates, recent operating information and projections. Such estimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, competition, events affecting various forms of grant. Expense is recognized over the requisite service period relatedtravel and access to each award, which is the period between the grant dateour properties, and the award’s stated vesting term. The fair valueother factors. If our estimates of stock options is estimated using the Black-Scholes option pricing model. Management makes severalfuture cash flows are not met or if there are changes in significant assumptions to determine the inputs into the Black-Scholes option pricing model, including our volatility and expected term assumptions which can significantly affect the fair value of stock options. For restricted stock units, compensation expense is calculated based on the fair market value of our common stock on the date of grant. Changesjudgments used in the assumptions can materially affect the estimate of the fair value of share-based compensation expense recognizedestimation process, we may have to record impairment charges in the consolidated statement of operations. The extent of the impact will depend, in part, on the extent of awards in any given year. All of our stock compensation expense is recorded in selling, general and administrative expenses in the consolidated statements of operations.See PoliciesPolicies” in the accompanying consolidated financial statementsPart II, Item 8: Financial Statements and Supplemental Data of this Annual Report for information regarding recently issued accounting pronouncements.SeeRefer to the “Regulation”“Regulation” section included in Part I, Item 11: Business of this Annual Report on Form 10-K for further discussion of applicable regulations.Off Balanceoff balanceoff-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.2017, approximately 99% of2022, our indebtedness for borrowed money accrued interest at a variable rate whichlong-term debt primarily comprised our indebtedness under the Credit Facilities.2017,2022, we had $800.0$575 million in principal amount of outstanding term loan borrowings under the First LienCredit Facility and $200.0 million in principal amount ofwith no outstanding borrowings under the Second Lien Term Loan.our $240 million Revolving Credit Facility. Our primary interest rate under the Credit FacilitiesFacility is the Eurodollar rate plus an applicable margin. As of December 31, 2017, theThe weighted-average effective interest rate on our outstandingFirst LienCredit Facility was approximately 4.4%, and under4.85% for the Second Lien Term Loan was approximately 8.3%.year ended December 31, 2022. Assuming the outstanding balance under our Credit FacilitiesFacility remained constant over a year, a 50 basis point increase in the applicable interest rate would increase interest incurred, prior to effects of capitalized interest, by $5.0$2.9 million over a twelve-month period.2017,2022, our investment portfolio included $90.6$142.0 million in cash and cash equivalents and a de minimis amount of$5.0 million in short-term investments.
We continue to evaluate the potential impact of the eventual replacement of the LIBOR benchmark interest rate. While some LIBOR rates are now extended through June 2023, lenders are no longer allowed to issue new loans and other financial instruments that are linked to LIBOR. Although we are not able to predict what will become a widely accepted benchmark in place of LIBOR, or the exact impact such a transition may have, our current expectation is that this transition will not have a material impact on our business, financial condition or results of operations.ITEM 8.PagePage ReportReports of Independent Registered Public Accounting FirmFirm; Ernst & Young LLP, Las Vegas, NV, (PCAOB ID: 42)475051525355CONSOLIDATEDthe Financial StatementsBoard of Directors and StockholdersGolden Entertainment, Inc. and SubsidiariesLas Vegas, NevadaOpinion on the Consolidated Financial Statements. We have audited the accompanying consolidated balance sheetsValuation of long-lived assets at Colorado Belle Description of the Golden Entertainment, Inc.MatterSubsidiaries (the Company)indefinite-lived intangible assets, for indicators of impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. As discussed in Note 1, the operations of the Colorado Belle remained suspended as of December 31, 20172022. Management identified an indicator of impairment related to the Colorado Belle asset group, performed an impairment test and 2016, andconcluded that the related consolidated statementsfair value was in excess of operations and comprehensive earnings (loss), shareholders’ equity andthe carrying value of the asset group.for eachincluding, among others, future growth rates, operating margins, economic and business conditions and discount rate. These assumptions are forward-looking and could be affected by future economic and market conditions.three yearscontrols over the Company’s impairment assessment of its long-lived assets. For example, we tested controls over the completeness and accuracy of the data and assumptions used in management’s impairment assessment.period ended December 31, 2017, andvaluation, considering factors including the notes to the consolidated financial statements and financial statement schedules listed in the Index at Item 15 (a)(2) (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial positionreopening date of the Companyproperty, future growth rates, operating margin, discount rate and forecasted capital expenditures. We also evaluated other assumptions used in preparing estimated future cash flows including future market conditions, industry and economic trends, and consumer preferences for contrary evidence. We inquired of management as of December 31, 2017 and 2016, andto their future operating plans for the Colorado Belle, comparing the results of its operations and itsour inquiries with the assumptions used in preparing their estimated future cash flows, for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States (U.S.).We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013 edition) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 15, 2018, expressed an unqualified opinion.Basis for Opinion. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluatinghistorical Company results, changes to the overall presentationCompany’s business plans and other relevant factors. We evaluated the Company’s internal and external communications, as well as third party industry and analyst reports to identify any corroboratory or contrary evidence. We assessed the historical accuracy of management’s estimates and evaluated management’s sensitivity analyses of the consolidated financial statements. We believesubjective assumptions to evaluate the changes in the analysis that our audits provide a reasonable basis for our opinion./s/ Piercy Bowler Taylor & Kern Certified Public AccountantsWe have served as the Company's auditor since 2005Las Vegas, NevadaMarch 15, 2018ON INTERNAL CONTROL OVER FINANCIAL REPORTINGBoard of Directors and StockholdersGolden Entertainment, Inc. and SubsidiariesLas Vegas, NevadaOpinion on Internal Control over Financial Reporting. We have audited the internal control over financial reporting of the Golden Entertainment, Inc. and Subsidiaries (the Company) as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013 edition) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on the COSO criteria.As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting included in Item 9A, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of American Casino and Entertainment Properties LLC (American), which was acquired on October 20, 2017, and is included in the 2017 consolidated financial statements of the Company and constituted 68.1% of total assets as of December 31, 2017 and 15% of net revenues for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of American.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) the consolidated balance sheets of the Company as of December 31, 2017 and 2016, and the related consolidated statements of operations and comprehensive earnings (loss), shareholders’ equity and cash flows, for each of the three years in the period ended December 31, 2017, and the notes to the consolidated financial statements and financial statement schedules listed in the Index at Item 15 (a)(2), and our report dated March 15, 2018, expressed an unqualified opinion.Basis for Opinion. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting included in Item 9A. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the United States (U.S.) federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission (SEC) and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control over financial reporting based on the assessed risk, and performing procedures that respond to those risks and such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
To the Shareholders and the Board of Directors of Golden Entertainment, Inc.
We have audited Golden Entertainment, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Golden Entertainment, Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.thousands)thousands, except per share data)December 31, 2022 2021 ASSETS Current assets Cash and cash equivalents $ 136,889 $ 220,540 Accounts receivable, net of allowance for credit losses of $775 and $481 at December 31, 2022 and 2021, respectively Accounts receivable, net of allowance for credit losses of $775 and $481 at December 31, 2022 and 2021, respectively 20,495 18,720 Prepaid expenses 25,900 15,108 Inventories 8,117 6,637 Other 13,610 2,933 Assets held for sale Assets held for sale 39,562 — Total current assets 244,573 263,938 Property and equipment, net 840,731 904,220 Operating lease right-of-use assets, net Operating lease right-of-use assets, net 147,893 179,251 Goodwill 158,396 158,396 Intangible assets, net 89,552 98,058 Deferred income tax assets Deferred income tax assets 11,822 — Other assets 15,703 11,701 Total assets $ 1,508,670 $ 1,615,564 LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Current portion of long-term debt and finance leases Current portion of long-term debt and finance leases $ 555 $ 1,057 Current portion of operating leases Current portion of operating leases 42,200 40,151 Accounts payable 25,168 19,102 Accrued payroll and related 21,227 31,309 Accrued liabilities 33,365 35,347 Liabilities related to assets held for sale Liabilities related to assets held for sale 10,187 — Total current liabilities 132,702 126,966 Long-term debt, net and non-current finance leases Long-term debt, net and non-current finance leases 900,464 1,010,469 Non-current operating leases Non-current operating leases 121,979 155,098 Deferred income tax liabilities Deferred income tax liabilities 53 1,861 Other long-term obligations 552 1,629 Total liabilities 1,155,750 1,296,023 Commitments and contingencies (Note 13) Commitments and contingencies (Note 13) Shareholders’ equity Shareholders’ equity Common stock, $.01 par value; authorized 100,000 shares; 28,179 and 28,830 common shares issued and outstanding at December 31, 2022 and 2021, respectively Common stock, $.01 par value; authorized 100,000 shares; 28,179 and 28,830 common shares issued and outstanding at December 31, 2022 and 2021, respectively 282 288 Additional paid-in capital 480,060 477,829 Accumulated deficit (127,422) (158,576) Total shareholders’ equity Total shareholders’ equity 352,920 319,541 Total liabilities and shareholders’ equity Total liabilities and shareholders’ equity $ 1,508,670 $ 1,615,564 and Comprehensive IncomeYear Ended December 31, 2022 2021 2020 Revenues Gaming $ 760,906 $ 766,307 $ 476,753 Food and beverage 175,363 167,815 112,081 Rooms 122,324 109,802 71,411 Other Other 63,126 52,619 33,910 Total revenues Total revenues 1,121,719 1,096,543 694,155 Expenses Gaming 428,984 416,197 275,041 Food and beverage 131,863 118,541 92,202 Rooms 56,414 48,632 39,935 Other operating 19,889 16,968 11,789 Selling, general and administrative 235,404 221,967 183,122 Depreciation and amortization 100,123 106,692 124,430 Loss on disposal of assets Loss on disposal of assets 934 1,260 803 Preopening expenses 161 246 308 Impairment of goodwill and intangible assets Impairment of goodwill and intangible assets — — 33,964 Total expenses 973,772 930,503 761,594 Operating income (loss) Operating income (loss) 147,947 166,040 (67,439) Non-operating expense Non-operating expense Other non-operating income Other non-operating income — 60,000 — Interest expense, net (63,490) (62,853) (69,110) Loss on debt extinguishment and modification Loss on debt extinguishment and modification (1,590) (975) — Change in fair value of derivative Change in fair value of derivative — — (1) Total non-operating expense, net (65,080) (3,828) (69,111) Income (loss) before income tax provision Income (loss) before income tax provision 82,867 162,212 (136,550) Income tax provision Income tax provision (521) (436) (61) Net income (loss) Net income (loss) $ 82,346 $ 161,776 $ (136,611) Weighted-average common shares outstanding Basic 28,662 28,709 28,080 Diluted 31,514 32,123 28,080 Net income (loss) per share Net income (loss) per share Basic $ 2.87 $ 5.64 $ (4.87) Diluted $ 2.61 $ 5.04 $ (4.87) Common stock Additional Paid-In Accumulated Total Shareholders’ Shares Amount Capital Deficit Equity Balance, January 1, 2020 27,879 $ 279 $ 461,643 $ (172,178) $ 289,744 Issuance of stock on options exercised and restricted stock units vested 330 3 — — 3 Repurchases of common stock (50) — — (950) (950) Share-based compensation — — 9,525 — 9,525 Tax benefit from share-based compensation — — (449) — (449) Net loss — — — (136,611) (136,611) Balance, December 31, 2020 28,159 $ 282 $ 470,719 $ (309,739) $ 161,262 Issuance of stock on options exercised and restricted stock units vested 898 9 98 — 107 Repurchases of common stock (227) (3) — (10,613) (10,616) Share-based compensation — — 13,844 — 13,844 Tax benefit from share-based compensation — — (6,832) — (6,832) Net income — — — 161,776 161,776 Balance, December 31, 2021 28,830 $ 288 $ 477,829 $ (158,576) $ 319,541 Issuance of stock on options exercised and restricted stock units vested 462 4 31 — 35 Repurchases of common stock (1,113) (10) — (51,192) (51,202) Share-based compensation — — 12,880 — 12,880 Tax benefit from share-based compensation — — (10,680) — (10,680) Net income — — — 82,346 82,346 Balance, December 31, 2022 28,179 $ 282 $ 480,060 $ (127,422) $ 352,920 Year Ended December 31, 2022 2021 2020 Cash flows from operating activities Net income (loss) $ 82,346 $ 161,776 $ (136,611) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 100,123 106,692 124,430 Non-cash lease expense 165 762 1,344 Share-based compensation 12,880 13,844 9,525 Amortization of debt issuance costs and discounts on debt 4,093 4,343 4,519 Loss on disposal of assets 934 1,260 803 Provision for credit losses 753 631 940 Deferred income taxes (13,630) 341 432 Loss on debt extinguishment and modification 1,590 975 — Impairment of goodwill and intangible assets — — 33,964 Change in fair value of derivative — — 1 Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (4,882) (5,643) 1,599 Prepaid expenses, inventories and other current assets (24,082) (1,213) 8,999 Other assets (4,307) (1,595) 174 Accounts payable and other accrued expenses (4,494) 14,393 (13,740) Other liabilities (1,292) (791) 356 Net cash provided by operating activities 150,197 295,775 36,735 Cash flows from investing activities Purchase of property and equipment, net of change in construction payables (51,419) (29,259) (36,502) Proceeds from disposal of property and equipment 152 374 648 Net cash used in investing activities (51,267) (28,885) (35,854) Cash flows from financing activities Repayments of revolving credit facility — — (200,000) Borrowings under revolving credit facility — — 200,000 Repayments of term loan (75,000) (122,000) — Repurchase of senior notes (39,524) — — Repayments of notes payable (512) (3,737) (5,017) Principal payments under finance leases (541) (6,179) (2,588) Payment for debt extinguishment and modification costs (12) (651) — Tax withholding on share-based payments (10,680) (6,832) (449) Proceeds from issuance of common stock, net of costs 4 9 3 Proceeds from exercise of stock options 31 98 — Repurchases of common stock (51,202) (10,616) (950) Net cash used in financing activities (177,436) (149,908) (9,001) Change in cash and cash equivalents (78,506) 116,982 (8,120) Balance, beginning of period 220,540 103,558 111,678 Balance, end of period $ 142,034 $ 220,540 $ 103,558 Cash and cash equivalents Cash and cash equivalents $ 136,889 $ 220,540 $ 103,558 Cash and cash equivalents included in assets held for sale 5,145 — — Balance, end of period $ 142,034 $ 220,540 $ 103,558 Year Ended December 31, 2022 2021 2020 Supplemental cash flow disclosures Cash paid for interest $ 58,900 $ 57,619 $ 64,422 Cash paid (received) for income taxes, net 19,706 — (1,483) Non-cash investing and financing activities Payables incurred for capital expenditures $ 5,386 $ 1,933 $ 3,585 Assets acquired under finance lease obligations — — 559 Loss on debt extinguishment and modification 1,590 975 — Operating lease right-of-use assets obtained in exchange for lease obligations 22,078 41,259 11,153 (collectively, the “Company”) own and operate a diversified entertainment platform, consisting of a portfolio of gaming assets that focus on resort casino operations and distributed gaming operations (including tavern gaming in our wholly-ownedthe Company’s branded taverns).The Company conducts its business through two reportable operating segments: Casinos and Distributed Gaming. The Company’s Casinosportfolio includes ten casino properties located in Nevada and Maryland. The Company’s Nevada tavern segment involvesis comprised of the operation of eight resort casino properties in Nevada and Maryland, comprising the Stratosphere Casino, Hotel & Tower (the “Stratosphere”), Arizona Charlie’s Decatur and Arizona Charlie’s Boulder in Las Vegas, Nevada, the Aquarius Casino Resort (the “Aquarius”) in Laughlin, Nevada, the Pahrump Nugget Hotel Casino (“Pahrump Nugget”), Gold Town Casino and Lakeside Casino & RV Park in Pahrump, Nevada, and the Rocky Gap Casino Resort in Flintstone, Maryland (“Rocky Gap”). The casino properties in Las Vegas and Laughlin, Nevada were added to the Company’s casino portfolio in October 2017 as a result of the Company’s acquisition of American Casino & Entertainment Properties LLC (“American”), as further described below.The Company’s Distributed Gaming segment involves the installation, maintenance and operation of slots and amusement devices in non-casino locations (such as grocery stores, convenience stores, restaurants, bars, taverns and liquor stores) in Nevada and Montana, and the operation of wholly-ownedits branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area.On October 20, 2017, the Company completed the acquisition of all of the outstanding equity interests of American from its former equity holders (the “American Acquisition”). The results of operations of American and its subsidiaries have been included in the Company’s results subsequent to that date. See Note 3, Merger and Acquisitions, for information regarding the American Acquisition.On January 29, 2016, the Company completed the acquisition of approximately 1,100 slots from a distributed gaming operatoroperations involve the installation, maintenance and operation of slot machines and amusement devices in Montana,third-party non-casino locations such as well as certain other non-gaming assetsrestaurants, bars, taverns, convenience stores, liquor stores and grocery stores in Nevada and Montana. Unless otherwise indicated, the terms “Golden” and the right to operate within certain locations (the “Initial Montana Acquisition”). Additionally, on April 22, 2016, the Company completed the acquisition of approximately 1,800 slots from a second distributed gaming operator in Montana, as well as amusement devices and other non-gaming assets and the right to operate within certain locations (the “Second Montana Acquisition” and, together with the Initial Montana Acquisition, the “Montana Acquisitions”). The results of operations of the distributed gaming businesses acquired in the Montana Acquisitions have been included in the Company’s results subsequent to their respective acquisition dates. See Note 3, Merger and Acquisitions, for information regarding the Montana Acquisitions.On July 31, 2015, the Company acquired Sartini Gaming, Inc. (“Sartini Gaming”) through the merger of a wholly-owned subsidiary of the Company with and into Sartini Gaming, with Sartini Gaming surviving as a wholly-owned subsidiary of the Company (the “Merger”). The results of operations of Sartini Gaming and its subsidiaries have been included in the Company’s results subsequent to that date. In connection with the Merger, the Company’s name was changed from Lakes Entertainment, Inc.“Company,” refer to Golden Entertainment, Inc. See Note 3, Mergertogether with its subsidiaries.AcquisitionsDistributed Gaming. Each reportable segment is comprised of the following properties and operations:Reportable Segment Location Nevada Casino Resorts The STRAT Hotel, Casino & SkyPod (“The STRAT”) Las Vegas, Nevada Aquarius Casino Resort (“Aquarius”) Laughlin, Nevada Edgewater Hotel & Casino Resort (“Edgewater”) Laughlin, Nevada Laughlin, Nevada Nevada Locals Casinos Arizona Charlie’s Boulder Las Vegas, Nevada Arizona Charlie’s Decatur Las Vegas, Nevada Gold Town Casino Pahrump, Nevada Lakeside Casino & RV Park Pahrump, Nevada Pahrump Nugget Hotel Casino (“Pahrump Nugget”) Pahrump, Nevada Maryland Casino Resort Rocky Gap Casino Resort (“Rocky Gap”) Flintstone, Maryland Nevada Taverns 64 branded tavern locations Nevada Distributed Gaming Nevada distributed gaming Nevada Montana distributed gaming Montana information regardingaggregate consideration of $260.0 million (the “Rocky Gap Transactions”). Specifically, Century agreed to acquire the Merger.operations of Rocky Gap from Golden for $56.1 million in cash (subject to adjustment based on Rocky Gap’s working capital and cage cash at closing), subject to the conditions and terms set forth therein, and VICI agreed to acquire the real estate assets relating to Rocky Gap from Golden for $203.9 million in cash, subject to the conditions and terms set forth therein. The Rocky Gap Transactions are required by their terms to close concurrently and the Company expects the Rocky Gap Transactions to close during the second quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and closing conditions. Refer to discussion in “Note 3 — Assets Held for Sale” for further information.disclosures.liabilities and the disclosure of contingent assets and liabilities at the balance sheet date and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates also include preliminary estimates of values assigned to assets acquired and liabilities assumed in connection with business combinations, including conclusions of useful lives, separate entity values and underlying valuation metrics and methods. These preliminary estimates could change significantly during the measurement period which can remain open for up to one year after the closing date of the business combination. See Note 3, Merger and Acquisitions, for further information regarding the Company’s business combinations.Additionally, certain minor reclassifications have beenReclassifications were made to the 2016 and 2015 amountsCompany’s prior period consolidated financial statements to conform to the current period presentation, including a reclassification of $2.7 million from food and beverage expense to gaming expense.thesecash and cash equivalents balances may at times exceed the federal insured deposit limit, the Company believes such risk is mitigated by the quality of the institutions holding such deposits.doubtful accounts.credit losses. Accounts receivable are non-interest bearing and are initially recorded at cost. Accounts are written off when management deems the account to be uncollectible. An estimated allowance for credit losses is maintained to reduce the Company’s accounts receivable to their expected net realizable value. The allowance is estimatedvalue based on specific reviews of customer accounts, as well asthe age of such accounts, management’s assessment of the customer’s financial condition, historical and current collection experience and management’s expectations of future collection trends based on the current and forecasted economic and business conditions. Accounts are written off when management deems them to be uncollectible. Recoveries of accounts previously written off are recorded when received.value (instead of market) beginning in 2017. The change in accounting principle did not have a material effect on the Company’s financial position, results of operations or cash flows.value. Cost is determined using the first-in, first-out and the average cost inventory methods.capital leasesfinance lease agreements are stated at the lower of the present value of the future minimum lease payments or fair value at the inception of the lease. Expenditures for major additions, renewals and improvements are capitalized and depreciated over their useful lives. Costswhile costs of routine repairs and maintenance are expensed when incurred. A significant amount of the Company’s property and equipment was acquired through business acquisitions and therefore, was initially recognized at fair value on the effective datesdate of the transactions.applicable acquisition transaction. Depreciation of property and equipment is computed using the straight-line method over the following estimated useful lives:Building and site improvements1510 - 4540 yearsevaluatesreviews the carrying amounts of its long-lived assets, other than goodwill and indefinite-lived intangible assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability is evaluated by comparing the estimated future cash flows of the asset, on an undiscounted basis, to its carrying amount. If the undiscounted estimated future cash flows exceed the carrying amount, no impairment is indicated. If the undiscounted estimated future cash flows do not exceed the carrying amount, impairment is recorded based on the difference between the asset’s estimated fair value and its carrying amount. To estimate fair values, the Company generally uses market comparables, when available, or a discounted cash flow model. The estimation of fair value requires significant judgment and is based on assumptions about future cash flows, including future growth rates, operating margins, economic and business conditions, and discount rate, all of which are unpredictable and inherently uncertain. The Company’s long-lived asset impairment tests are performed at the reporting unit level.long-liveddisposals recorded in the Company’s consolidated statements of operations.in accordance withannually during the guidance for accounting for the impairmentfourth quarter of each year, and whenever events or disposal of long-live assets.circumstances indicate that it is more likely than not that an asset is impaired. Indefinite-lived intangible assets are not amortized unless it is determined that an asset’s useful life is no longer indefinite. The Company periodically reviews its indefinite-lived assets to determine whether events and circumstances continue to support an indefinite useful life. If an indicator of impairment exists,indefinite-lived intangible asset no longer has an indefinite life, the impairment is measured based on fair value compared to book value. For the years ended December 31, 2017 and 2016, there were no impairment charges. For the year ended December 31, 2015 the Company recognized an impairment charge of $0.4 million.Goodwill and Intangible AssetsGoodwill represents the purchase price in excess of fair values assigned to the underlying net assets of the acquired company. Goodwill is assigned to the reporting unit, which is the operating segment level or one level below the operating segment. Goodwill is not amortized but insteadasset is tested for impairment annually.and is subsequently accounted for as a finite-lived intangible asset.with finite livesprimarily represent assets related to its customer relationships, player relationships, and non-compete agreements, and were acquired in a business combination. The Company’s finite-lived intangible assets are amortized using the straight-line method over the periods estimated to be benefited.also comprised of leasehold interest and licenses. Finite-lived intangible assets are also reviewed for impairment if factsamortized over their estimated useful lives using the straight-line method. The Company periodically evaluates the remaining useful lives of its finite-lived intangible assets to determine whether events and circumstances warrant. Impairment tests areperformed on October 1stwarrant a revision to the remaining period of each year,amortization.more frequently when negativea business acquisition. The Company’s player relationships represent the value associated with its rated casino guests. The initial fair value of these intangible assets was determined using the income approach. The recoverability of the finite-lived intangible assets could be affected by, among other things, increased competition within the gaming industry, a downturn in the economy, declines in customer spending which could impact the expected future cash flows associated with the rated casino guests, declines in the number of customer visits which could impact the expected attrition rate of the rated casino guests, and erosion of operating margins associated with rated casino guests. Should events or changes in circumstances are experienced. No indicatorscause the carrying amount of possible impairment have been identified and no impairment charges have been recorded.Derivative InstrumentsIn November 2017, the Company executed a trade with Credit Suissecustomer relationship intangible asset to purchase a derivative instrument from whichexceed its estimated fair value, the Company will receive cash payments at the end of each period in which the interest rate exceeds the agreed upon strike price (the “Interest Rate Cap”). Derivative financial instruments such as the Interest Rate Cap are recorded at fair value. Changesrecognize an impairment charge in the fair value of derivative instruments are recognized in the consolidated statements of operations and comprehensive income.Rewards ProgramsThe Company offers various rewards and loyalty programs at its resort casino properties to encourage repeat business. At its Las Vegas and Laughlin casinos in Nevada, the Company offers the ace|PLAY rewards program. Under this program, participants earn points based on gaming activity that can be redeemed for cash, free play, lodging, food and beverages and merchandise. Participant points expire after thirteen months of no activity.At its Pahrump, Nevada casinos, the Company offers the Gold Mine Rewards loyalty program. Under this program, participants earn points based on play and retail purchases, which points are redeemable for food, beverages and hotel rooms, among other items. The close proximityamount of the Company’s three Pahrump, Nevada casino properties allows it to leverage the convenience of a one-card player rewards system, where reward points and other benefits can be earned and redeemed across all threeexcess of the Company’s Pahrump casinos via a single card.At Rocky Gap, the Company offers the Rewards Club loyalty program. Under this program, participants earn points based on play and amounts spent on the purchase of rooms, food, beverage and resort activities, which points are redeemable for complimentary slot play and free goods and services at Rocky Gap’s hotel, restaurants, spa and golf course.Incarrying amount over its Distributed Gaming segment, the Company offers a Golden Rewards promotional program for its taverns. Golden Rewards tavern player relationships represent loyalty program members who earn points based on play and amounts spent on the purchase of food and beverage, which points are redeemable for complimentary slot play, food and beverages, among other items.With respect to each of the Company’s rewards and loyalty programs, the Company records a liability based on the value of points earned, less an estimate for points not expected to be redeemed (“breakage”). The Company records net points earned for complimentary gaming play as a reduction to gaming revenue and points earned for free goods and services as promotional allowances. Redemption history at the Company’s casinos and taverns is used to assist in the determination of the estimated accruals. Changes in the programs, increases in membership and changes in the redemption patterns of the participants can impact this liability. The ace|PLAY, Gold Mine Rewards, Rewards Club and Golden Rewards points accruals are included in current liabilities on the Company’s consolidated balance sheet. Net net is reported as the outstanding debt amount, net of unamortized debt issuance costs and debt discount costs.discount. These costs include legal and other direct costs related to the issuance of the Company’s outstanding debt and discounts granted to the initial purchasers or lenders of the Company’s debt instruments, and are recorded as a direct reduction to the face amount of the Company’s outstanding debt.long-term debt on the consolidated balance sheets. The debt discount and debt issuance costs are accreted to interest expense using the effective interest method or, if the amounts approximate the effective interest method, on a straight-line basis over the contractual term of the underlying debt. InThe amount amortized to interest expense was $4.1 million, $4.3 million and $4.5 million for the event thatyears ended December 31, 2022, 2021 and 2020, respectively.debt is modified, repurchased or otherwise reduced prior to its original maturity date,derivative financial instruments do not qualify for hedge accounting. The fair value approximates the amount the Company ratably reduceswould pay if these contracts were settled at the unamortized debt issuance costsrespective valuation dates.and records a loss on extinguishment of debt.rate determined at lease commencement.Revenue Recognition and Promotional AllowancesGaming revenueThe Company is the difference betweenlessor under non-cancelable operating leases for retail and food and beverage outlet space within its casino properties. The Company also enters into operating lease agreements with certain equipment providers for placement of amusement devices and automated teller machines within its casino properties and taverns. The lease arrangements generally include minimum base rent and/or contingent rental clauses based on a percentage of net sales exceeding minimum base rent. Revenue is recorded on a straight-line basis over the term of the lease. The Company recognizes revenue for contingent rentals when the contingency has been resolved.losseslosses. The commissions rebated to premium players for cash discounts and is recognizedother cash incentives to patrons related to gaming play are recorded as winsa reduction to casino gaming revenues. Gaming contracts include a performance obligation to honor the patron’s wager and losses occur fromtypically include a performance obligation to provide a product or service to the patron on a complimentary basis to incentivize gaming activities.threetwo types of slot and amusement device placement contracts as part of theits distributed gaming business: space lease revenue shareagreements and participation agreements. Under space lease agreements, the Company pays a fixed monthly rental fee for the right to install, maintain and operate the Company’s slotsits slot machines at a business location.location and the Company is the sole holder of the applicable gaming license that allows it to operate such slot machines. Under these agreements, the Company recognizes all gaming revenue and records fixed monthly rental fees as gaming expenses in the consolidated statement of operations.expense. Under revenue shareparticipation agreements, the Company pays the business location retains a percentage of the gaming revenue generated from the Company’s slots placed atslot machines, and as a result both the business location rather than a fixed monthly rental fee. With regard to both space lease and revenue share agreements, the Company holds the applicable gaming license to conduct gaming at the location (although revenue share locationsGolden are required to obtain separate regulatory approval to receivehold a percentage of thestate issued gaming revenue). Under participation agreements, the business location holds the applicable gaming license and retains a percentage of the gaming revenue that it generates from the Company’s slots.license. In Montana, the Company’s slot and amusement device placement contracts are all participation agreements.agreements.The retail value of revenue recorded as gaming expenses.food and beverage,entertainment, merchandise and other discretionary complimentaries, and wagering contracts that include products and services furnishedprovided to customers without charge, including couponsa patron in exchange for points earned under the Company’s loyalty program contain more than one performance obligation. The transaction price is allocated to each performance obligation in the gaming wagering contract. The amount allocated to loyalty points earned is based on an estimate of the standalone selling price of the loyalty points, which is determined by the redemption value less an estimate for points not expected to be redeemed. The amount allocated to discretionary complimentaries is the standalone selling price of the underlying goods or services, which is determined using the retail price at which those goods or services would be sold separately in similar transactions. The remaining amount of the transaction price is allocated to wagering activity using the residual approach as the standalone selling price for gaming wagers is highly variable due to wide disparity of wagering options available to the Company’s patrons. The amount wagered, frequency of wagering, patron betting habits, and outcomes of the games of chance are unpredictable. As a result, no stand-alone selling price of a gaming transaction is determinable and the residual approach is utilized to represent the net revenue ascribed to the gaming wager.redeemed,its sales exceed an agreed upon minimum amount and is included in gross revenues and then deducted as a promotional allowance. The estimated cost of providing such promotional allowancesnot recognized by the Company until the threshold is included primarily in gaming expenses.Outstanding Chip Liability Loyalty Program Customer Deposits and Other (In thousands) 2022 2021 2022 2021 2022 2021 Balance at January 1 $ 1,184 $ 997 $ 2,995 $ 3,969 $ 4,937 $ 3,497 1,312 1,308 2,861 3,250 5,119 5,656 Increase (decrease) $ 128 $ 311 $ (134) $ (719) $ 182 $ 2,159 casinos are subject to taxes based on gross gaming revenues and pay annual fees based on the number of slotsslot machines and table games licensed during the year. Rocky Gap is subject to gaming taxes based on gross gaming revenues and also pays an annual flat tax based on the number of table games and video lottery terminals in operation during the year. The Company’s distributed gaming operations in Nevada are subject to taxes based on the Company’s share of non-restricted gross gaming revenue for those locations that have grandfathered rights to more than 15 slotsslot machines for play, and/or annual and quarterly fees at all branded tavern and third partythird-party distributed gaming locations. The Company’s distributed gaming operations in Montana are subject to taxes based on the Company’s share of gross gaming revenue. These gaming taxes are recorded as gaming expenses in the consolidated statements of operations. Total gaming taxes and licenses were $41.5$73.2 million, $35.7$72.2 million and $24.2$51.8 million for the years ended December 31, 2017, 20162022, 2021 and 2015,2020, respectively.expenses, which are primarilycosts included in selling, general and administrative expenses in the Company’s consolidated statements of operations were $3.3$12.2 million, $2.6$9.9 million and $3.4$6.9 million for the years ended December 31, 2017, 20162022, 2021 and 2015,2020, respectively.andtime-based restricted stock units.units (“RSUs”) and performance-based restricted stock units (“PSUs”). Share-based compensation expense is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense, net of estimated forfeitures, over the employee'semployee’s requisite service period. Compensation costs related to stock option awards are calculated based on the fair value of the award on the date of grant using the Black-Scholes option pricing model. For restricted stock units,RSUs and PSUs, compensation expense is calculated based on the fair market value of the Company’s common stock on the date of grant. All of the Company’s share-based compensation expense is recorded in selling, general and administrative expenses in the consolidated statements of operations. See Note 9, Share-Based Compensation,additional discussion.The determinationthe estimated future tax consequences attributable to differences between financial statement carrying amounts of the Company’s income tax-related account balances requires the exercise of significant judgment by management. Accordingly, the Company determines deferredexisting assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities based upon the difference between the financial statement and tax basis of assets and liabilitiesare measured using enacted tax rates in effect for the year in which thethose temporary differences are expected to affect taxable income. Management assessesbe recovered or settled. The effect of a change in tax rates on the likelihood thatincome tax provision and deferred tax assets will be recovered fromand liabilities generally is recognized in the results of operations in the period that includes the enactment date. Accounting standards also require recognition of a future taxable income and establishestax benefit to the extent that realization of such benefit is more likely than not; otherwise, a valuation allowance when management believes recovery is not likely. applied.Company establishes assets and liabilities for uncertain tax positions taken or expected to be taken inCompany’s income tax returns usingare subject to examination by the Internal Revenue Service and other tax authorities in the locations where it operates. The Company assesses potentially unfavorable outcomes of such examinations based on accounting standards for uncertain income taxes. The accounting standards prescribe a more-likely-than-notminimum recognition threshold.For all periods, basicgenerally accepted accounting principles in the United StatesGAAP are established by the Financial Accounting Standards Board (“FASB”), in the form of Accounting Standards Updatesaccounting standards updates (“ASUs”), to the FASB’s Accounting Standards Codification.ASC. The Company considers the applicability and impact of all ASUs. While management continues to assess the possible impact onof the Company's consolidated financial statementsadoption of new accounting standards and the future adoption of the new accounting standards that are not yet effective on the Company’s financial statements, management currently believes that the following new standards have or may have an impact on the Company’s consolidated financial statements and disclosures:and disclosures:May 2017, October 2021, the FASB issued ASU 2017-09, Compensation – Stock Compensation, which amendsNo. 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU improves the scope of modification accounting for share-based payment arrangements.revenue contracts with customers acquired in a business combination by addressing diversity in practice and inconsistency related to recognition of contract assets and liabilities acquired in a business combination. The provisions of this ASU 2017-09 provides guidance onrequire that an acquiring entity account for the types of changes torelated revenue contracts in accordance with ASC 606 as if it had originated the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting.contracts. The standard is effective for annual periodsfiscal years beginning after December 15, 20172022 and interim periods therein, andwithin those fiscal years with early adoption is permitted. The Company will adopt the standard as of January 1, 2018, and does not expect the impact of the adoption of this ASU to be material to its financial statements or disclosures.statements and disclosures.In January 2017, the FASB issued ASU 2017-04, Intangiblesstatements.Goodwill and Other, which addresses goodwill impairment testing. Instead of determining goodwill impairment by calculating the implied fair value of goodwill, an entity should perform a goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. ASU 2017-04 is effectiveAssets Held for annual periods beginning after December 15, 2019 and interim periods therein, with early adoption permitted. Salecurrently evaluating the impact of this guidance on its consolidated financial statements.In January 2017, the FASB issued ASU 2017-01, Business Combinations, which clarified the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The standardprobable, is effective for annual periods beginning after December 15, 2017 and interim periods therein. The Company will adopt the standard as of January 1, 2018.In February 2016, the FASB issued ASU 2016-02, Leases, which replaces the existing guidance. ASU 2016-02 requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. ASU 2016-02 is effective for annual periods beginning after December 15, 2018 and interim periods therein, with early application permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.In May 2014, the FASB issued a comprehensive new revenue recognition model, ASU 2014-09, Revenue from Contracts with Customers which created a new Topic 606 (“ASC 606”). The new guidance is intended to clarify the principles for recognizing revenue and to develop a common revenue standard for United States GAAP applicable to revenue transactions. Existing industry guidance will be eliminated, including revenue recognition guidance specific to the gaming industry. The FASB has issued several amendments to the standard, including clarification on accounting for and identifying performance obligations. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. The guidance should be adopted by applying either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach with the cumulative effect of initially applying the guidance recognized at the date of initial application.The Company will adopt the standard as of January 1, 2018, and will follow the full retrospective approach. The accompanying financial statements and related disclosures do not reflect the effects of the new revenue standard. The Company is finalizing the assessment of the effects of the standard on its consolidated financial statements, and will begin reporting under the new guidance in its consolidated financial statements for the first quarter of 2018. The quantitative effects of these changes have not yet been determined and are still being analyzed.The Company’s current presentation, which reports the retail value of services provided to customers without charge as revenues, with a corresponding contra amount deducted as promotional allowances, will no longer be allowed under the new revenue standard. Upon adoption of the new guidance, revenues will be allocated among the Company’s departmental classifications based on the relative standalone selling prices of the goods and services provided to guests. The Company currently anticipates that this methodology will result in a reduction of reported gaming revenues by an amount equivalent to reported promotional allowance revenues, with no change to total net revenues.Currently, the Company estimates the cost of fulfilling the redemption of rewards earned through customer loyalty programs based upon the cost of historical redemptions. Upon adoption of the new guidance, the Company will account for the rewards using a deferred revenue model for the classification and timing of revenue recognized as well as the classification of related expenses when player rewards are redeemed. The impact of this change in accounting is not expected to be material to any annual accounting period.Historically,completed within one year, and in accordance with prior guidance, the Company reported the expense for amounts paid to operators of wide area progressive games as contra-revenues. Upon adoption of the new guidance, these payments will be reported as an operating expense. The impact of this classification change will be to increase our gaming revenues and gaming expenses by equal amounts.Note 3 – Merger and AcquisitionsAmerican AcquisitionOverviewOn October 20, 2017, the Company completed the acquisition ofasset group meets all of the outstanding equity interestsaccounting criteria to be classified as held for sale. As discussed in “American from its former equity holders for aggregate consideration consisting of $781.0 million in cash (subject to certain post-closing adjustments) and the issuance by the Company of 4,046,494 shares of its common stock to W2007/ACEP Holdings, LLC (“ACEP Holdings”)Business, a former American equity holder. Pursuant to the post-closing adjustment provisions in the purchase agreement, the cash portion of the consideration paid in the American Acquisition was subsequently increased to $787.6 million.At the time of the American Acquisition, American owned and operated four casino hotel properties in Nevada: the Stratosphere, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder in Las Vegas, and the Aquarius in Laughlin. As of October 20, 2017, the American casino properties offered an aggregate of 3,865 slots, 89 table games and 4,896 hotel rooms.The American Acquisition has been accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”), which, among other things, establishes that equity issued to effect the acquisition be measured at the closing date of the transaction at the then-current market price. Accordingly, the fair value of the Company's common stock issued to ACEP Holdings at the closing is based” on the closing price per share of the Company's common stock on October 20, 2017 of $25.08.The following is a summary of the components of the purchase price paid by the Company to the sellers in the American Acquisition (after taking into account the adjustment to the cash portion of the purchase price pursuant to the post-closing adjustment provisions of the purchase agreement, as described above):Purchase Price AllocationUnder ASC 805, the purchase price of the acquisition is allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over the fair values is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with a corresponding offset to goodwill and will allocate goodwill to each of the business segments at the conclusion of the measurement period.The following table summarizes the preliminary allocation of the purchase price as of October 20, 2017 (the closing date of the American Acquisition), based on preliminary estimates of the fair values of the assets acquired and liabilities assumed:The following table summarizes the preliminary values assigned to acquired property and equipment and estimated useful lives by category:The following table summarizes the preliminary values assigned to acquired intangible assets and estimated useful lives by category:See Note 12, Financial Instruments and Fair Value Measurements, for further discussion regarding the valuation of the tangible and intangible assets acquired through the American Acquisition.RefinancingIn connection with the closing of the American Acquisition,August 24, 2022, the Company entered into two new creditdefinitive agreements with respect to sell Rocky Gap. The Rocky Gap Transactions are expected to close in the second quarter of 2023, subject to satisfaction or waiver of customary regulatory approvals and closing conditions. As a $900.0 million senior secured first lien credit facility (consistingresult, the assets related to the Rocky Gap property were classified as held for sale as of $800.0 millionSeptember 30, 2022term loans and a $100.0 million revolving credit facility, which was undrawn at closing) (the “First Lien Facility”) and a $200.0 million senior secured second lien term loan facility (the “Second Lien Term Loan” and, together with the First Lien Facility, the “Credit Facilities”). The Company used the net proceedssale from the borrowings underdate of execution of the Credit Facilities at the closing primarily to fund the cash purchase pricedefinitive agreements. Operations of Rocky Gap have historically been represented in the American Acquisition (a portion of which was used to repay American’s outstanding senior secured indebtedness), to refinance the Company’s outstanding senior secured indebtedness under its then-existing senior secured credit facility (the “Former Credit Facility”), and to pay certain transaction fees and expenses. See Note 7, Debt, for a discussionMaryland Casino Resort reportable segment.Credit Facilitiesassets and associated refinancing.Pro Forma Financial InformationThe following unaudited pro forma combined financial information has been prepared by managementliabilities held for illustrative purposes only and does not purport to represent whatsale in the results of operations, financial condition or other financial informationRocky Gap Transactions consisted of the Company would have been if the American Acquisition had occurred asfollowing:(In thousands) December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 5,145 Accounts receivables, net 2,354 Prepaid expenses 539 Inventories 548 Other 46 Total current assets held for sale 8,632 Property and equipment, net 23,877 Operating lease right-of-use assets, net 5,980 Intangible assets, net 1,064 Other assets 9 Total assets held for sale $ 39,562 LIABILITIES Current liabilities Current portion of finance leases $ 103 Current portion of operating leases 436 Accounts payable 1,195 Accrued payroll and related 1,071 Other accrued liabilities 1,972 Total current liabilities related to assets held for sale 4,777 Non-current finance leases 204 Non-current operating leases 5,206 Total liabilities related to assets held for sale $ 10,187 the date indicated or what such results or financial condition will be for any future periods. The unaudited pro forma combined financial information is based on preliminary estimates$78.0 million, $78.2 million, and assumptions$51.6 million, and on the information available at the timepretax income of the preparation thereof. Any of these preliminary estimates$23.0 million, $22.2 million, and assumptions may change, be revised or prove to be materially different, and the estimates and assumptions may not be representative of facts existing at the time of the American Acquisition. The unaudited pro forma combined financial information does not reflect non-recurring charges that will be incurred in connection with the American Acquisition, nor any cost savings and synergies expected to result from the American Acquisition (and associated costs to achieve such savings or synergies), nor any costs associated with severance, restructuring or integration activities resulting from the American Acquisition.The following table summarizes certain unaudited pro forma combined financial information derived from a combination of the historical consolidated financial statements of the Company and of American$10.1 million for the years ended December 31, 20172022, 2021, and 2016, adjusted to give effect to the American Acquisition and related transactions (including the refinancing). The unaudited pro forma combined financial information was prepared as if the American Acquisition occurred on January 1, 2016.The following adjustments have been made to the pro forma combined net income and pro forma combined net income per share in the table above:Adjustment to eliminate the historical shareholders’ equity of American and the issuance of 4,046,494 shares of common stock of the Company to ACEP Holdings at the closing of the American Acquisition valued at $101.5 million.Adjustment to eliminate transaction costs incurred by the Company and American in connection with the American Acquisition.Adjustments to remove severance costs, sale-related expenses and restricted stock unit compensation costs incurred by American related to the American Acquisition.Adjustments to depreciation and amortization expense of property, plant and equipment and intangible assets acquired by the Company resulting from the effect of the preliminary purchase price allocation.Adjustments to interest expense and debt issuance costs resulting from the refinancing of the Company’s and American’s former senior secured credit facilities, and the removal of the historical interest expense of the Company and American related to their respective senior secured indebtedness that was repaid as part of the refinancing. The pro forma adjustments are based on the amounts borrowed in the refinancing and the interest rates in effect at the closing of the American Acquisition.Adjustment to remove the loss on extinguishment of the Company and American’s senior secured indebtedness resulting from the refinancing.Adjustments to income tax benefit (provision) as a result of the application of the guidance in ASC 740 and the Company’s combined federal and state statutory rate.Montana AcquisitionsOn January 29, 2016, the Company completed the Initial Montana Acquisition, which involved the acquisition of approximately 1,100 slots, as well as certain other non-gaming assets and the right to operate within certain locations, from C. Lohman Games, Inc., Rocky Mountain Gaming, Inc. and Brandy’s Shoreliner Restaurant, Inc., for total consideration of $20.1 million, including the issuance of $0.5 million of the Company’s common stock (comprising 50,252 shares at fair value at issuance of $9.95 per share). In connection with the Initial Montana Acquisition, the Company is required to pay the sellers contingent consideration of up to a total of $2.0 million in cash paid in four quarterly payments which began in September 2017, subject to certain potential adjustments. In the third quarter of 2017, the Company revalued the estimated fair value of the contingent consideration and recognizeda gain on revaluation of contingent consideration of $1.7 million on the Company’s consolidated statement of operations. In the first quarter of 2018 the contingent consideration was paid in full. The allocation of the $20.1 million purchase price to the assets acquired as of January 29, 2016 includes $1.7 million of cash, $2.4 million of property and equipment, $14.4 million of intangible assets and $1.6 million of goodwill. The amounts assigned to intangible assets include customer relationships of $9.8 million with an economic life of 15 years, non-compete agreements of $3.9 million with an economic life of five years, trade names of $0.5 million with an economic life of four years and other amounts of $0.2 million with an economic life of 15 years.On April 22, 2016, the Company completed the Second Montana Acquisition, which involved the acquisition of approximately 1,800 slots, as well as amusement devices and certain other non-gaming assets and the right to operate within certain locations, from Amusement Services, LLC, for total consideration of $25.7 million. The allocation of the $25.7 million purchase price to the assets acquired as of April 22, 2016 includes $0.3 million of cash, less than $0.1 million of prepaid gaming license fees, $7.8 million of property and equipment, $11.4 million of intangible assets and $6.0 million of goodwill. The amounts assigned to intangible assets include customer relationships of $9.1 million with an economic life of 15 years, non-compete agreements of $1.8 million with an economic life of five years, trade names of $0.2 million with an economic life of four years and other amounts of $0.3 million with an economic life of 15 years.The goodwill recognized in the Montana Acquisitions is primarily attributable to potential expansion and future development of, and anticipated synergies from, the acquired businesses and is expected to be deductible for income tax purposes.The Company reports the results of operations from each of the Montana Acquisitions, subsequent to their respective closing dates, within its Distributed Gaming segment. Pro forma information is not being presented as there is no practicable method to calculate pro forma earnings given that the Montana Acquisitions were asset purchases that represented only a component of the businesses of the sellers. As a result, historical financial information obtained would have required significant estimates.Merger with Sartini Gaming, Inc.On July 31, 2015, the Company acquired Sartini Gaming through the consummation of the Merger. At the effective time of the Merger, all issued and outstanding shares of capital stock of Sartini Gaming were canceled and converted into the right to receive shares of the Company’s common stock. At the closing of the Merger, the Company issued 7,772,736 shares of its common stock to The Blake L. Sartini and Delise F. Sartini Family Trust (the “Sartini Trust”), as sole shareholder of Sartini Gaming in accordance with the agreement and plan of merger (the “Merger Agreement”). In addition, at the closing of the Merger, the Company issued 457,172 shares of its common stock to holders of warrants issued by a subsidiary of Sartini Gaming that elected to receive shares of the Company’s common stock in exchange for their warrants. The total number of shares of the Company’s common stock issued in connection with the Merger was subject to adjustment pursuant to the post-closing adjustment provisions of the Merger Agreement. In connection with such post-closing adjustment, the Company issued an additional 223,657 shares of its common stock to the Sartini Trust. As a result, the value of the purchase consideration following such adjustment was $77.4 million. This amount is the product of the 8,453,565 shares of the Company’s common stock issued in the aggregate in connection with the Merger and the closing price of $9.15 per share of the Company's common stock on July 31, 2015. In August 2016, the 777,274 shares previously held in escrow as security in the event of any claims for indemnifiable losses in accordance with the Merger Agreement were released to the Sartini Trust in accordance with the terms of the escrow agreement.Under the Merger Agreement, the number of shares of the Company’s common stock issued in connection with the Merger reflected the pre-Merger value of Sartini Gaming relative to the pre-Merger value of the Company, which pre-Merger values were calculated in accordance with formulas set forth in the Merger Agreement. To determine the number of shares of the Company’s common stock issued in connection with the Merger, the sum of the number of shares of the Company’s common stock outstanding immediately prior to the Merger and the number of shares issuable upon the exercise of outstanding in-the-money stock options was divided by the percentage of the total pre-Merger value of both companies that represented the Company’s pre-Merger value to determine the total number of fully diluted shares immediately following the Merger. The number of shares of the Company’s common stock issued in connection with the Merger was the difference between the total number of fully diluted sharesimmediately following the Merger and the total number of fully diluted shares immediately prior to the Merger. No fractional shares of the Company’s common stock were issued in connection with the Merger, and any fractional share was rounded to the nearest whole share.The Merger Agreement specified the procedure for determining the pre-Merger values of Sartini Gaming and the Company. The final pre-Merger values of the Company and Sartini Gaming were determined and approved during the fourth quarter of 2015, pursuant to the post-closing adjustment provisions of the Merger Agreement.The total number of shares of the Company’s common stock issued in connection with the Merger was as follows:
2020, respectively.(1)Calculated as the sum of the number of shares of the Company’s common stock outstanding immediately after the Merger (on a fully diluted basis, including shares issuable upon the exercise of outstanding in-the-money stock options) and the number of shares of the Company’s common stock issued pursuant to the post-closing adjustment provisions of the Merger Agreement.(2)Includes 457,172 shares of the Company’s common stock that were issued to certain former holders of warrants issued by a subsidiary of Sartini Gaming upon the closing of the Merger.Merger AccountingThe Merger has been accounted for under the purchase method of accounting in accordance with ASC 805. Under the purchase method, the total purchase price, or consideration transferred, was measured at the Merger closing date. The purchase price of the acquisition was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over the estimated fair values was recorded as goodwill. The goodwill recognized in the Merger was primarily attributable to potential expansion and future development of, and anticipated synergies from, the tavern brands and the acquired distributed gaming and casino businesses, while enhancing the Company’s existing brand and casino portfolio. None of the goodwill recognized is expected to be deductible for income tax purposes. The Company allocated the goodwill to each reporting unit at the conclusion of the measurement period. Measurement Period AdjustmentsThe final pre-Merger values of the Company and Sartini Gaming were determined and approved during the fourth quarter of 2015, pursuant to the post-closing adjustment provisions of the Merger Agreement. As a result of this post-closing adjustment calculation, the number of shares issued in connection with the Merger was increased by an additional 223,657 shares, and the 388,637 shares of the Company's common stock held in escrow as security for the post-closing adjustment were released to the Sartini Trust. The effect of the issuance of these additional shares on the purchase price consideration calculation was an increase of $2.1 million to $77.4 million. This amount is the product of the 8,453,565 total shares of the Company’s common stock issued in connection with the Merger on July 31, 2015 and issued pursuant to the post-closing “true-up” adjustment and the $9.15 per share closing price of the Company's common stock on July 31, 2015. The Company accounted for the issuance of the additional 223,657 shares, and the adjustment of the purchase price consideration, during the fourth quarter of 2015 when the additional shares were issued.The measurement period for the Merger ended on July 31, 2016. In addition to the issuance of the additional shares pursuant to the post-closing adjustment calculation mentioned above, during the measurement period, the Company:recorded a deferred tax liability totaling $14.7 million due to the assumption of a net deferred tax liability generated from intangible assets acquired in the Merger, with a corresponding increase to goodwill by the same amount;further analyzed the trade names acquired as part of the Merger, which were originally given 10 year useful lives, and concluded that the trade names are indefinite-lived. An adjustment to reverse $0.2 million of amortization for the trade names in the third quarter of 2015 was recorded during the fourth quarter of 2015;determined that the preliminary estimated useful lives of certain tangible acquired assets were not consistent with the useful lives used by other market participants. The useful lives determined during the measurement period were updated to reflect the Company’s determination and are reflected in the property and equipment by category table below; identified an acquired prepaid asset (recorded in other current assets previously) that was reclassified to a gaming license that represents the Company’s ability and right to operate in its current capacity in Montana. Management has valued the gaming license using estimates for explicit and implicit costs to obtain the gaming license and has determined the license has an indefinite life;recorded an adjustment to increase goodwill by less than $0.1 million, increasing accrued taxes by the same amount, due to a tax liability resulting from a prior year assumed as part of the Merger;recorded an adjustment to increase goodwill by $0.3 million, decreasing player relationships at the Company’s Gold Town Casino by the same amount, due to an increase in the discount rate used in the valuation upon further review. This adjustment triggered a release of $0.1 million of the previously recorded deferred tax liability, with a corresponding decrease to goodwill by the same amount; andidentified $0.9 million worth of equipment that was disposed of prior to the Merger but recorded in the opening balance. As such, the Company recorded an increase to goodwill for the amount of equipment written off.AllocationThe final allocation of the $77.4 million purchase price to the assets acquired and liabilities assumed as of July 31, 2015 was as follows:The amounts assigned to property and equipment by category are summarized in the table below:The amounts assigned to intangible assets by category as of July 31, 2015 are summarized in the table below:See Note 12, Financial Instruments and Fair Value Measurements, for further discussion regarding the valuation of the tangible and intangible assets acquired through the Merger.RefinancingIn connection with the Merger, the Company entered into the Former Credit Facility to refinance the outstanding senior secured indebtedness of Sartini Gaming and the Company’s then-existing financing facility with Centennial Bank.Jamul Note and Distribution to ShareholdersOn December 9, 2015, the Company sold its $60.0 million subordinated promissory note (“Jamul Note”) from the Jamul Indian Village (“Jamul Tribe”) to a subsidiary of Penn National Gaming, Inc. for $24.0 million in cash. Under the terms of the Merger Agreement with Sartini Gaming and subject to applicable law, the Company agreed that the proceeds received from the sale of the Jamul Note, net of related costs, would be distributed in a cash dividend to its shareholders holding shares as of the record date for such dividend (other than shareholders that had waived their right to receive such dividend in connection with the Merger). Under the terms of the Merger Agreement, Sartini Gaming’s former sole shareholder, for itself and any related party transferees of its shares, waived their right to receive such dividend with respect to their shares (which totaled 7,996,393 shares in the aggregate). Also in connection with the Merger, holders of an additional 457,172 shares waived their right to receive such dividend. On June 17, 2016, the Board of Directors of the Company approved and declared the special dividend to the eligible shareholders of record on the close of business on June 30, 2016 (the “Record Date”) of cash in the aggregate amount of approximately $23.5 million (the “Special Dividend”), which was paid on July 14, 2016. The $1.71 per share amount of the Special Dividend was calculated by dividing the aggregate amount of the Special Dividend by 13,759,374 outstanding shares of common stock held by eligible shareholders on the close of business on the Record Date (rounded down to the nearest whole cent per share). NetThe following table summarizes the components of propertynet:net, consisted of the following:At December 31, (In thousands) 2022 2021 Land $ 125,240 $ 125,240 Building and improvements Building and improvements 923,157 937,759 Furniture and equipment 244,735 246,323 Construction in process 23,224 16,347 Property and equipment 1,316,356 1,325,669 Accumulated depreciation Accumulated depreciation (475,625) (421,449) Property and equipment, net $ 840,731 $ 904,220 capitalfinance leases, totaled $31.3$92.7 million, $20.2$98.6 million, and $8.5$103.4 million for 2017, 2016,the years ended December 31, 2022, 2021, and 2015,2020, respectively. Netactivitybalances by reportable segment:(In thousands) Nevada Casino Resorts Nevada Locals Casinos Maryland Casino Resort Nevada Taverns Distributed Gaming Total Goodwill Balance, December 31, 2021 and 2022 $ 22,105 $ 38,187 $ — $ 20,459 $ 77,645 $ 158,396 Goodwill represents the initial goodwill allocation related to the Merger and the Montana Acquisitions and final adjustments to purchase price allocations during the applicable measurement periods, and the initial goodwill allocation related to the American Acquisition. The impact of the final purchase price allocation adjustments related to the Merger and the Montana Acquisitions on the Company's results of operations and financial position was immaterial. The Company may continue to record adjustments to the carrying value of assets acquired with a corresponding offset to goodwill during the measurement period related to the American Acquisition, which can be up to one year from the date of the consummation of the acquisition. See Note 3, Merger and Acquisitions, for a description of the intangible assets acquired through the Merger, the Montana Acquisitions and the American Acquisition.At December 31, 2022 (In thousands) Useful Life (Years) Gross Carrying
ValueCumulative
AmortizationCumulative Impairment Intangible Assets, Net Indefinite-lived intangible assets Trade names Indefinite $ 53,690 $ — $ (6,890) $ 46,800 53,690 — (6,890) 46,800 Amortizing intangible assets Customer relationships 4-16 81,105 (41,743) — 39,362 Player relationships 2-14 42,990 (40,455) — 2,535 Non-compete agreements 2-5 9,840 (9,114) — 726 In-place lease value In-place lease value 4 1,170 (1,170) — — Leasehold interest 4 570 (570) — — Other 4-25 1,366 (1,237) — 129 137,041 (94,289) — 42,752 Balance, December 31, 2022 Balance, December 31, 2022 $ 190,731 $ (94,289) $ (6,890) $ 89,552 At December 31, 2021 (In thousands) Useful Life (Years) Gross Carrying
ValueCumulative
AmortizationCumulative Impairment Intangible Assets, Net Indefinite-lived intangible assets Trade names Indefinite $ 53,690 $ — $ (6,890) $ 46,800 53,690 — (6,890) 46,800 Amortizing intangible assets Customer relationships 4-16 81,105 (35,879) — 45,226 Player relationships 2-14 42,990 (39,812) — 3,178 Non-compete agreements 2-5 9,840 (8,349) — 1,491 15 2,100 (1,210) — 890 In-place lease value In-place lease value 4 1,170 (1,155) — 15 Leasehold interest Leasehold interest 4 570 (570) — — Other 4-25 1,814 (1,356) — 458 139,589 (88,331) — 51,258 Balance, December 31, 2021 Balance, December 31, 2021 $ 193,279 $ (88,331) $ (6,890) $ 98,058 TheGap gaming license is being amortized over its 15 year term.$9.5$7.4 million, $7.3$8.1 million, and $2.3$21.0 million for 2017, 2016,the years ended December 31, 2022, 2021, and 2015,2020, respectively. Estimated future amortization expense related to intangible assets which includes acquiredis as follows:(In thousands) 2023 2024 2025 2026 2027 Thereafter Estimated amortization expense $ 7,209 $ 6,313 $ 5,974 $ 5,869 $ 5,737 $ 11,650 $ 42,752 recorded on a preliminary basis, isthat were not placed in service as follows:of December 31, 2022.consistconsisted of the following:At December 31, (In thousands) 2022 2021 Gaming liabilities $ 10,952 $ 12,311 Accrued taxes, other than income taxes Accrued taxes, other than income taxes 9,291 9,035 Interest 6,036 6,168 Other accrued liabilities 5,027 5,549 Deposits Deposits 2,059 2,284 Total current accrued liabilities Total current accrued liabilities $ 33,365 $ 35,347 At December 31, (In thousands) 2022 2021 Term Loan $ 575,000 $ 650,000 2026 Unsecured Notes 335,461 375,000 Finance lease liabilities 2,157 3,005 Notes payable 90 602 Total long-term debt and finance leases 912,708 1,028,607 Unamortized discount (7,899) (11,689) Unamortized debt issuance costs (3,790) (5,392) Total long-term debt and finance leases after debt issuance costs and discount 901,019 1,011,526 Current portion of long-term debt and finance leases (555) (1,057) Long-term debt, net and finance leases $ 900,464 $ 1,010,469 FacilitiesAs of December 31,FacilityCompany’s Credit Facilities consistedCompany entered into a senior secured credit facility consisting of a $900.0$900 million First Lien Facilitysenior secured first lien credit facility (consisting of $800.0an $800 million in term loansloan (the “Term Loan”) maturing on October 20, 2024 and a $100.0$100 million revolving credit facility)facility (the “Revolving Credit Facility”)) with JPMorgan Chase Bank, N.A. (as administrative agent and collateral agent), the lenders party thereto and the other entities party thereto (the “Credit Facility”). The Revolving Credit Facility was subsequently increased from $100 million to $200 million in 2018, increasing the total Credit Facility capacity to $1 billion. On October 12, 2021, the Company further modified the terms of the Revolving Credit Facility by increasing its size to $240 million and a $200.0extending the maturity date from October 20, 2022 to April 20, 2024. The Company incurred $0.7 million Second Lien Term Loan within debt modification costs and fees related to this modification of the Revolving Credit Suisse AG, Cayman Islands Branch (as administrative agentFacility that have been deferred and collateral agent),are being amortized over the lenders party thereto andterm of the other entities party thereto. Revolving Credit Facility using the straight-line method.2017, $800.02022, the Company had $575 million and $200.0 millionin principal amount of term loan borrowings were outstanding under our First Lien Facility and Second Lien Term Loan respectively, there wereborrowings under its Credit Facility, no outstanding letters of credit outstandingand no borrowings under the First LienRevolving Credit Facility, and our revolving credit facility was undrawn, leavingsuch that the full borrowing availability of $240 million under the revolving credit facility as of December 31, 2017 of $100.0 million.each of the Credit FacilitiesFacility bear interest, at the Company’s option, at either (1) a base rate equal to the greatest of the federal funds rate plus 0.50%, the applicable administrative agent’s prime rate as announced from time to time, or the LIBOR rate for a one-month interest period plus 1.00%, subject to a floor of 1.75% (with respect to the term loans)loan) or 1.00% (with respect to borrowings under the revolving credit facility)Revolving Credit Facility) or (2) the LIBOR rate for the applicable interest period, subject to a floor of 0.75% (with respect to the term loansloan only), plus in each case, an applicable margin. The applicable margin for the term loansloan under the First LienCredit Facility is 2.00% for base rate loans and 3.00% for LIBOR rate loans. The applicable margin for borrowings under the revolving credit facility under the First LienRevolving Credit Facility ranges from 1.50% to 2.00% for base rate loans and 2.50% to 3.00% for LIBOR rate loans, based on the Company’s net leverage ratio. The applicable margin for the Second Lien Term Loan is 6.00% for base rate loans and 7.00% for LIBOR rate loans. The commitment fee for the revolving credit facilityRevolving Credit Facility is payable quarterly at a rate of between 0.375% andor 0.50%, depending on the Company’s net leverage ratio, and is accrued based on the averageAs of December 31, 2017, theThe weighted-average effective interest rate on the Company’s outstanding borrowings under the Credit FacilitiesFacility was approximately 5.1%.revolving credit facility under the First Lien Facility matures on October 20, 2022, and the term loans under the First Lien Facility mature on October 20, 2024. The term loans under the First Lien Facility must be repaidTerm Loan is repayable in 27 quarterly installments of $2.0$2 million each, which commencecommenced in March 2018, followed by a final installment of $746.0$746 million at maturity. The term loansIn April 2019, the Company made a $18 million prepayment of the Term Loan under the Second LienCredit Facility with the proceeds from the issuance of the Company’s 7.625% Senior Notes due 2026 (the “2026 Unsecured Notes”). During 2019, the Company recognized a $5.5 million loss on extinguishment of debt and $3.7 million of expense related to modification of debt, related to the repayment of the Company’s former second lien term loan discussed below and $18 million prepayment.must be repaid in fullthereby eliminating the requirement to make any further quarterly installment payments, prior to maturity. As of December 31, 2022, the final installment payment due at the maturity on date of October 20, 2025.Borrowing each of the Credit FacilitiesFacility are guaranteed by each of the Company’s existing and future wholly-owned domestic subsidiaries (other than certain insignificant or unrestricted subsidiaries), and are secured by substantially all of the present and future assets of the Company and its subsidiary guarantors (subject to of certain exceptions).Facilities,Facility, the Company and its restricted subsidiaries are subject to certain limitations, including limitations on their respective ability to: incur additional debt, grant liens, sell assets, make certain investments, pay dividends and make certain other restricted payments. In addition, the Company will be required to pay down the term loansloan under the Credit FacilitiesFacility under certain circumstances if the Company or its restricted subsidiaries issue debt, sell assets, receive certain extraordinary receipts or generate excess cash flow (subject to exceptions). The revolving credit facility under the First LienCredit Facility contains a financial covenant regarding a maximum net leverage ratio that applies when borrowings under the revolving credit facilityRevolving Credit Facility exceed 30% of the total revolving commitment. The Credit FacilitiesFacility also prohibitprohibits the occurrence of a change of control, which includes the acquisition of beneficial ownership of 50% or more of the Company’s capital stock (other than by certain permitted holders, which include, among others, Blake L. Sartini, Lyle A. Berman, Neil I. Sell and certain affiliated entities). If the Company defaults under the Credit FacilitiesFacility due to a covenant breach or otherwise, the lenders may be entitled to, among other things, require the immediate repayment of all outstanding amounts and sell the Company’s assets to satisfy the obligations thereunder. The Company was in compliance with its financial covenants under the Credit FacilitiesFacility as of December 31, 2017.Former 2022.Secured Credit FacilityAmerican Acquisitionissuance of the 2026 Unsecured Notes, the Company incurred $6.7 million in debt financing costs and fees that have been deferred and are being amortized over the entry intoterm of the 2026 Unsecured Notes using the effective interest method.Facilities, in October 2017 the Company repaid all principal amounts outstanding under the Company’s Former Credit Agreement with Capital One, National Association (as administrative agent)Facility, and the lenders named therein, which amounted(iv) pay accrued interest, fees and expenses related to approximately $173.4 million, together with accrued interest. As a resulteach of the repayment and discharge of the Former Credit Facility, the Company recognized a loss on extinguishment of debt of $1.7 million duringforegoing.2017.Former Rocky Gap Financing FacilityIn connection with the entry into the Former Credit Agreement, in July 20152022, the Company repaid allrepurchased $39.5 million in principal amounts outstanding underamount of 2026 Unsecured Notes in open market transactions, thereby reducing the Company’s then-existing $17.5final payment due at maturity to $335.5 million. The Company recorded a non-cash charge in the amount of $1.1 million financing facility with Centennial Bank, which amounted to approximately $10.7 million, together with accrued interest. As a resultfor the accelerated amortization of the repayment of this facility, the Company recognized a loss on extinguishment of debt of $1.2 million,issuance costs and discount related to the unamortized discountrepurchase of 2026 Unsecured Notes.facility, duringCredit Facility (to the year endedextent of the value of the assets securing such debt), are structurally subordinated to all existing and future liabilities (including trade payables) of any of the Company’s subsidiaries that do not guarantee the 2026 Unsecured Notes, and are senior in right of payment to all of the Company and its subsidiary guarantors’ existing and future subordinated indebtedness.2015.Summary of Outstanding DebtLong-term debt, net is comprised2020. No payments or receipts were required to be exchanged on the Interest Rate Cap unless interest rates rose above the pre-determined ceiling rate. The estimated fair value of the following:follows:follows (in thousands):Year Ending December 31, Amount 2023 $ 555 2024 575,158 2025 133 2026 137 2027 335,616 Thereafter 1,109 Total outstanding principal of long-term debt $ 912,708 Promotional AllowancesThe retail valueShareholders’ Equity and Stock Incentive PlansfoodDirectors authorized a share repurchase program of $50 million, which was re-authorized on May 3, 2022 and beverages, roomssubsequently increased to $75 million on November 1, 2022. Share repurchases may be made from time to time in open market transactions, block trades or in private transactions in accordance with applicable securities laws and regulations and other services furnishedlegal requirements, including compliance with the Company’s finance agreements. There is no minimum number of shares that the Company is required to customersrepurchase and the repurchase program may be suspended orcharge, including coupons for discounts when redeemed,prior notice. As of December 31, 2022, the Company had $61.5 million of remaining share repurchase availability under its November 1, 2022 authorization.Year Ended December 31, 2022 2021 2020 (In thousands, except per share data) 1,113 227 50 Total cost, including brokerage fees $ 51,202 $ 10,616 $ 950 $ 46.01 $ 46.87 $ 19.00 included in gross revenues and then deducted as promotional allowances. The estimated retail value of the promotional allowances are as follows:calculated based on unrounded numbers.The estimated cost of providing these promotional allowances, which is primarily included in gaming expenses, are as follows:Note 9 – Share-Based CompensationOverview (“RSUs”), dividend equivalents, stock payment awards, stock appreciation rights, performance bonus awards and other incentive awards. The 2015 Plan authorizes the grant of awards to employees, non-employee directors and consultants of the Company and its subsidiaries. Options generally have a ten-year term. Except as provided in any employment agreement between the Company and the employee, if an employee is terminated, (voluntarily or involuntarily), any unvested options as of the date of termination will be forfeited.20172022 was 889,2591,153,210 shares. In addition, the maximum aggregate number of shares of common stock that may be subject to awards granted to any one participant during a calendar year is 2.0 million shares. As of December 31, 2017,2022, a total of 109,2633,135,469 shares of the Company’s common stock remained available for grants of awards under the 2015 Plan.The 2015 Plan provides that no stock option or stock appreciation right (even if vested) may be exercised prior to the earlier of August 1, 2018 or immediately prior to the consummation of a change in control of the Company that would result in an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended.In June 2007, the Company’s shareholders approved the 2007 Lakes Stock Option and Compensation Plan (the “2007 Plan”), which is authorized to grant a total of 1.25 million shares of the Company’s common stock. Vested options are exercisable for ten years from the date of grant; however, if the employee is terminated (voluntarily or involuntarily), any unvested options as of the date of termination will be forfeited. As of December 31, 2017, no shares of the Company’s common stock remained available for grants of awards under the 2007 Plan.In connection with the Special Dividend discussed in Note 3, Merger and Acquisitions, and in accordance with the Company’s equity incentive plans approved by the Company’s shareholders, equitable anti-dilutive adjustments were made to the exercise prices of outstanding stock options to purchase shares of Company common stock, in order to preserve the value of such stock options following the Special Dividend. Accordingly, effective as of the close of business on July 14, 2016, the exercise price of each outstanding stock option granted prior to the Record Date under the 2015 Plan, the 2007 Plan and the 1998 Stock Option and Compensation Plan (collectively, the “Adjusted Options”) was reduced by $1.71 per share. The weighted-average exercise price of the Adjusted Options presented in the table below have been adjusted accordingly. The Adjusted Options had a weighted-average exercise price of $7.04 per share after giving effect to such anti-dilutive adjustments. The Adjusted Options have varying remaining terms, which were not affected by the adjustments. The Company measured the incremental compensation cost as the excess of the fair value of the Adjusted Options immediately following such anti-dilutive adjustments over the fair value of the Adjusted Options immediately prior to such anti-dilutive adjustments. Of the 2,337,643 Adjusted Options, 1,908,070 were unvested and 429,573 were vested at the time of the adjustment. The incremental fair value related to the unvested Adjusted Options resulting from the anti-dilutive adjustments was estimated to be $1.7 million, which will be recorded over the remaining vesting period of such Adjusted Options. The incremental fair value related to the vested Adjusted Options resulting from the anti-dilutive adjustments, determined using the Black-Scholes option pricing model, was $0.7 million and was recorded as share-based compensation expense during the third quarter of 2016.Stock Options Outstanding Weighted-Average Exercise Price Outstanding at January 1, 2020 3,126,521 6.1 $ 11.61 Granted — $ — Exercised (84,875) $ 3.88 Cancelled (2,292) $ 13.50 Expired (148,013) $ 26.61 Outstanding at December 31, 2020 2,891,341 5.5 $ 11.07 $ 25,520 Granted — $ — Exercised (749,847) $ 10.39 Cancelled — $ — Expired — $ — Outstanding at December 31, 2021 2,141,494 4.5 $ 11.31 $ 83,992 Granted — $ — Exercised (69,500) $ 9.94 Cancelled — $ — Expired — $ — Outstanding at December 31, 2022 2,071,994 3.5 $ 11.35 $ 53,966 Exercisable at December 31, 2020 2,854,813 5.5 $ 11.04 $ 25,286 Exercisable at December 31, 2021 2,141,494 4.5 $ 11.31 $ 83,992 Exercisable at December 31, 2022 2,071,994 3.5 $ 11.35 $ 53,966 duringwas $2.6 million, $26.1 million, and $1.3 million for the years ended December 31, 2017, 20162022, 2021, and 2015 was $0.1 million, $1.8 million and $0.1 million,2020, respectively. The weighted-average grant-date fair value ofCompany has not granted any stock options granted duringsince 2017 and the years ended December 31, 2017, 2016 and 2015 was $7.30, $4.80 and $3.72 per share, respectively.The total amount of cash received from stock options exercised during the year ended December 31, 20172022 was $0.2less than $0.1 million.following assumptions were usednumber of PSUs that will be eligible to estimatevest with respect to these PSU awards will be determined based on the fair valueCompany’s attainment of performance goals set by the Compensation Committee. Following the one- or two-year performance periods, the number of “vesting eligible” PSUs will then be subject to two- or one- additional years of time-based vesting, respectively. Share-based compensation costs related to RSU and PSU awards are calculated based on the market price on the date of the grant. The Company periodically reviews the estimates of performance against the defined criteria to assess the expected payout of each outstanding PSU grant and adjusts the stock options granted:compensation expense accordingly.Restricted Stock UnitsRSUs Shares Weighted-
Average Grant Date Fair ValueOutstanding at January 1, 2020 Outstanding at January 1, 2020 661,258 $ 16.44 Granted 624,415 $ 9.65 Vested (308,222) $ 16.06 $ 3,336 Cancelled (33,494) $ 16.58 Outstanding at December 31, 2020 Outstanding at December 31, 2020 943,957 $ 12.06 Granted Granted 318,356 $ 31.46 Vested Vested (426,770) $ 14.20 $ 14,203 Cancelled Cancelled (20,123) $ 26.08 Outstanding at December 31, 2021 Outstanding at December 31, 2021 815,420 $ 18.17 Granted Granted 123,970 $ 51.86 Vested Vested (363,450) $ 17.78 $ 18,963 Cancelled Cancelled (28,269) $ 17.63 Outstanding at December 31, 2022 Outstanding at December 31, 2022 547,671 $ 26.09 There was no RSU activityPSUs Weighted-
Average Grant Date Fair ValueOutstanding at January 1, 2020 376,328 $ 20.65 Granted 404,880 $ 8.86 Vested (5,254) (2) $ 28.72 $ 47 Cancelled (32,235) (2) $ 28.72 Outstanding at December 31, 2020 743,719 $ 13.82 Granted 129,503 $ 29.00 Vested (89,920) (2) (3) $ 25.73 $ 2,608 Cancelled (77,725) (2) (3) $ 25.23 Outstanding at December 31, 2021 705,577 (4) $ 13.84 Granted 83,579 $ 53.51 Performance certification 534,383 (5) $ — Vested (247,380) (6) $ 12.51 $ 13,030 Cancelled — $ — Outstanding at December 31, 2022 1,076,159 $ 17.17 2015.2021 related to PSUs granted in November 2017, for which applicable performance goals were not met. 14,934 of the 77,725 PSUs cancelled during the period related to PSUs granted in March 2019 (the “2019 PSU Awards”). The Company’s financial results for the applicable performance goals were certified in March 2021, which resulted in the reduction of the shares subject to the 2019 PSU Awards from 204,580 to 189,646. In addition, 18,452 of the shares under the 2019 PSU Awards vested during the first quarter of 2021.
(4)Includes 171,194 shares of PSUs granted in March 2019 that were certified below target during the three months ended March 31, 2021 and vested in March 2022. Also includes PSUs granted in March 2020 and March 2021 at “target.”Year Ended December 31, (In thousands) 2022 2021 2020 Stock options $ — $ 191 $ 1,919 RSUs RSUs 6,900 6,867 5,264 PSUs PSUs 5,980 6,786 2,342 Total share-based compensation costs $ 12,880 $ 13,844 $ 9,525 For the year ended December 31, 2017, management has evaluated all applicable positive and negative evidence and believes that the positive evidence is strong enough to warrant a full release of the valuation allowance associated with the share-based compensation deferred tax asset. The deferred tax asset associated with share-based compensation was $2.5 million as of December 31, 2017For the years ended December 31, 2016 and 2015, no income tax benefit was recognized in the Company’s consolidated statements of operations for share-based compensation arrangements. Management assessed the likelihood that the deferred tax assets relating to future tax deductions from share-based compensation will be recovered from future taxable income and determined that a valuation allowance is necessary to the extent that management currently believes it is more likely than not that tax benefits will not be realized. Management’s determination is based primarily on historical losses and earnings volatility.2017,2022, the Company’s unrecognized share-based compensation expense related to stock optionsRSUs and PSUs was approximately $13.0$8.2 million and $6.2 million, respectively, which is expected to be recognized over a weighted-average period of 2.7 years.As1.2 years and 0.6 years for RSUs and PSUs, respectively. The Company did not have any remaining unrecognized share-based compensation expense related to stock options as of December 31, 2017, there was $1.7 million of unamortized compensation related to unvested RSUs which is expected to be recognized over a weighted-average period of 3.9 years.109 – Income Taxes(benefits) are(benefit) is summarized as follows:Year Ended December 31, (In thousands) 2022 2021 2020 Current: Federal $ 13,877 $ — $ (371) State 274 95 — Total current tax provision (benefit) Total current tax provision (benefit) $ 14,151 $ 95 $ (371) Deferred: Federal $ (13,462) $ 325 $ 430 State (168) 16 2 Total deferred tax (benefit) provision Total deferred tax (benefit) provision (13,630) 341 432 Income tax provision Income tax provision $ 521 $ 436 $ 61 benefitprovision (benefit) is summarized as follows:Year Ended December 31, 2022 2021 2020 Statutory federal tax rate 21.00 % 21.00 % 21.00 % State income taxes, net of federal income taxes 0.62 1.41 0.89 Permanent tax differences – stock compensation (6.31) (3.93) (0.43) Permanent tax differences – business meals 0.44 0.23 (0.07) Permanent tax differences – executive compensation and other 9.27 2.13 (0.86) Change in valuation allowance (23.99) (19.69) (19.09) FICA credit generated (1.09) (0.28) 0.33 Change in tax rate and apportionment (0.26) (0.03) 0.11 Deferred only adjustment to beginning deferred balances 0.95 (0.57) (1.92) Effective tax rate 0.63 % 0.27 % (0.04) % December 31, (In thousands) 2022 2021 Deferred tax assets: Deferred tax assets: Accruals and reserves $ 6,350 $ 7,688 Share-based compensation expense 966 5,781 General business credit carryforward — 489 State tax credits 3,867 4,192 Net operating loss carryforwards 753 6,076 Operating lease obligation Operating lease obligation 36,483 41,877 Depreciation of fixed assets Depreciation of fixed assets 6,532 4,875 Other 493 545 55,444 71,523 Valuation allowances (5,680) (30,783) $ 49,764 $ 40,740 Deferred tax liabilities: Prepaid services $ (2,116) $ (3,282) Amortization of intangible assets (2,895) (941) Right-of-use assets Right-of-use assets (32,984) (38,378) (37,995) (42,601) Net deferred tax assets (liabilities) $ 11,769 $ (1,861) Non-current deferred tax assets Non-current deferred tax assets $ 11,822 $ — Non-current deferred tax liabilities Non-current deferred tax liabilities (53) (1,861) Net deferred tax assets (liabilities) Net deferred tax assets (liabilities) $ 11,769 $ (1,861) Company'sCompany’s financial results for the year ended December 31, 2017,2022 include the release of a portion of thenet decrease in valuation allowance recorded againstof $25.1 million. During the deferred tax assetsfirst quarter of 2022, the Company. This release resulted in the recognition of a $7.9 million income tax benefit. The Company has performed a continuing evaluation of its deferred tax asset valuation allowance on a quarterly basis. The Company concluded that as of December 31, 2017, it iswas more likely than not that the Company willwould generate sufficient taxable income within the applicable net operating loss carry-forward periods to realize a portion of its deferred tax assets. This conclusion, and the resultingassets, which resulted in a partial releasereversal of the deferred tax asset valuation allowance, was based upon consideration of several factors, including the Company's completion of eight consecutive quarters of profitability,allowance.its demonstrated ability to meet or exceed budgets, and its forecast of future profitability. Although the Company’s operations in the fourth quarter of 2017 reported a book loss, this loss was primarily attributable to costs associated with the American Acquisition and accordingly is not expected to be recurring.2017,2022, the Company had approximately $77.1$70.5 million of federalMaryland net operating loss carryforwards (“NOLs”), which will begin to expire in 2032.do not expire. These net operating losses have the potential to be used to offset future ordinary taxable income and reduce future cash tax liabilities. However, in connection with the American Acquisition, the Company issued 4,046,494 shares of its common stock to ACEP Holdings, which resulted in an “ownership change” under Section 382 that will generally limit the amount of net operating losses the Company can utilize annually. Following an “ownership change” under Section 382, the amount of net operating losses the Company can utilize in a given year is limited to an amount equal to the aggregate fair market value of the Company’s common stock immediately prior to the ownership change, multiplied by the long-term exempt interest rate in effect for the month of the ownership change. The Company estimates that the amount of net operating losses that it will be able to utilize following the closing of the American Acquisition is limited to approximately $10.8 million annually.approximately $1.5$3.9 million related to Alternative Minimum Tax credits and approximately $1.1 million related to general businessMaryland tax credits. The general businessMaryland credit carryforward expiresbegins to expire in 2037. With2029. Maryland NOLs and credits have been reduced by a full valuation allowance.enactmentCompany’s 2017 and 2018 federal tax returns were under audit by the IRS.The Tax Cuts and Jobs Act of 2017, Alternative Minimum Tax credits can no longer be carried forward indefinitely. Due to the Section 382 limitations and projected taxable income estimates, it has been determined thatDecember 31, 2022, the Company will not be able to utilize any of its Alternative Minimum Tax credits. A valuation allowance against the Alternative Minimum Tax credits has been created accordingly.During the second quarter of 2015, the Company was notified by the state of California that its audit of the Company for the 2010had no material uncertain tax year had been completed and resulted in no adjustments.During the fourth quarter of 2016, the Company completed an IRS audit for the 2009 through 2013 tax years. The impact of the audit was not material and has been reflected in the financial statements. The 2014 and 2015 tax years are still subject to examination.The Tax Cuts and Jobs Act of 2017 reduced the corporate federal income tax rate to 21%, effective January 1, 2018. The Company has completed its accounting for the Tax Cuts and Jobs Act. Consequently, the Company has recorded a decrease related to the net deferred tax assets of $4.3 million, with a corresponding net adjustment to deferred income tax expense for the year ended December 31, 2017.1110 – Employee Retirement and Benefit PlansCompany has aCompany’s qualified defined contribution employee savings plan for employees (other than those who were acquired though the American Acquisition). The savings plan allows eligible participants to defer, on a pre-tax basis, a portion of their salary and accumulate tax-deferred earnings as a retirement fund. The Company currently matches employee contributions up to a maximum of 4% of participating employees’ gross wages. Company contributions are vested immediately for this plan.The Company inherited a qualified defined contribution employee savings plan through the American Acquisition for all non-union employees previously employed by American and its subsidiaries. The plan allows eligible participants to defer, within prescribed limits, up to 75% of their income on a pre-tax basis through contributions to the plan.The Company also inherited a qualified defined contribution employee savings plan through the Merger for all employees previously employed by Sartini Gaming. The savings plan for those former Sartini Gaming employees allows eligible participants to defer, on a pre-tax basis, a portion of their salary and accumulate tax-deferred earnings as a retirement fund. Beginning on August 1, 2015, the Company matched employee contributions for this plan up to a maximum of 1% of participating employees’ gross wages. Company contributions are vested over a five-year schedule.With respect to the two plans with Company contributions, theThe Company contributed approximately $0.2$0.5 million, $0.3$0.4 million, and $0.2$0.6 million duringfor the years ended December 31, 2017, 20162022, 2021, and 2015, respectively.The Company inherited various other employee multiemployer benefit and pension plans through the American Acquisition. 2017, approximately2022, over 1,700 of the Company’s employees were members of various unions and covered by union-sponsored,union-$2.1$11.2 million, $9.1 million, and $7.1 million in expenses for these plans for the yearyears ended December 31, 2017.2022, 2021, and 2020, respectively. The Company has no obligation to fund the plans beyond payments made based upon hours worked. The risks of participating in multiemployer plans are different from single-employer plans, including in the following aspects:FIR/RP Status Pending/Implemented Surcharge Imposed Expiration Date Of Collective-
Bargaining AgreementMultiemployer Pension Plans EIN/Plan Number 2021 2020 Central Pension Fund of the IUOE and Participating Employers 36-6052390-001 Green Green No No 3/31/2022 (2) Southern Nevada Culinary and Bartenders Pension Plan 88-6016617-001 Green Green No No 5/31/2023
(1)The Pension Protection Act of 2006 requires plans that are certified as endangered (yellow) or critical (red) to develop and implement a funding improvement plan.(1)The Pension Protection Act of 2006 requires plans that are certified as endangered (yellow) or critical (red) to develop and implement a funding improvement plan.December 31, (In thousands) 2022 2021 2020 Multiemployer pension plans Central Pension Fund of the IUOE and Participating Employers Central Pension Fund of the IUOE and Participating Employers $ 691 $ 637 $ 545 Southern Nevada Culinary and Bartenders Pension Plan 2,054 1,645 1,356 Other pension plans 168 146 142 Total contributions $ 2,913 $ 2,428 $ 2,043 Multiemployer benefit plans (excluding pension plans) HEREIU Welfare Fund $ 8,007 $ 6,353 $ 5,216 All other 7 — 3 Total contributions $ 8,014 $ 6,353 $ 5,219 20162021 plan year, the latest period for which plan data is available, the Company did not make anymade less than 5% of total contributions to thefor all multiemployer pension and benefit plans it inherited from American, asto which the American Acquisition was not consummated until October 2017.Company contributes.1211 – Financial Instruments and Fair Value MeasurementsOverviewThe Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, an Interest Rate Cap derivative and debt.valuevalues of the Company’s cash and cash equivalents, accounts receivable, other current assets and accounts payable approximate fair value because of the short duration of these financial instruments.carryingfollowing table summarizes the fair value measurement of the Company’s debt approximates fair value because the terms were recently negotiated and based on the Company’s expected borrowing rate for debt with similar remaining maturities and comparable risk.As of December 31, 2017, the Company had one Interest Rate Cap outstanding, with a notional amount totaling $650 million and a purchase price of $3.1 million, which expires on December 31, 2020. Using Level 2 inputs, the Company adjusts the carrying value of its Interest Rate Cap derivative to estimate fair value quarterly. The fair value of the Company's asset under its Interest Rate Cap is based upon observable market-based inputs that reflect the present values of the difference between estimated future fixed rate payments and future variable receipts. Fair value of the Company’s Interest Rate Cap at December 31, 2017 was $3.3 million. The change in fair value was recorded on the consolidated statement of operations.Business Combinations and Long-lived AssetsIn connection with business combinations, the Company recognizes assets acquired and liabilities assumed at estimated fair value and adjusts liabilities for contingent consideration to estimates of fair value quarterly. For the American Acquisition, these amounts remain preliminary as of December 31, 2017. For the Initial Montana Acquisition and Second Montana Acquisition, these amounts were finalized during the first and second quarter of 2017, respectively. All value metrics and estimates utilize Level 3 inputs.Fair value estimates for land, land improvements, building and leasehold improvements, and other property and equipment are calculated with primary reliance on the cost approach, with secondary consideration being placed on the market/sales comparison approach. Significant inputs include consideration of highest and best use, replacement costs, sales comparisons (recent transactions of comparable properties), and market approaches (and the properties’ ability to generate future benefits).Fair value estimates of intangible assets are based on a variety of methods. Some examples are as follows:Trade names – Primary reliance for estimating fair value of trade names is typically placed on a relief-from-royalty method and includes an estimate for a reasonable royalty rate (0.25% to 1.0% in the American Acquisition) that give consideration to third-party license agreements to determine an implied royalty rate. Estimated after-tax cash flows are discounted to present value utilizing a range of discount rates from 11.0%December 31, 2022 (In thousands) Carrying Amount Fair Value Fair Value Hierarchy Term Loan $ 575,000 $ 575,000 Level 2 2026 Unsecured Notes 335,461 330,630 Level 2 Finance lease liabilities 2,157 2,157 Level 3 Notes payable 90 90 Level 3 Total debt $ 912,708 $ 907,877 to 14.5% depending on the trade name, which reflects the risk of the cash flows related to the asset and the risk and uncertainty of the cash flows for the trade name relative to the overall business. The trade names associated with the American Acquisition and the Merger were given an indefinite life. The trade names associated with the Montana Acquisitions were given a four year useful life.Player and customer relationships – December 31, 2021 (In thousands) Carrying Amount Fair Value Fair Value Hierarchy Term Loan $ 650,000 $ 650,813 Level 2 2026 Unsecured Notes 375,000 390,938 Level 2 Finance lease liabilities 3,005 3,005 Level 3 Notes payable 602 602 Level 3 Total debt $ 1,028,607 $ 1,045,358 playerthe Company’s Term Loan and customer relationships acquired typically relies2026 Unsecured Notes is based on an excess earnings method undera relative value analysis performed as of December 31, 2022 and 2021. The finance lease liabilities and notes payable are fixed-rate debt, are not traded and do not have observable market inputs, therefore, the income approach and/or a cost-to-replace approach. After-tax cash flow discount rates have varied from 11.0% to 14.0%. The player relationships associated with the American Acquisition were given a useful life of three years. The player relationships associated with the Merger were given a useful life of eight years for the taverns and 12 to 14 years for the Pahrump casinos. The customer relationships associated with the Montana Acquisitions were given a useful life of 15 years, and the distributed gaming customer relationships associated with the Merger were given a useful life of 13 to 16 years.Gaming and liquor licenses – Estimated fair value for gaming and liquor licenses is generally determined based on the cost approach. In performing the cost approach, management uses estimates for explicit and implicit costs to obtain the licenses. The economic life of the Company’s Nevada gaming licenses, Montana gaming license and various liquor licenses are anticipatedestimated to be indefinite,equal to the carrying value.they are easily maintained. The Company’s Maryland gaming license associated with Rocky Gap is subject to amortization as it has a finite life of 15 years.Leasehold interest and in-place lease value – The leasehold interest acquired as part of the American Acquisition comprises third party rights to lease retail space within the casinos. The leasehold interest acquired as part of the American Acquisition was given a useful life 3 to 80 years and the in-place lease value was given a useful life of 3 to 4 years.Non-compete agreements – The estimated fair value of non-compete agreements is generally based on the lost profits method under the income approach. It uses the difference between estimated future cash flows “With” and “Without” the non-compete agreements and probability factors associated with the assumptions. The non-compete agreements associated with the Montana Acquisitions and the Merger were given a useful life of five years and two years, respectively.Note 13 – LeasesAmerican Leasesacquired various operating and capital leases through the American Acquisition in October 2017. See Note 3, Merger and Acquisitions, foris a description of the American Acquisition.For the year ended December 31, 2017, the Company recorded rental revenue of $1.3 million.The future minimum lease payments to be received by the Companylessee under non-cancelable operating leases are as follows:The above minimum rental income does not include contingent rental income or common area maintenance cost reimbursement contained within certain retail operating leases.The Company entered into an operating ground lease with the Maryland Department of Natural Resources for approximately 270 acres in the Rocky Gap State Park in which Rocky Gap is situated. The lease expires in 2052, with an option to renew for an additional 20 years.Under the lease, rent payments are due and payable annually in the amount of $275,000 plus 0.9% of any gross operator share of gaming revenue (as defined in the lease) in excess of $275,000, and $150,000 plus any surcharge revenue in excess of $150,000. Surcharge revenue consists of amounts billed to and collected from guests and are $3.00 per room per night and $1.00 per round of golf. Rent expense associated with the lease was $0.3 million (net of surcharge revenue of $0.1 million) during each of the years ended December 31, 2017, 2016 and 2015.Gold Town Casino LeasesThe Company’s Gold Town Casino is located on four leased parcels of land, comprising approximately nine acres in the aggregate, in Pahrump, Nevada. The leases are with unrelated third parties and have various expiration dates beginning in 2026 (for the parcel on which the Company’s main casino building is located, which the Company leases from a competitor). Rent expense associated with these leases was $0.5 million during December 31, 2017 and $0.6 million during each of the years ended December 31, 2016 and 2015. The Company subleases approximately two of the acres to an unrelated third party. Rental income during each of the years ended December 31, 2017, 2016 and 2015 was less than $0.1 million related to the sublease of the two acres in Pahrump, Nevada.Other Operating LeasesThe Company leases its branded tavern locations, office headquarters building, equipment and vehicles under noncancelable operating leases that are not subject to contingent rents. The original terms of the currentfinance leases for the Company’s branded tavern locations range from one to 15 years with various renewal options from one to 15 years. The Company has operating leases with related parties for certain of its tavern locationsoffices, taverns, land, vehicles, slot machines and its office headquarters building. The lease for the Company’s office headquarters building expires in July 2025. A portion of the office headquarters building is sublet to a related party. Rental income during each of the years ended December 31, 2017 and 2016 was less than $0.1 million for the sublet portion of the office headquarters building. See Note 15, Related Party Transactions, for more detail. Slotequipment. In addition, slot placement contracts in the form of space lease agreements at chain stores are also accounted for as operating leases. Under chain store space lease agreements, the Company pays fixed monthly rental fees for the right to install, maintain and operate its slotsslot machines at business locations, which are recorded in gaming expenses.Operating The Company’s slot machine lease rentalagreements with gaming equipment manufacturers are short-term in nature with the majority of such leases being under variable rent structure, with amounts determined based on the performance of the leased machines. Certain other short-term slot machine lease agreements are under fixed fee payment structure.whichfor arrangements with a fixed fee payment structure is calculatedrecognized on a straight-line basis net of surcharge revenue,over the lease term. Lease expense for arrangements under a variable rent structure is as follows:recognized in the period in which the obligation for the payment is incurred.Future minimum lease payments, not subjectThe Company historically leased its office headquarters building and leases the office space in a building adjacent to contingent rents, are as follows:long-termnon-current obligations under capitalfinance leases are included in “Current“Current portion of long-term debt”debt and “Long-termfinance leases” and “Long-term debt, net and non-current finance leases” in the Company’s consolidated balance sheets, respectively. The majorityfinance leases relate to equipment for the Company’s casino properties and buildings for certain casino and branded tavern locations.Year Ended December 31, (In thousands) Classification 2022 2021 Operating lease cost Operating lease cost Operating and SG&A expenses $ 55,907 $ 54,131 Variable lease cost Operating and SG&A expenses 17,943 20,449 Short-term lease cost Operating and SG&A expenses 4,796 4,862 Total operating lease cost $ 78,646 $ 79,442 Finance lease cost Amortization of leased assets Depreciation and amortization $ 934 $ 1,693 Interest on lease liabilities Interest expense, net 114 300 Total finance lease cost $ 1,048 $ 1,993 Year Ended December 31, (In thousands) 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used under operating lease agreements $ 55,846 $ 53,527 Operating cash flows used under finance lease agreements 109 293 Financing cash flows used under finance lease agreements 541 6,179 December 31, (In thousands) 2022 2021 Operating leases Operating lease right-of-use assets, gross $ 193,565 $ 221,732 Accumulated amortization (45,672) (42,481) Operating lease right-of-use assets, net $ 147,893 $ 179,251 Current portion of operating leases $ 42,200 $ 40,151 Non-current operating leases 121,979 155,098 Total operating lease liabilities $ 164,179 $ 195,249 Finance leases Property and equipment, gross $ 5,719 $ 6,278 Accumulated depreciation (3,341) (2,407) Property and equipment, net $ 2,378 $ 3,871 Current portion of finance leases $ 465 $ 546 Non-current finance leases 1,692 2,459 Total finance lease liabilities $ 2,157 $ 3,005 December 31, 2022 2021 Weighted Average Remaining Lease Term Operating leases 7.5 years 7.8 years Finance leases 18.0 years 16.4 years Weighted Average Discount Rate Operating leases 5.9 % 5.7 % Finance leases 6.4 % 6.1 % (In thousands) Operating Leases Finance Leases Total 2023 $ 50,372 $ 521 $ 50,893 2024 43,268 227 43,495 2025 26,378 200 26,578 2026 16,933 200 17,133 2027 12,755 214 12,969 Thereafter 54,674 3,213 57,887 Total lease payments 204,380 4,575 208,955 Amount of interest (40,201) (2,418) (42,619) Present value of lease liabilities $ 164,179 $ 2,157 $ 166,336 capital leases related to vehicles with minimum lease payment termsand recognizes revenue for contingent rentals when the contingency has been resolved. The Company combines lease and non-lease components for the purpose of four years or less.Year Ended December 31, (In thousands) 2022 2021 2020 Minimum rental income $ 7,380 $ 6,041 $ 3,913 Contingent rental income 4,071 3,169 1,840 Total rental income $ 11,451 $ 9,210 $ 5,753 capital leaserent payments to be received under operating leases are as follows:follows (in thousands):Year Ending December 31, Amount 2023 $ 5,025 2024 4,913 2025 4,875 2026 4,072 2027 1,173 Thereafter 1,371 Total future minimum rent payments $ 21,429 1413 – Commitments and Contingenciesand Revenue Share Agreementsabove in “Note 13, Leases,12 — Leases” and “Note 2 — Summary of Significant Accounting Policies,” the Company also enters into slot placement contracts in the form of participation and revenue share agreements. Under revenue shareparticipation agreements, the Company paysand the business location each hold a state issued gaming license in order to be able to receive a percentage of gaming revenue earned on the Company’s slot machines. The business location retains a percentage of the gaming revenue generated from the Company’s slots placed atslot machines. The Company is considered to be the location, rather than a fixed monthly rental fee. Underprincipal in these arrangements and therefore, records its share of revenue generated under participation agreements on a gross basis with the business location holds the applicablelocation’s share of revenue recorded as gaming license and retains a percentage of the gaming revenue that it generates from the Company’s slots. During the years ended December 31, 2017, 2016 and 2015, theexpenses.(recorded inas gaming expenses)expenses under revenue share and participation agreements were $143.3$215.0 million, $128.1$211.5 million, and $41.7$133.2 million respectively, including $1.0 million, $2.1 million and $0.7 million, respectively, under revenue share and participation agreements with related parties, as described in Note 15, Related Party Transactions.The Company also enters into amusement device and ATM placement contracts in the form of revenue share agreements. Under these revenue share agreements, the Company pays the business location a percentage of the non-gaming revenue generated from the Company’s amusement devices and ATMs placed at the location. Duringfor the years ended December 31, 20172022, 2021, and 2016,2020, respectively. For the totalyear ended December 31, 2020, such contingent payments recognized byalso included $0.7 million incurred in related party agreements described in (recordedhad over 6,400 employees, of which over 1,700 were covered by various collective bargaining agreements. The Company’s collective bargaining agreements expire between 2023 and 2024 (with some having expired in other operating expenses) for amusement devices and ATMs under2022 with extensions being negotiated). There can be no assurance that, upon the expiration of existing collective bargaining agreements, new agreements will be reached without union action or that any such new agreements were $1.4 million and $0.9 million, respectively. No amounts were recognized bywill be on terms satisfactory to the Company under such agreements during 2015.eachcertain of the Company’s executive officers. Under each employment agreement, in addition to the executive’s annual base salary, the executive is entitled to participate in the Company’s incentive compensation programs applicable to executive officers of the Company. The executivesexecutive officers are also eligible to participate in all health benefits, insurance programs, pension and retirement plans and other employee benefit and compensation arrangements. Each executive officer is also provided with other benefits as set forth in his employment agreement. In the event of a termination without “cause” or a “constructive termination” of the Company’s executive officers (as defined in their respective employment agreements), the Company could be liable for estimated severance payments of up to $6.1$4.8 million for Mr.Blake L. Sartini, $1.9$3.2 million for Charles H. Protell, $2.6 million for Stephen A. Arcana, $1.9and $1.0 million for Charles H. Protell, $1.6 million for Sean T. Higgins, and amounts ranging from $0.4 million to $0.7 million for the Company’s other executive officersBlake L. Sartini II (assuming each officer’s respective annual salary and health benefit costs as of December 31, 2017 are the2022, subject to amounts in effect at the time of termination and excluding potential expense related to acceleration of stock options, RSUs and RSUs)PSUs).Miscellaneous has recorded $1.5 million for claims as of the date of thisfiling.records reserves. Although lawsuits, claims, investigations and other legal proceedings are inherently uncertain and their results cannot be predicted with certainty, the Company believes that the resolution of its currently pending matters should not have a material adverse effect on its business, financial condition, results of operations or liquidity. Regardless of the outcome, legal proceedings can have an adverse impact on the Company because of defense costs, diversion of management resources and other factors. In addition, it is possible that an unfavorable resolution of one or more such proceedings could in the future materially and adversely affect the Company’s business, financial condition, results of operations or liquidity in a particular period.FebruaryJanuary 2021, the Company was affected by a ransomware cyber-attack that temporarily disrupted the Company’s access to certain information located on the Company’s network and April 2017, several former employees filed two separate purported class action lawsuits againstincurred expenses relating thereto. The Company’s financial information and business operations were not materially affected. The Company implemented a variety of measures to further enhance its cybersecurity protections and minimize the impact of any future cyber incidents. The Company has insurance related to this event and has recovered a portion of the costs it incurred to remediate this matter, which amounts were received and recorded during 2021 and the three months ended March 31, 2022.District Courtevent of Clark County, Nevada, and on behalfa change of similarly situated individuals employedcontrol transaction with respect to William Hill. Under this agreement, as amended, the April 22, 2021 acquisition of William Hill PLC by Caesars Entertainment, Inc. (“Caesars”) constituted the change of control event triggering this payment. On May 26, 2021, the Company, inWilliam Hill and Caesars executed an amendment to the State of Nevada. The lawsuits allege thatagreement requiring William Hill and Caesars, as the Company violated certain Nevada labor laws includingacquiring party, to make a payment of an hourly wage below the statutory minimum wage without providing a qualified health insurance plan and an associated failure to pay proper overtime compensation. The complaints seek, on behalf of the plaintiffs and members of the putative class, an unspecified amount of damages (including punitive damages), injunctive and equitable relief, and an award of attorneys’ fees, interest and costs. In the second half of 2017, the Company agreed to settle the first of these two cases, subject to court approval. The second case is in the discovery phase.In February 2018, a prior guest of the Stratosphere filed a purported class action complaint against the Company in the United States District Court, District of Nevada, on behalf of similarly situated individuals and entities that paid the Clark County Combined Transient Lodging Tax (“Tax”) on the portion of a resort fee that constitutes charges for Internet access, during the period of February 6, 2014 through the date the alleged conduct ceases. The lawsuit alleges that the Tax was charged in violation of the federal Internet Tax Freedom Act, which imposes a national moratorium on the taxation of Internet access by states and their political subdivisions, and seeks, on behalf of the plaintiff and the putative class, damages equal to the amount of the Tax collected on the Internet access component of the resort fee, injunctive relief, disgorgement, interest, fees and costs.$60 million by July 15, 2021. The Company not yet been served withreceived this payment in July 2021 and recognized $60.0 million in non-operating income for the complaint. In the event a complaint is served on the Company, it anticipates being accorded a stay to respond in connection with an agreement that other hotel casino operators have entered into with regard to case consolidation while the federal court reviews subject matter jurisdiction. This case is at an early stage in the proceedings, and the Company is therefore unable to make a reasonable estimate of the probable loss or range of losses, if any, that might arise from this matter.While legal proceedings are inherently unpredictable and no assurance can be given as to the ultimate outcome of any of the above matters, based on management’s current understanding of the relevant facts and circumstances, the Company believes that these proceedings should not have a material adverse effect on its financial position, results of operations or cash flows. and one tavern location from a company 33% beneficially owned by Blake L. Sartini, 5% owned by a trust for the benefit of Mr. Sartini’s immediate family members (including Blake L. Sartini, II) for which Mr. Sartini serves as trustee, and 3% beneficially owned by Stephen A. Arcana,Arcana. On May 24, 2021 the building was sold to an independent third party, and leased one tavern location fromtherefore this lease is no longer with a company controlled by Mr. Sartini through a trust for the benefit of Mr. Sartini’s immediate family members (including Blake L. Sartini, II) for which Mr. Sartini serves as trustee. In addition, two tavern locations that the Company had previously leased from related parties were sold in 2017 to unrelated third parties. The lease for the Company’s office headquarters building expires on July 31, 2025.party. The rent expense for the office headquarters building duringfor the period in which the location was leased from a related party was $0.5 million and $1.6 million for the years ended December 31, 2017, 20162021 and 2015 was $1.2 million, $1.1 million, and $0.5 million2020, respectively. Under the office headquarters lease, there was no amount and less than $0.1 million owed to the Company as of December 31, 2017 and 2016, respectively, and no amount was due and payable by the Company as of December 31, 2017 and 2016. The leases for the tavern locations have remaining terms of up to 10 years. The rent for the tavern locations (including sold tavern locations for the periods in which the leases were with related parties) was $0.9 million, $1.3 million, and $0.6 million during the years ended December 31 2017, 2016, and 2015, respectively. Under the tavern leases, there was no amount and less than $0.1 million owed to the Company as of December 31, 2017 and 2016, respectively, and no amount was due and payable by the Company as of December 31, 2017 and 2016. Additionally, a portion of the office headquarters building iswas sublet to Sartini Enterprises, Inc., a company owned or controlled by Mr. Sartini. Rental income during each of the years ended December 31, 2017, 2016,2022, 2021, and 20152020 for the sublet portion of the office headquarters building was less than $0.1 million. Under this sublease, thereNo amount was no amount and less than $0.1 million owed to the Company under such sublease as of December 31, 20172022 and 2016, respectively.2021. In addition, the Company and Sartini Enterprises, Inc. participate in certain cost-sharing arrangements. No amount was owed by the Company under such arrangements as of December 31, 2022 and the amount due and payable by the Company under such arrangements as of December 31, 2021 was insignificant. Mr. Sartini serves as the Chairman of the BoardPresident and Chief Executive Officer of the Company and is a co-trustee of theThe Blake L. Sartini and Delise F. Sartini Family Trust, which is a significant shareholder of the Company. Mr. Arcana serves as the Executive Vice President and Chief Operating Officer of the Company. All of these related partyagreements wereagreement for office space in place priora building adjacent to the consummationCompany’s office headquarters building to be constructed and owned by a company 33% beneficially owned by Mr. Sartini, 5% owned by a trust for the benefit of Mr. Sartini’s immediate family members (including Blake L. Sartini, II) for which Mr. Sartini serves as trustee, and 3% beneficially owned by Mr. Arcana. The lease commenced in August 2020 and expires on December 31, 2030. The rent expense for the space was $0.3 million for each of the Merger.a privatepurposes pursuant to aircraft owned bytime-sharing, co-user and cost-sharing agreements between the Company and Sartini Enterprises, Inc., a company controlledall of which have been approved by Mr. Sartini. In April 2016, the Audit Committee of the Board of Directors approved the Company’s entering into an aircraft timesharing agreement between the Company and Sartini Enterprises, Inc. pursuant to which the Company will reimburse Sartini Enterprises, Inc. for direct costs and expenses incurred for travel on the private aircraft by Company employees while on Company business. Sartini Enterprises, Inc. sold the aircraft subject to this agreement in December 2017. In June 2017, the Audit Committee approved the Company’s entering into a second aircraft timesharing agreement between the Company and Sartini Enterprises, Inc. on similar terms for a private aircraft leased by Sartini Enterprises Inc.Directors. The aircraft timesharingtime-sharing, co-user and cost-sharing agreements specify the maximum expense reimbursement that Sartini Enterprises, Inc. can charge the Company under the applicable regulations of the Federal Aviation Administration for the use of the aircraft and the flight crew. Such costs include fuel, landing fees, hangar and tie-down costs away from the aircraft’s operating base, flight planning and weather contract services, crew costs and other related expenses. The Company’s compliance department regularly reviews these reimbursements. DuringThe Company incurred $0.6 million, $0.8 million, and $0.5 million in costs under these arrangements for the years ended December 31, 20172022, 2021, and 2016, the2020, respectively. The Company paid approximatelyowed $0.1 million and $0.2 million and $0.1 million, respectively, andunder such agreements as of December 31, 20172022 and 2021, respectively. No amount was owed to the Company owed less than $0.1 million, under the aircraft timesharing agreements.Three of the distributed gaming locations at which the Company’s slots are located are owned in part by the spouse of Matthew W. Flandermeyer, the Company’s former Executive Vice President and Chief Financial Officer. On November 11, 2016, Matthew Flandermeyer resigned, effectivethese agreements as of November 28, 2016, from his position with the Company. Net revenues and gaming expenses recorded by the Company from the use of the Company’s slots at these three locations were $1.4 million and $1.2 million, respectively, during the year ended December 31, 2016, in each case excluding net revenues2022 and gaming expenses incurred during the period after the termination of Mr. Flandermeyer’s employment with the Company (as during such period the agreement was not with a related party). The gaming expenses recorded by the Company represent amounts retained by the counterparty (with respect to the two locations that are subject to participation agreements) or paid to the counterparty (with respect to the location that is subject to a revenue share agreement) from the operation of the slots. All of the agreements were in place prior to the consummation of the Merger.slotsslot machines are located iswas owned in part by Sean T. Higgins, who servespreviously served as Executive Vice President and Chief Legal Officerof Government Affairs of the Company. This agreement was in place prior to Mr. HigginsHiggins’s joining the Company on March 28, 2016.2016 and terminated in 2020. Net revenues and gaming expenses recorded by the Company from the use of the Company’s slotsslot machines at this location were $1.1 million and $1.0 million, respectively, during the year ended December 31, 2017, and were $0.9 million and $0.8 million, respectively, during the year ended December 31, 2016, in each case excluding net revenues and gaming expenses incurred during the period prior to the commencement of Mr. Higgins employment with the Company (as during such period the agreement was not with a related party). No amounts were owed to or due and payable by the Company related to this agreement as of December 31, 2017.Additionally, one distributed gaming location at which the Company’s slots are located was owned in part by Terrence L. Wright, who serves on the Board of Directors of the Company, who divested his interest in such distributed gaming location in March 2016. Net revenues and gaming expenses recorded by the Company from the use of the Company’s slots at this location during the period in which the agreement was with a related party were $0.1 million during the year ended December 31, 2016. This agreement was in place prior to the consummation of the Merger. In connection with the Merger, Lyle A. Berman, who serves on the Board of the Directors of the Company, entered into a three-year consulting agreement with the Company that pays his wholly-owned consulting firm $200,000 annually, plus reimbursements for certain health insurance, administrative assistant and office costs. Expenses recorded by the Company for the agreement with Mr. Berman were $0.2 million for each of the years ended December 31, 2017 and 2016. No amounts were due and payable by the Company related to this agreement at December 31, 2017.Additionally, in connection with the Merger, Timothy J. Cope, who serves on the Board of Directors of the Company, entered into a short-term consulting agreement for the period from July 31, 2015 to April 1, 2016 under which Mr. Cope was paid a total of $140,000, plus reimbursement of certain health insurance costs. Expenses recorded by the Company for the agreement with Mr. Cope were $0.1 million for the year ended December 31, 2016.1615 – Segment Informationtwofive reportable operating segments: Nevada Casino Resorts, Nevada Locals Casinos, Maryland Casino Resort, Nevada Taverns, and Distributed Gaming. Duringthird quarter of 2015, the Company redefined its reportable segments to reflect the changeother casino properties in its business followingportfolio. While hotel stays at these casino resorts are typically longer, the Merger. Prioroverall frequency of visitation from guests is lower when compared to the Merger, the Company conducted its business through the following two segments: Rocky Gap and Other. Information for the period priorNevada Locals Casinos.the Merger has been recast to reflect the new segment structure and present comparative year-over-year results.Casinos segment involves the ownership and operationlocals casino properties typically experience a higher frequency of eightcustomer visits compared to its casino resort casino properties in Nevada and Maryland.Maryland, with many of the customers visiting the Company’s Nevada Locals Casinos on a weekly basis. The casino properties within this reportable segment have no or a limited number of hotel rooms and offer fewer food and beverage outlets or other amenities, with revenues primarily generated from slot machine play.involvesis comprised of the installation, maintenance and operation of slotsslot machines and amusement devices in certain strategic, high-traffic,over 1,000 third party non-casino locations, (suchsuch as grocery stores, convenience stores, restaurants, bars, taverns, convenience stores, liquor stores and liquor stores) ingrocery stores, across Nevada and Montana with a limited number of slot machines in each location. Distributed Gaming operations cater to local residents with high frequency visitation to these locations. The Company places its slot machines and the operation of wholly-owned branded taverns targeting local patrons located primarilyamusement devices in the greater Las Vegas, Nevada metropolitan area. locations where it believes they will receive maximum customer traffic.operating segments because these costs are not easily allocable and to do so would not be practical. Amounts in the Eliminations column represent the intercompany management fee for Rocky Gap.evaluatespresents Adjusted EBITDA in its segment disclosures because it is the primary metric used by the Company’s chief operating decision makers in measuring both the Company’s past and future expectations of performance. Further, the Company’s annual performance plan used to determine compensation of its executive officers and employees is tied to the Adjusted EBITDA metric. Adjusted EBITDA represents each segment’s profitability based upon such segment’s Adjusted EBITDA, which represents each segment's earnings before interest and other non-operating income (expense), income taxes, depreciation and amortization, impairment of goodwill and intangible assets, severance expenses, preopening expense, acquisition and mergerrelated expenses, share-based compensation expenses, executive severance and sign-on bonuses, gain on revaluation of contingent consideration, class action litigation expenses, gain/or loss on disposal of property and equipment or investments, and impairmentsassets, share-based compensation expenses, non-cash lease expense, and other losses,non-cash charges that are deemed to be not indicative of the Company’s core operating results, calculated before corporate overhead (which is not allocated to each reportable segment).The following table sets forth,Due to the Company’s use of Adjusted EBITDA as its measure of profit for its reportable segments, the periods indicated, certain operating data for our segments, and reconcilesCompany includes a reconciliation of the total of the Company’s consolidated Adjusted EBITDA to the Company’s consolidated net income (loss) determined in accordance with GAAP. The Company also discloses Adjusted EBITDA at the reportable segment level, as set forth in the table below:Year Ended December 31, (In thousands) 2022 2021 2020 Revenues Nevada Casino Resorts Gaming $ 175,014 $ 179,793 $ 114,571 Food and beverage 89,424 83,092 55,588 Rooms 104,375 94,952 61,070 38,137 31,875 19,414 Nevada Casino Resorts revenues $ 406,950 $ 389,712 $ 250,643 Nevada Locals Casinos Gaming $ 114,388 $ 120,537 $ 82,522 Food and beverage 25,219 24,036 18,406 Rooms 10,162 7,626 5,598 7,745 7,656 6,505 Nevada Locals Casinos revenues $ 157,514 $ 159,855 $ 113,031 Maryland Casino Resort Gaming $ 59,553 $ 60,797 $ 40,505 Food and beverage 8,440 7,932 4,669 Rooms 7,787 7,224 4,743 Other 2,230 2,202 1,719 Maryland Casino Resort revenues $ 78,010 $ 78,155 $ 51,636 Nevada Taverns Gaming $ 53,619 $ 53,909 $ 28,128 Food and beverage 51,564 52,002 33,047 4,782 4,259 2,866 Nevada Taverns revenues $ 109,965 $ 110,170 $ 64,041 Distributed Gaming Gaming $ 358,332 $ 351,274 $ 211,027 Food and beverage 716 753 371 6,424 5,387 2,817 Distributed Gaming revenues $ 365,472 $ 357,414 $ 214,215 Corporate and other 3,808 1,237 589 Total Revenues $ 1,121,719 $ 1,096,543 $ 694,155 each segment, under ASC 842 for the arrangements in which the Company is a lessor. Refer to “Note 2 — Summary of Significant Accounting Policies” and “Note 12 — Leases” for details.Year Ended December 31, (In thousands) 2022 2021 2020 Adjusted EBITDA Nevada Casino Resorts $ 135,104 $ 149,077 $ 57,462 Nevada Locals Casinos 75,848 80,005 45,610 Maryland Casino Resort 25,383 26,697 15,094 Nevada Taverns 37,610 39,762 10,086 Distributed Gaming 44,021 47,514 16,866 Corporate and other (50,886) (51,337) (34,861) Total Adjusted EBITDA 267,080 291,718 110,257 Adjustments Other non-operating income — 60,000 — Depreciation and amortization (100,123) (106,692) (124,430) Non-cash lease expense (165) (762) (1,344) Share-based compensation (13,433) (14,401) (9,637) Loss on disposal of assets (934) (1,260) (803) Loss on debt extinguishment and modification (1,590) (975) — (161) (246) (533) Severance expenses (378) (228) (3,710) Impairment of goodwill and intangible assets — — (33,964) Other, net (3,939) (2,089) (3,275) Interest expense, net (63,490) (62,853) (69,110) Change in fair value of derivative — — (1) Income tax provision (521) (436) (61) Net income (loss) $ 82,346 $ 161,776 $ (136,611) reported in our accompanying consolidated statements of operations:
AssetsAssets(In thousands) Nevada Casino Resorts Nevada Locals Casinos Maryland Casino Resort Nevada Taverns Distributed Gaming Corporate and Other Consolidated Balance at December 31, 2022 $ 784,242 $ 164,580 $ 39,562 $ 145,065 $ 258,260 $ 116,961 $ 1,508,670 Balance at December 31, 2021 $ 811,016 $ 165,362 $ 41,403 $ 149,296 $ 262,046 $ 186,441 $ 1,615,564 (In thousands) Consolidated For the year ended December 31, 2022 $ 26,347 $ 4,035 $ 1,878 $ 2,712 $ 9,146 $ 7,301 $ 51,419 For the year ended December 31, 2021 $ 7,859 $ 2,813 $ 1,447 $ 1,573 $ 9,912 $ 5,655 $ 29,259 For the year ended December 31, 2020 $ 23,649 $ 911 $ 2,531 $ 1,750 $ 5,136 $ 2,525 $ 36,502 (1) in the Distributed Gaming segment exclude non-cash purchases of property and equipment of approximately $2.6 million and $0.7 million for the years ended December 31, 2017 and 2016, respectively.Note 17 – Selected Quarterly Financial Information (Unaudited):The following tables present selected quarterly financial information:(1)Results included the operating results of American from and after October 20, 2017, following the completion of the American Acquisition.(2)Results included the operating results of the Initial Montana Acquisition from and after January 30, 2016, following the completion of the acquisition.(3)Results included the operating results of the Second Montana Acquisition from and after April 23, 2016, following the completion of the acquisition.(4)For the fourth quarter of 2017, the Company generated a net loss. Accordingly, the effect of all potential common share equivalents was anti-dilutive, and therefore all such shares were excluded from the computation of diluted weighted average shares outstanding and diluted loss per share for this period. The amount of potential common share equivalents was 2,373 for the fourth quarter of 2017.Because net income (loss) per share amounts are calculated using the weighted-average number of common equivalent shares outstanding during each quarter, the sum of the per share amounts for the four quarters in the tables above may not equal the total net income (loss) per share amounts for the year.Note 18 – Subsequent EventsThe Company's management evaluates subsequent events through the dateNevada Casino Resorts segment exclude non-cash purchases of issuanceproperty and equipment of the consolidated financial statements. There have been no subsequent events that occurred during such period that would require adjustment to or disclosure$5.0 million, $0.6 million, and $1.1 million as of December 31, 2022, 2021, and 2020, respectively.consolidated financial statementsNevada Locals Casinos segment exclude non-cash purchases of property and equipment of $0.1 million and $0.2 million as of and for the year ended December 31, 2017.
2022 and 2021, respectively.
(3)Capital expenditures in the Maryland Casino Resort segment exclude non-cash purchases of property and equipment of $0.5 million as of December 31, 2020.ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSUREITEM 9A.
a.Disclosure Controls and Proceduresa.Disclosure Controls and Procedures2017,2022, the end of the period covered by this Annual Report on Form 10-K. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2017.On October 20, 2017, the American Acquisition was completed. As discussed below, we have excluded American from our evaluation of the effectiveness of internal control2022.financial reporting. Accordingly, pursuant to the SEC's general guidance that an assessment of an acquired business’ internal control over financial reporting may be omitted from the scope of an assessment for one year following the acquisition, the scope of our assessment of the effectiveness of our disclosure controls and procedures does not include American.Financial Reportingb.Management’s Annual Report on Internal Control over Financial Reporting2017,2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO.Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2017.On October 20, 2017, the American Acquisition was completed. Management has begun the evaluation of the internal control structures of American. However, SEC guidance permits management to omit an assessment of an acquired business’ internal control over financial reporting from management’s assessments of internal control over financial reporting and disclosure controls and procedures for a period not to exceed one year from the date of the acquisition. Accordingly, we excluded American from our annual assessment of internal control over financial reporting as of December 31, 2017. We have reported the operating results of American in our consolidated statements of operations and cash flows from the acquisition date through December 31, 2017. As of December 31, 2017, total assets related to American represented approximately 68.1% of our total assets, which consisted primarily of intangible assets, including goodwill, recorded on a preliminary basis as the measurement period for the business combination remained open as of December 31, 2017. Net revenues from American comprisedapproximately 15% of our consolidated net revenues for the year ended December 31, 2017. We will include American in our evaluation of internal control over financial reporting as of December 31, 2018.2017, likewise excluding the internal control over financial reporting of American,2022 has been audited by Piercy Bowler TaylorErnst & Kern,Young LLP, our independent registered public accounting firm, as stated in their report in Part II, Item 8 of this Annual Report on Form 10-K.c.Management’s Remediation of Previous Material WeaknessA material weakness is a deficiency, or a combination of deficiencies,c.Changes in internal controlInternal Control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis. In our Annual Report on Form 10-K for the year ended December 31, 2016 and our subsequent Quarterly Reports on Form 10-Q, we reported the following material weakness in our internal control over financial reporting:Untimely Preparation and Review of Account Reconciliations. Account reconciliations were not consistently prepared on a timely basis and subjected to proper review and written approval by a person not involved in their preparation.We took the following actions to remediate this material weakness:In November 2016 and January 2017, we hired a new principal financial officer (Charles H. Protell) and principal accounting officer (Gary A. Vecchiarelli), respectively;During the second quarter of 2017, management presented to the Audit Committee an action plan for remediating the identified material weakness and strengthening internal controls overall;During 2017, in accordance with this action plan, we hired additional personnel with the requisite expertise in the key functional areas of finance and accounting to supervise the preparation of account reconciliations and to perform proper reviews of such reconciliations;Also in accordance with this action plan, we established or enhanced numerous processes and policies during 2017 relating to various accounting, financial reporting and internal audit tasks;We also implemented new reconciliation management software to track the status and progress of account reconciliations each period and quantify unreconciled or unidentified variances; andIn addition, we provided, and will continue to provide, additional training to new and existing accounting and financial reporting personnel regarding our procedures and systems concerning the preparation and review of account reconciliations.For the quarter ended December 31, 2017, management tested the design and operating effectiveness of the newly implemented controls and concluded that the material weakness described above had been remediated as of December 31, 2017.d.Changes in Internal Control over Financial ReportingExcept as described above, thereThere have been no changes in our internal control over financial reporting during the quarter ended December 31, 20172022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As described above, on October 20, 2017, the American Acquisition was completed. Management excluded American from its assessment of the effectiveness of our internal control over financial reporting as of December 31, 2017. Our integration of American may lead us to modify certain internal controls in future periods.ITEM 9B.boardBoard of directorsDirectors and our audit committee, including our audit committee financial expert, will be included in our definitive Proxy Statement to be filed with the SEC in connection with20182023 annual meeting of shareholders (the “Proxy“2023 Proxy Statement”) under the headings “Corporate Governance,” “Executive Officers,” “Election of Directors” and “Ownership of Securities,” and is incorporated herein by reference.The information required by this item relating to our executive officers is included under the caption “Executive Officers” in Part I of this Annual Report on Form 10-K and is incorporated herein by reference into this section.“Investors-Governance”“Investors — Governance” section of our website at www.goldenent.com.www.goldenent.com.ITEM 11.ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSEQUITY COMPENSATION PLAN INFORMATIONOn August 27, 2015, our Board of Directors approved the Golden Entertainment, Inc. 2015 Incentive Award Plan (the “2015 Plan”), which was subsequently approved by our shareholders at our 2016 annual meeting of shareholders. The 2015 Plan authorizes the issuance of stock options, restricted stock, restricted stock units, dividend equivalents, stock payment awards, stock appreciation rights, performance bonus awards and other incentive awards. The 2015 Plan authorizes the grant of awards to employees, non-employee directors and consultants of the Company and its subsidiaries. Options generally have a ten-year term. Except as provided in any employment agreement between us and the employee, if an employee is terminated (voluntarily or involuntarily), any unvested options as of the date of termination will be forfeited.The maximum number of shares of our common stock for which grants may be made under the 2015 Plan is 2,250,000 shares, plus an annual increase on January 1st of each year during the ten-year term of the 2015 Plan equal to the lesser of 1,800,000 shares, 4% of the total shares of our common stock outstanding (on an as-converted basis) and such smaller amount as may be determined by the Board in its sole discretion. The annual increases on January 1, 2018 and 2017 were 889,259 shares and 874,709 shares, respectively. The following annual limitations also apply: (i) the maximum aggregate number of shares of common stock that may be subject to awards granted to any one participant during a calendar year is 2,000,000 shares; and (ii) the maximum aggregate amount of cash that may be paid to any one participant during any calendar year with respect to awards initially payable in cash is $10 million.At our June 6, 2007 annual shareholders meeting, our shareholders approved the 2007 Lakes Stock Option and Compensation Plan (the “2007 Plan”), which authorized a total of 250,000 shares of our common stock. In August of 2009, our shareholders approved an amendment to the 2007 Plan to increase the number of shares of the Company’s common stock authorized for awards from 250,000 to 1,250,000. The 2007 Plan is designed to integratecompensation of our executives and employees, including our officers and directors, with our long-term interests and those of our shareholders and to assist in the retention of executives and other key personnel.20172022 with respect to our equity compensation plans:(1)As of December 31, 2017, we had 62,791 restricted stock units outstanding that do not have an exercise price; therefore, the weighted-average exercise price per share only relates to outstanding stock options. Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column) Plan Category 2,046,994 $ 11.33 3,135,469 2007 Lakes Stock Option and Compensation Plan 25,000 $ 13.50 — Total 2,071,994 $ 11.35 3,135,469 ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEITEM 14.ITEM 15.Statements:Statements (including related notes to Consolidated Financial Statements) filed in Part II of this report are listed below:Page475051525355Financial Statement Schedules: Schedule II – Valuation and Qualifying Accounts
We have omitted all other financial statement schedules because they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes to the consolidated financial statements.Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2017, 2016 and 201599
GOLDEN ENTERTAINMENT, INC.Balance at Beginning of Period Increase Decrease Balance at End of Period Deferred income tax valuation allowance: Year Ended December 31, 2022 $ 30,783 $ — $ (25,103) $ 5,680 Year Ended December 31, 2021 62,724 — (31,941) 30,783 Year Ended December 31, 2020 36,652 26,072 — 62,724 Exhibits: Incorporated by Reference Filed or Furnished Herewith Exhibit
NumberExhibit Description Form File No. Exhibit Filing Date 2.1 8-K 000-24993 2.1 8/25/2022 2.2 8-K 000-24993 2.2 8/25/2022 3.1 8-K 000-24993 3.1 8/4/2015 3.2 10-Q 000-24993 3.1 11/7/2022 4.1 10-Q 000-24993 4.1 5/10/2019 Incorporated by Reference Filed or Furnished Herewith Exhibit
NumberExhibit Description Form File No. Exhibit Filing Date 4.2 10-Q 000-24993 4.1 5/10/2019 4.3 10-K 000-24993 4.3 3/13/2020 10.1 8-K 000-24993 10.3 10/23/2017 10.1.1 8-K 000-24993 10.1 6/12/2018 10.1.2 10-Q 000-24993 10.1 11/9/2018 10.1.3 8-K 000-24993 10.1 10/14/2021 10.2 8-K 000-24993 10.2 8/9/2012 10.3 8-K 000-24993 10.2 8/4/2015 10.4 8-K 000-24993 10.4 8/4/2015 10.5# 8-K 000-24993 10.1 10/5/2015 10.5.1# 10-K 000-24993 10.11.1 3/14/2016 10.5.2# 10-Q 000-24993 10.1 5/10/2018 Incorporated by Reference
Number10.5.3# 10-Q 000-24993 10.1 5/6/2022 10.13#10.6# 10.3 10.14#10-K 000-24993 10.12.1 3/16/2017 10.6.2# 10-Q 000-24993 10.3 5/10/2018 10.6.3# 10-Q 000-24993 10.1 11/8/2019 10.6.4# 10-Q 000-24993 10.2 5/6/2022 10.7# 8-K 000-24993 10.2 10/5/2015 10.7.1# 10.1416/2017 10.15#10-K 000-24993 10.11.2 3/16/2017 10.7.3# 10-Q 000-24993 10.2 5/10/2018 10.7.4# 10-Q 000-24993 10.30 5/6/2022 10.8# 10.16#10-Q 000-24993 10.4 5/10/2018 X 10.17#8-K10.111/17/2016 10.18#10-Q000-2499310.10.111/6/2015 10.19# 10.19.1# 10.19.2# 10.19.3# 10.20#Incorporated by Reference Filed or Furnished Herewith Exhibit
NumberExhibit Description Form File No. Exhibit Filing Date 10.10# 10.20.1# 10.20.2# 10.21#10-Q 000-24993 10.5 5/10/2018 10.10.4# 10-Q 000-24993 10.6 5/10/2018 10.11# 10-K10.213/16/2017Incorporated by ReferenceFiled orFurnishedHerewithExhibitNumberExhibit DescriptionFormFile No.ExhibitFiling Date21.1 12.1Statement Regarding the Computation of Ratio of Earnings to Fixed ChargesX 21XXXXXX DocumentXXXXX104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) √ #Dated: March 1, 2023 GOLDEN ENTERTAINMENT, INC. Registrant By:/s/ BLAKE L. SARTINI Blake L. Sartini Chairman of the Board President andDated as of March 16, 201816, 2018.1, 2023.NameTitleName Title /s/ BLAKE L. SARTINI PresidentBlake L. SartiniBlake L. Sartini (Principal Executive Officer) Executive Vice President and ChiefStrategy and Financial OfficerGARY A. VECCHIARELLIGary A. VecchiarelliAccounting and FinanceLYLE A. BERMANLyle A. BermanTIMOTHY J. COPETimothy J. CopeROBERT L. MIODUNSKIRobert L. Miodunski/s/ NEIL I. SELLDirectorNeil I. SellSCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS(In thousands)99