Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November ~~6, 2017,~~4, 2019, the registrant had ~~26,371,614~~27,813,192 shares of common stock, $0.01 par value per share, outstanding.

								September 30, 2019			December 31, 2018
	September 30, 2017				December 31, 2016			(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	42,911		��	$	46,898		$	123,829		$	116,071
Accounts receivable, net		9,117				6,697
Income taxes receivable		197				2,340
Accounts receivable, net of allowance of $880 and $503, respectively									13,940			12,779
Prepaid expenses		11,937				9,761			18,994			17,722
Inventories		2,747				2,605			7,379			6,759
Other		1,656				1,346			3,212			3,428
Total current assets		68,565				69,647			167,354			156,759

Property and equipment, net		148,048				137,581			1,038,692			894,953

Other assets
Operating lease right-of-use assets, net									148,911			—
Goodwill		105,655				105,655			182,870			158,134
Intangible assets, net		92,995				98,603			141,125			141,128
Deferred income taxes		10,760				—
Other		9,618				7,592
Total other assets		219,028				211,850
Other assets									11,767			15,595
Total assets	$	435,641			$	419,078		$	1,690,719		$	1,366,569

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt	$	13,932			$	15,752
Current portion of long-term debt and finance leases								$	6,176		$	10,480
Current portion of operating leases									25,822			—
Accounts payable		16,235				11,739			28,710			27,812
Accrued taxes, other than income taxes		959				3,024			6,940			6,540
Accrued payroll and related		4,705				3,478			22,166			19,780
Other accrued expenses		7,374				3,846
Accrued liabilities									35,475			18,848
Total current liabilities		43,205				37,839			125,289			83,460

Long-term debt, net		158,889				167,690
Long-term debt, net and finance leases									1,129,072			960,563
Non-current operating leases									138,104			—
Deferred income taxes		—				38			797			2,593
Other long-term obligations		2,991				4,085			1,246			4,801
Total liabilities		205,085				209,652			1,394,508			1,051,417
Commitments and contingencies (Note 10)

Shareholders' equity
Common stock, $.01 par value; authorized 100,000 shares; 22,325 and 22,232 common shares issued and outstanding, respectively		223				223
Common stock, $.01 par value; authorized 100,000 shares; 27,813 and 26,779 common shares issued and outstanding, respectively									278			268
Additional paid-in capital		295,677				290,157			460,439			435,245
Accumulated deficit		(65,344	)			(80,954	)		(164,506	)		(120,361	)
Total shareholders' equity		230,556				209,426			296,211			315,152
Total liabilities and shareholders' equity	$	435,641			$	419,078		$	1,690,719		$	1,366,569

The accompanying condensed notes are an integral part of these consolidated financial statements.

	Three Months Ended						Nine Months Ended						Three Months Ended September 30,						Nine Months Ended September 30,
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			2019			2018			2019			2018
Revenues
Gaming	$	92,215		$	89,157		$	278,386		$	255,966		$	142,568		$	127,764		$	432,606		$	394,173
Food and beverage		15,572			14,404			47,030			41,846			51,109			41,999			152,971			128,024
Rooms		2,342			2,349			5,932			5,849			35,347			28,227			102,148			82,014
Other operating		3,619			3,298			10,697			8,589
Gross revenues		113,748			109,208			342,045			312,250
Less: Promotional allowances		(5,426	)		(4,982	)		(16,584	)		(14,432	)
Net revenues		108,322			104,226			325,461			297,818

Other														14,290			12,347			43,551			37,458
Total revenues														243,314			210,337			731,276			641,669
Expenses
Gaming		65,364			65,261			197,175			184,293			83,799			76,465			250,154			232,663
Food and beverage		9,816			8,646			29,119			25,245			41,020			34,508			119,450			103,451
Rooms		558			355			1,178			920			16,644			13,109			47,053			36,965
Other operating		1,155			1,247			3,861			3,193			4,815			3,805			16,409			11,456
Selling, general and administrative		19,655			17,816			57,586			50,272			57,106			47,359			170,288			135,180
Acquisition and merger expenses		2,975			139			5,041			614
(Gain) loss on disposal of property and equipment		308			(344	)		308			(344	)
Gain on revaluation of contingent consideration		(1,719	)		—			(1,719	)		—
Depreciation and amortization														29,611			23,330			86,852			71,421
Acquisition and severance expenses														428			1,243			3,095			3,107
Preopening expenses		282			801			1,128			1,893			243			21			1,759			858
Depreciation and amortization		7,539			7,223			21,499			19,862
(Gain) loss on disposal of assets														(233	)		774			599			1,069
Total expenses		105,933			101,144			315,176			285,948			233,433			200,614			695,659			596,170
Income from operations		2,389			3,082			10,285			11,870

Operating income														9,881			9,723			35,617			45,499
Non-operating income (expense)
Interest expense, net		(1,885	)		(1,689	)		(5,568	)		(4,786	)		(18,776	)		(16,291	)		(56,046	)		(47,100	)
Other, net		—			—			—			18
Loss on extinguishment and modification of debt														—			—			(9,150	)		—
Change in fair value of derivative														(352	)		1,222			(4,089	)		5,895
Total non-operating expense, net		(1,885	)		(1,689	)		(5,568	)		(4,768	)		(19,128	)		(15,069	)		(69,285	)		(41,205	)
Income before income tax benefit (provision)		504			1,393			4,717			7,102
Income (loss) before income tax benefit														(9,247	)		(5,346	)		(33,668	)		4,294
Income tax benefit (provision)		8,051			(91	)		10,893			(761	)		(200	)		2,222			1,795			106
Net income	$	8,555		$	1,302		$	15,610		$	6,341
Net income (loss)													$	(9,447	)	$	(3,124	)	$	(31,873	)	$	4,400

Weighted-average common shares outstanding
Basic		22,266			22,221			22,280			22,103			27,806			27,655			27,714			27,405
Dilutive impact of stock options and restricted stock units		1,825			564			1,167			319			—			—			—			1,787
Diluted		24,091			22,785			23,447			22,422			27,806			27,655			27,714			29,192
Net income per share
Net income (loss) per share
Basic	$	0.38		$	0.06		$	0.70		$	0.29		$	(0.34	)	$	(0.11	)	$	(1.15	)	$	0.16
Diluted	$	0.36		$	0.06		$	0.67		$	0.28		$	(0.34	)	$	(0.11	)	$	(1.15	)	$	0.15

The accompanying condensed notes are an integral part of these consolidated financial statements.

Nine Months Ended

September 30, 2017

September 30, 2016

Cash flows from operating activities

Net income

$
15,610

$
6,341

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

21,499

19,862

Amortization of debt issuance costs

561

538

Share-based compensation

5,352

2,509

(Gain) loss on disposal of property and equipment

308

(344
)
Gain on revaluation of contingent consideration

(1,719
)

—

Deferred income taxes

(10,798
)

776

Other operating activities

—

(18
)
Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(1,419
)

(973
)
Income taxes receivable

2,142

—

Prepaid expenses

(2,209
)

(2,916
)
Inventories and other current assets

(455
)

(90
)
Other assets

(559
)

(270
)
Accounts payable and other accrued expenses

5,322

1,745

Accrued taxes, other than income taxes

(2,065
)

(212
)
Other liabilities

236

856

Net cash provided by operating activities

31,806

27,804

Cash flows from investing activities

Purchase of property and equipment

(18,383
)

(24,208
)
Deposit paid for asset purchase

(2,467
)

—

Acquisition of businesses, net of cash acquired

—

(41,273
)
Proceeds from disposal of property and equipment

—

400

Issuance of notes receivable

—

(107
)
Other investing activities

(196
)

(2,083
)
Net cash used in investing activities

(21,046
)

(67,271
)
Cash flows from financing activities

Repayments of Revolving Credit Facility

(4,000
)

—

Borrowings on Revolving Credit Facility

1,000

—

Repayments of Term Loans

(9,000
)

(5,500
)
Proceeds from Term Loans

—

40,000

Repayments of notes payable

(3,049
)

(1,539
)
Proceeds from leased equipment obligation

742

—

Dividends paid

—

(23,529
)
Proceeds from issuance of common stock

168

1,778

Payments for debt issuance costs

—

(500
)
Principal payments under capital leases

(608
)

(457
)
Net cash provided by (used in) financing activities

(14,747
)

10,253

Cash and cash equivalents

Net decrease for the period

(3,987
)

(29,214
)
Balance, beginning of period

46,898

69,177

Balance, end of period

$
42,911

$
39,963

					Additional						Total
	Common stock				Paid-In			Accumulated			Shareholders'
	Shares		Amount		Capital			Deficit			Equity
Balances, June 30, 2019		27,800	$	278	$	457,870		$	(155,059	)	$	303,089
Proceeds from issuance of stock on options exercised		13		—		—			—			—
Share-based compensation		—		—		2,578			—			2,578
Tax benefit from share-based compensation		—		—		(9	)		—			(9	)
Net loss		—		—		—			(9,447	)		(9,447	)
Balances, September 30, 2019		27,813	$	278	$	460,439		$	(164,506	)	$	296,211

Consolidated Statements of ~~Cash Flows-~~Shareholders’ Equity – (Continued)

Nine Months Ended

September 30, 2017

September 30, 2016

Supplemental cash flow disclosures

Cash paid interest

$
5,073

$
4,248

Non-cash investing and financing activities

Payables incurred for capital expenditures

$
4,317

$
—

Notes payable issued for property and equipment

717

345

Assets acquired under capital lease obligations

3,015

2,597

Common stock issued in connection with acquisition

—

500

					Additional						Total
	Common stock				Paid-In			Accumulated			Shareholders'
	Shares		Amount		Capital			Deficit			Equity
Balances, December 31, 2017		26,413	$	264	$	399,510		$	(79,861	)	$	319,913
Proceeds from issuance of stock on options exercised		564		6		1,267			—			1,273
Share-based compensation		—		—		7,063			—			7,063
Issuance of common stock, net of offering costs		975		10		25,598			—			25,608
Tax benefit from share-based compensation		—		—		(820	)		—			(820	)
Net income		—		—		—			4,400			4,400
Balances, September 30, 2018		27,952	$	280	$	432,618		$	(75,461	)	$	357,437

The accompanying notes are an integral part of these consolidated financial statements.

GOLDEN ENTERTAINMENT, INC.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

	Nine Months Ended September 30,
	2019			2018
Cash flows from operating activities
Net income (loss)	$	(31,873	)	$	4,400
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		86,852			71,421
Amortization of debt issuance costs and discounts on debt		3,427			3,799
Share-based compensation		8,840			7,063
Loss on disposal of assets		599			1,069
Loss on extinguishment of debt		9,150			—
Change in fair value of derivative		4,089			(5,895	)
Deferred income taxes		(1,796	)		(106	)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		455			(454	)
Prepaid expenses		1,358			2,494
Inventories and other current assets		537			266
Accounts payable and other accrued expenses		17,860			(10,312	)
Accrued taxes, other than income taxes		(371	)		(290	)
Other		(1,083	)		(434	)
Net cash provided by operating activities		98,044			73,021
Cash flows from investing activities
Purchase of property and equipment, net of change in construction payables		(81,202	)		(48,939	)
Acquisition of business, net of cash acquired		(148,952	)		—
Proceeds from disposal of property and equipment		107			—
Deposit paid from asset purchase		—			(800	)
Asset purchase		(45	)		(300	)
Other investing activities		(33	)		—
Net cash used in investing activities		(230,125	)		(50,039	)
Cash flows from financing activities
Repayments of revolving credit facility		(145,000	)		—
Borrowings under revolving credit facility		145,000			—
Repayments of term loans		(220,000	)		(6,000	)
Proceeds from issuance of senior notes		375,000			—
Repayments of notes payable		(2,200	)		(322	)
Principal payments under finance leases		(1,267	)		(838	)
Payments for debt issuance costs		(6,686	)		(95	)
Debt extinguishment and modification costs		(4,763	)		—
Proceeds from issuance of common stock, net of issuance costs		56			26,881
Tax withholding on share-based payments		(301	)		(820	)
Net cash provided by financing activities		139,839			18,806
Cash and cash equivalents
Change in cash and cash equivalents		7,758			41,788
Balance, beginning of period		116,071			90,579
Balance, end of period	$	123,829		$	132,367

The accompanying condensed notes are an integral part of these consolidated financial statements.

Golden Entertainment, Inc. and its ~~wholly owned~~wholly-owned subsidiaries (collectively, the “Company” ~~or “Golden”~~) isown and operate a diversified ~~group~~entertainment platform, consisting of a portfolio of gaming ~~companies~~assets that focus on resort casino operations and distributed gaming (including tavern gaming) and casino and resort operations. On October 20, 2017, the Company completed the acquisition of American Casino & Entertainment Properties, LLC (“American”), and the results of operations of American and its subsidiaries will be includedgaming in the Company’s ~~results from and after such date. The Company’s common stock is traded on the NASDAQ Global Market, and the Company’s ticker symbol is “GDEN.”~~branded taverns).

The Company conducts its business through two reportable operating segments: Casinos and Distributed ~~Gaming~~Gaming. The Company’s Casinos segment involves the operation of ten resort casino properties in Nevada and ~~Casinos.~~Maryland, comprising:

The Company’s Distributed Gaming segment involves the installation, maintenance and operation of ~~gaming~~slots and amusement devices in ~~certain strategic, high-traffic,~~ non-casino locations ~~(such~~such as ~~grocery stores, convenience stores,~~ restaurants, bars, taverns, ~~saloons~~convenience stores, liquor stores and ~~liquor stores)~~grocery stores in Nevada and Montana, and the operation of ~~traditional,~~ branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area.

The Company’s Casinos segment involves the operation of eight casino and resort properties in Nevada and Maryland, comprising the Stratosphere Casino, Hotel & Tower, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder in Las Vegas, Nevada, the Aquarius Casino Resort in Laughlin, Nevada, the Rocky Gap Casino Resort in Flintstone, Maryland, and the Pahrump Nugget Hotel Casino, Gold Town Casino and Lakeside Casino & RV Park in Pahrump, Nevada. 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.

The unaudited consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial information. Accordingly, certain information normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) has been condensed and/or omitted. For further information, please refer to the audited consolidated financial statements of the Company for the year ended December 31, ~~2016~~2018 and the notes thereto included in the Company’s Annual Report on Form 10-K previously filed with the SEC. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s results for the periods presented. Results for interim periods should not be considered indicative of the results to be expected for the full year.

The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Certain ~~minor reclassifications~~amounts in the consolidated financial statements for the previous year period have been reclassified to be consistent with current year presentation. These reclassifications had no effect on previously reported net income.

The Company is the lessee under non-cancelable real estate leases, equipment leases and space lease agreements. Beginning on January 1, 2019 (the date of the Company's adoption of Topic 842, as defined and discussed further in “Accounting Standards Issued and Adopted”, below), operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term. The Company’s lease terms may include options to extend or terminate the lease. The Company assesses these options using a threshold of reasonably certain. For leases where the Company is reasonably certain to renew, those option periods are included within the lease term and, therefore, the measurement of the right-of-use asset and lease liability. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value guarantees, restrictions or covenants.

The Company’s lease agreements for land, buildings and taverns with lease and non-lease components are accounted for separately. The lease and non-lease components of certain vehicle and equipment leases are accounted for as a single lease component. Additionally, for certain vehicle and equipment leases, a portfolio approach is utilized to effectively account for the operating lease ROU assets and liabilities.

As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate is estimated based on the information available at the commencement date in determining the present value of lease payments. The implicit rate will be used when readily determinable. The operating lease ROU assets also includes any lease payments made and excludes lease incentives. The Company does not record an asset or liability for operating leases with a term of less than one year. Prior to the ~~prior year period amounts~~adoption of Topic 842 on January 1, 2019, the Company did not record an asset or liability for any of its operating leases.

The Company is the lessor under non-cancelable operating leases for retail and food and beverage outlet space within its resort casino properties. The lease arrangements generally include minimum base rent and/or contingent rental clauses based on a percentage of net sales exceeding minimum base rent. Generally, the terms of the leases range between five and 10 years, with options to ~~conform~~extend the leases. The Company records revenue on a straight-line basis over the term of the lease, and recognizes revenue for contingent rentals when the contingency has been resolved. The Company has elected to combine lease and non-lease components for the ~~current presentation. Additionally,~~purpose of measuring lease revenue. Revenue is recorded in ~~the current year there was a $6.1 million reclassification of year to date activity from~~ other operating ~~expense to gaming expense in~~revenue on the ~~Company’s~~ consolidated ~~statement~~statements of operations.

For all periods, basic net income per share is calculated by dividing net income by the weighted-average common shares outstanding. Diluted net income per share in profitable periods reflects the effect of all potentially dilutive common shares outstanding by dividing net income by the weighted-average of all common and potentially dilutive shares outstanding. InDue to the ~~event~~net losses for the three months ended September 30, 2019 and 2018 and nine months ended September 30, 2019, 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 for both periods. The amount of potential common share equivalents were 730,282 and 1,870,290 for three months ended September 30, 2019 and 2018, respectively. The amount of potential common share equivalents were 842,142 for nine months ended September 30, 2019.

The Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (“Topic 842”), as amended, as of January 1, 2019, and elected the option to apply the transition requirements in the new standard at the effective date of January 1, 2019 with the effects of initially applying Topic 842 recognized as a cumulative-effect adjustment to retained earnings on January 1, 2019. As a result, the balance sheet presentation is not comparable to the prior period in this first year of adoption.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allows the carry forward of the Company’s Leases – Topic 840 assessment regarding definition of a lease, lease classification, and initial direct costs. The Company also elected the short-term lease exception, which allows leases with a lease term of 12 months or less to be accounted for similar to existing operating leases. The Company elected not to separate non-lease components from lease components and, instead, to account for each separate lease component and the non-lease components associated with it as a single lease component, recognized on the balance sheet. The Company did not elect the use-of-hindsight, which requires an entity to use hindsight in determining the lease term and in assessing impairment of right-of-use assets, or the practical expedient pertaining to land easements, which is not applicable.

The standard did not materially impact the Company’s consolidated net ~~loss, diluted shares are not considered because~~earnings and had no impact on cash flows. The effect of adopting Topic 842 on the ~~anti-dilutive effect.~~January 1, 2019 consolidated balance sheet is as follows:

In June 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-07, Compensation – Stock Compensation, ~~in the form of Accounting Standards Updates (“ASUs”)~~which expands previous guidance to include all share-based payment arrangements related to the ~~FASB's Accounting Standards Codification.~~acquisition of goods and services

from both non-employees and employees. The Company ~~considers~~adopted the ~~applicability~~standard as of January 1, 2019, and ~~impact of all ASUs. While management continues to assess~~ the ~~possible impact on the Company's consolidated financial statements of the future~~ adoption ~~of new accounting standards that are~~did not ~~yet effective, management currently believes that the following new standards may~~ have a material impact on the ~~Company's~~Company’s financial statements and ~~disclosures:~~disclosures.

~~In May 2017, the FASB issued ASU 2017-09,~~Accounting Standards Issued but Not Yet Adopted

See Note 2, ~~Compensation – Stock Compensation~~Summary of Significant Accounting Policies, ~~which amends the scope of modification accounting for share-based payment arrangements. ASU 2017-09 provides guidance on the types of changes~~ to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The standard is effective for annual periods beginning after December 15, 2017 and interim periods therein, and early adoption is permitted. The Company will adopt the standard as of January 1, 2018.

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles – 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 goodwill~~

impairment test by comparing the fair value of a reporting unit with its carrying amount. ASU 2017-04 is effective for annual periods beginning after December 15, 2019 and interim periods therein, with early adoption permitted. The Company is currently evaluating the impact of this guidance on itsCompany’s audited consolidated financial ~~statements.~~

~~In January 2017,~~statements for the ~~FASB~~year ended December 31, 2018 for a discussion of accounting standards 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 standard 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 adoption 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 GAAP applicable to revenue transactions. Existing industry guidance will be eliminated, including revenue recognition guidance specific to the gaming industry. The FASB has recently 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 applied using the full retrospective method or retrospectively with the cumulative effect initially applying the guidance recognized at the date of initial application. The Company anticipates adopting this standard effective January 1, 2018. The Company is currently in the process of its analysis and anticipates this standard will have a material effect on its consolidated financial statements. As described below, the Company expects the most significant effect will be related to the accounting for customer loyalty programs and casino promotional allowances. However, the quantitative effects of these changes havebut not yet ~~been determined and are still being analyzed. The Company is currently assessing the full effect that the adoption of this standard will have on its financial statements.~~

The customer loyalty programs affect revenues from the Company’s four core business operations: gaming, food and beverage, rooms and other operations. Currently, the Company estimates the cost of fulfilling the redemption of player rewards, after consideration of breakage, based upon the cost of historical redemptions. Upon adoption of the new guidance, player rewards will no longer be recorded at cost, and a deferred revenue model will be used to account for the classification and timing of revenue recognized as well as the classification of related expenses when player rewards are redeemed.

The Company expects that its current presentation which reflects revenues gross for complementary goods and services provided to guests, with a corresponding offsetting amount included in promotional allowances, will no longer be allowed. Instead, revenues will be allocated among its 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 its reported gaming revenues by an amount equivalent to its reported promotional allowance revenues.

adopted. No other recently issued accounting standards that are not yet effective have been identified that management believes are likely to have a material impact on the ~~Company's~~Company’s financial statements.

On ~~October 20, 2017, subsequent to quarter end,~~January 14, 2019, the Company completed the acquisition of ~~all of the outstanding equity interests of American~~Edgewater Gaming, LLC and Colorado Belle Gaming, LLC (the “Acquired Entities”) from ~~its former equity holders (the “American Acquisition”~~Marnell Gaming, LLC (“Marnell”) for ~~aggregate consideration consisting of $781.0~~$156.2 million in cash ~~(subject~~(after giving effect to ~~certain~~the post-closing ~~adjustments)~~adjustment provisions in the purchase agreement) and the issuance ~~by the Company~~ of 4,046,494 shares of its common stock to W2007/ACEP Holdings, LLC (“ACEP Holdings”), a former American equity holder. Of the cash consideration, $5.0 million is being held in escrow as security for satisfaction of the sellers’ post-closing working capital adjustment obligations in accordance with the purchase agreement governing the American Acquisition (the “Purchase Agreement”). At the closing of the American Acquisition, the Company entered into a stockholders agreement with ACEP Holdings that includes, among other things, a 90-day restriction on sales of the Company’s common stock by ACEP Holdings (subject to certain exceptions) and a standstill agreement. Also at the closing of the American Acquisition, the Company entered into a registration rights agreement with ACEP Holdings with respect to the911,002 shares of the Company’s common stock ~~that were issued at~~to certain assignees of Marnell (the “Acquisition”). The results of operations of the ~~closing.~~Acquired Entities are included in the Company’s results subsequent to the acquisition date.

~~American owns and operates four casino hotel properties in Nevada:~~In connection with the ~~Stratosphere Casino, Hotel & Tower, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder in Las Vegas, and~~Acquisition, the ~~Aquarius Casino Resort in Laughlin. As of October 20, 2017, the American casino properties offered an aggregate of 3,865 slot machines, 89 table games and 4,896 hotel rooms.~~Company borrowed $145.0 million under its revolving credit facility.

The ~~American~~ Acquisition ~~will be~~has been accounted for ~~under~~using the acquisition method of accounting in accordance with ~~ASC Topic~~Accounting Standards Codification 805, Business Combinations(“ (“ASC 805”)~~. Under~~, which, among other things, establishes that equity issued to effect the acquisition ~~method, the total estimated purchase price, or consideration transferred, is~~be measured at the ~~acquisition~~ closing ~~date.~~ date of the transaction at the then-current market price. Accordingly, the fair value of the Company's common stock issued was based on the closing price of the Company's common stock on January 14, 2019 of $18.23.

The following is a summary of the components of the purchase price paid by the Company to Marnell in the 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):

Under ASC 805, the purchase price of the acquisition ~~will be~~is allocated to the identified tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition ~~date.~~date which are determined in accordance with the applicable accounting guidance for business combinations and with the services of third-party valuation consultants. The excess of the purchase price over the fair values ~~will be~~is recorded as ~~goodwill.~~ goodwill which is expected to be deductible for tax purposes.

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. As described above, the consideration paid by the Company at the closing of the American Acquisition isgoodwill. Balances subject to ~~certain post-closing adjustments under the Purchase Agreement.~~

In connection with the closing of the American Acquisition, the Company entered into two new credit agreements with respect to a $900.0 million senior secured first lien credit facility (consisting of $800.0 million in term loansadjustment primarily include current assets, property 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. The Company 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 outstanding senior secured indebtedness), to refinance the Company’s outstanding senior secured indebtedness under its then-existing senior secured credit facility, and to pay certain transaction fees and expenses. See Note 5, ~~Long-Term Debt, for a discussion of the new credit agreements and associated refinancing.~~

~~On January 29, 2016, the Company completed the acquisition of approximately 1,100 gaming devices,~~equipment, intangible assets, liabilities, as well as ~~certain other non-gaming~~tax-related matters, including tax basis of acquired assets and the right to operate within certain locations (the “Initial Montana Acquisition”). The total consideration for the transaction was $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. See Note 9, ~~Financial Instruments and Fair Value Measurements~~liabilities.~~, for further discussion regarding the estimated fair value of the contingent consideration and the Company’s revaluation of such contingent consideration in the third quarter.~~

On April 22, 2016, the Company completed the acquisition of approximately 1,800 gaming devices, as well as amusement devices and certain other non-gaming assets and the right to operate within certain locations, from Amusement Services, LLC (the “Second Montana Acquisition”, and, together with the Initial Montana Acquisition, the “Montana Acquisitions”). The total consideration for the transaction was $25.7 million.

The ~~Company followed~~following table summarizes the acquisition method of accounting for the Montana Acquisitions per ASC 805 guidance. In accordance with ASC 805, the Company allocated the purchase price for each Montana Acquisition to the tangible and intangible assets acquired and liabilities assumed based on their fair values, which were determined primarily by management with assistance from third-party appraisals. The excesspreliminary allocation of the purchase ~~prices over those fair values was recorded as goodwill.~~

~~The allocation of the $20.1 million purchase price of the Initial Montana Acquisition was finalized in the first quarter of 2017 and as of the date of the acquisition was comprised of the following:~~price:

(In thousands)	Final Purchase Price Allocation
Cash and cash equivalents	$	1,700
Property and equivalents		2,350
Current assets			$	12,615
Property and equipment				126,198
Right-of-use assets				2,620
Intangible assets		14,400		19,234
Goodwill		1,680		24,736
Total acquired assets	$	20,130
Liabilities				(10,023	)
Lease liabilities				(2,620	)
Total assets acquired, net of liabilities assumed			$	172,760

The ~~intangible assets acquired in~~following table summarizes the ~~Initial Montana Acquisition~~preliminary amounts assigned to property and ~~the related weighted-average~~equipment and estimated useful ~~lives of definite-lived intangible assets were as follows:~~life by category:

The ~~allocation of~~following table summarizes the ~~$25.7 million purchase price of the Second Montana Acquisition was finalized in the second quarter of 2017~~preliminary values assigned to acquired intangible assets and ~~as of the date of acquisition was comprised of the following:~~estimated useful lives by category:

~~The intangible assets acquired in the Second Montana Acquisition and the related weighted-average useful lives of definite-lived intangible assets were as follows:~~

The ~~goodwill recognized in the Montana Acquisitions was primarily attributable~~following unaudited pro forma combined financial information has been prepared by management for illustrative purposes only and does not purport 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's estimation of the fair value of the assets acquired in the Montana Acquisitions as of the respective dates of the acquisitions was determined based on certain valuations and analyses.

~~The Company reports~~represent what the results of operations, ~~from each~~financial condition or other financial information of the ~~Montana Acquisitions, subsequent to their respective closing dates, within its Distributed Gaming segment. For each~~Company would have been if the Acquisition had occurred on January 1, 2018, 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 and assumptions and on the information available at the time of the ~~three months ended September 30, 2017~~preparation thereof. These preliminary estimates and ~~2016, net revenues~~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 Acquisition. The unaudited pro forma combined financial information does not reflect non-recurring charges that were incurred in connection with the Acquisition, nor any cost savings and synergies expected to result from the ~~Montana Acquisitions totaled $15.1 million. For~~Acquisition (and associated costs to achieve such savings or synergies), nor any costs associated with severance, restructuring or integration activities resulting from the 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 the Acquired Entities for the three and nine months ended September 30, ~~2017~~2018, adjusted to give effect to the Acquisition, related transactions, and ~~2016, net revenues from~~ the ~~Montana Acquisitions totaled $45.7~~adoption of ASC 606 for the Acquired Entities.

In connection with the Acquisition, the Company incurred approximately $0.3 million and ~~$32.0~~$1.6 million ~~respectively. For each~~ of acquisition costs during the three ~~months ended September 30, 2017~~ and ~~2016, there were no transaction-related costs for the Montana Acquisitions. For each of the~~ nine months ended September 30, ~~2017~~2019, respectively. For the three and ~~2016, transaction-related costs for~~nine months ended September 30, 2019, the ~~Montana Acquisitions totaled $0.2 million. All transaction-related costs for~~Acquired Entities contributed revenue of approximately $23.7 million and $70.4 million, respectively. For the ~~Montana Acquisitions were included in preopening expenses. The Company may incur additional transaction-related costs~~three and nine months ended September 30, 2019, operating expenses related to the ~~Montana Acquisitions in future periods. Pro forma information is not being presented as there is no practicable method to calculate pro forma earnings given that the Montana Acquisitions~~Acquired Entities 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.~~approximately $12.0 million and $37.0 million, respectively.

~~The following table summarizes the components of property~~Property and equipment, ~~net:~~net, consisted of the following:

(In thousands)	September 30, 2017			December 31, 2016			September 30, 2019			December 31, 2018
Land	$	12,771		$	12,470		$	125,240		$	121,081
Building and site improvements		88,685			77,515			863,827			723,354
Furniture and equipment		87,464			75,740			203,062			154,663
Construction in process		7,700			5,246			54,876			35,151
Property and equipment		196,620			170,971			1,247,005			1,034,249
Less: Accumulated depreciation		(48,572	)		(33,390	)		(208,313	)		(139,296	)
Property and equipment, net	$	148,048		$	137,581		$	1,038,692		$	894,953

Depreciation expense for property and equipment, including finance leases, was ~~$5.6~~$23.9 million and ~~$5.3~~$18.8 million for the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~$15.7~~$69.8 million and ~~$14.5~~$58.2 million for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

~~Goodwill was acquired in connection with the 2015 acquisition of Sartini Gaming, Inc. through a merger transaction (the “Merger”), as well as the Montana Acquisitions. See Note 2,~~ ~~Acquisitions, for a description of the intangible assets acquired through the Montana Acquisitions.~~

September 30, 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

12,200

—

12,200

Other

Indefinite

185

—

185

13,345

—

13,345

Amortizing intangible assets

Customer relationships

12.5 years

78,100

(11,015
)

67,085

Player relationships

9.7 years

7,300

(1,392
)

5,908

Gaming license

10.6 years

2,100

(613
)

1,487

Non-compete agreements

3.2 years

6,000

(2,110
)

3,890

Other

8.4 years

1,769

(489
)

1,280

95,269

(15,619
)

79,650

Balance, September 30, 2017

$
108,614

$
(15,619
)

$
92,995

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

Total amortization expense related to intangible assets was $1.9 million and $2.0 million for the three months ended September 30, 2017 and 2016, respectively, and $5.8 million and $5.4 million for the nine months ended September 30, 2017 and 2016, respectively.

~~As of September 30,~~In October 2017, the facilities under the Company’s credit agreement with Capital One, National Association (as administrative agent) and the lenders named therein (the “Former Credit Agreement”) consisted of $160.0 million in senior secured term loans, of which $141.0 million was outstanding at such date, and a $50.0 million revolving credit facility, with outstanding borrowings of $27.0 million at such date. The facilities were scheduled to mature on July 31, 2020. Borrowings under the Former Credit Agreement bore interest, at the Company’s option, at either (1) the highest of the federal funds rate plus 0.50%, the Eurodollar rate for a one-month interest period plus 1.00%, or the administrative agent’s prime rate as announced from time to time, or (2) the Eurodollar rate for the applicable interest period, plus in each case, an applicable margin based on the Company’s leverage ratio. For the nine months ended September 30, 2017, the weighted-average effective interest rate on the Company’s outstanding borrowings under the Former Credit Agreement was approximately 3.5%.

~~On October 20, 2017, subsequent to quarter end,~~ the Company entered into a senior secured credit ~~agreements with respect to~~facility consisting of a ~~$900.0~~ $900 million senior secured first lien credit facility (consisting of ~~$800.0~~an $800 million in term ~~loans~~loan and a ~~$100.0~~$100 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~~“Credit 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 Facility” and, together with the First Lien Facility, the “Credit Facilities”). The ~~term loans under both Credit Facilities were fully drawn at closing; the~~ revolving credit facility ~~under~~was subsequently increased from $100 million to $200 million in 2018.

As of September 30, 2019, the ~~First Lien Facility was undrawn at closing. Proceeds from the~~Company had $772 million in principal amount of outstanding term loan borrowings under its Credit Facility, no letters of credit outstanding under the Credit ~~Facilities at the closing were primarily used to fund the cash purchase price in the American Acquisition~~

~~(a portion of which was used to repay American’s outstanding senior secured indebtedness), to refinance~~Facility, and the Company’s ~~outstanding senior secured indebtedness under the Former Credit Agreement, and to pay certain transaction fees and expenses.~~

Borrowings under each of the Credit Facilities 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) or 1.00% (with respect to borrowings under the 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 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 loans and 3.00% for LIBOR rate loans. The applicable margin for borrowingsfacility was undrawn, leaving borrowing availability under the revolving credit facility ~~ranges from 1.50% to 2.00% for base~~as of September 30, 2019 of $200 million.

As of September 30, 2019, the weighted-average effective interest 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 term loans~~outstanding borrowings under the ~~Second Lien~~Credit Facility 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 the Company’s net leverage ratio, and is accrued based on the average daily unused amount of the available revolving commitment.was approximately 5.4%.

The revolving credit facility ~~under the First Lien Facility~~ matures on October 20, 2022, and the term ~~loans~~loan under the ~~First Lien~~Credit Facility ~~mature~~matures on October 20, 2024. The term ~~loans~~loan under the ~~First Lien~~Credit Facility ~~must be repaid~~is repayable in 27 quarterly installments of ~~$2.0~~$2 million each, which ~~commence~~commenced in March 2018, followed by a final installment of ~~$746.0~~$746 million at maturity.

The ~~term loans~~Company was in compliance with its financial covenants under the ~~Second~~Credit Facility as of September 30, 2019.

On April 15, 2019, the Company issued $375 million in principal amount of 7.625% Senior Notes due 2026 (“2026 Notes”) in a private placement to institutional buyers at face value. The 2026 Notes bear interest at 7.625%, payable semi-annually on April 15^th and October 15^th of each year.

In conjunction with the issuance of the 2026 Notes, the Company incurred approximately $6.7 million in debt financing costs and fees that have been deferred and are being amortized over the term of the 2026 Notes using the effective interest method.

The net proceeds of the 2026 Notes were used to (i) repay the Company’s $200 million second lien term loan (the “Second Lien Term Loan”), (ii) repay outstanding borrowings under the revolving credit facility, (iii) repay $18 million of the outstanding term loan indebtedness under the Credit Facility, ~~must be repaid in full at maturity on October 20, 2025.~~

~~Borrowings under~~and (iv) pay accrued interest, fees and expenses related to each of the ~~Credit Facilities are guaranteed by~~foregoing.

The 2026 Notes may be redeemed, in whole or in part, at any time during the 12 months beginning on April 15, 2022 at a redemption price of 103.813%, during the 12 months beginning on April 15, 2023 at a redemption price of 101.906%, and at any time on or after April 15, 2024 at a redemption price of 100%, in each case plus accrued and unpaid interest, if any, thereon to the redemption date. Prior to April 15, 2022, the Company may redeem up to 40% of the ~~Company’s existing and future wholly owned domestic subsidiaries (other than certain insignificant or unrestricted subsidiaries), and are secured by substantially all~~2026 Notes at a redemption price of 107.625% of the ~~present~~principal amount thereof, plus accrued and ~~future assets~~unpaid interest, if any, thereon to the redemption date, from the net cash proceeds of specified equity offerings. Prior to April 15, 2022, the Company may also redeem the 2026 Notes, in whole or in part, at a redemption price equal to 100% of the ~~Company~~principal amount thereof, plus accrued and unpaid interest and an Applicable Premium (as defined in the ~~guarantors (subject~~indenture governing the 2026 Notes (the “Indenture”)), if any, thereon to ~~certain exceptions).~~ the redemption date.

Under the ~~Credit Facilities,~~Indenture, the Company and its restricted subsidiaries are subject to certain limitations, including limitations on their respective ability to: incur additional ~~debt,~~debt. grant liens, sell assets, make certain investments, pay dividends and make certain other restricted payments. In addition, in the Company will be required to pay down the term loans under the Credit Facilities 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 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 occurrenceevent of a change of control ~~which includes~~(as defined in the ~~acquisition~~Indenture), each holder will have the right to require the Company to repurchase all or any part of ~~beneficial ownership~~such holder’s 2026 Notes at a purchase price in cash equal to 101% of ~~50% or more~~the aggregate principal amount of the 2026 Notes repurchased, plus accrued and unpaid interest, if any, to the date of purchase.

In April 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 ~~capital stock (other than by certain permitted holders, which include, among others, Blake L. Sartini, Lyle A. Berman, Neil I. Sell~~Second Lien Term Loan and ~~certain affiliated entities). If~~$18 million prepayment of the ~~Company defaults~~term loan under ~~the~~its 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 the Company’s assets to satisfy the obligations thereunder.Facility.

Note 6 – ~~Promotional Allowances~~Stockholders’ Equity and Stock Incentive Plans

On March 12, 2019, the Company’s Board of Directors authorized the repurchase of up to $25.0 million additional shares of common stock, which replaced the prior share repurchase program authorized in November 2018. 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 legal requirements, including compliance with the Company’s finance agreements. There is no minimum number of shares that the Company is required to repurchase and the repurchase program may be suspended or discontinued at any time without prior notice. As of September 30, 2019, the Company has not repurchased any shares under the March 12, 2019 authorization.

The retail value of food and beverages, rooms and other services furnished to customers without charge, including coupons for discounts when redeemed, is included in gross revenues and then deducted as promotional allowances. The estimated retail value offollowing table summarizes the ~~promotional allowances was as follows:~~Company’s stock option activity:

Share-based compensation expense related to stock options was $0.8 million and $1.1 million for the three months ended September 30, 2019 and 2018, respectively, and $4.2 million and $4.0 million for the nine months ended September 30, 2019 and

2018, respectively. The Company’s unrecognized share-based compensation expense related to stock options was approximately $2.8 million as of September 30, 2019, which is expected to be recognized over a weighted-average period of 1.2 years.

The ~~estimated cost of providing these promotional allowances, which is primarily included in gaming expenses, was as follows:~~

~~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~~following table summarizes the Company’s ~~shareholders at the Company’s 2016 annual meeting. The 2015 Plan authorizes the issuance of stock options, restricted stock,~~activity related to time-based restricted stock units (“RSUs”)~~, dividend equivalents,~~ and performance-based restricted stock ~~payment awards, stock appreciation rights, performance bonus awards and other incentive awards. The 2015 Plan authorizes~~units (“PSUs”):

Share-based compensation expense related to RSUs was $1.1 million for both 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.

The maximum number of shares of the Company’s common stock for which grants may be made under the 2015 Plan is 2.25 million shares, plus an annual increase on each January 1 during the ten-year term of the 2015 Plan equal to the lesser of 1.8 million shares, 4% of the total shares of the Company’s common stock outstanding (on an as-converted basis) and such smaller amount as may be determined by the Board in its sole discretion. 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. The annual increase on January 1, 2017 was 889,259 shares.

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. There were 3,583,282 stock options outstanding under the 2015 Plan as ofthree months ended September 30, ~~2017, of which 1,223,611 had vested.~~ 2019 and 2018, and $3.1 million and $2.3 million for the nine months ended September 30, 2019 and 2018, respectively. Share-based compensation expense related to PSUs was $0.7 million and $0.3 million for the three months ended September 30, 2019 and 2018, respectively, and $1.4 million and $0.8 million for the nine months ended September 30, 2019 and 2018, respectively.

As of September 30, ~~2017,~~2019, there was $7.6 million and $4.1 million of unamortized share-based compensation expense related to RSUs and PSUs, respectively, which is expected to be recognized over a weighted-average period of 2.6 years and 2.2 years for RSUs and PSUs, respectively.

As of September 30, 2019, a total of ~~289,390~~1,267,201 shares of the Company’s common stock remained available for grants of awards under the Golden Entertainment, Inc. 2015 ~~Plan.~~

~~In June 2007, the Company’s shareholders approved the 2007 Lakes Stock Option and Compensation~~Incentive Award Plan (the ~~“2007~~“2015 Plan”), which ~~is authorized to grant a total~~includes the annual increase in the number 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. There were 645,675 stock options outstanding under the 2007 Plan as of September 30, 2017, 388,040 of which had vested. As of September 30, 2017, no shares of the Company’s common stock remained available for ~~grants~~grant on January 1, 2019 of ~~awards under the 2007 Plan.~~

The Company uses the Black-Scholes option pricing model to estimate the fair value and compensation cost associated with employee incentive stock options, which requires considerable judgment, including estimating stock price volatility, expected option life and forfeiture rates. The Company develops estimates based on historical data and market information, which can change significantly over time. There were no options granted in the three months ended September 30, 2017 and 977,570 options granted in the nine months ended September 30, 2017, respectively. The weighted-average grant date fair value in the nine months ended September 30, 2017 was $6.36 per share. There were 905,000 and 1,128,070 stock options granted in the three and nine months ended September 30, 2016, respectively, with weighted-average grant date fair values of $4.80 and $4.83 per share, respectively.

Share-based compensation expense related to stock options was $1.4 million and $1.7 million for the three months ended September 30, 2017 and 2016, respectively, and $3.6 million and $2.5 million for the nine months ended September 30, 2017 and 2016, respectively.

~~The following table summarizes the Company’s stock option activity during the nine months ended September 30, 2017 and 2016:~~

Number of Common Shares

Weighted-

Options

Available

Average

Outstanding

Exercisable

for Grant

Exercise Price

2017

Balance at December 31, 2016

3,402,481

411,029

274,596

$
9.02

Authorized

—

889,259

—

Granted

977,570

(977,570
)

14.25

Exercised

(22,989
)

—

7.36

Cancelled

(128,105
)

103,105

11.36

Balance at September 30, 2017

4,228,957

388,040

289,390

$
10.17

2016

Balance at December 31, 2015

2,419,529

724,529

837,635

$
8.16

Authorized

—

874,709

—

Granted

1,128,070

(1,128,070
)

11.89

Options Subject to Anti-Dilutive Adjustments

(2,337,643
)

—

8.75

Options Subject to Anti-Dilutive Adjustments

2,337,643

—

7.04

Exercised

(310,656
)

—

5.73

Cancelled

(10,000
)

10,000

9.33

Balance at September 30, 2016

3,226,943

413,873

594,274

$
8.57

As of September 30, 2017, the outstanding stock options had a weighted-average remaining contractual life of 7.6 years, weighted-average exercise price of $10.17 per share and an aggregate intrinsic value of $60.1 million. As of September 30, 2017, the outstanding exercisable stock options had a weighted-average remaining contractual life of 1.0 years, weighted-average exercise price of $4.33 per share and an aggregate intrinsic value of $7.8 million.

There were 3,000 options exercised during the three months ended September 30, 2017. During the three months ended September 30, 2016, there were 15,700 options exercised. There were 22,989 and 310,656 options exercised during the nine months ended September 30, 2017 and 2016, respectively. The total intrinsic value of options exercised was $0.1 million during each of the three months ended September 30, 2017 and 2016, respectively. The total intrinsic value of options exercised was $0.1 million and $1.7 million for the nine months ended September 30, 2017 and 2016, respectively. The Company’s unrecognized share-based compensation expense related to stock options was approximately $12.5 million as of September 30, 2017, which is expected to be recognized over a weighted-average period of 2.7 years.

~~The Company issues new shares of common stock upon the exercise of stock options.~~

There were 70,648 RSUs outstanding under the 2015 Plan as of September 30, 2017, none of which had vested. Share-based compensation expense related to RSUs was $0.2 million and $1.5 million for the three and nine months ended September 30, 2017, respectively. There was no RSU activity during the nine months ended September 30, 2016. As of September 30, 2017, there was approximately $0.1 million of total unrecognized share-based compensation expense related to unvested RSUs, all of which is expected to be recognized in 2017.1,119,924 shares.

The Company’s effective tax rate was ~~(231.33)%~~4.5% and ~~10.7%~~(2.5)% for the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, respectively. For the nine months ended September 30, 2017 and 2016, the effective tax rate differed from the federal tax rate of 35% due to the partial release of the valuation allowance for deferred tax assets and changes in the valuation allowance for deferred taxes, respectively.

Income tax benefit ~~was $10.9~~of $1.8 million for the nine months ended September 30, ~~2017, which~~2019 was ~~attributed~~ primarily due to ~~a partial release~~the change in valuation allowance against the Company’s deferred tax assets during the first nine months of ~~valuation allowance.~~2019. Income tax ~~expense~~benefit was ~~$0.8~~$0.1 million for the nine months ended September 30, ~~2016, which~~2018 was ~~attributed~~ primarily due to excess tax ~~amortization~~benefits from stock options exercised during the third quarter of ~~indefinite-lived intangibles and measurement period adjustments to goodwill.~~2018.

Deferred tax assets are evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies. The Company's financial results include the reversal of a portion of the valuation allowance recorded against the deferred tax assets of the Company. This reversal resulted in the recognition of a $12.6 million income tax benefit for the nine months ended September 30, 2017. The Company ~~has performed a continuing evaluation of~~continues to evaluate its deferred tax asset valuation allowance on a

quarterly basis. The Company concluded that, effective December 31, 2016, it is more likely than not that the Company will 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 resulting partial reversal of the deferred tax asset valuation allowance, is based upon consideration of several factors, including the Company's completion of eight consecutive quarters of profitability, its demonstrated ability in such quarters to meet or exceed budgets, and its forecast of future profitability.

The Company's income taxes receivable was $0.2 million as of September 30, 2017, and $2.3 million as of December 31, 2016. The decrease in income taxes receivable was primarily due to the collection of a $2.2 million tax refund which was released in connection with the settlement of an IRS audit related to 2012 taxable losses carried back to a prior year.

As of September 30, 2019, the Company’s 2017 the Company had approximately $61.5 million of net operating loss carryforwards (“NOLs”) which begin to expire in 2032. These NOLs 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 at the closing of the transaction, which resulted in an “ownership change” under Section 382 that will generally limit the amount of NOLs the Company can utilize annually. Following an “ownership change” under Section 382, the amount of NOLs 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~~under audit by the long-term exempt interest rate in effect for the month of the ownership change. The Company estimates that the amount of NOLs that it will be able to utilize following the closing of the American Acquisition is limited to approximately $10.8 million annually.IRS.

To help preserve the Company’s ability to utilize its NOLs, the Company previously entered into an Amended and Restated Rights Agreement with Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association, as rights agent (the “Amended and Restated Rights Agreement”) to deter acquisitions of shares of the Company’s common stock that would result in a shareholder owning 4.99% or more of the Company’s common stock. In connection with its approval of the American Acquisition, the Company’s Board of Directors granted ACEP Holdings an exemption with respect to its acquisition of shares of common stock so that ACEP Holdings was an “exempt person” under the Amended and Restated Rights Agreement. On October 20, 2017, in connection with the completion of the American Acquisition, the Company entered into the First Amendment to the Amended and Restated Rights Agreement, which changed the final expiration date of the Amended and Restated Rights Agreement from July 31, 2018 to October 20, 2017 and caused the Amended and Restated Rights Agreement to expire on October 20, 2017.

Also, the Company previously entered into an NOL Preservation Agreement with The Blake L. Sartini and Delise F. Sartini Family Trust (the “Sartini Trust”), Lyle A. Berman (a director and shareholder of the Company), as well as certain other shareholders of the Company affiliated with Mr. Berman or that are trusts for which Neil Sell, a director of the Company, serves as trustee. The NOL Preservation Agreement was intended to help minimize the risk of an “ownership change” under Section 382. On October 20, 2017, the Company, the Sartini Trust, Lyle A. Berman and the other investors that were parties to the NOL Preservation Agreement entered into an agreement terminating the NOL Preservation Agreement effective as of the closing of the American Acquisition.

~~The authoritative~~Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value ~~measurements specifies a hierarchy of~~measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, ~~based on whether~~such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to ~~those~~ valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's market assumptions. These inputs create the followingused to measure fair value ~~hierarchy:~~into three broad levels. The following is a brief description of those three levels:

Financial assets and liabilities are classified ~~in their entirety~~ based on the lowest level of input that is significant to the fair value measurement. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels.

~~For the Company’s~~The carrying values of cash and cash equivalents, accounts receivable and accounts payable ~~short-term borrowings and accrued and other current liabilities, the carrying amounts~~ approximate fair value because of the short duration of these financial instruments. ~~As of September 30, 2017 and December 31, 2016,~~

The following table summarizes the fair value measurement information about the Company’s long-term debt:

The estimated fair value of the Company’s ~~long-term~~term loan debt ~~approximated~~is based on a relative value analysis performed as of September 30, 2019 and December 31, 2018. The finance lease liabilities and note payable debt are fixed-rate debt, are not traded and do not have observable market inputs, therefore, the fair value is estimated to be equal to the carrying value.

As of September 30, 2019, the Company had an interest rate cap agreement that was outstanding with a notional amount of $650 million, which expires on December 31, 2020. Using Level 2 inputs, the Company adjusts the carrying value of the interest rate cap agreement to estimated fair value quarterly based upon observable market-based inputs that reflect the present values of the difference between estimated future fixed rate payments and future variable receipts. The fair value of the Company’s ~~expected borrowing~~interest rate cap agreement was $5.0 million as of December 31, 2018 and had no value as of September 30, 2019. As the Company elected to not apply hedge accounting, the change in fair value of its interest rate cap agreement was recorded in the consolidated statement of operations.

The Company has operating and finance leases for ~~debt~~offices, taverns, land, vehicles, slot machines, and equipment. In addition, slot placement contracts in the form of space lease agreements at chain stores are 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 slots at business locations, which are recorded in gaming expenses. The leases, excluding land, have remaining lease terms of 1 year to 28 years, some of which include options to extend the leases for an additional 5 to 15 years. Some equipment leases and space lease agreements include options to terminate the lease with ~~similar remaining maturities~~60 days’ to 1 year’s notice. The Company leases slot machines from gaming equipment manufacturers under short-term agreements. Most of the slot machine leases have variable rent structures, with amounts determined based on the performance of those machines. Certain others are short-term in nature, with fixed payment amounts. The Company has an operating ground lease with the Maryland Department of Natural Resources for approximately 270 acres in the Rocky Gap State Park on which Rocky Gap is situated. The Company leases approximately 20 acres of land in Laughlin, Nevada for the Laughlin Event Center and ~~comparable risk.~~four parcels of land in Pahrump, Nevada on which the Gold Town Casino is located.

The Company leases approximately 4.5 acres of undeveloped land in Carson City. Upon the adoption of Topic 842, the Company wrote off the associated ROU asset for this land lease of $9 million to its beginning balance of retained earnings as of January 1, 2019. The Company is also lessee for nine taverns and locations subject to space lease agreements that it does not plan to develop, operate, or sub-lease. The Company wrote off the associated ROU asset for these ten leases of $3 million to its beginning balance of retained earnings as of January 1, 2019.

The Company leases its office headquarters building from a related party. See Note 12, Related Party Transactions, for more detail.

~~In connection with~~The current and long-term obligations under finance leases are included in “current portion of long-term debt, net and finance leases” and “long-term debt, net and finance leases”, respectively. The majority of the ~~Montana Acquisitions,~~finance leases relate to vehicles used within the Company’s Distributed Gaming business and equipment for the Company’s casinos.

As of September 30, 2019, the Company ~~recognized the acquired assets at fair value.~~ does not have any leases that have not yet commenced but that create significant rights and obligations.

For the Initial Montana Acquisition, these amounts were finalized during the first quarter of 2017. The Second Montana Acquisition amounts were finalized during the second quarter of 2017. All amounts are recognized as Level 3 measurements due to the subjective nature of the unobservable inputs used to determine the fair values. Additionally, 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 inthree months ended September 2017, subject to certain potential adjustments based upon the availability of certain gaming machines and, if applicable, the performance of replacement games. In the third quarter, the Company revalued the estimated fair value of the contingent consideration and recognized a gain on revaluation of contingent consideration of $1.7 million on the Company’s consolidated statement of operations. See Note 2, ~~Acquisitions, for a discussion of the Montana Acquisitions.~~

~~Balances Measured at Fair Value~~30, 2018, operating lease rental expense, calculated on a ~~Non-Recurring Basis~~

The identified intangible assets acquired in connection with the Initial Montana Acquisition and the Second Montana Acquisition have been valued using unobservable (Level 3) inputs at a fair value of $14.4straight-line basis, was $9.6 million, $0.4 million and ~~$11.4~~$3.8 million ~~respectively (see Note 2,~~ ~~Acquisitions~~).

for space lease agreements, related party leases and other operating leases, respectively. For the nine months ended September 30, 2018, operating lease rental expense, calculated on a straight-line basis, was $29.0 million, $1.2 million, and $11.2 million for space lease agreements, related party leases and other operating leases, respectively. The Company ~~owns various parcels~~recorded rental revenue of ~~developed~~$1.9 million and ~~undeveloped land relating to its casinos in Pahrump, Nevada. The Company performs an impairment analysis on~~$5.5 million for the ~~land it owns at least quarterly~~three and ~~determined that no impairment had occurred as of~~nine months ended September 30, ~~2017 and December 31, 2016.~~2018, respectively.

The 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 current branded tavern location leases 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 locations and its office headquarters building. See Note 12, ~~Related Party Transactions~~, for more detail. Gaming device placement contracts in the form of space lease agreements are also accounted for as operating leases. Under space lease agreements, the Company pays fixed monthly rental fees for the right to install, maintain and operate its gaming devices at business locations, which are recorded in gaming expenses.

~~Operating lease rental expense, which is calculated on a straight-line basis, net of surcharge revenue, associated with all operating leases was as follows:~~

~~As of September 30, 2017, future minimum operating lease payments, excluding contingent rents, were as follows:~~

The current and long-term obligations under capital leases are included in “Current portion of long-term debt, net” and “Long-term debt, net,” respectively. The majority of the capital leases relate to vehicles with minimum lease payment terms of three to four years. During the first quarter of 2017, the Company entered into a capital lease agreement with a related party for one of its tavern locations. During the third quarter of 2017, the Company assigned this capital lease agreement to a non-related third party. See Note 12, ~~Related Party Transactions, for more detail.~~

~~As of September 30, 2017, future minimum capital lease payments, excluding contingent rents, were as follows:~~

~~The~~In addition to the space lease agreements described above in Note 9, Leases, the Company also enters into ~~gaming device~~slot placement contracts in the form of participation and revenue share agreements. Under revenue share agreements, the Company pays the business location a percentage of the gaming revenue generated from the Company’s gaming devices placed at the location, rather than a fixed monthly rental fee. 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. Under revenue share agreements, the Company pays the business location a percentage of the gaming ~~devices.~~revenue generated from the Company’s slots placed

at the location, rather than a fixed monthly rental fee. During the three and nine months ended September 30, ~~2017,~~2019, the ~~total~~aggregate contingent payments recognized by the Company ~~(recorded in~~as gaming ~~expenses)~~expenses under revenue share and participation agreements were ~~$35.4~~$39.3 million and ~~$107.0~~$117.3 million, respectively, including ~~$0.3~~$0.2 million and ~~$0.8~~$0.7 million, respectively, under revenue share and participation agreements with related parties, as described in Note 12, Related Party ~~Transactions~~Transactions.. During the three and nine months ended September 30, ~~2016,~~2018, the ~~total~~aggregate contingent payments recognized by the Company ~~(recorded in~~as gaming ~~expenses)~~expenses under revenue share and participation agreements were ~~$33.2~~$35.5 million and ~~$94.1~~$110.1 million, respectively, including ~~$0.6~~$0.2 million and ~~$1.6~~$0.7 million, respectively, under revenue share and participation agreements with related ~~parties~~.parties.

The Company also enters into amusement device and ATM placement contracts in the form of ~~revenue share~~participation 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. During the three months ended September 30, ~~2017~~2019 and ~~2016,~~2018, the total contingent payments recognized by the Company ~~(recorded in~~as other operating ~~expenses)~~expenses for amusement devices and ATMs under such agreements were ~~$0.2~~$0.4 million and $0.3 million, respectively. During the nine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, the total contingent payments recognized by the Company ~~(recorded in~~as other operating ~~expenses)~~expenses for amusement devices and ATMs under such agreements were ~~$1.0 million and $0.7 million, respectively.~~both $1.1 million.

The Company has entered into at-will employment agreements with each 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 executives are also eligible to participate in all health benefits, insurance programs, pension and retirement plans and other employee benefit and compensation arrangements. Each executive 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 million for Mr. Sartini, $1.9 million for Stephen A. Arcana, $1.9 million for Charles H. Protell, $1.6 million for Sean T. Higgins, $0.7 million for Blake L. Sartini II, and $0.4 million for Gary A. Vecchiarelli (assuming each officer’s respective annual salary and health benefit costs as of September 30, 2017 are the amounts in effect at the time of termination and excluding potential expense related to acceleration of stock options).

From time to time, the Company is involved in a variety of lawsuits, claims, investigations and other legal proceedings arising in the ordinary course of business, including proceedings concerning labor and employment matters, personal injury claims, breach of contract claims, commercial disputes, business practices, intellectual property, tax and other matters for which the Company ~~has recorded $1.5 million for claims as of the date of this filing.~~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 ~~will~~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.

In ~~February and April~~ 2017, several former employees filed two separate purported class action lawsuits against the Company in the District Court of Clark County, Nevada, ~~and~~ on behalf of similarly situated individuals employed by the Company in the State of Nevada. The lawsuits ~~allege~~alleged that the Company 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,~~court approved the settlement of one case in February 2019 and the second case in July 2019.

In August 2018, prior guests of The Strat filed a purported class action complaint against the Company in the District Court, Clark County, 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 alleged that the Tax was charged in violation of the federal Internet Tax Freedom Act, which imposed a national moratorium on the taxation of Internet access by states and their political subdivisions, and sought, on behalf of the ~~plaintiffs~~plaintiff and ~~members of~~ the putative class, ~~an unspecified~~damages equal to the amount of ~~damages (including punitive damages),~~the Tax collected on the Internet access component of the resort fee, injunctive ~~and equitable~~ relief, ~~and an award of attorneys’~~disgorgement, interest, fees ~~interest~~ and costs. All defendants to this matter, including Golden Entertainment, Inc., filed a joint motion to dismiss this matter for lack of merit. The District Court granted this joint motion to dismiss in February 2019. The plaintiffs appealed the District Court decision in April 2019 to the Supreme Court of Nevada. Briefs in this matter were filed with the Federal Appeals Court in October 2019.

While legal proceedings are inherently unpredictable and no assurance can be given as to the ultimate outcome of ~~these~~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 ~~the Company’s~~its financial position, results of operations or cash flows.

The Company conducts its business through two reportable operating segments: Casinos and Distributed ~~Gaming~~Gaming. The Company’s Casinos segment involves the ownership and ~~Casinos.~~operation of resort casino properties in Nevada and Maryland. The Company’s Distributed Gaming segment involves the installation, maintenance and operation of ~~gaming~~slots and amusement devices in ~~certain strategic, high-traffic,~~ non-casino locations ~~(such~~such as ~~grocery stores, convenience stores,~~ restaurants, bars, taverns, ~~saloons~~convenience stores, liquor stores and ~~liquor stores)~~grocery stores in Nevada and Montana, and the operation of ~~traditional,~~ branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area. The Company’s Casinos segment includes results of operations and assets related to Rocky Gap in Flintstone, Maryland and its three casino properties in Pahrump, Nevada for the periods cover by this report. The Corporate and Other segment includes the Company’s cash and cash equivalents, miscellaneous receivables and corporate overhead. Costs recorded in the Corporate and Other segment have not been allocated to the Company’s reportable operating segments because these costs are not easily allocable and to do so would not be practical.

~~Results of Operations - Segment Net Income (Loss), Net Revenues and Adjusted EBITDA~~

The Company ~~evaluated its segments’~~evaluates each segment’s profitability based upon such segment’s Adjusted EBITDA, which represents each segment’s earnings before interest ~~expense~~ and other non-operating income (expense), income taxes, depreciation and amortization, preopening expense, acquisition expenses, ~~acquisition and merger~~share-based compensation expenses, executive severance, rebranding, class action litigation ~~expense, share-based compensation expense, executive severance~~expenses, gain/loss

on disposal of property and ~~sign-on bonuses,~~equipment, gain on ~~revaluation~~change in fair value of ~~contingent consideration, impairments~~derivative and other ~~gains and~~ losses, ~~as applicable.~~calculated before corporate overhead (which is not allocated to each segment).

The following tables set forth, for the periods indicated, certain operating data for the Company’s segments, and reconciles ~~Adjusted EBITDA to~~ net income (loss): to Adjusted EBITDA:

Three Months Ended September 30, 2017

(In thousands)

Distributed
Gaming

Casinos

Corporate
and Other

Consolidated

Net revenues

$
80,746

$
27,484

$
92

$
108,322

Adjusted EBITDA

11,169

8,928

(5,024
)

15,073

Acquisition expenses

—

—

(2,975
)

(2,975
)
Share-based compensation

—

—

(1,603
)

(1,603
)
Loss on disposal of property and equipment

(272
)

(35
)

(1
)

(308
)
Gain on revaluation of contingent consideration

1,719

—

—

1,719

Preopening expenses

(121
)

—

(161
)

(282
)
Class action litigation expenses

—

—

(1,530
)

(1,530
)
Sign-on bonuses

—

—

(166
)

(166
)
Depreciation and amortization

(4,937
)

(2,202
)

(400
)

(7,539
)
Income (loss) from operations

7,558

6,691

(11,860
)

2,389

Non-operating income (expense)

Interest expense, net

(41
)

(5
)

(1,839
)

(1,885
)
Total non-operating expense, net

(41
)

(5
)

(1,839
)

(1,885
)
Income (loss) before income tax benefit

7,517

6,686

(13,699
)

504

Income tax benefit

—

—

8,051

8,051

Net income (loss)

$
7,517

$
6,686

$
(5,648
)

$
8,555

	Three Months Ended September 30, 2019
(In thousands)	Casinos			Distributed Gaming			Corporate and Other			Consolidated
Revenues
Gaming	$	69,953		$	72,615		$	—		$	142,568
Food and beverage		37,836			13,273			—			51,109
Rooms		35,347			—			—			35,347
Other		11,977			2,110			203			14,290
Total revenues	$	155,113		$	87,998		$	203		$	243,314

Net income (loss)	$	17,858		$	5,786		$	(33,091	)	$	(9,447	)
Depreciation and amortization		23,500			5,616			495			29,611
Preopening and related expenses⁽¹⁾		308			189			59			556
Acquisition and severance expenses		137			—			291			428
Asset disposal and other writedowns		(4	)		(223	)		(6	)		(233	)
Share-based compensation		—			—			2,583			2,583
Other, net		218			—			25			243
Interest expense, net		200			18			18,558			18,776
Change in fair value of derivative		—			—			352			352
Income tax provision		—			—			200			200
Adjusted EBITDA	$	42,217		$	11,386		$	(10,534	)	$	43,069

	Three Months Ended September 30, 2018
(In thousands)	Casinos		Distributed Gaming		Corporate and Other			Consolidated
Revenues
Gaming	$	60,440	$	67,324	$	—		$	127,764
Food and beverage		29,666		12,333		—			41,999
Rooms		28,227		—		—			28,227
Other		10,504		1,531		312			12,347
Total revenues	$	128,837	$	81,188	$	312		$	210,337

Net income (loss)	$	19,113	$	5,014	$	(27,251	)	$	(3,124	)
Depreciation and amortization		17,667		5,292		371			23,330
Preopening expenses⁽¹⁾		—		73		(52	)		21
Acquisition and severance expenses		54		1		1,188			1,243
Asset disposal and other writedowns		770		4		—			774
Share-based compensation		37		3		2,743			2,783
Other, net		—		—		269			269
Interest expense, net		25		21		16,245			16,291
Change in fair value of derivative		—		—		(1,222	)		(1,222	)
Income tax benefit		—		—		(2,222	)		(2,222	)
Adjusted EBITDA	$	37,666	$	10,408	$	(9,931	)	$	38,143

Three Months Ended September 30, 2016

(In thousands)

Distributed
Gaming

Casinos

Corporate
and Other

Consolidated

Net revenues

$
78,253

$
25,909

$
64

$
104,226

Adjusted EBITDA

10,483

6,511

(4,439
)

12,555

Merger expenses

—

—

(139
)

(139
)
Share-based compensation

—

—

(1,654
)

(1,654
)
Gain on disposal of property and equipment

14

—

330

344

Preopening expenses

(666
)

—

(135
)

(801
)
Depreciation and amortization

(4,871
)

(2,034
)

(318
)

(7,223
)
Income (loss) from operations

4,960

4,477

(6,355
)

3,082

Non-operating income (expense)

Interest expense, net

(43
)

(3
)

(1,643
)

(1,689
)
Total non-operating expense, net

(43
)

(3
)

(1,643
)

(1,689
)
Income (loss) before income tax provision

4,917

4,474

(7,998
)

1,393

Income tax provision

(60
)

—

(31
)

(91
)
Net income (loss)

$
4,857

$
4,474

$
(8,029
)

$
1,302

	Nine Months Ended September 30, 2019
(In thousands)	Casinos		Distributed Gaming			Corporate and Other			Consolidated
Revenues
Gaming	$	213,075	$	219,531		$	—		$	432,606
Food and beverage		113,327		39,644			—			152,971
Rooms		102,148		—			—			102,148
Other		36,653		6,333			565			43,551
Total revenues	$	465,203	$	265,508		$	565		$	731,276

Net income (loss)	$	63,018	$	20,739		$	(115,630	)	$	(31,873	)
Depreciation and amortization		69,195		16,514			1,143			86,852
Preopening and related expenses⁽¹⁾		2,662		1,415			208			4,285
Acquisition and severance expenses		524		35			2,536			3,095
Asset disposal and other writedowns		763		(158	)		384			989
Share-based compensation		11		5			8,885			8,901
Other, net		310		—			1,284			1,594
Interest expense, net		316		57			55,673			56,046
Loss on extinguishment and modification of debt		—		—			9,150			9,150
Change in fair value of derivative		—		—			4,089			4,089
Income tax benefit		—		—			(1,795	)		(1,795	)
Adjusted EBITDA	$	136,799	$	38,607		$	(34,073	)	$	141,333

Nine Months Ended September 30, 2017

(In thousands)

Distributed
Gaming

Casinos

Corporate
and Other

Consolidated

Net revenues

$
247,192

$
78,002

$
267

$
325,461

Adjusted EBITDA

37,753

22,164

(16,272
)

43,645

Acquisition expenses

—

—

(5,041
)

(5,041
)
Share-based compensation

—

—

(5,352
)

(5,352
)
Loss on disposal of property and equipment

(272
)

(35
)

(1
)

(308
)
Gain on revaluation of contingent consideration

1,719

—

—

1,719

Preopening expenses

(730
)

—

(398
)

(1,128
)
Class action litigation expenses

—

—

(1,585
)

(1,585
)
Sign-on bonuses

—

—

(166
)

(166
)
Depreciation and amortization

(14,513
)

(5,798
)

(1,188
)

(21,499
)
Income (loss) from operations

23,957

16,331

(30,003
)

10,285

Non-operating income (expense)

Interest expense, net

(361
)

34

(5,241
)

(5,568
)
Total non-operating income (expense), net

(361
)

34

(5,241
)

(5,568
)
Income (loss) before income tax benefit

23,596

16,365

(35,244
)

4,717

Income tax benefit

—

—

10,893

10,893

Net income (loss)

$
23,596

$
16,365

$
(24,351
)

$
15,610

	Nine Months Ended September 30, 2018
(In thousands)	Casinos		Distributed Gaming		Corporate and Other			Consolidated
Revenues
Gaming	$	186,828	$	207,345	$	—		$	394,173
Food and beverage		90,405		37,619		—			128,024
Rooms		82,014		—		—			82,014
Other		31,003		5,782		673			37,458
Total revenues	$	390,250	$	250,746	$	673		$	641,669

Net income (loss)	$	67,190	$	20,014	$	(82,804	)	$	4,400
Depreciation and amortization		54,714		15,419		1,288			71,421
Preopening expenses⁽¹⁾		—		309		549			858
Acquisition and severance expenses		273		38		2,796			3,107
Asset disposal and other writedowns		1,050		19		—			1,069
Share-based compensation		37		3		7,345			7,385
Other, net		160		362		472			994
Interest expense, net		74		93		46,933			47,100
Change in fair value of derivative		—		—		(5,895	)		(5,895	)
Income tax benefit		—		—		(106	)		(106	)
Adjusted EBITDA	$	123,498	$	36,257	$	(29,422	)	$	130,333

Nine Months Ended September 30, 2016

(In thousands)

Distributed
Gaming

Casinos

Corporate
and Other

Consolidated

Net revenues

$
224,602

$
73,031

$
185

$
297,818

Adjusted EBITDA

32,065

18,118

(13,779
)

36,404

Merger expenses

—

—

(614
)

(614
)
Share-based compensation

—

—

(2,509
)

(2,509
)
Gain on disposal of property and equipment

14

—

330

344

Preopening expenses

(1,655
)

—

(238
)

(1,893
)
Depreciation and amortization

(13,166
)

(5,720
)

(976
)

(19,862
)
Income (loss) from operations

17,258

12,398

(17,786
)

11,870

Non-operating income (expense)

Interest expense, net

(118
)

(4
)

(4,664
)

(4,786
)
Other, net

—

—

18

18

Total non-operating expense, net

(118
)

(4
)

(4,646
)

(4,768
)
Income (loss) before income tax provision

17,140

12,394

(22,432
)

7,102

Income tax provision

(60
)

—

(701
)

(761
)
Net income (loss)

$
17,080

$
12,394

$
(23,133
)

$
6,341

The ~~Company's~~Company’s assets by segment consisted of the following amounts:

As of September 30, ~~2017,~~2019, the Company leased its office headquarters building ~~and two tavern locations~~ 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, and leased one tavern location, from companies 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. We had two related party tavern locations, of which one was sold in July of the third quarter to a non-related third party. The lease for the Company’s office headquarters building expires on July 31, 2025.Arcana. The rent expense for the office headquarters building was $0.3 million ~~during~~for each of the three months ended September 30, ~~2017~~2019 and ~~2016. The rent expense~~2018, and $1.0 million for ~~the office headquarters building was $0.9 million and $0.8 million during~~each of the nine months ended September 30, ~~2017~~2019 and ~~2016, respectively.~~2018. There ~~was~~were no amounts owed to the Company, and no amount ~~owed~~was due and payable by the Company, ~~with respect to such~~under this lease as of September 30, ~~2017. The leases for the tavern locations have remaining terms of up to 10 years. The rent expense for the tavern locations was $0.2 million~~2019 and $0.3 million during the three months ended September 30, 2017 and 2016, respectively, and $0.7 million and $1.0 million during the nine months ended September 30, 2017 and 2016, respectively. There was no amount owed by the Company with respect to such leases as of September 30, 2017.December 31, 2018. Additionally, a portion of the office headquarters building was sublet to a company owned or controlled by Mr. ~~Sartini through February 28, 2017.~~Sartini. There was ~~zero and~~ less than $0.1 million of rental income under such sublease for each of the three ~~months ended September 30, 2017~~ and ~~2016, respectively. Rental income for the sublet portion of the office headquarters building during each of the~~ nine months ended September 30, ~~2017~~2019 and ~~2016~~2018. No amount was ~~less than $0.1 million.~~owed to the Company under such sublease as of September 30, 2019 and December 31, 2018. Mr. Sartini serves as the Chairman of the Board ~~President~~ and Chief Executive Officer of the Company and is co-trustee of ~~the~~The 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~~

In November 2018, the Company entered into a lease agreement for office space in a building to be constructed and owned by a company 33% beneficially owned by Mr. Sartini, 5% owned by a trust for the benefit of ~~these~~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 is intended to commence in 2019 and expires on December 31, 2030. The rent expense for the space is expected to be approximately $0.3 million per year. Additionally, the lease agreement includes a right of first refusal for additional space on the second floor of the building.

One tavern location that the Company had previously leased from a related party ~~lease agreements~~was sold in the second quarter of 2019 to an unrelated third party. A second tavern location that the Company had previously leased from a related party was sold in 2018 to an unrelated third party. The rent expense for tavern locations leased from related parties (for the periods in which the leases were ~~in place prior~~with related parties) was $0.1 million for the three months ended September 30, 2018 and $0.2 million and $0.4 million during the nine months ended September 30, 2019 and 2018, respectively. No tavern locations were leased from related parties during the three months ended September 30, 2019. There were no amounts owed to the ~~consummation~~Company, and no amount was due and payable by the Company, under such leases as of December 31, 2018.

During the ~~Merger, other~~three months ended September 30, 2019 and 2018, the Company paid less than ~~two lease~~$0.1 million in each period under aircraft time-sharing, co-user and cost-sharing agreements ~~entered into in 2016.~~

~~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., a company controlled by Mr. Sartini. ~~Pursuant to~~During the agreement, the Company will reimburse Sartini Enterprises, Inc. for direct costs and expenses incurred by Company employees traveling on Company business on the private aircraft owned by Sartini Enterprises Inc. 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. During each of the threenine months ended September 30, ~~2017~~2019 and ~~2016,~~2018, the Company paid $0.5 million and $0.2 million, respectively, under the aircraft time-sharing, co-user and cost-sharing agreements. The Company owed less than $0.1 million under the aircraft ~~timesharing agreements.~~ time-sharing, co-user and cost-sharing agreements as of September 30, 2019 and December 31, 2018.

2019 and ~~2016,~~2018, the Company ~~paid $0.1~~recorded revenues of $0.2 million in each period, and ~~less than $0.1 million, respectively, under the aircraft timesharing agreements. As of September 30, 2017, there was no amount owed by~~ the Company ~~under~~recorded gaming expenses of $0.2 million in each period, related to the ~~aircraft timesharing agreements.~~

~~Mr. Sartini’s son, Blake L. Sartini, II (“Mr. Sartini II”), serves as Senior Vice President of Distributed Gaming~~use of the Company. Mr. Sartini II has an employment agreement that was approved by both the Audit Committee and Compensation Committee of the Board of Directors, which was amended and restated in March 2017. The amended and restated employment agreement provides for an annual base salary of $375,000, of which approximately $267,000 was earned during the nine months ended September 30, 2017. Additionally, Mr. Sartini II is eligible forCompany’s slots at a target annual bonus equal to 50% of his base salary. Mr. Sartini II also participates in the Company's equity award and benefit programs. In 2017, Mr. Sartini II received a grant of 75,000 options to purchase the Company’s common stock with an exercise price of $13.50 per share, which stock options will vest over a four-year period (but pursuant to the 2015 Plan such stock options may not be exercised prior to August 1, 2018 except in limited circumstances).

~~One of the~~ distributed gaming ~~locations at which the Company’s gaming devices are located is~~location owned in part by Sean T. Higgins, who serves as the Company’s ~~Chief Legal Officer and~~ Executive Vice President of ~~Development, Compliance and~~ Government Affairs. ~~This arrangement was in place prior to Mr. Higgins joining the Company on March 28, 2016. Net revenues and gaming expenses recorded by the Company from the use~~During each of the Company’s gaming devices at this location during the period in which the agreement was with a related party were each $0.3 million during the three months ended September 30, 2017 and were $0.3 million and $0.2 million, respectively, during the three months ended September 30, 2016. Net revenues and gaming expenses recorded by the Company from the use of the Company’s gaming devices at this location during the period in which the agreement was with a related party were $0.9 million and $0.8 million, respectively, during the nine months ended September 30, ~~2017,~~2019 and ~~were $0.6~~2018, the Company recorded revenues of $0.8 million and ~~$0.5~~$0.7 million, respectively, ~~during~~and the ~~nine months ended September 30, 2016.~~ NoCompany recorded gaming expenses of $0.7 million in each period, related to the use of the Company’s slots at this distributed gaming location. De minimis amounts were owed to the Company and ~~no amounts~~ were due and payable by the Company related to this arrangement as of September 30, ~~2017.~~2019 and December 31, 2018.

Three of the distributed gaming locations at which the Company’s gaming devices are located are owned in part by the spouse of Matthew W. Flandermeyer, the former Executive Vice President and Chief Financial Officer of the Company. Net revenues and gaming expenses recorded by the Company from the use of the Company’s gaming devices at these three locations were $0.3 million and $0.2 million, respectively, duringDuring the three months ended September 30, ~~2016 and $1.1~~2018, the Company recorded expenses of less than $0.1 million ~~and $1.0 million, respectively, during the nine months ended September 30, 2016. Mr. Flandermeyer ceased~~related to ~~be an employee of~~a three-year consulting agreement between the Company and a related party in November 2016. 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 gaming devices. All of the agreements were in place prior to the consummation of the Merger.

~~One distributed gaming location at which the Company’s gaming devices are located was owned in part by Terrence L. Wright,~~Lyle A. Berman, 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 gaming devices at this location during the period in which the agreement was with a related party were each $0.1 million duringCompany. During the nine months ended September 30, ~~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~~2018, 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 less than $0.1 million for each of the three months ended September 30, 2017 and 2016 and~~ $0.2 million ~~for each~~ of ~~the nine months ended September 30, 2017 and 2016. There were no amounts~~SG&A expenses related to Mr. Berman’s consulting agreement. No amount was due and payable by the Company as of December 31, 2018 ~~at September 30, 2017~~related to this agreement.

~~Additionally, in connection with the Merger, Timothy J. Cope, who serves on the Board of Directors of the Company, entered into a short-term~~ The consulting agreement ~~for the period from~~expired on 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 nine months ended September 30, 2016.2018.

The ~~Company has evaluated all~~Company’s management evaluates subsequent events ~~or transactions~~through the date of issuance of the consolidated financial statements. There have been no subsequent events that occurred ~~after~~during such period that would require adjustment to or disclosure in the consolidated financial statements as of and for the nine months ended September 30, ~~2017. During this period, up to the filing date, the Company did not identify any additional subsequent events, other than the American Acquisition disclosed in Note 2,~~ ~~Acquisitions,~~ ~~and the related refinancing and repayment of the Former Credit Agreement disclosed in Note 2,~~ ~~Acquisitions, and Note 5,~~ ~~Long-Term Debt, the effects of which would require disclosure or adjustment to the Company’s financial position or results of operations.~~2019.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As used in this Quarterly Report on Form 10-Q, unless the context suggests otherwise, the terms “Golden,” “we,” “our” and “us” refer to Golden Entertainment, Inc. and its subsidiaries.

The following information should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 filed with the Securities and Exchange Commission (“SEC”).

This Quarterly Report on Form 10-Q, 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, ~~or the Exchange Act.~~as amended (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,” “plan,” “project,” “seek,” “should,” “think,” “will,” “would” and similar expressions. In addition, forward-looking statements include statements regarding cost savings, synergies, growth opportunities and other financial and operating benefits of our ~~acquisition of American Casino & Entertainment Properties, LLC (“American”)~~casino and ~~our~~ other acquisitions; 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 ability to realize the anticipated cost savings, synergies and other benefits of our ~~acquisition of American~~casino and ~~our~~ other acquisitions, including the casinos we recently acquired in Las Vegas and Laughlin, Nevada, and integration risks relating to such transactions; 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 ~~Operating Officer, Chief Strategy~~Financial Officer, and Chief ~~Financial~~Operating Officer); the level of our indebtedness and our ability to comply with covenants in our debt instruments; 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 Factors” in our Annual Report on Form 10-K and in Part II, Item 1A of this report, or appearing elsewhere in this report and in our other filings with the 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.

We ~~are~~own and operate a diversified ~~group~~entertainment platform, consisting of a portfolio of gaming ~~companies~~assets that focus on resort casino operations and distributed gaming (including ~~tavern gaming) and casino and resort operations.~~gaming in our branded taverns).

We conduct our business through two reportable operating segments: Casinos and Distributed Gaming. In our Casinos segment, we own and operate ten resort casino properties in Nevada and Maryland. Our Distributed Gaming segment involves the installation, maintenance and ~~Casinos.~~operation of slots and amusement devices in non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores and grocery stores in Nevada and Montana, and the operation of branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area.

On January 14, 2019, we completed the acquisition of Edgewater Gaming, LLC and Colorado Belle Gaming, LLC (the “Acquired Entities”) from Marnell Gaming, LLC (“Marnell”) for $156.2 million in cash (after giving effect to the post-closing adjustment provisions in the purchase agreement) and the issuance by us of 911,002 shares of our common stock to certain assignees of Marnell (the “Laughlin Acquisition”). The Laughlin Acquisition added two resort casino properties in Laughlin, Nevada to our casino portfolio: the Edgewater Hotel & Casino Resort (the “Edgewater”) and the Colorado Belle Hotel & Casino Resort (the “Colorado Belle”), which increase our scale and presence in the Southern Nevada market. The results of operations of the Acquired Entities are included in our results subsequent to the acquisition date. See Note 2, Acquisitions, in the accompanying unaudited consolidated financial statements for additional information.

We own and operate ten resort casino properties in Nevada and Maryland, comprising:

Our Distributed Gaming segment involves the installation, maintenance and operation of ~~gaming~~slots and amusement devices in ~~certain strategic, high-traffic,~~ non-casino locations ~~(such~~such as ~~grocery stores, convenience stores,~~ restaurants, bars, taverns, ~~saloons~~convenience stores, liquor stores and ~~liquor stores)~~grocery stores in Nevada and ~~Montana, and the operation of traditional, branded taverns targeting local patrons, primarily in the greater Las Vegas, Nevada metropolitan area. As of September 30, 2017,~~Montana. We place our ~~distributed gaming operations comprised over 10,400 gaming devices in approximately 980 locations.~~

Nevada law limits distributed gaming operations (commonly known as “restricted gaming” operations) to certain types of non-casino locations, including grocery stores, drug stores, convenience stores, restaurants, bars, taverns, saloons and liquor stores, where gaming is incidental to the primary business being conducted at the location and games are limited to 15 or fewer gaming devices 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 gaming devices into the physical bar (more commonly known as “bar top” gaming devices) in bars, taverns and saloons. Such segregation provides greater oversight and supervision of the gaming devices. Under Montana law, distributed gaming operations are limited to business locations licensed to sell alcoholic beverages for on-premises consumption only, with such locations restricted to offering a maximum of 20 gaming devices.

~~Gaming~~slots and amusement devices ~~are placed~~ in locations where we believe they will receive maximum customer traffic, generally near a store’s entrance. In addition, we own and operate branded taverns with slots, which target local patrons, primarily in the greater Las Vegas, Nevada ~~we generally enter into three types~~metropolitan area. As of ~~gaming device placement contracts as part of~~September 30, 2019, 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 gaming devices at a business location. Under revenue share agreements, we pay the business location a percentage of the gaming revenue generated from our gaming devices 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 gaming devices. In Montana, our gaming and amusement device placement contracts are all revenue share agreements.operations comprised approximately 10,900 slots in over 1,000 locations.

Our branded taverns offer a ~~casually~~casual, upscale environment catering to local patrons offering superior food, craft beer and other alcoholic beverages, and typically include 15 onsite ~~gaming devices.~~slots. As of September 30, ~~2017,~~2019, we owned and operated 5766 branded taverns, which offered a total of ~~approximately 900~~over 1,000 onsite ~~gaming devices.~~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, ~~PT’s~~Sierra Gold, Sean Patrick’s, PT’s Place, PT’s ~~Brewing Company,~~Ranch, Sierra ~~Gold,~~Junction and SG Bar and Sean Patrick’s. Our taverns also serve as an incubator for new games and technology that can then be rolled out to our third party distributed gaming customers within the segment and to our Casinos segment.Bar. We also ~~opened our first~~own a brewery in Las Vegas, PT’s Brewing Company, ~~during the first quarter of 2016 to produce~~which produces craft beer for our taverns and casinos.

We own and operate eight casino and resort 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 in Laughlin, Nevada, the Rocky Gap Casino Resort in Flintstone, Maryland (“Rocky Gap”), and the Pahrump Nugget Hotel Casino (“Pahrump Nugget”), Gold Town Casino and Lakeside Casino & RV Park in Pahrump, Nevada. The casino properties in Las Vegas and Laughlin, Nevada were added to our casino portfolio in October 2017 as a result of our acquisition of American.

The Stratosphere is our premier casino property, located between downtown Las Vegas and the center strip. With nearly 2,500 hotel rooms, the Stratosphere is also our largest hotel property. As of October 20, 2017, the Stratosphere featured an 80,000 sq. ft. casino and offered 738 gaming devices, 42 table games, a race and sports book, 15 restaurants, two rooftop pools, a fitness center, retail shops and entertainment facilities.

Our Arizona Charlie’s Decatur and Arizona Charlie’s Boulder casino properties primarily serve local Las Vegas patrons, and provide an alternative for customers who prefer a local gaming experience to the Las Vegas Strip atmosphere. As of October 20, 2017, our Arizona Charlies casino properties offered approximately 560 hotel rooms and a total of 1,896 gaming devices, 14 table games, race and sports books, 10 restaurants, and a 24-hour bingo parlor.

Rocky Gap is situated on approximately 270 acres in the Rocky Gap State Park in Maryland, which are leased 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 September 30, 2017, Rocky Gap offered 665 gaming devices, 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.

Pahrump is located approximately 60 miles from Las Vegas and is a gateway to Death Valley National Park. Pahrump Nugget is our largest property in Pahrump, Nevada with approximately 70 hotel rooms. As of September 30, 2017, our Pahrump Nugget casino offered 423 gaming devices, as well as 8 table games, a race and sports book, a 208-seat bingo facility and a bowling center. As of September 30, 2017, our Gold Town Casino offered 227 gaming devices and a 125-seat bingo facility, and our Lakeside Casino & RV Park offered 185 gaming devices and a recreational vehicle park surrounding a lake with approximately 160 RV hook-up sites.

Laughlin is located approximately 90 miles from Las Vegas on the western shores of the Colorado River. The Aquarius Casino Resort caters primarily to local Laughlin patrons, as well as value-oriented customers traveling from Nevada, Arizona and Southern California. As of October 20, 2017, the Aquarius Casino Resort had approximately 1,900 hotel rooms and offered 1,231 gaming devices, 33 table games and 10 restaurants.

On October 20, 2017, subsequent to quarter end, 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) 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. Of the cash consideration, $5.0 million is being held in escrow as security for satisfaction of the sellers’ post-closing working capital adjustment obligations in accordance with the purchase agreement governing the American Acquisition (the “Purchase Agreement”). At the closing of the American Acquisition, we entered into a stockholders agreement with ACEP Holdings that includes, among other things, a 90-day restriction on sales of our common stock by ACEP

Holdings (subject to certain exceptions) and a standstill agreement. Also at the closing of the American Acquisition, we entered into a registration rights agreement with ACEP Holdings with respect to the shares of our common stock that were issued at the closing. The results of operations of American and its subsidiaries will be included in our results from and after the acquisition date. For additional information regarding the American Acquisition, see Note 2, ~~Acquisitions, in the accompanying unaudited consolidated financial statements.~~

In connection with the closing of the American Acquisition, we entered into two new credit 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 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 5, ~~Long-Term Debt, in the accompanying unaudited consolidated financial statements for a discussion of the new credit agreements and associated refinancing.~~

The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018.


	Three Months Ended						Nine Months Ended						Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016			2019			2018			2019			2018
Net revenues
Revenues by segment
Casinos													$	155,113		$	128,837		$	465,203		$	390,250
Distributed Gaming	$	80,746		$	78,253		$	247,192		$	224,602			87,998			81,188			265,508			250,746
Corporate and other														203			312			565			673
Total revenues														243,314			210,337			731,276			641,669
Operating expenses by segment
Casinos		27,484			25,909			78,002			73,031			77,334			62,818			228,113			185,939
Distributed Gaming														68,621			64,243			204,214			196,205
Corporate and other		92			64			267			185			323			826			739			2,391
Total operating expenses														146,278			127,887			433,066			384,535
Selling, general and administrative														57,106			47,359			170,288			135,180
Depreciation and amortization														29,611			23,330			86,852			71,421
Acquisition and severance expenses														428			1,243			3,095			3,107
Preopening expenses														243			21			1,759			858
(Gain) loss on disposal of assets														(233	)		774			599			1,069
Total expenses														233,433			200,614			695,659			596,170
		108,322			104,226			325,461			297,818

Operating expenses
Distributed Gaming		63,860			61,647			191,716			174,725
Casinos		13,034			13,832			39,622			38,849
Corporate and other		(1	)		30			(5	)		77
		76,893			75,509			231,333			213,651
Selling, general and administrative		19,655			17,816			57,586			50,272
Acquisition and merger expenses		2,975			139			5,041			614
(Gain) loss on disposal of property and equipment		308			(344	)		308			(344	)
Gain on revaluation of contingent consideration		(1,719	)		—			(1,719	)		—
Preopening expenses		282			801			1,128			1,893
Depreciation and amortization		7,539			7,223			21,499			19,862
Total expenses		105,933			101,144			315,176			285,948
Income from operations		2,389			3,082			10,285			11,870
Operating income														9,881			9,723			35,617			45,499
Non-operating expense, net		(1,885	)		(1,689	)		(5,568	)		(4,768	)		(19,128	)		(15,069	)		(69,285	)		(41,205	)
Income tax benefit (provision)		8,051			(91	)		10,893			(761	)		(200	)		2,222			1,795			106
Net income	$	8,555		$	1,302		$	15,610		$	6,341
Net income (loss)													$	(9,447	)	$	(3,124	)	$	(31,873	)	$	4,400

Three and Nine Months Ended September 30, ~~2017~~2019 Compared to Three and Nine Months Ended September 30, ~~2016~~2018

The $33.0 million, or 16%, increase in ~~net~~ revenues for the three months ended September 30, 2017 compared to the three months ended September 30, 2016 was primarily due to a $3.1 million and $1.2 million increase in our gaming and food and beverage revenues, respectively, relating primarily to our Distributed Gaming segment. This was offset by a $0.4 million increase in promotional allowance, compared to the prior year period.

~~The increase in our Distributed Gaming segment net revenues for the three months ended September 30, 2017~~2019 compared to the prior year period ~~was primarily due to~~resulted from increases of ~~$1.6~~$14.8 million, $9.1 million, $7.3 million and $1.8 million in gaming, ~~revenues and $1.3 million in~~ food and beverage, room and other revenues, ~~reflecting~~respectively, due primarily to the ~~opening~~impact of ~~one new tavern~~the Acquired Entities.

Casinos segment revenue increased $26.3 million, or 20%, for the three months ended September 30, 2019 compared to the prior year period. Gaming revenues in the ~~Las Vegas Valley~~Casinos segment increased $9.5 million, which reflected the inclusion in the current year period of $9.2 million of gaming revenue from the Acquired Entities. The increase was also due to an increase in slot and table game revenue of $0.6 million at The Strat, which was offset by a decrease in The Strat’s race and sports book revenue of $0.3 million. Casinos segment food and beverage revenue increased by $8.2 million, which reflected the inclusion in the current year period of $6.8 million of food and beverage revenue from the Acquired Entities as well as a ~~full~~$1.6 million increase at The Strat. Casinos segment room revenues increased by $7.2 million, which reflected the inclusion in the current year period of $6.7 million of room revenue from the Acquired Entities. Casinos segment other revenues increased by $1.4 million due primarily to the inclusion in the current year period of other revenues from ~~five taverns opened in 2016.~~the Acquired Entities.

~~The increase in our Casinos~~Distributed Gaming segment ~~net revenues~~revenue increased $6.8 million or 8% for the three months ended September 30, ~~2017~~2019 compared to the prior year period ~~was primarily~~ due to an increase of ~~$1.5~~$5.3 million in gaming revenues, ~~of which $0.7 million related to our Rocky Gap casino, reflecting~~(reflecting an increase in ~~parking capacity to accommodate peak days, increased patron volume~~our Montana Distributed Gaming business from improved sales at our additional locations and ~~revised marketing efforts to cater to~~machines and an increase in our ~~gaming customers.~~Nevada Distributed Gaming business from our six new taverns that opened since the prior year period as well as improved performance of our slot devices at non-casino locations), an increase of $0.9 million in branded tavern food and beverage revenues and an increase of $0.6 million in other revenues.

The $89.6 million, or 14%, increase in ~~net~~ revenues for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 was primarily due to increases of $22.4 million, $5.2 million and $2.1 million in our gaming, food and beverage and other operating revenues, respectively, relating primarily to our Distributed Gaming segment. This was offset by a $2.2 million increase in promotional allowance, compared to the prior year period.

~~The increase in our Distributed Gaming segment net revenues for the nine months ended September 30, 2017~~2019 compared to the prior year period ~~consisted of~~resulted from increases of ~~$17.9~~$38.4 million, ~~$5.5~~$25.0 million, $20.4 million and ~~$1.6~~$5.8 million in ~~our~~ gaming, food and beverage, room and other ~~operating~~ revenues, ~~respectively. These increases reflect~~respectively, due primarily to the ~~opening~~impact of ~~four new taverns~~the Acquired Entities.

Casinos segment revenue increased $75.0 million, or 19%, for the nine months ended September 30, 2019 compared to the prior year period. Gaming revenues in the ~~Las Vegas Valley~~Casinos segment increased $26.2 million, which reflected the inclusion in the current year period of $26.0 million of gaming revenue from the Acquired Entities, a $1.1 million increase in our Pahrump casinos and an increase of $1.3 million at Rocky Gap. The increase was offset by a combined decrease in our Arizona Charlie’s properties’ gaming revenue of $2.4 million. Casinos segment food and beverage revenue increased by $22.9 million due primarily to the inclusion in the current year period of $21.3 million in food and beverage revenues from the Acquired Entities and an increase of $2.7 million in food and beverage revenue at The Strat. The increase was partially offset by decreases in food and beverage revenues at the Aquarius and Arizona Charlie’s properties. Casinos segment room revenues increased by $20.4 million primarily due to increased room revenues at all of

our casino properties, as well as the inclusion in the current year period of $17.3 million in room revenues from the Acquired Entities. Casinos segment other revenues increased by $5.4 million primarily due to the inclusion in the current year period of $5.9 million in other revenues from the Acquired Entities and increases at some of our other casino properties, partially offset by a decrease in other revenues at The Strat of $1.0 million.

Distributed Gaming segment revenue increased $14.8 million or 6% for the nine months ended September 30, 2019 compared to the prior year period due to an increase of $12.2 million in gaming revenues (reflecting an increase in our Montana Distributed Gaming business from improved sales at our additional locations and machines and an increase in our Nevada Distributed Gaming business from our six new taverns that opened since the prior year period as well as improved performance of our slot devices at non-casino locations), an increase of $2.0 million in branded tavern food and beverage revenues (primarily due to the inclusion in the current year period of a full period of revenues from ~~five~~the three taverns opened in ~~2016. Additionally, net~~2018) and an increase of $0.6 million in other revenues ~~related to our Distributed Gaming segment in~~.

During the ~~current year period included a full period of net revenues from the initial acquisition of a Montana distributed gaming business that occurred on January 29, 2016,~~three and ~~the second acquisition of a Montana distributed gaming business that occurred on April 22, 2016 (collectively, the “Montana Acquisitions”)~~.

~~The increase in our Casino segment net revenues for the~~ nine months ended September 30, ~~2017~~2019, Adjusted EBITDA in our Casinos segment as a percentage of segment revenues (or Adjusted EBITDA margin) was 27% and 29%, respectively, compared to Adjusted EBITDA margin in our Distributed Gaming segment of 13% and 15%, respectively. During the ~~prior year period~~three and nine months ended September 30, 2018, Adjusted EBITDA margin in our Casinos segment was ~~primarily due~~29% and 32%, respectively, compared to ~~an increase~~Adjusted EBITDA margin in our Distributed Gaming segment of ~~$4.5 million~~13% and 14%, respectively. The lower Adjusted EBITDA margin in our Distributed Gaming segment relative to our Casinos segment reflects the fixed and variable amounts paid to third parties under our space and revenue share agreements as expenses in the Distributed Gaming segment (which includes the percentage of gaming revenues paid to third parties under revenue share agreements). See Note 11, Segment Information, in the accompanying unaudited consolidated financial statements for additional information regarding segment Adjusted EBITDA and a reconciliation of ~~which $3.4 million related~~segment Adjusted EBITDA to ~~our Rocky Gap casino, reflecting an increase in parking capacity to accommodate peak days, increased patron volume and revised marketing efforts to cater to our gaming customers.~~segment net income (loss).

~~Operating expenses comprise gaming, food and beverage, rooms and other operating expenses.~~ The $18.4 million, or 14%, increase in operating expenses for the three months ended September 30, ~~2017~~2019 compared to the prior year period resulted primarily from the inclusion of operating expenses of the Acquired Entities. Gaming expenses increased $7.3 million for the three months ended September 30, 2019 compared to the prior year period. Of this increase, $3.9 million related to the inclusion of gaming expenses relating to the Acquired Entities in the current year period and $0.3 million related to an increase in gaming expenses at Rocky Gap. The increase also included $3.1 million related to gaming expenses in our Distributed Gaming segment, which included increases of $2.3 million relating to our Montana distributed gaming operations from our additional locations and machines and $0.9 million relating to our Nevada distributed gaming operations from our six new taverns that opened since the prior year period. The increase of $6.5 million in food and beverage expense compared to the prior year period was due primarily to the inclusion in the current year period of $4.1 million relating to the Acquired Entities, combined with increases of $1.6 million relating to The Strat (reflecting increased and improved offerings at The Strat), offset by a ~~$1.2 million~~decrease in food and ~~$0.2 million~~beverage revenues at our other casino properties. The increase in food and beverage expense was also due to a $1.2 million increase in our Distributed Gaming segment from our six new taverns that opened since the prior year period. The $3.5 million year-over-year increase in room expense was due primarily to the inclusion in the current year period of $3.5 million relating to the Acquired Entities. The $1.0 million year-over-year increase in other operating expenses was primarily due to the inclusion in the current year period of other operating expenses relating to the Acquired Entities and ~~room~~the increase in other operating expenses ~~respectively.~~at our other casino properties.

The $48.5 million, or 13%, increase in operating expenses for the nine months ended September 30, ~~2017~~2019 compared to the prior year period resulted primarily from the inclusion of operating expenses of the Acquired Entities. Gaming expenses increased $17.5 million for the nine months ended September 30, 2019 compared to the prior year period. Of this increase, $1.2 million related to Rocky Gap and $11.0 million related to the inclusion of gaming expenses relating to the Acquired Entities in the current year period, offset by a ~~$12.9~~slight decrease at some of our other casino properties. The increase also includes $5.9 million related to gaming expenses in our Distributed Gaming segment, which included an increase of $5.2 million relating to our Montana distributed gaming operations and ~~$3.9~~$0.7 million relating to our Nevada distributed gaming operations. The increase ~~in gaming and~~of $16.0 million of food and beverage ~~expenses, respectively. The increase also reflected~~expense compared to the prior year period was due primarily to the inclusion in the current year period of ~~$38.5~~$12.5 million relating to the Acquired Entities, combined with increases of $1.9 million relating to our Nevada distributed gaming operations and $2.8 million relating to The Strat (reflecting increased and improved offerings at The Strat), offset by a decrease in food and beverage revenues at our other casino properties. The $10.1 million year-over-year increase in room expense was due primarily to the inclusion in the current year period of $9.2 million relating to the Acquired Entities, combined with an increase in room expense at all of our other casino properties. The $5.0 million year-over-year increase in other operating expenses was almost entirely due to the inclusion in the current year period of other operating expenses relating to the businesses acquired in the Montana Acquisitions in 2016 (representing a full period of operating expenses from the businesses acquired in the Montana Acquisitions), compared to $26.9 million in the prior year period.Acquired Entities.

The $9.7 million, or 21%, increase in selling, general and administrative (“SG&A”) expenses for the three months ended September 30, ~~2017~~2019 compared to the prior year period resulted primarily from the inclusion in the current year period of $6.6 million in SG&A expenses relating to the Acquired Entities, an increase in corporate SG&A of $0.6 million and an increase in Distributed Gaming segment SG&A of $1.5 million.

Within our Casinos segment, the majority of the SG&A expenses are comprised of marketing and advertising, utilities, maintenance contracts, payroll expenses and payroll taxes. Casino segment SG&A expenses increased $7.7 million, or 27%, for the three months

ended September 30, 2019, compared to the prior year period, resulting primarily from the inclusion $6.6 million in the current year period of SG&A related to the Acquired Entities.

Within our Distributed Gaming segment, the majority of the SG&A expenses are comprised of marketing and advertising, utilities, building rent, payroll expenses and payroll taxes. Distributed gaming segment SG&A expenses increased $1.5 million, or 23%, for the three months ended September 30, ~~2016~~2019 compared to the prior year period, primarily due to an increase in salaries, bonuses, and building rent.

Corporate SG&A expenses represent corporate office overhead, information technology, legal, accounting, third party service providers, executive compensation, share based compensation, payroll expenses and payroll taxes. The $0.6 million, or 5%, increase in corporate SG&A for the three months ended September 30, 2019 compared to the prior year period resulted primarily from increases ~~of $1.3~~ in ~~legal reserves, $0.6 million~~outside service expenses in ~~salaries~~finance and ~~bonus expenses, $0.3 million in marketing and advertising expenses and $0.4 million in building and rent expense, which were partially offset by decreases of $0.5 million in professional fees.~~accounting.

The $35.1 million, or 26%, increase in SG&A expenses for the nine months ended September 30, ~~2017~~2019 compared to the prior year period resulted primarily from the inclusion in the current year period of $17.8 million in SG&A expenses relating to the Acquired Entities, an increase in corporate SG&A of $9.0 million and an increase in Distributed Gaming segment SG&A of $4.1 million.

Casino segment SG&A expenses increased $22.0 million, or 27%, for the nine months ended September 30, ~~2016 resulted~~2019, compared to the prior year period, resulting primarily from ~~increases of $5.2~~the inclusion $17.8 million in salaries and bonus expenses (including share-based compensation expense), $1.6 in legal reserves, $0.8 million in marketing and advertising expenses and $1.4 million in building and rent expense, which were partially offset by decreases of $1.1 million in professional fees and $0.5 million in rental equipment expenses. Share-based compensation expense increased during the current year period ~~due primarily to $1.5 million~~ of ~~expense~~SG&A related to ~~a restricted stock unit award granted~~the Acquired Entities. The remaining increase was primarily due to increases in ~~November 2016.~~expenses for labor and advertising.

~~Within our~~ Distributed Gaming segment SG&A expenses ~~were $5.7~~increased $4.1 million, ~~and $6.1 million for the three months ended September 30, 2017 and 2016, respectively, and $17.7 million and $17.8 million~~or 22%, for the nine months ended September 30, ~~2017~~2019 compared to the prior year period, primarily due to an increase in salaries, bonuses, building rent, and ~~2016, respectively.~~expenses for marketing.

~~Within our Casinos segment,~~Corporate SG&A expenses ~~were $5.5~~increases $9.0 million, ~~for the three months ended September 30, 2017, compared to $5.6 million for the prior year period.~~or 25%, increase in corporate SG&A ~~expenses for our Casinos segment were $16.2 million~~ for the nine months ended September 30, ~~2017,~~2019 compared to ~~$16.1 million for~~ the prior year ~~period.~~period resulted primarily from increases in labor costs and professional services in accounting.

Acquisition ~~and merger~~ expenses during the three and nine months ended September 30, ~~2017~~2019 related primarily ~~related~~ to the ~~American~~Laughlin Acquisition, which closed on January 14, 2019, and expenses during the three and nine months ended September 30, ~~2016 primarily~~2018 related to the ~~2015 acquisition of Sartini Gaming, Inc. through a merger transaction.~~American Acquisition.

Preopening expenses consist of labor, food, utilities, training, initial licensing, rent and organizational costs incurred. Non-capital costs associated with the opening of tavern and casino locations are also expensed as preopening expenses as incurred.

~~Preopening expenses for~~During the three and nine months ended September 30, ~~2017 were $0.3 million~~2019 and ~~$1.1 million, respectively,~~2018, preopening expenses related primarily to costs incurred in the opening of new taverns in the Las Vegas Nevada. The preopening expenses for the three and nine months ended September 30, 2016 were $0.8 million and $1.9 million, respectively, related primarily to costs incurred in connection with the Montana Acquisitions and the opening of new tavern locations in Las Vegas, Nevada.Valley.

The increase in depreciation and amortization expenses for the three ~~and nine~~ months ended September 30, ~~2017~~2019 compared to the prior year ~~periods,~~period was primarily due to the depreciation of the assets and the amortization of the intangibles acquired in the ~~Montana Acquisitions.~~

The ~~increases~~increase in ~~non-operating expense, net for the three~~depreciation and nine months ended September 30, 2017 compared to the prior year periods were $0.2 million and $0.8 million, respectively, due primarily to year-over-year increases in interest expense related to a higher ~~weighted-average effective interest rate~~ ~~under our former senior secured credit facility.~~

~~Our effective tax rate was (231.33)% and 10.7%~~amortization expenses for the nine months ended September 30, ~~2017~~2019 compared to the prior year period was primarily due to the depreciation of the assets and ~~2016,~~the amortization of the intangibles acquired in the Laughlin Acquisition, the opening of our six new taverns in 2019, and the installation of new gaming systems at some of our Nevada casinos.

Non-operating expense, net increased $4.1 million for the three months ended September 30, 2019 compared to the prior year period, primarily due to a $2.5 million increase in interest expense from the substantially higher level of indebtedness following the Laughlin Acquisition and a loss on change in fair value of derivative of $0.4 million versus a gain on change in fair value of derivative of $1.2 million in the prior year period.

Non-operating expense, net increased $28.1 million for the nine months ended September 30, 2019 compared to the prior year period, primarily due to a $8.9 million increase in interest expense from the substantially higher level of indebtedness following the Laughlin Acquisition, a loss on extinguishment and modification of debt of $9.2 million and a loss on change in fair value of derivative of $4.1 million versus a gain on change in fair value of derivative of $5.9 million in the prior year period.

Our effective tax rate was 4.5% and (2.5)% for the nine months ended September 30, 2019 and 2018, respectively. For the nine months ended September 30, ~~2017 and 2016,~~2019, the effective tax rate differed from the federal tax rate of ~~35%~~21% due primarily to ~~partial release of~~ the change in valuation allowance ~~for~~against our deferred tax assets ~~and changes in~~during the ~~valuation allowance for deferred taxes, respectively.~~

~~Income tax benefit was $10.9 million for~~first nine months of 2019. For the nine months ended September 30, ~~2017, which was attributed~~

2018, the effective tax rate differed from the federal tax rate of 21% due primarily to ~~a partial release~~excess tax benefits from stock options exercised during the third quarter of valuation allowance. Income tax expense was $0.8 million for the nine months ended September 30, 2016, which was attributed primarily to tax amortization of indefinite-lived intangibles and measurement period adjustments to goodwill.2018.

To supplement our consolidated financial statements presented in accordance with United States generally accepted accounting principles (“GAAP”), we use Adjusted EBITDA, a measure we believe is appropriate to provide meaningful comparison with, and to enhance an overall understanding of, our past financial performance and prospects for the future. We believe Adjusted EBITDA provides useful information to both management and investors by excluding specific expenses and gains that we believe are not indicative of our core operating results. Further, Adjusted EBITDA is 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.

We define “Adjusted EBITDA” as earnings before interest and other non-operating income (expense), income taxes, depreciation and amortization, acquisition expenses, preopening expenses, ~~acquisition~~gain/loss on disposal of property and ~~merger~~equipment, share-based compensation expenses, executive severance, rebranding, class action litigation ~~expense, share-based compensation expense, executive severance and sign-on bonuses, gain on revaluation of contingent consideration, impairments and~~expenses, other gains and losses, ~~as applicable.~~and change in fair value of derivative.

The following table presents a reconciliation of Adjusted EBITDA to net ~~income:~~income (loss):

Three Months Ended

Nine Months Ended

(In thousands)

September 30, 2017

September 30, 2016

September 30, 2017

September 30, 2016

Adjusted EBITDA

$
15,073

$
12,555

$
43,645

$
36,404

Acquisition and merger expenses

(2,975
)

(139
)

(5,041
)

(614
)
Share-based compensation

(1,603
)

(1,654
)

(5,352
)

(2,509
)
(Gain) loss on disposal of property and equipment

(308
)

344

(308
)

344

Gain on revaluation of contingent consideration

1,719

—

1,719

—

Preopening expenses

(282
)

(801
)

(1,128
)

(1,893
)
Class action litigation expenses

(1,530
)

—

(1,585
)

—

Sign-on bonuses

(166
)

—

(166
)

—

Depreciation and amortization

(7,539
)

(7,223
)

(21,499
)

(19,862
)
Income from operations

2,389

3,082

10,285

11,870

Non-operating income (expense)

Interest expense, net

(1,885
)

(1,689
)

(5,568
)

(4,786
)
Other, net

—

—

—

18

Total non-operating expense, net

(1,885
)

(1,689
)

(5,568
)

(4,768
)

Income before income tax benefit (provision)

504

1,393

4,717

7,102

Income tax benefit (provision)

8,051

(91
)

10,893

(761
)
Net income

$
8,555

$
1,302

$
15,610

$
6,341

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands)	2019			2018			2019			2018
Net income (loss)	$	(9,447	)	$	(3,124	)	$	(31,873	)	$	4,400
Depreciation and amortization		29,611			23,330			86,852			71,421
Preopening and related expenses⁽¹⁾		556			21			4,285			858
Acquisition and severance expenses		428			1,243			3,095			3,107
Asset disposal and other writedowns		(233	)		774			989			1,069
Share-based compensation		2,583			2,783			8,901			7,385
Other, net		243			269			1,594			994
Interest expense, net		18,776			16,291			56,046			47,100
Loss on extinguishment and modification of debt		—			—			9,150			—
Change in fair value of derivative		352			(1,222	)		4,089			(5,895	)
Income tax (benefit) provision		200			(2,222	)		(1,795	)		(106	)
Adjusted EBITDA	$	43,069		$	38,143		$	141,333		$	130,333

As of September 30, ~~2017,~~2019, we had ~~$42.9~~$123.8 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 revolving credit facility will be sufficient to meet our ~~working~~ capital requirements during the next 12 months.

Our operating results and performance depend significantly on national, regional and local economic conditions and their effect on consumer spending. Declines in consumer spending would cause revenues generated in both our Casinos and Distributed Gaming segments to be adversely affected.

To further enhance our liquidity position or to finance ~~acquisitions~~any future acquisition or other business investment initiatives, we may obtain additional financing, ~~from time to time,~~ which could consist of debt, convertible debt or equity financing from public and/or private credit and capital markets. ~~Any additional financing that is needed may not be available~~

In January 2018, we completed an underwritten public offering pursuant to ~~us or, if available, may not be on terms favorable to us. In June 2016, we filed a~~our universal shelf registration statement, ~~with the SEC for the future sale~~in which certain of ~~up to $150.0~~our shareholders resold an aggregate of 6.5 million shares of our common stock, ~~preferred stock, debt securities, warrants~~ and ~~units. The securities may be offered~~we sold 975,000 newly issued shares of our common stock. Our net proceeds from ~~time to time, separately or together, directly by us or through underwriters, dealers or agents at amounts, prices, interest rates~~the offering were approximately $25.6 million after deducting underwriting discounts and ~~other terms to be determined at the time of the applicable offering.~~offering expenses.

~~Year-to-date net~~Net cash provided by operating activities ~~increased $4.0~~was $98.0 million for the nine months ended September 30, 2019, compared to $73.0 million for the prior ~~year~~year. The increase was primarily due ~~primarily~~ to the ~~flow-through effect~~timing of ~~higher revenues.~~working capital spending.

Net cash used in investing activities was ~~$20.3~~$230.1 million for the nine months ended September 30, ~~2017,~~2019, compared to ~~$67.3~~$50.0 million for the prior year period. The ~~decrease~~increase in net cash used in investing activities as compared to the prior year period was primarily due to the ~~consummation~~closing of the ~~Montana Acquisitions during~~Laughlin Acquisition in January 2019 and the ~~prior~~additional capital expenditures in the current year period.

Net cash ~~used in~~provided by financing activities ~~totaled $15.5~~was $139.8 million for the nine months ended September 30, ~~2017, and~~2019, due primarily ~~related~~ to ~~repayments under~~ our ~~former~~issuance of the 7.625% Senior Notes due 2026 (“2026 Notes”) in April 2019, partially offset by the repayment in full of our $200 million senior secured ~~credit facility.~~ second lien term loan facility (“Second Lien Term Loan”).

Net cash provided by financing activities was ~~$10.3~~$18.8 million for the nine months ended September 30, ~~2016,~~2018, and primarily related to net proceeds ~~from borrowings, net of~~to us in the underwritten public offering completed in January 2018, partially offset by repayments under our ~~former senior secured credit facility.~~Credit Facility.

As of September 30, 2017, the facilities under our credit agreement with Capital One, National Association (as administrative agent) and the lenders named therein (the “Former Credit Agreement”) consisted of $160.0 million in senior secured term loans, of which $141.0 million was outstanding at such date, and a $50.0 million revolving credit facility, with outstanding borrowings of $27.0 million at such date. The facilities were scheduled to mature on July 31, 2020. Borrowings under the Former Credit Agreement bore interest, at our option, at either (1) the highest of the federal funds rate plus 0.50%, the Eurodollar rate for a one-month interest period plus 1.00%, or the administrative agent’s prime rate as announced from time to time, or (2) the Eurodollar rate for the applicable interest period, plus in each case, an applicable margin based on our leverage ratio. For the nine months ended September 30, 2017,

~~the weighted-average effective interest rate on our outstanding borrowings under the Former Credit Agreement was approximately 3.5%.~~

OnIn October ~~20,~~ 2017, we entered into a senior secured credit ~~agreements with respect to~~facility consisting of a ~~$900.0~~ $900 million senior secured first lien credit facility (consisting of ~~$800.0~~a $800 million in term ~~loans~~loan and a ~~$100.0~~$100 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~~“Credit Facility”)~~, and a $200.0~~. The revolving credit facility was subsequently increased from $100 million ~~senior secured second lien~~to $200 million in 2018.

As of September 30, 2019, we had $772 million in principal amount of outstanding term loan borrowings under our Credit Facility, no letters of credit outstanding under the Credit Facility, and our revolving credit 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 Facility” and, together with the First Lien Facility, the “Credit Facilities”). The term loanswas undrawn, leaving borrowing availability under ~~both Credit Facilities were fully drawn at closing;~~ the revolving credit facility ~~under the First Lien Facility was undrawn at closing. Proceeds from the term loan borrowings~~as of September 30, 2019 of $200 million.

Borrowings under the Credit Facilities at the closing were primarily used to fund the cash purchase price in the American Acquisition (a portion of which was used to repay American’s outstanding senior secured indebtedness), to refinance our outstanding senior secured indebtedness under the Former Credit Agreement, and to pay certain transaction fees and expenses.

~~Borrowings under each of the Credit Facilities~~Facility 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 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) or (2) the LIBOR rate for the applicable interest period, subject to a floor of 0.75% (with respect to the term ~~loans~~loan only), plus in each case, an applicable margin. The applicable margin for the term ~~loans~~loan under the ~~First Lien~~Credit 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 ranges from 1.50% to 2.00% for base rate loans and 2.50% to 3.00% for LIBOR rate loans, based on our net leverage ratio. The ~~applicable margin for the term loans under the Second Lien Facility 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~~or 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 September 30, 2019, the weighted-average effective interest rate on our outstanding borrowings under the Credit Facility was approximately 5.4%.

Borrowings under ~~each of~~ the Credit ~~Facilities~~Facility are guaranteed by each of our existing and future ~~wholly owned~~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,~~Facility, we and our restricted subsidiaries are subject to certain limitations, 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~~loan under the Credit ~~Facilities~~Facility 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~~Facility also ~~prohibit~~prohibits 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~~Facility 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 Facility as of September 30, 2019.

On April 15, 2019, we issued $375 million in principal amount of 2026 Notes in a private placement to institutional buyers face value. The 2026 Notes bear interest at 7.625%, payable semi-annually on April 15^th and October 15^th of each year.

In conjunction with the issuance of the 2026 Notes, we incurred approximately $6.7 million in debt financing costs and fees that have been deferred and are being amortized over the term of the 2026 Notes using the effective interest method.

The net proceeds of the 2026 Notes were used to (i) repay our $200 million Second Lien Term Loan, (ii) repay outstanding borrowings under the revolving credit facility, (iii) repay $18 million of the outstanding term loan indebtedness under the Credit Facility, and (iv) pay accrued interest, fees and expenses related to each of the foregoing.

offerings. Prior to April 15, 2022, we may also redeem the 2026 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest and an Applicable Premium (as defined in the indenture governing the 2026 Notes (the “Indenture”)), if any, thereon to the redemption date.

The 2026 Notes are guaranteed on a senior unsecured basis by each of our existing and future wholly-owned domestic subsidiaries that guarantees the Credit Facility. The 2026 Notes are our and the subsidiary guarantors’ general senior unsecured obligations and rank equally in right of payment with all of our respective existing and future unsecured unsubordinated debt. The 2026 Notes are effectively junior in right of payment to our and the subsidiary guarantors’ existing and future secured debt, including under the Credit Facility (to the extent of the value of the assets securing such debt), are structurally subordinated to all existing and future liabilities (including trade payables) of any of our subsidiaries that do not guarantee the 2026 Notes, and are senior in right of payment to all of our and the subsidiary guarantors’ existing and future subordinated indebtedness.

Under the Indenture, we and our restricted subsidiaries are subject to certain limitations, 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 the event a change of control (which includes the acquisition of more than 50% of our capital stock, other than by certain permitted holders, which include, among others, Blake L. Sartini, Lyle A. Berman, and certain affiliated entities), each holder will have the right to require us to repurchase all or any part of such holder’s 2026 Notes at a purchase price in cash equal to 101% of the aggregate principal amount of the 2026 Notes repurchased, plus accrued and unpaid interest, if any, to the date of purchase.

In April 2019, we 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 our Second Lien Term Loan and an $18 million prepayment of the term loan under our Credit Facility.

On March 12, 2019, our Board of Directors authorized the repurchase of up to $25.0 million additional shares of common stock, subject to available liquidity, general market and economic conditions, alternate uses for the capital and other factors, which replaced the prior share repurchase program authorized in November 2018. 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 legal requirements, including compliance with our finance agreements. There is no minimum number of shares that we are required to repurchase and the repurchase program may be suspended or discontinued at any time without prior notice. During the three and nine months ended September 30, 2019, no shares of our common stock were repurchased under our share repurchase programs.

We perform on-going refurbishment and maintenance at our facilities, of which certain maintenance costs are capitalized if such improvement or refurbishment extends the life of the related asset, while other maintenance costs that do not so qualify are expensed as incurred. The commitment of capital and the related timing thereof are contingent upon, among other things, negotiation of final agreements and receipt of approvals from the appropriate regulatory bodies. We intend to fund such capital expenditures through our revolving credit facility and operating cash flows.

See Note 10, Commitments and Contingencies, in the accompanying unaudited consolidated financial statements for additional information regarding commitments and contingencies that may also affect our liquidity.

The following table summarizes our contractual obligations as of September 30, 2019:

We may investigate and pursue expansion opportunities in our existing or new 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 ~~Credit Facilities.~~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.

~~Management's~~Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates that affect the reported amounts of assets and 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. On an ongoing basis, we evaluate our estimates and judgments, including those related to the application of the acquisition method of accounting, long-lived assets, goodwill and indefinite-lived intangible assets, revenue recognition, ~~and promotional allowances,~~ income taxes and share-based compensation expenses. We base our estimates and judgments on historical experience and on various other factors 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.

A description of our critical accounting ~~policies described~~estimates can be found under Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2018, previously filed with the SEC. For a more extensive discussion of our accounting policies, see Note 2, Summary of Significant Accounting Policies, in the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018. As of January 1, 2019, we updated our lease accounting policies in conjunction with our adoption of the new lease accounting standard. A description of this change is included in Note 2 to the unaudited consolidated financial statements and notes thereto included in Item 1 of this Quarterly Report on Form 10-Q. There were no other material changes to our critical accounting policies and estimates during the nine months ended September 30, 2019.

NoOn April 15, 2019, we issued the 2026 Notes in a private placement to institutional buyers, and in connection therewith we repaid and discharged the Second Lien Term Loan in full, repaid $18 million in principal amount of term loan borrowings under the Credit Facility, and repaid all of the outstanding indebtedness under the revolving credit facility under the Credit Facility. Otherwise, no significant changes occurred in the ~~first nine months~~second quarter of ~~2017~~2019 to the contractual commitments discussed under Part II. Item 7., Management’s Discussion and Analysis of Financial Condition and Results of Operations – Commitments and Contractual Obligations, in our Annual Report on Form 10-K for the year ended December 31, 2016. On October 20, 2017, subsequent to quarter end, the American Acquisition and the related financing transaction were consummated. See “– Liquidity and Capital Resources–Senior Secured Credit Facilities” above for a discussion of our new Credit Facilities.2018.

We ~~may experience~~believe that our Casinos and Distributed Gaming segments are affected by seasonal ~~fluctuations that could significantly impact~~factors, including holidays, weather and travel conditions. Our Las Vegas and Pahrump casinos as well as our ~~quarterly operating results. Our casinos and~~Nevada distributed gaming ~~business in Nevada~~businesses have historically experienced lower revenues during the summer as a result of fewer tourists due to higher temperatures ~~as well as~~in addition to increased vacation activity by local residents. Our casinos in Laughlin and Rocky Gap typically ~~experiences~~experience higher revenues during summer months with increased visitation and may be ~~significantly~~ adversely impacted by inclement weather during winter months. Our ~~Nevada~~Montana distributed gaming operations also 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 winter months~~summer due to the inclement weather in ~~the state and less opportunity for outdoor activities, in addition to the impact from professional sports~~other seasons. 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.

See Note 1, Nature of Business and Basis of Presentation, in the accompanying unaudited consolidated financial statements for information regarding recently issued accounting pronouncements.

The casino and distributed gaming ~~and casino~~ industries are subject to extensive regulation by state gaming authorities. Changes in applicable laws or regulations could have a material adverse effect on us.

The gaming industry represents a significant source of tax revenues to regulators. From time to time, various federal and state legislators and officials have proposed changes in tax law, or in the administration of such law, affecting the gaming industry. It is not possible to determine the likelihood of possible changes in tax law or in the administration of such law. Such changes, if adopted, could have a material adverse effect on our future financial position, results of operations, cash flows and prospects.

We have no off 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.

Our primary exposure to market risk is interest rate risk associated with our variable rate long-term debt. As of September 30, ~~2017, approximately 96% of~~2019, our ~~indebtedness for borrowed money accrued interest at a~~ variable rate ~~which~~long-term debt primarily comprised our indebtedness under the ~~Former~~ Credit ~~Agreement. Immediately following the consummation~~Facility.

refinancing of the Former Credit Agreement on October 20, 2017, approximately 99% of our indebtedness for borrowed money accrued interest at a variable rate, primarily comprised of indebtedness under our new Credit Facilities.

At September 30, ~~2017,~~2019, we had ~~$168.0~~$772 million in principal amount of outstanding borrowings under the ~~Former~~ Credit ~~Agreement.~~Facility. Our primary interest rate under the ~~Former~~ Credit ~~Agreement was~~Facility is the Eurodollar rate plus an applicable ~~margin that was based on our total leverage ratio. For the nine months ended~~margin. As of September 30, ~~2017,~~2019, the weighted-average effective interest rate on our outstanding borrowings under the ~~Former~~ Credit ~~Agreement~~Facility was ~~3.5%~~approximately 5.4%. Assuming the outstanding balance under our Credit Facility remained constant over a year, a 50 basis point increase in the applicable interest rate would ~~have increased our~~increase interest incurred, prior to effects of capitalized interest, by ~~$0.8~~$3.9 million over a twelve-month period.

As of September 30, ~~2017,~~2019, our investment portfolio included ~~$42.9~~$123.8 million in cash and cash equivalents. As of September 30, ~~2017,~~2019, we did not hold any short-term investments.

We maintain disclosure controls and procedures designed to provide reasonable assurance of achieving the objective that information in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified and pursuant to the requirements of the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), we carried out an evaluation, with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of September 30, ~~2017,~~2019, the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the material weakness in our internal control over financial reporting which existed as of December 31, 2016, as described below, existed as of September 30, 2017. As a result of this material weakness, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were ~~not~~ effective at athe reasonable assurance level as of September 30, ~~2017.~~2019.

~~A material weakness is a deficiency, or a combination~~On January 14, 2019, the Laughlin Acquisition was completed. Management has begun the evaluation of ~~deficiencies, in~~the internal control structures of the Acquired Entities. However, SEC guidance permits management to omit an assessment of an acquired business’ internal control over financial reporting ~~such that there is a reasonable possibility that a material misstatement~~from management’s assessments of ~~the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness that management previously identified in~~ ~~connection with its evaluation of our~~ 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 the Acquired Entities from our evaluation of our disclosure controls and procedures as of ~~December 31, 2016 was as follows:~~

~~In light of~~as the ~~material weakness described above, and based on~~measurement period for the ~~criteria set forth in~~ ~~Internal Control — Integrated Framework (2013)~~ ~~issued by the COSO, our management concluded that our internal control over financial reporting was not effective~~business combination remained open as of ~~December 31, 2016.~~

~~We are in~~September 30, 2019. Revenues from the ~~process~~Acquired Entities comprised approximately 10% of ~~actively addressing~~our consolidated revenues for both the three and remediating the material weaknesses in internal control over financial reporting described above. During the first quarter of 2017, the Audit Committee directed management to develop and present to the Committee a plan and timetable for the implementation of remediation measures to correct this material weakness. During the second quarter of 2017, management delivered the remediation plan and timetable to the Audit Committee. Under management’s remediation plan, the remediation measures include, among other things:nine months ended September 30, 2019.

During the quarter ended September 30, ~~2017, except as described above,~~2019, there ~~were~~have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As described above, on January 14, 2019, the Laughlin Acquisition was completed. Our integration of the Acquired Entities may lead us to modify certain internal controls in future periods.

From time to time, we are involved in a variety of lawsuits, claims, investigations and other legal proceedings arising in the ordinary course of business, including proceedings concerning labor and employment matters, personal injury claims, breach of contract claims, commercial disputes, business practices, intellectual property, tax and other matters for which ~~the Company has recorded $1.5 million for claims as of the date of this filing.~~we record reserves. 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 ~~will~~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 usthe Company in the District Court of Clark County, Nevada, ~~and~~ on behalf of similarly situated individuals employed by usthe Company in the State of Nevada. The lawsuits ~~allege we~~alleged that the Company 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,~~court approved the settlement of one case in February 2019 and the second case in July 2019.

In August 2018, prior guests of The Strat filed a purported class action complaint against us in the District Court, Clark County, 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 alleged that the Tax was charged in violation of the federal Internet Tax Freedom Act, which imposed a national moratorium on the taxation of Internet access by states and their political subdivisions, and sought, on behalf of the ~~plaintiffs~~plaintiff and ~~members of~~ the putative class, ~~an unspecified~~damages equal to the amount of ~~damages (including punitive damages),~~the Tax collected on the Internet access component of the resort fee, injunctive ~~and equitable~~ relief, ~~and an award of attorneys’~~disgorgement, interest, fees ~~interest~~ and costs. All defendants to this matter, including Golden Entertainment, Inc., filed a joint motion to dismiss this matter for lack of merit. The District Court granted this joint motion to dismiss in February 2019. The plaintiffs appealed the District Court decision in April 2019 to the Supreme Court of Nevada. Briefs in this matter were filed with the Federal Appeals Court in October 2019.

While legal proceedings are inherently unpredictable and no assurance can be given as to the ultimate outcome of ~~these~~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.

In addition to the other information set forth in this report, you should carefully consider the factors discussed below, which we are including in this Quarterly Report on Form 10-Q as a result of the consummation of the American Acquisition and the related refinancing of our former senior secured credit facility on October 20, 2017, and which risk factors replace and supersede the risk factors previously described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016, as updated~~2018, which factors could materially affect our business, financial condition, liquidity or future results. There have been no material changes to the risk factors described in the “Risk Factors” section in our ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K for the ~~quarter~~year ended ~~June 30, 2017.~~December 31, 2018. The risks described ~~below and elsewhere~~ in ~~this Quarterly~~our Annual Report on Form ~~10-Q~~10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, liquidity, results of operations, prospects or stock price.

Any failure to successfully integrate our businesses 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:

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 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.

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.

The demand for gaming, entertainment and leisure activities is highly sensitive to downturns in the economy and the corresponding impact on discretionary consumer spending. Any actual or perceived deterioration or weakness in general, regional or local economic conditions, unemployment levels, the job or housing markets, consumer debt levels or consumer confidence, as well as any increase in gasoline prices, tax rates, interest rates, inflation rates or other adverse economic or market conditions, may lead to our customers having less discretionary income to spend on gaming, entertainment and discretionary travel, any of which may have a material adverse effect on our business, financial condition, results of operations and prospects.

Acts of terrorism, natural disasters, severe weather conditions and actual or perceived outbreaks of public health threats and pandemics could also significantly affect demand for gaming, entertainment and leisure activities and discretionary travel, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Furthermore, our properties are subject to the risk that operations could be halted for a temporary or extended period of time, as a result of casualty, forces of nature, adverse weather conditions, flooding, mechanical failure, or extended or extraordinary maintenance, among other causes. If there is a prolonged disruption at any of our casino properties due to natural disasters, terrorist attacks or other catastrophic events, our business, financial condition, results of operations and prospects could be materially adversely affected. Additionally, if extreme weather adversely impacts general economic or other conditions in the areas in which our properties are located or from which we draw our patrons or prevents patrons from easily coming to our properties, our business, financial condition, results of operations and prospects could be materially adversely affected.

~~We face substantial competition in both of our business segments, and may lose market share.~~

The casino resort and distributed gaming industries are highly competitive. In our casinos segment, we 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. If our competitors operate more successfully than we do, if they attract customers away from us as a result of aggressive pricing and promotion, if they are more successful than us in attracting and retaining employees, if their properties are enhanced or expanded, if they operate in jurisdictions that give them operating advantages due to differences or changes in gaming regulations or taxes, or if additional hotels and casinos are established in and around our markets, we may lose market share or the ability to attract or retain employees. Furthermore, several states are currently considering legalizing casino gaming in designated areas, and Native American tribes may develop or expand gaming properties in markets located more closely to our customer base (particularly Native American casinos located in California). 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.~~

With respect to our distributed gaming businesses, 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. In addition, 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 Credit Agreement. As of October 20, 2017, after giving effect to the entry into the Credit Facilities and associated refinancing of the Former Credit Facility, our total 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:

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 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 the closing of the acquisition. In addition, the 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 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. The 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.~~

The 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. The Credit Facilities include covenants restricting, among other things, our ability to do the following:

In addition, our revolving credit facility contains a financial covenant regarding including a maximum net leverage ratio that applies when borrowings under the facility exceed 30% of the total revolving commitment. The 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 the 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 our covenants under the 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.

~~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.~~

Our casino and tavern properties have an ongoing need for renovations and other capital improvements to remain competitive, including room refurbishments, amenity upgrades, and replacement, from time to time, 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.

Renovations and other capital improvements of casino properties in particular require significant capital expenditures. In addition, 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 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.

~~Changes to gaming tax laws could increase our cost of doing business and have a material adverse effect on our financial condition.~~

The gaming industry represents a significant source of tax revenue, particularly to the State of Nevada and its counties and municipalities. Gaming companies are currently subject to significant state and local taxes and fees in addition to normal federal and state corporate income taxes, and such taxes and fees are subject to increase at any time. From time to time, various federal, state and local legislators and other government officials have proposed and adopted changes in tax laws, or in the administration or interpretation of such laws, affecting the gaming industry. In addition, any worsening of economic conditions and the large number of state and local governments with significant current or projected budget deficits could intensify the efforts of state and local governments to raise revenues through increases in gaming taxes and/or property taxes. It is not possible to determine with certainty

the likelihood of changes in tax laws or in the administration or interpretation of such laws. Any material increase, or the adoption of additional taxes or fees, could have a material adverse effect on our business, financial condition, results of operations and prospects.

~~Our business is subject to extensive gaming regulation, which is costly to comply with, and gaming authorities have significant control over our operations.~~

We are subject to a variety of gaming regulations in the jurisdictions in which we operate, including the extensive gaming laws and regulations of the State of Nevada. Compliance with these regulations is costly and time-consuming. Regulatory authorities at the federal, state and local levels have broad powers with respect to the regulation and licensing of casino and gaming operations and may revoke, suspend, condition or limit our gaming or other licenses, impose substantial fines on us and take other actions, any one of which could have a material adverse effect on our business, financial condition, results of operations and prospects. We cannot assure you that we will be able to obtain and maintain the gaming licenses and related approvals necessary to conduct our gaming operations. Any failure to maintain or renew our existing licenses, registrations, permits or approvals could have a material adverse effect on our business, financial condition, results of operations and prospects.

Our directors, officers and key employees are also subject to a variety of regulatory requirements and must be approved by certain gaming authorities. If any gaming authority with jurisdiction over our business were to find an officer, director or key employee of ours unsuitable for licensing or unsuitable to continue having a relationship with 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.

Applicable gaming laws and regulations also restrict our ability to issue securities, incur debt and undertake other financing activities. Such transactions would generally require approval of gaming authorities, and our financing counterparties, including lenders, might be subject to various licensing and related approval procedures in the various jurisdictions in which we operate gaming facilities. Further, our gaming regulators can require us to disassociate ourselves from suppliers or business partners found unsuitable by the regulators. If any gaming authorities were to find any person unsuitable with regard to his, her or its relationship to us or any of our subsidiaries, we would be required to sever our relationship with that person, which could have a material adverse effect on our business, operations and prospects.

If additional gaming regulations are adopted in a jurisdiction in which we operate, such regulations could impose restrictions on us that would prevent us from operating our business as it is currently operated, or the increased costs associated with compliance with such regulations could lower our profitability. From time to time, various proposals are introduced in the legislatures of the jurisdictions in which we have operations that, if enacted, could adversely affect the tax, regulatory, operational or other aspects of the gaming industry and our company. Any such change to the regulatory environment or the adoption of new federal, state or local government legislation could impose additional restrictions or costs or could otherwise have a material adverse effect on our business, financial condition, results of operations and prospects.

Any violation of applicable anti-money laundering laws or regulations or the Foreign Corrupt Practices Act could adversely affect our business, financial condition, results of operations and prospects.

We handle significant amounts of cash in our operations and are subject to various reporting and anti-money laundering laws and regulations. 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.

We are subject to numerous other federal, state and local laws that may expose us to liabilities or have a significant adverse impact on our operations. Changes to any such laws could have a material adverse effect on our operations and financial condition.

Our business is subject to a variety of other federal, state and local laws, rules, regulations and ordinances. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, employees, currency transactions, taxation, zoning and building codes, and marketing and 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.

Our operations are subject to various environmental laws and regulations relating to emissions and discharges into the environment, and the storage, handling and disposal of hazardous and non-hazardous substances and wastes. These laws and regulations are complex, and subject to change, and violations can lead to significant costs for corrective action and remediation, fines and penalties.

Under certain of these laws and regulations, a current or previous owner or operator of property may be liable for the costs of remediating contamination on its property, without regard to whether the owner or operator knew of, or 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, 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.

Many of our employees, especially those that interact with our customers, receive a base salary or wage that is established by applicable state and federal laws that establish a minimum hourly wage that is, in turn, supplemented through tips and gratuities from customers. In February 2017, a former employee filed a purported class action lawsuit on behalf of similarly situated individuals employed by us in Nevada alleging 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 II, Item 1 of this Quarterly Report on Form 10-Q 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 manufacture and sale of alcoholic beverages is a highly regulated 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 pursuant 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 of 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.

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 restaurant business or businesses to be forced to cease operations. Moreover, state liquor laws may prevent the expansion of restaurant operations into certain markets.

Our insurance coverage may not be adequate to cover all possible losses that our properties could suffer. In addition, our insurance costs may increase and we may not be able to obtain the same insurance coverage in the future.

Although we have comprehensive property and liability insurance policies for our properties 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. Market 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.

We renew our insurance policies on an annual basis. The cost of coverage may become so high that we may need to reduce our policy limits or agree to certain exclusions from our coverage. Among other factors, it is possible that regional political tensions, homeland security concerns, other catastrophic events or any change in government legislation governing insurance coverage for acts of terrorism could materially adversely affect available insurance coverage and result in increased premiums on available coverage (which may cause us to elect to reduce our policy limits), additional exclusions from coverage or higher deductibles.

~~Increasing prices or shortages of energy and water may increase our cost of operations.~~

Our properties use significant amounts of water, electricity, natural gas and other forms of energy. Our Nevada properties in particular are located in a desert where water is scarce and the hot temperatures require heavy use of air conditioning. While we have not experienced any shortages of energy or water in the past, we cannot guarantee you that we will not in the future. Other states have suffered from electricity shortages. For example, California and Texas have experienced rolling blackouts due to excessive air conditioner use because of unexpectedly high temperatures in the past. We expect that potable water in Nevada, where the majority of our facilities are located, will become an increasingly scarce commodity at an increasing price.

~~Work stoppages, labor problems and unexpected shutdowns may limit our operational flexibility and negatively impact our future profits.~~

A number of employees at our casino properties are covered by collective bargaining agreements. Any work stoppage at one or more of our casino properties could require us to expend significant funds to hire replacement workers, and qualified replacement labor may not be available at reasonable costs, if at all. Strikes and work stoppages could also result in adverse media attention or otherwise discourage customers from visiting our casino properties. As a result, a strike or other work stoppage at one of our casino properties could have a material adverse effect on the business of our casino properties and our financial condition and results of operations.

Any unexpected shutdown of one of our casino properties could have an adverse effect on the business of our casino properties and our results of operations. There can be no assurance that we will be adequately prepared for unexpected events, including political or regulatory actions, which may lead to a temporary or permanent shutdown of any of our casino properties.

~~Our reputation and business could be materially harmed as a result of data breaches, data theft, unauthorized access or hacking.~~

Our success depends, in part, on the secure and uninterrupted performance of our information technology and other systems and infrastructure, including systems to maintain and transmit customers’ personal and financial information, credit card settlements, credit card funds transmissions and mailing lists. We could encounter difficulties in developing new systems, maintaining and upgrading current systems and preventing security breaches. Among other things, our systems are susceptible to outages due to fire, floods, power loss, break-ins, cyber-attacks, network penetration, denial of service attacks and similar events. An increasing number of companies have disclosed 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. 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 could be held liable to our customers or other parties, or 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.

~~Our revenues may be negatively impacted by volatility in our hold percentage, and we also face the risk of fraud or cheating.~~

Casino revenue is recorded as the difference between gaming wins and losses or net win from gaming activities. Net win is impacted by variations in the hold percentage (the ratio of net win to total amount wagered), or actual outcome, on our 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 slot machines and the random nature of slot machine payouts. If our games perform below their expected range of outcomes, our cash flow may suffer.

In addition, gaming customers may attempt or commit fraud or otherwise cheat in order to increase their winnings. Acts of fraud or cheating could involve the use of counterfeit chips or other tactics and could include collusion with our employees. Internal acts of cheating could also be conducted by employees through collusion with dealers, surveillance staff, floor managers or other casino or

gaming area staff. Failure to discover such acts or schemes in a timely manner could result in losses in our gaming operations, which could be substantial. In addition, negative publicity related to such schemes could have an adverse effect on our reputation, thereby materially adversely affecting our business, financial condition, results of operations, and prospects.

~~Our business is geographically concentrated, which subjects us to greater risks from changes in local or regional conditions.~~

We currently operate casinos solely in Nevada and in Flintstone, Maryland, and conduct our distributed gaming (including tavern gaming) 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:

Some of our casino properties and most of our tavern properties largely cater to the local markets and depend on the local markets for customers. Competition for local customers in Las Vegas in particular has historically been 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.

As a result of the geographic concentration of our businesses, we face a greater risk of a negative impact on our business, financial condition, results of operations and prospects in the event that any of the geographic areas in which we operate is more severely impacted by any such adverse condition, as compared to other areas in the United States.

~~We may experience seasonal fluctuations that could significantly impact our quarterly operating results.~~

We may experience seasonal fluctuations that could significantly impact our quarterly operating results. Our casinos and distributed gaming business 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 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 winter months due to the inclement weather in the state and less opportunity for outdoor activities, in addition to the impact from professional sports seasons. 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 gaming devices 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 slot machines, 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 gaming devices 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 gaming devices 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.

~~The success of our distributed gaming business is dependent on our ability to renew our contracts.~~

We conduct the majority of our distributed gaming business under space lease, revenue share and participation contracts with third parties. Contracts with chain store and street customers are renewable at the option of the owner of the applicable chain store or street account. As our distributed gaming contracts 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, 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 contracts will be renewed on reasonable or comparable terms, or at all.

We have identified a material weakness in our internal control over financial reporting, and we cannot provide assurances that this material weakness will be effectively remediated or that additional material weaknesses will not occur in the future.

As discussed in “Part II, Item 9A, “Controls and Procedures,” our Chief Executive Officer and Chief Financial Officer concluded that a material weakness existed in our internal control over financial reporting as of December 31, 2016. 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. The material weakness identified 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. There can be no assurance that we will be able to fully remediate this material weakness. If we fail to remediate this material weakness or otherwise maintain effective internal control over financial reporting 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 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.

~~We may be subject to litigation which, if adversely determined, could expose us to significant liabilities, damage our reputation and result in substantial losses.~~

From time to time, we are involved in a variety of lawsuits, claims, investigations and other legal proceedings arising in the ordinary course of business, including proceedings concerning labor and employment matters, personal injury claims, breach of contract claims, commercial disputes, business practices, intellectual property, tax and other matters. See Part II, Item 1 of this Quarterly Report on Form 10-Q 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.

We evaluate all litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of potential losses. Based on these assessments and estimates, we establish reserves and/or disclose the relevant litigation claims or legal proceedings, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. We caution you that actual outcomes or losses may differ materially from those envisioned by our current assessments and estimates. As a result, litigation can have a significant adverse effect on our businesses and, because we cannot predict the outcome of any action, it is possible that adverse judgments or settlements could have a material adverse effect on our business, financial condition, results of operations and prospects.

~~We depend on a limited number of key employees who would be difficult to replace.~~

We depend on a limited number of key personnel to manage and operate our business, including our Chief Executive Officer, our Chief Operating Officer and our Chief Strategy and Financial 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.

~~Our executive officers and directors own or control a large percentage of our common stock, which permits them to exercise significant control over us.~~

As of September 30, 2017, after giving effect to the issuance of 4,046,494 shares of our common stock in the American Acquisition, our executive officers and directors and entities affiliated with them would have owned, in the aggregate, approximately 43% 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.

Our shareholders may be required to provide information that is requested 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.

Gaming authorities may, in their sole and absolute discretion, require the holder of any securities issued by us to file applications, be investigated, and be found suitable to own our securities if they have reason to believe that the security ownership would be

inconsistent with the declared policies of their respective states. 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.

Our Articles of Incorporation require our shareholders to provide information that is requested by authorities that regulate our current or proposed gaming operations. Our Articles of Incorporation also permit us to redeem the securities held by persons whose status as a security holder, in the opinion of our Board of Directors, jeopardizes our existing gaming licenses or approvals. The price paid for these securities is, in general, the average closing price for the 30 trading days prior to giving notice of redemption.

In the event a shareholder’s background or status jeopardizes our current or proposed gaming licensure, we may be required to redeem such shareholder’s securities in order to continue gaming operations or obtain a gaming license. This redemption may divert our cash resources from other productive uses and require us to obtain additional financing which, if in the form of equity financing, would be dilutive to our shareholders. Further, any debt financing may involve additional restrictive covenants and further leveraging of our fixed assets. The inability to obtain additional financing to redeem a disqualified shareholder’s securities may result in the loss of a current or potential gaming license.

There is a limited public market for our common stock. We cannot provide assurances that a more active trading market will develop or be sustained. As a result of low trading volume in our common stock, the purchase or sale of a relatively small number of shares of our common stock could result in significant price fluctuations, and it may be difficult for holders to sell their shares without depressing the market price for our common stock.

~~We expect our stock price to be volatile, and you may lose some or all of your investment.~~

~~The market price of our common stock has been, and is likely to continue to be, volatile. The market price of our common stock may be significantly affected by many factors, including:~~

Any of these events may cause the market price of our common stock to fall. In addition, the stock market in general has experienced significant volatility, which may adversely affect the market price of our common stock regardless of our operating performance.

~~Future sales of our common stock could lower our stock price and dilute existing shareholders.~~

In June 2016, we filed a universal shelf registration statement with the SEC for the future sale of up to $150 million in aggregate amount of common stock, preferred stock, debt securities, warrants and units. The securities may be offered 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.

We may also issue additional shares of common stock to finance future acquisitions through the use of equity. For example, we issued approximately 8.5 million shares of our common stock in connection with the acquisition of Sartini Gaming, Inc. and approximately 4.0 million shares of our common stock in connection with the American Acquisition. The holders of approximately 12.0 million of such shares have the right to require us to register with the SEC resales of such shares from time to time. 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 any shares issued in connection with the acquisitions of Sartini Gaming, Inc. and American, 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 previously disclosed.~~

The pro forma financial results that we have previously disclosed with respect to the American Acquisition were 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 Acquisition for several reasons. Our actual financial condition and results of operations following the 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 Acquisition. Any potential decline in our financial condition or results of operations may cause significant declines in our stock price.

~~Provisions in our Articles of Incorporation and Bylaws or our Credit Facilities may discourage, delay or prevent a change in control or prevent an acquisition of our business at a premium price.~~

Some of the provisions of our Articles of Incorporation and our Bylaws and Minnesota law could discourage, delay or prevent an acquisition of our business, even if a change in control would be beneficial to the interests of our shareholders and was made at a premium price. These provisions:

Although we have amended our Bylaws to provide that Section 302A.671 (Control Share Acquisitions) of the Minnesota Business Corporation Act does not apply to or govern us, we remain subject to 302A.673 (Business Combinations) of the Minnesota Business Corporation Act, which generally prohibits us from engaging in business combinations with any “interested” shareholder for a period of four years following the shareholder’s share acquisition date, which may discourage, delay or prevent a change in control of our company. In addition, our Credit Facilities provide for an event of default upon the occurrence of certain specified change of control events.

#Management contract or compensatory plan or arrangement in which one or more executive officers or directors participates

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

Minnesota	41-1913991
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

6595 S Jones Boulevard
Las Vegas, Nevada	89118
(Address of principal executive offices)	(Zip Code)

		Page
PART I.	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	1

	Consolidated Balance Sheets as of September 30, ~~2017~~2019 and December 31, ~~2016~~2018	1

	Consolidated Statements of Operations for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018	2

	Consolidated Statement of Shareholders’ Equity for the three and nine months ended September 30, 2019 and 2018	3

	Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018	35

	Condensed Notes to Consolidated Financial Statements	57

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2830

ITEM 4.	CONTROLS AND PROCEDURES	2930

PART II.	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	30

ITEM 1A.	RISK FACTORS	3031

ITEM 6.	EXHIBITS	4132

SIGNATURES		4233

Supplemental cash flow disclosures
Cash paid for interest	$	38,676		$	44,648
Cash received for income taxes, net		(193	)		—
Non-cash investing and financing activities
Payables incurred for capital expenditures	$	9,434		$	3,680
Assets acquired under finance lease obligations		5,768			237
Loss on extinguishment of debt		4,388			—
Impairment of right-of-use asset		12,272			—
Common stock issued in connection with acquisition		16,608			—

(In thousands)	Prior to Adoption			Effect of Adoption⁽¹⁾			Post Adoption
Prepaid expenses	$	17,722		$	(194	)	$	17,528
Property and equipment, net		894,953			2,503			897,456
Operating lease right-of-use assets, net		—			140,715			140,715
Intangible assets, net		141,128			(2,503	)		138,625
Operating lease liability		—			155,878			155,878
Other long-term obligations		4,801			(3,085	)		1,716
Accumulated deficit		(120,361	)		(12,272	)		(132,633	)

The STRAT Hotel, Casino & SkyPod ("The Strat")		Las Vegas, Nevada
Arizona Charlie's Decatur		Las Vegas, Nevada
Arizona Charlie's Boulder		Las Vegas, Nevada
Aquarius Casino Resort ("Aquarius")		Laughlin, Nevada
Edgewater Hotel & Casino Resort ("Edgewater")		Laughlin, Nevada
Colorado Belle Hotel & Casino Resort ("Colorado Belle")		Laughlin, Nevada
Pahrump Nugget Hotel Casino ("Pahrump Nugget")		Pahrump, Nevada
Gold Town Casino		Pahrump, Nevada
Lakeside Casino & RV Park		Pahrump, Nevada
Rocky Gap Casino Resort ("Rocky Gap")		Flintstone, Maryland

(In thousands)	Amount
Cash	$	156,152
Fair value of common stock issued (911,002 shares)		16,608
Total purchase price	$	172,760

(In thousands)	Useful Life	As Recorded, at Fair Value
Customer relationships	15 years	$	9,800
Non-competition agreements	5 years		3,900
Trade name	4 years		500
Other	15 years		200
Total intangible assets acquired		$	14,400

(In thousands)	Useful Life (Years)
Land	Not applicable	$	4,160
Building and site improvements	10-30		102,450
Furniture and equipment	2-13		18,185
Construction in process	Not applicable		1,403
Total property and equipment		$	126,198

(In thousands)	Final Purchase Price Allocation
Cash and other current assets	$	404
Property and equipment		7,839
Intangible assets		11,400
Goodwill		6,013
Total acquired assets	$	25,656

(In thousands)	Useful Life (Years)
Non-compete agreements	5	$	3,630
Trade names	Indefinite		6,980
Player loyalty program	2		8,600
Other	4		24
Total intangible assets		$	19,234

	Three Months Ended			Nine Months Ended
(In thousands, except per share data)	September 30, 2018			September 30, 2018
Pro forma combined revenues	$	233,102		$	713,807
Pro forma combined net income (loss)		(1,453	)		6,066
Weighted-average common shares outstanding:
Basic		28,566			28,316
Diluted		28,566			30,103
Pro forma combined net income (loss) per share:
Basic	$	(0.05	)	$	0.21
Diluted		(0.05	)		0.20

	September 30, 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		12,200		—			12,200
Other	Indefinite		185		—			185
			13,345		—			13,345

Amortizing intangible assets
Customer relationships	12.5 years		78,100		(11,015	)		67,085
Player relationships	9.7 years		7,300		(1,392	)		5,908
Gaming license	10.6 years		2,100		(613	)		1,487
Non-compete agreements	3.2 years		6,000		(2,110	)		3,890
Other	8.4 years		1,769		(489	)		1,280
			95,269		(15,619	)		79,650
Balance, September 30, 2017		$	108,614	$	(15,619	)	$	92,995

	Stock Options
				Weighted-
				Average
	Shares			Exercise Price
Outstanding at January 1, 2019		3,424,755		$	11.49
Granted		—		$	—
Exercised		(90,890	)	$	9.10
Cancelled		(21,875	)	$	11.41
Outstanding at September 30, 2019		3,311,990		$	11.56
Exercisable at September 30, 2019		2,793,348		$	11.32

	RSUs					PSUs
				Weighted-				Weighted-
				Average Grant				Average Grant
	Shares			Date Fair Value		Shares⁽¹⁾		Date Fair Value
Outstanding at January 1, 2019		232,299		$	29.10		171,748	$	28.41
Granted		561,606		$	13.94		204,580	$	14.13
Vested		(102,218	)	$	29.59		—	$	—
Cancelled		(20,899	)	$	22.69		—	$	—
Outstanding at September 30, 2019		670,788		$	16.53		376,328	$	20.65

	Number of Common Shares								Weighted-
	Options					Available			Average
	Outstanding			Exercisable		for Grant			Exercise Price
2017
Balance at December 31, 2016		3,402,481			411,029		274,596		$	9.02
Authorized		—					889,259			—
Granted		977,570					(977,570	)		14.25
Exercised		(22,989	)				—			7.36
Cancelled		(128,105	)				103,105			11.36
Balance at September 30, 2017		4,228,957			388,040		289,390		$	10.17

2016
Balance at December 31, 2015		2,419,529			724,529		837,635		$	8.16
Authorized		—					874,709			—
Granted		1,128,070					(1,128,070	)		11.89
Options Subject to Anti-Dilutive Adjustments		(2,337,643	)				—			8.75
Options Subject to Anti-Dilutive Adjustments		2,337,643					—			7.04
Exercised		(310,656	)				—			5.73
Cancelled		(10,000	)				10,000			9.33
Balance at September 30, 2016		3,226,943			413,873		594,274		$	8.57

	September 30, 2019
	Carrying		Fair		Fair Value
(In thousands)	Amount		Value		Hierarchy
Term loans	$	772,000	$	775,358	Level 2
Senior notes due 2026		375,000		390,938	Level 2
Finance lease liabilities		11,569		11,569	Level 3
Notes payable		4,748		4,748	Level 3
Total debt	$	1,163,317	$	1,182,613

(In thousands, except lease term and discount rate)	September 30, 2019
Operating leases
Operating lease right-of-use assets, gross	$	175,898
Accumulated amortization		26,987
Operating lease right-of-use assets, net	$	148,911

Current portion of operating leases	$	25,822
Noncurrent operating leases		138,104
Total operating lease liabilities	$	163,926

Finance leases
Property and equipment, gross	$	18,209
Accumulated depreciation		(3,356	)
Property and equipment, net	$	14,853

Current portion of finance leases, net	$	3,201
Noncurrent finance leases, net		8,368
Total finance lease liabilities	$	11,569

Weighted Average Remaining Lease Term
Operating leases	10.3 years
Finance leases	6.9 years

Weighted Average Discount Rate
Operating leases		6.3	%
Finance leases		6.5	%

	Operating			Finance
(In thousands)	Leases			Leases			Total
Remaining 2019	$	11,373		$	1,037		$	12,410
2020		30,776			3,787			34,563
2021		29,441			3,290			32,731
2022		22,906			1,954			24,860
2023		17,469			529			17,998
Thereafter		117,243			4,055			121,298
Total lease payments		229,208			14,652			243,860
Less: interest		(65,282	)		(3,083	)		(68,365	)
Present value of lease liabilities	$	163,926		$	11,569		$	175,495

	Remainder of
(In thousands)	2017		2018		2019		2020		2021		Thereafter		Total
Minimum operating lease payments
Space lease agreements	$	7,035	$	27,300	$	26,286	$	6,653	$	2,974	$	1,845	$	72,093
Related party leases		470		1,890		1,902		1,914		1,927		9,109		17,212
Other operating leases		3,083		11,629		10,903		10,717		9,948		88,481		134,761
	$	10,588	$	40,819	$	39,091	$	19,284	$	14,849	$	99,435	$	224,066

	Three Months Ended September 30, 2017
(In thousands)	Distributed Gaming			Casinos			Corporate and Other			Consolidated
Net revenues	$	80,746		$	27,484		$	92		$	108,322

Adjusted EBITDA		11,169			8,928			(5,024	)		15,073
Acquisition expenses		—			—			(2,975	)		(2,975	)
Share-based compensation		—			—			(1,603	)		(1,603	)
Loss on disposal of property and equipment		(272	)		(35	)		(1	)		(308	)
Gain on revaluation of contingent consideration		1,719			—			—			1,719
Preopening expenses		(121	)		—			(161	)		(282	)
Class action litigation expenses		—			—			(1,530	)		(1,530	)
Sign-on bonuses		—			—			(166	)		(166	)
Depreciation and amortization		(4,937	)		(2,202	)		(400	)		(7,539	)
Income (loss) from operations		7,558			6,691			(11,860	)		2,389
Non-operating income (expense)
Interest expense, net		(41	)		(5	)		(1,839	)		(1,885	)
Total non-operating expense, net		(41	)		(5	)		(1,839	)		(1,885	)
Income (loss) before income tax benefit		7,517			6,686			(13,699	)		504
Income tax benefit		—			—			8,051			8,051
Net income (loss)	$	7,517		$	6,686		$	(5,648	)	$	8,555

	Three Months Ended September 30, 2016
(In thousands)	Distributed Gaming			Casinos			Corporate and Other			Consolidated
Net revenues	$	78,253		$	25,909		$	64		$	104,226

Adjusted EBITDA		10,483			6,511			(4,439	)		12,555
Merger expenses		—			—			(139	)		(139	)
Share-based compensation		—			—			(1,654	)		(1,654	)
Gain on disposal of property and equipment		14			—			330			344
Preopening expenses		(666	)		—			(135	)		(801	)
Depreciation and amortization		(4,871	)		(2,034	)		(318	)		(7,223	)
Income (loss) from operations		4,960			4,477			(6,355	)		3,082
Non-operating income (expense)
Interest expense, net		(43	)		(3	)		(1,643	)		(1,689	)
Total non-operating expense, net		(43	)		(3	)		(1,643	)		(1,689	)
Income (loss) before income tax provision		4,917			4,474			(7,998	)		1,393
Income tax provision		(60	)		—			(31	)		(91	)
Net income (loss)	$	4,857		$	4,474		$	(8,029	)	$	1,302

	Nine Months Ended September 30, 2017
(In thousands)	Distributed Gaming			Casinos			Corporate and Other			Consolidated
Net revenues	$	247,192		$	78,002		$	267		$	325,461

Adjusted EBITDA		37,753			22,164			(16,272	)		43,645
Acquisition expenses		—			—			(5,041	)		(5,041	)
Share-based compensation		—			—			(5,352	)		(5,352	)
Loss on disposal of property and equipment		(272	)		(35	)		(1	)		(308	)
Gain on revaluation of contingent consideration		1,719			—			—			1,719
Preopening expenses		(730	)		—			(398	)		(1,128	)
Class action litigation expenses		—			—			(1,585	)		(1,585	)
Sign-on bonuses		—			—			(166	)		(166	)
Depreciation and amortization		(14,513	)		(5,798	)		(1,188	)		(21,499	)
Income (loss) from operations		23,957			16,331			(30,003	)		10,285
Non-operating income (expense)
Interest expense, net		(361	)		34			(5,241	)		(5,568	)
Total non-operating income (expense), net		(361	)		34			(5,241	)		(5,568	)
Income (loss) before income tax benefit		23,596			16,365			(35,244	)		4,717
Income tax benefit		—			—			10,893			10,893
Net income (loss)	$	23,596		$	16,365		$	(24,351	)	$	15,610

	Nine Months Ended September 30, 2016
(In thousands)	Distributed Gaming			Casinos			Corporate and Other			Consolidated
Net revenues	$	224,602		$	73,031		$	185		$	297,818

Adjusted EBITDA		32,065			18,118			(13,779	)		36,404
Merger expenses		—			—			(614	)		(614	)
Share-based compensation		—			—			(2,509	)		(2,509	)
Gain on disposal of property and equipment		14			—			330			344
Preopening expenses		(1,655	)		—			(238	)		(1,893	)
Depreciation and amortization		(13,166	)		(5,720	)		(976	)		(19,862	)
Income (loss) from operations		17,258			12,398			(17,786	)		11,870
Non-operating income (expense)
Interest expense, net		(118	)		(4	)		(4,664	)		(4,786	)
Other, net		—			—			18			18
Total non-operating expense, net		(118	)		(4	)		(4,646	)		(4,768	)
Income (loss) before income tax provision		17,140			12,394			(22,432	)		7,102
Income tax provision		(60	)		—			(701	)		(761	)
Net income (loss)	$	17,080		$	12,394		$	(23,133	)	$	6,341

	Remaining 2019		2020		2021		2022		2023		Thereafter		Total
(In thousands)
Term loan	$	—	$	—	$	4,000	$	8,000	$	8,000	$	752,000	$	772,000
Senior notes due 2026		—		—		—		—		—		375,000		375,000
Interest on long-term debt ⁽¹⁾		16,980		67,807		67,642		67,303		66,898		95,181		381,811
Operating leases		11,373		30,776		29,441		22,906		17,469		117,243		229,208
Notes payable and finance lease obligations⁽²⁾		1,776		6,859		4,225		1,977		541		4,055		19,433
	$	30,129	$	105,442	$	105,308	$	100,186	$	92,908	$	1,343,479	$	1,777,452

Exhibits		Description

~~4.1~~ 10.1#		~~First~~Third Amendment to ~~Amended and Restated Rights~~Employment Agreement, dated as of ~~October 20, 2017,~~August 5, 2019, by and between Golden Entertainment, Inc. and ~~Wells Fargo Shareowner Services, a division of Wells Fargo Bank, National Association.~~ ~~(incorporated by reference to Exhibit 4.1 to Golden Entertainment, Inc.’s Current Report on Form 8-K~~ Charles Protell~~dated October 20, 2017, filed on October 23, 2017)~~
~~10.1~~		~~Registration Rights Agreement, dated as of October 20, 2017, by and between Golden Entertainment, Inc. and W2007/ACEP Holdings, LLC.~~ ~~(incorporated by reference to Exhibit 10.1 to Golden Entertainment, Inc.’s Current Report on Form 8-K dated October 20, 2017, filed on October 23, 2017)~~
~~10.2~~		~~Stockholders Agreement, dated as of October 20, 2017, by and between Golden Entertainment, Inc. and W2007/ACEP Holdings, LLC.(incorporated by reference to Exhibit 10.2 to Golden Entertainment, Inc.’s Current Report on Form 8-K dated October 20, 2017, filed on October 23, 2017)~~
~~10.3~~		First Lien Credit Agreement, dated as of October 20, 2017, by and among Golden Entertainment, Inc. (as borrower), the subsidiaries of Golden Entertainment, Inc. party thereto, JPMorgan Chase Bank, N.A. (as administrative agent and collateral agent) and the other lenders party thereto. ~~(incorporated by reference to Exhibit 10.3 to Golden Entertainment, Inc.’s Current Report on Form 8-K dated October 20, 2017, filed on October 23, 2017)~~
~~10.4~~		Second Lien Credit Agreement, dated as of October 20, 2017, by and among Golden Entertainment, Inc. (as borrower), the subsidiaries of Golden Entertainment, Inc. party thereto, Credit Suisse AG (as administrative agent and collateral agent) and the other lenders party thereto. ~~(incorporated by reference to Exhibit 10.4 to Golden Entertainment, Inc.’s Current Report on Form 8-K dated October 20, 2017, filed on October 23, 2017)~~
~~10.5~~		Termination of NOL Preservation Agreement, dated as of October 20, 2017, entered into by and between Golden Entertainment, Inc., The Blake L. Sartini and Delise F. Sartini Family Trust, Lyle A. Berman and certain other shareholders of Golden Entertainment, Inc. ~~(incorporated by reference to Exhibit 10.5 to Golden Entertainment, Inc.’s Current Report on Form 8-K dated October 20, 2017, filed on October 23, 2017)~~
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Calculation Definition Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

	GOLDEN ENTERTAINMENT, INC.
	(Registrant)

Dated: November ~~9, 2017~~8, 2019	/s/ BLAKE L. SARTINI
	Blake L. Sartini
	Chairman of the Board ~~President~~ and Chief Executive Officer
	(Principal Executive Officer)

	/s/ CHARLES H. PROTELL
	Charles H. Protell
	~~Executive Vice~~ President ~~Chief Strategy Officer~~ and Chief Financial Officer
	(Principal Financial Officer)

	/s/ ~~GARY A. VECCHIARELLI~~THOMAS E. HAAS
	~~Gary A. Vecchiarelli~~Thomas E. Haas
	Senior Vice President of ~~Finance and~~ Accounting
	(Principal Accounting Officer)

Large accelerated filer

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☐ ~~(Do not check if a smaller reporting company)~~

Smaller reporting company

Emerging growth company