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Financial report summary
?Risks
- We face substantial competition and expect that such competition will continue.
- Our business is sensitive to reductions in discretionary consumer spending as a result of downturns in the economy and other factors outside our control.
- Win rates (hold rates) for our casino operations depend on a variety of factors, some of which are beyond our control, and participation in the sports betting industry exposes us to trading, liability management and pricing risks. We may experience lower than expected profitability and potentially significant losses as a result of factors beyond our control or a failure to accurately determine odds.
- We rely on third parties to provide services that are essential to the operation of our online betting and gaming business, including, player account management, geolocation and identity verification, payment processing and sports data.
- The growth of our digital business will depend, in part, on the success of our strategic relationships with third parties.
- The growth of our digital business will require investments in our online offerings, technology and strategic marketing initiatives, which could be costly and negatively impact the economics of our online business.
- We face the risk of fraud, theft, and cheating.
- We extend credit to a portion of our customers, and we may not be able to collect gaming receivables from our credit customers.
- The outbreak of pandemics and other public health matters and related impacts have had, and may once again have, a significant impact on our operations and results of operations.
- Acts of terrorism, war, natural disasters, severe weather, and political, economic and military conditions may impede our ability to operate or may negatively impact our financial results.
- Increased scrutiny and changing expectations from investors, consumers, employees, regulators, and others regarding our environmental, social and governance practices and reporting could cause us to incur additional costs, devote additional resources and expose us to additional risks, which could adversely impact our reputation, customer attraction and retention, access to capital and employee recruitment and retention.
- Climate change regulations and greenhouse gas effects may adversely impact our operations.
- Our business may be subject to fluctuations due to seasonality and other factors that could result in volatility and have an adverse effect on our operating results.
- Our business is particularly sensitive to energy or water prices and a rise in these prices could harm our operating results.
- Any deterioration in our reputation or the reputation of our brands could adversely impact our business, financial condition, or results of operations.
- Compromises of our information systems or unauthorized access to confidential information or our customers’ personal information could materially harm our reputation and business.
- Our operations, and particularly our digital betting and gaming operations, are reliant on information technology and other systems and services, and any failures, errors, defects or disruptions in our systems or services could adversely affect our operations.
- Our online business is dependent on the Internet and we rely on Amazon Web Services and other third-party technology, platforms and services to deliver our offerings to users.
- Our online business model depends upon the continued compatibility between our apps and the major mobile operating systems and upon third-party platforms for the distribution of our product offerings, which depend on factors beyond our control such as the design of third-party operating systems and continued access to our apps on third-party distribution platforms like the Apple App Store.
- We rely on our key personnel and we may face difficulties in attracting and retaining qualified employees for our casinos and racetracks.
- Work stoppages and other labor problems could negatively impact our future profits.
- We cannot assure you that we will be able to retain our performers and other entertainment offerings on acceptable terms or at all.
- Our substantial indebtedness and the fact that a significant portion of our cash flow is used to make interest payments and rent payments under our debt and lease agreements could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from making debt service payments and rent payments.
- Despite our current indebtedness levels, we and our subsidiaries may still incur significant additional indebtedness. Incurring more indebtedness could increase the risks associated with our substantial indebtedness.
- Our variable rate indebtedness exposes us to interest rate volatility, which could cause our debt service obligations to increase significantly.
- A significant portion of our casinos are located on leased property. If we default on one or more leases, the applicable lessors could terminate the affected leases and we could lose possession of the affected casino.
- We are subject to extensive governmental regulation, taxation policies and licensing, and gaming authorities have significant control over our operations, which could have an adverse effect on our business.
- The growth of our online betting and gaming business will depend on expansion of online betting and gaming into new jurisdictions and our ability to obtain required licenses.
- We may not be able to protect the intellectual property rights we own or may be prevented from using intellectual property necessary for our business.
- We rely on licenses to use the intellectual property rights of third parties which are incorporated into our products and services. Failure to renew or expand existing licenses may require us to modify, limit or discontinue certain offerings.
- We are or may become involved in legal proceedings that, if adversely adjudicated or settled, could impact our business and financial condition.
Management Discussion
- (a)Corporate and Other includes revenues related to certain licensing arrangements and various revenue sharing agreements. Corporate and Other Adjusted EBITDA includes corporate overhead costs, which consist of certain expenses, such as: payroll, professional fees and other general and administrative expenses.
- (b)See the “Supplemental Unaudited Presentation of Consolidated Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”)” discussion later in this MD&A for a description of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.