UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 000-24993

GOLDEN ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)


Minnesota			41-1913991
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
6595 S Jones Boulevard
Las Vegas, Nevada			89118
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (702) 893-7777

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	GDEN	The Nasdaq Stock Market LLC

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 every Interactive Data File required to be submitted 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 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.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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 May ~~2, 2022,~~1, 2023, the registrant had ~~28,980,488~~28,837,173 shares of common stock, $0.01 par value per share, outstanding.

GOLDEN ENTERTAINMENT, INC.

FORM 10-Q

INDEX


		Page
PART I.	FINANCIAL INFORMATION	1

ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	1

	Consolidated Balance Sheets as of March ~~31, 2022~~ 3 1 , 202 3 and December 31, ~~2021~~20 2 2	1

	Consolidated Statements of Operations for the three months ended March ~~31, 2022~~ 3 1 , 202 3 and ~~2021~~202 2	2

	Consolidated Statements of Shareholders’ Equity for the three months ended March 3 1 , 202 23 and 202 12	3

	Consolidated Statements of Cash Flows for the three months ended ~~March~~Ma rch 3 1 , 202 23 and 202 12	4

	Condensed Notes to Consolidated Financial Statements	6

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1819

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2628

ITEM 4.	CONTROLS AND PROCEDURES	2729

PART II.	OTHER INFORMATION	2729

ITEM 1.	LEGAL PROCEEDINGS	2729

ITEM 1A.	RISK FACTORS	27

~~ITEM 2.~~	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~	2729

ITEM 5.	OTHER INFORMATION	2830

ITEM 6.	EXHIBITS	2931

SIGNATURES		3032

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GOLDEN ENTERTAINMENT, INC.

Consolidated Balance Sheets

(In thousands, except per share data)


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(unaudited)					(unaudited)
ASSETS	ASSETS					ASSETS
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	202,283	$	220,540	Cash and cash equivalents	$	110,474	$	136,889
Accounts receivable, net of allowance for credit losses of $659 and $481 at March 31, 2022 and December 31, 2021, respectively		20,535		18,720
Accounts receivable, net of allowance for credit losses of $931 and $775 at March 31, 2023 and December 31, 2022, respectively						Accounts receivable, net of allowance for credit losses of $931 and $775 at March 31, 2023 and December 31, 2022, respectively	15,097		20,495
Prepaid expenses	Prepaid expenses	24,244		15,108		Prepaid expenses	21,257		25,900
Inventories	Inventories	7,427		6,637		Inventories	7,239		8,117
Other	Other	3,184		2,933		Other	8,234		13,610
Assets held for sale						Assets held for sale	293,365		39,562
Total current assets	Total current assets	257,673		263,938		Total current assets	455,666		244,573
Property and equipment, net	Property and equipment, net	890,625		904,220		Property and equipment, net	812,308		840,731
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	170,775		179,251		Operating lease right-of-use assets, net	80,619		147,893
Goodwill	Goodwill	158,396		158,396		Goodwill	80,751		158,396
Intangible assets, net	Intangible assets, net	96,169		98,058		Intangible assets, net	49,718		89,552
Deferred income tax assets	Deferred income tax assets	18,698		—		Deferred income tax assets	11,822		11,822
Other assets	Other assets	11,803		11,701		Other assets	9,000		15,703
Total assets	Total assets	$	1,604,139	$	1,615,564	Total assets	$	1,499,884	$	1,508,670
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities	Current liabilities					Current liabilities
Current portion of long-term debt and finance leases	Current portion of long-term debt and finance leases	$	655	$	1,057	Current portion of long-term debt and finance leases	$	477	$	555
Current portion of operating leases	Current portion of operating leases	38,770		40,151		Current portion of operating leases	12,989		42,200
Accounts payable	Accounts payable	23,880		19,102		Accounts payable	17,722		25,168
Accrued payroll and related	Accrued payroll and related	24,188		31,309		Accrued payroll and related	19,556		21,227
Accrued liabilities	Accrued liabilities	47,212		35,347		Accrued liabilities	36,680		33,365
Liabilities related to assets held for sale						Liabilities related to assets held for sale	74,472		10,187
Total current liabilities	Total current liabilities	134,705		126,966		Total current liabilities	161,896		132,702
Long-term debt, net and non-current finance leases	Long-term debt, net and non-current finance leases	986,542		1,010,469		Long-term debt, net and non-current finance leases	901,405		900,464
Non-current operating leases	Non-current operating leases	148,131		155,098		Non-current operating leases	83,609		121,979
Deferred income tax liabilities	Deferred income tax liabilities	—		1,861		Deferred income tax liabilities	53		53
Other long-term obligations	Other long-term obligations	1,503		1,629		Other long-term obligations	448		552
Total liabilities	Total liabilities	1,270,881		1,296,023		Total liabilities	1,147,411		1,155,750
Commitments and contingencies (Note 9)		—		—
Commitments and contingencies (Note 10)						Commitments and contingencies (Note 10)
Shareholders’ equity	Shareholders’ equity					Shareholders’ equity
Common stock, $.01 par value; authorized 100,000 shares; 28,980 and 28,830 common shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		290		288
Common stock, $.01 par value; authorized 100,000 shares; 28,837 and 28,179 common shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Common stock, $.01 par value; authorized 100,000 shares; 28,837 and 28,179 common shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	288		282
Additional paid-in capital	Additional paid-in capital	470,672		477,829		Additional paid-in capital	467,977		480,060
Accumulated deficit	Accumulated deficit	(137,704)		(158,576)		Accumulated deficit	(115,792)		(127,422)
Total shareholders’ equity	Total shareholders’ equity	333,258		319,541		Total shareholders’ equity	352,473		352,920
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	1,604,139	$	1,615,564	Total liabilities and shareholders’ equity	$	1,499,884	$	1,508,670

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

GOLDEN ENTERTAINMENT, INC.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Revenues	Revenues					Revenues
Gaming	Gaming	$	190,787	$	177,000	Gaming	$	188,087	$	190,787
Food and beverage	Food and beverage	42,456		33,804		Food and beverage	46,271		42,456
Rooms	Rooms	25,746		18,398		Rooms	30,577		25,746
Other	Other	14,655		10,494		Other	13,116		14,655
Total revenues	Total revenues	273,644		239,696		Total revenues	278,051		273,644
Expenses	Expenses					Expenses
Gaming	Gaming	105,651		96,372		Gaming	106,926		105,651
Food and beverage	Food and beverage	31,457		23,541		Food and beverage	34,022		31,457
Rooms	Rooms	12,474		9,610		Rooms	14,781		12,474
Other operating	Other operating	3,976		2,696		Other operating	3,830		3,976
Selling, general and administrative	Selling, general and administrative	60,910		53,591		Selling, general and administrative	62,036		60,910
Depreciation and amortization	Depreciation and amortization	26,276		27,186		Depreciation and amortization	23,508		26,276
(Gain) loss on disposal of assets		(41)		209
Gain on disposal of assets						Gain on disposal of assets	(86)		(41)
Preopening expenses	Preopening expenses	55		120		Preopening expenses	384		55
Total expenses	Total expenses	240,758		213,325		Total expenses	245,401		240,758
Operating income	Operating income	32,886		26,371		Operating income	32,650		32,886
Non-operating expense	Non-operating expense					Non-operating expense
Interest expense, net	Interest expense, net	(15,118)		(16,048)		Interest expense, net	(18,236)		(15,118)
Loss on debt extinguishment and modification		(181)		—
Loss on debt extinguishment						Loss on debt extinguishment	—		(181)
Total non-operating expense, net	Total non-operating expense, net	(15,299)		(16,048)		Total non-operating expense, net	(18,236)		(15,299)
Income before income tax benefit		17,587		10,323
Income tax benefit		18,479		297
Income before income tax (provision) benefit						Income before income tax (provision) benefit	14,414		17,587
Income tax (provision) benefit						Income tax (provision) benefit	(2,784)		18,479
Net income	Net income	$	36,066	$	10,620	Net income	$	11,630	$	36,066

Weighted-average common shares outstanding	Weighted-average common shares outstanding					Weighted-average common shares outstanding
Basic	Basic	28,894		28,219		Basic	28,308		28,894
Diluted	Diluted	32,149		30,414		Diluted	30,904		32,149
Net income per share	Net income per share					Net income per share
Basic	Basic	$	1.25	$	0.38	Basic	$	0.41	$	1.25
Diluted	Diluted	$	1.12	$	0.35	Diluted	$	0.38	$	1.12

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

GOLDEN ENTERTAINMENT, INC.

Consolidated Statements of Shareholders’ Equity

(In thousands)

(Unaudited)


		Common stock			Additional Paid-In Capital				Accumulated Deficit					Total Shareholders’ Equity			Common stock				Additional Paid-In Capital			Accumulated Deficit			Total Shareholders’ Equity
		Shares	Amount										Shares					Amount
Balance, January 1, 2021		28,159	$	282			$	470,719			$	(309,739)					$	161,262
Balance, January 1, 2022																Balance, January 1, 2022	28,830		$	288		$	477,829		$	(158,576)		$	319,541
Issuance of stock on options exercised and restricted stock units vested	Issuance of stock on options exercised and restricted stock units vested	303	3		98				—					101		Issuance of stock on options exercised and restricted stock units vested	419		4		—			—			4
Repurchase of common stock																Repurchase of common stock	(269)		(2)		—			(15,194)			(15,196)
Share-based compensation	Share-based compensation	—	—		2,669				—					2,669		Share-based compensation	—		—		3,141			—			3,141
Tax benefit from share-based compensation	Tax benefit from share-based compensation	—	—		(3,439)				—					(3,439)		Tax benefit from share-based compensation	—		—		(10,298)			—			(10,298)
Net income	Net income	—	—		—				10,620					10,620		Net income	—		—		—			36,066			36,066
Balance, March 31, 2021		28,462	$	285	$	470,047			$	(299,119)				$	171,213
Balance, March 31, 2022																Balance, March 31, 2022	28,980		$	290	$	470,672		$	(137,704)		$	333,258


		Common stock			Additional Paid-In Capital				Accumulated Deficit					Total Shareholders’ Equity			Common stock				Additional Paid-In Capital			Accumulated Deficit			Total Shareholders’ Equity
		Shares	Amount										Shares					Amount
Balance, January 1, 2022		28,830	$	288			$	477,829			$	(158,576)					$	319,541
Balance, January 1, 2023																Balance, January 1, 2023	28,179		$	282		$	480,060		$	(127,422)		$	352,920
Issuance of stock on options exercised and restricted stock units vested	Issuance of stock on options exercised and restricted stock units vested	419	4		—				—					4		Issuance of stock on options exercised and restricted stock units vested	658		6		—			—			6
Repurchases of common stock		(269)	(2)		—				(15,194)					(15,196)
Share-based compensation	Share-based compensation	—	—		3,141				—					3,141		Share-based compensation	—		—		3,290			—			3,290
Tax benefit from share-based compensation	Tax benefit from share-based compensation	—	—		(10,298)				—					(10,298)		Tax benefit from share-based compensation	—		—		(15,373)			—			(15,373)
Net income	Net income	—	—		—				36,066					36,066		Net income	—		—		—			11,630			11,630
Balance, March 31, 2022		28,980	$	290	$	470,672			$	(137,704)				$	333,258
Balance, March 31, 2023																Balance, March 31, 2023	28,837		$	288	$	467,977		$	(115,792)		$	352,473

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

GOLDEN ENTERTAINMENT, INC.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income	Net income	$	36,066	$	10,620	Net income	$	11,630	$	36,066
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	26,276		27,186		Depreciation and amortization	23,508		26,276
Change in non-cash lease expense		181		439
Non-cash lease expense						Non-cash lease expense	33		181
Share-based compensation	Share-based compensation	3,141		2,669		Share-based compensation	3,290		3,141
Amortization of debt issuance costs and discounts on debt	Amortization of debt issuance costs and discounts on debt	1,117		1,155		Amortization of debt issuance costs and discounts on debt	1,079		1,117
(Gain) loss on disposal of assets		(41)		209
Provision (benefit) for credit losses		188		(27)
Gain on disposal of assets						Gain on disposal of assets	(86)		(41)
Provision for credit losses						Provision for credit losses	232		188
Deferred income taxes	Deferred income taxes	(20,559)		(297)		Deferred income taxes	—		(20,559)
Loss on debt extinguishment and modification		181		—
Loss on debt extinguishment						Loss on debt extinguishment	—		181
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	(2,003)		(1,352)		Accounts receivable	2,691		(2,003)
Prepaid expenses, inventories and other current assets	Prepaid expenses, inventories and other current assets	(10,177)		(6,012)		Prepaid expenses, inventories and other current assets	6,690		(10,177)
Other assets	Other assets	(167)		9,472		Other assets	144		(167)
Accounts payable and other accrued expenses	Accounts payable and other accrued expenses	9,492		17,791		Accounts payable and other accrued expenses	5,434		9,492
Other liabilities	Other liabilities	(177)		(9,659)		Other liabilities	(99)		(177)
Net cash provided by operating activities	Net cash provided by operating activities	43,518		52,194		Net cash provided by operating activities	54,546		43,518
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Purchase of property and equipment, net of change in construction payables	Purchase of property and equipment, net of change in construction payables	(10,813)		(4,873)		Purchase of property and equipment, net of change in construction payables	(25,072)		(10,813)
Proceeds from disposal of property and equipment	Proceeds from disposal of property and equipment	90		223		Proceeds from disposal of property and equipment	211		90
Net cash used in investing activities	Net cash used in investing activities	(10,723)		(4,650)		Net cash used in investing activities	(24,861)		(10,723)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Repayments of term loan	Repayments of term loan	(25,000)		—		Repayments of term loan	—		(25,000)
Repayments of notes payable	Repayments of notes payable	(433)		(1,483)		Repayments of notes payable	(24)		(433)
Principal payments under finance leases	Principal payments under finance leases	(117)		(839)		Principal payments under finance leases	(125)		(117)
Payment for debt extinguishment and modification costs	Payment for debt extinguishment and modification costs	(12)		—		Payment for debt extinguishment and modification costs	—		(12)
Tax withholding on share-based payments	Tax withholding on share-based payments	(10,298)		(3,439)		Tax withholding on share-based payments	(15,373)		(10,298)
Proceeds from issuance of common stock, net of costs	Proceeds from issuance of common stock, net of costs	4		3		Proceeds from issuance of common stock, net of costs	6		4
Proceeds from exercise of stock options		—		98
Repurchases of common stock	Repurchases of common stock	(15,196)		—		Repurchases of common stock	—		(15,196)
Net cash used in financing activities	Net cash used in financing activities	(51,052)		(5,660)		Net cash used in financing activities	(15,516)		(51,052)
Cash and cash equivalents
Change in cash and cash equivalents	Change in cash and cash equivalents	(18,257)		41,884		Change in cash and cash equivalents	14,169		(18,257)
Balance, beginning of period	Balance, beginning of period	220,540		103,558		Balance, beginning of period	142,034		220,540
Balance, end of period	Balance, end of period	$	202,283	$	145,442	Balance, end of period	$	156,203	$	202,283
Cash and cash equivalents						Cash and cash equivalents
Cash and cash equivalents						Cash and cash equivalents	$	110,474	$	202,283
Cash and cash equivalents included in assets held for sale						Cash and cash equivalents included in assets held for sale	45,729		—
Balance, end of period						Balance, end of period	$	156,203	$	202,283


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Supplemental cash flow disclosures	Supplemental cash flow disclosures					Supplemental cash flow disclosures
Cash paid for interest	Cash paid for interest	$	6,435	$	7,630	Cash paid for interest	$	11,109	$	6,435
Non-cash investing and financing activities	Non-cash investing and financing activities					Non-cash investing and financing activities
Payables incurred for capital expenditures	Payables incurred for capital expenditures	$	2,790	$	561	Payables incurred for capital expenditures	$	2,342	$	2,790
Loss on debt extinguishment and modification		181		—
Loss on debt extinguishment						Loss on debt extinguishment	—		181
Operating lease right-of-use assets obtained in exchange for lease obligations	Operating lease right-of-use assets obtained in exchange for lease obligations	4,352		28,681		Operating lease right-of-use assets obtained in exchange for lease obligations	110		4,352

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

GOLDEN ENTERTAINMENT, INC.

Condensed Notes to Consolidated Financial Statements (Unaudited)

Note 1 — Nature of Business and Basis of Presentation

Overview

Golden Entertainment, Inc. and its wholly-owned subsidiaries own and operate a diversified entertainment platform, consisting of a portfolio of gaming assets that focus on casino and distributed gaming operations (including gaming in the Company’s branded taverns). The Company’s portfolio includes 10ten casino properties located in Nevada and Maryland. The Company’s Nevada Taverns segment is comprised of the operation of its branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area. The Company’s distributed gaming operations involve the installation, maintenance and operation of slot machines and amusement devices in third-party non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores and grocery stores in Nevada and ~~Montana, as well as the operation of branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area.~~Montana. Unless otherwise indicated, the terms “Golden” and the “Company,” refer to Golden Entertainment, Inc. together with its subsidiaries.

The Company conducts its business through 4five reportable segments: Nevada Casino Resorts, Nevada Locals Casinos, Maryland Casino Resort, Nevada Taverns, and Distributed Gaming. Each reportable segment is comprised of the following properties and operations:


Reportable Segment						Location
Nevada Casino Resorts
The STRAT Hotel, Casino & SkyPod (“The STRAT”)						Las Vegas, Nevada
Aquarius Casino Resort (“Aquarius”)						Laughlin, Nevada
Edgewater ~~Hotel &~~ Casino Resort (“Edgewater”)						Laughlin, Nevada
Colorado Belle ~~Hotel &~~ Casino Resort (“Colorado Belle”) (1)						Laughlin, Nevada

Nevada Locals Casinos
Arizona Charlie’s Boulder						Las Vegas, Nevada
Arizona Charlie’s Decatur						Las Vegas, Nevada
Gold Town Casino						Pahrump, Nevada
Lakeside Casino & RV Park						Pahrump, Nevada
Pahrump Nugget Hotel Casino (“Pahrump Nugget”)						Pahrump, Nevada

Maryland Casino Resort
Rocky Gap Casino Resort (“Rocky Gap”)						Flintstone, Maryland
Nevada Taverns
64 branded tavern locations						Nevada
Distributed Gaming
Nevada distributed gaming						Nevada
~~Nevada taverns~~						~~Nevada~~
Montana distributed gaming						Montana

(1)~~As a result of the impact of the 2019 novel coronavirus (“COVID-19”) pandemic, the~~The operations of the Colorado Belle remain suspended.

~~Impact~~On August 24, 2022, the Company entered into definitive agreements to sell Rocky Gap to Century Casinos, Inc. (“Century”) and VICI Properties, L.P. (“VICI”), an affiliate of ~~COVID-19~~

~~In response~~VICI Properties Inc., for aggregate consideration of $260.0 million (the “Rocky Gap Transactions”). Specifically, Century agreed to acquire the operations of Rocky Gap from Golden for $56.1 million in cash (subject to adjustment based on Rocky Gap’s working capital and cage cash at closing), subject to the ~~COVID-19 pandemic,~~conditions and terms set forth therein, and VICI agreed to acquire the real estate assets relating to Rocky Gap from Golden for $203.9 million in cash, subject to the conditions and terms set forth therein. The Rocky Gap Transactions are required by their terms to close concurrently and the Company expects the Rocky Gap Transactions to close during the ~~week~~second quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and closing conditions. Refer to discussion in “Note 2 — Assets Held for Sale” for further information.

On March ~~16, 2020~~3, 2023, the Governors of Nevada, Maryland and Montana issued emergency executive orders mandating temporary closures of all of the Company’s properties and suspension of the distributed gaming operations at third-party locations. The Company ~~re-opened its casino properties and resumed~~entered into definitive agreements to sell its distributed gaming operations ~~during the second~~in Nevada and ~~third quarters~~Montana (the “Distributed Gaming Operations”) to J&J Ventures Gaming, LLC (“J&J Gaming”), for aggregate consideration of ~~2020. However, the implementation of protocols intended to protect team members, gaming patrons and guests from potential COVID-19 exposure continued to limit~~$322.5 million. Specifically, J&J Gaming will acquire the Company’s Distributed Gaming Operations in Nevada for $213.5 million in cash plus purchased cash, comprised of cash and cash equivalents related to such operations ~~post re-opening. While some~~at the time of ~~these restrictions were~~ ~~eased during 2021,~~closing (subject to adjustment based on working capital and purchased cash at closing), and the Company’s ~~properties~~Distributed Gaming operations in Montana for $109 million in cash plus purchased cash, comprised of cash and ~~distributed gaming~~cash equivalents related to such operations ~~may be~~at the time of closing (subject to adjustment based on working capital and purchased cash at closing), subject ~~to temporary, complete or partial closures~~ in the future and it is unknown how the uncertainties associated with the pandemic will continue to impact the Company’s operations. Further, as a result of the impact of the pandemic, the operations of the Colorado Belle property remain suspended.

Temporary closures of the Company’s operations due to the COVID-19 pandemic resulted in lease concessions for certain of the Company’s taverns and route locations in 2020, some of which continued in 2021. Such concessions provided for deferral and, in some instances, forgiveness of rent payments with no substantive amendments to the consideration due per the terms of theeach

~~original contract~~case to the conditions and ~~did not result in substantial changes in~~terms set forth therein (the “Distributed Gaming Transactions”). The sale of the ~~Company’s obligations under such leases.~~Nevada Distributed Gaming Operations is contingent upon the closing of the sale of the Montana Distributed Gaming Operations. The Company ~~elected~~expects the Distributed Gaming Transactions to ~~account for~~close during the ~~deferred rent as variable lease payments, which resulted in a reduction~~fourth quarter of ~~the rent expense of~~ ~~$1.7 million for the three months ended March 31, 2021.~~ ~~Rent expense that was not forgiven was recorded in future periods as those deferred payments were paid~~2023, subject to the ~~Company’s lessors.~~satisfaction or waiver of customary regulatory approvals and closing conditions. Refer to discussion in “Note 2 — Assets Held for Sale” for further information.

Basis of Presentation

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, refer to the audited consolidated financial statements of the Company for the year ended December 31, ~~2021~~2022 and the notes thereto included in the Company’s Annual Report on Form 10-K (the “Annual Report”) previously filed with the SEC. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, which included 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 and should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report.

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. Reclassifications were made to the Company’s prior period consolidated financial statements to conform to the current period presentation, where applicable. These reclassifications had no effect on previously reported net income.

Significant Accounting Policies

There have been no changes to the significant accounting policies disclosed in the Company’s Annual Report.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and in banks and highly liquid investments with original maturities of three months or less. As of March 31, 2023, the Company had $156.2 million in cash and cash equivalents, which included $45.7 million of cash and cash equivalents related to assets held for sale. Although cash and cash equivalents balances may at times exceed the federal insured deposit limit, the Company believes such risk is mitigated by the quality of the institutions holding such deposits.

Net Income Per Share

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. In the event of a net loss, diluted shares are not considered because of their anti-dilutive effect. For the three months ended March 31, 2023, diluted net income per share excluded the weighted average effect of 51,819 shares of common stock, related to time-based and performance-based restricted stock units due to such shares being anti-dilutive. No shares of common stock related to time-based and performance-based restricted stock units were anti-dilutive for the three months ended March 31, 2022.

Recent Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards ~~Codification.~~Codification (“ASC”). The Company considers the applicability and impact of all ASUs. While management continues to assess the possible impact of the adoption of new accounting standards and the future adoption of the new accounting standards that are not yet effective on the Company’s financial statements, management currently believes that the following new standards have or may have an impact on the Company’s consolidated financial statements and disclosures:

Accounting Standards Issued and ~~Adopted~~

~~In July 2021, the FASB issued~~ ~~ASU No. 2021-05,~~ ~~Leases (Topic 842): Lessors — Certain Leases with Variable Lease Payments~~. The ASU addresses an issue related to a lessor’s accounting for lease contracts that have variable lease payments that do not depend on a reference index or a rate and would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. The amendment allows the lessor to classify and account for such lease contracts as operating. The Company adopted the standard effective January 1, 2022, and the adoption did not have a material impact on the Company’s financial statements or disclosures.

~~Accounting Standards Issued but Not Yet~~ Adopted

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU improves the accounting for revenue contracts with customers acquired in a business combination by addressing diversity in practice and inconsistency related to recognition of contract assets and liabilities acquired in a business combination. The provisions of this ASU require that an acquiring entity account for the related revenue contracts in accordance with ASC 606 as if it had originated the contracts. The Company adopted the standard is effective ~~for fiscal years beginning after December 15, 2022~~January 1, 2023, and ~~interim periods within those fiscal years with early adoption permitted. The Company does not expect the impact of~~ the adoption ~~of this ASU to be~~did not have a material ~~to its~~impact on the Company’s financial statements or disclosures.

Management does not believe that any other recently issued accounting standards that are not yet effective are likely to have a

material impact on the Company’s financial statements.

Note 2 — Assets Held for Sale

The Company classifies assets as held for sale when a sale is probable, is expected to be completed within one year, and the asset group meets all of the accounting criteria to be classified as held for sale.

As discussed in “Note 1 — Nature of Business and Basis of Presentation,” on August 24, 2022, the Company entered into definitive agreements to sell Rocky Gap. The Rocky Gap Transactions are expected to close in the second quarter of 2023, subject to satisfaction or waiver of customary regulatory approvals and closing conditions. As a result, the assets related to the Rocky Gap property were classified as held for sale as of September 30, 2022 and the Company ceased recording depreciation and amortization of the long-lived assets included in the sale from the date of execution of the definitive agreements. Operations of Rocky Gap have historically been presented in the Company’s Maryland Casino Resort reportable segment.

As discussed in “Note 1 — Nature of Business and Basis of Presentation,” on March 3, 2023, the Company entered into definitive agreements to sell its Distributed Gaming Operations. The Distributed Gaming Transactions are expected to close during the fourth quarter of 2023, subject to satisfaction or waiver of customary regulatory approvals and closing conditions. As a result, the assets related to the Distributed Gaming Operations were classified as held for sale as of March 31, 2023 and the Company ceased recording depreciation and amortization of the long-lived assets included in the sale from the date of execution of the definitive agreements. Distributed Gaming Operations have historically been presented in the Company’s Distributed Gaming reportable segment.

The carrying amounts of the assets and liabilities held for sale in the Rocky Gap Transactions and Distributed Gaming Transactions consisted of the following:


	March 31, 2023
(In thousands)	Maryland Casino Resort		Distributed Gaming		Total
ASSETS
Current assets
Cash and cash equivalents	$	6,389	$	39,340	$	45,729
Accounts receivables, net	1,929		2,900		4,829
Prepaid expenses	431		1,480		1,911
Inventories	642		3		645
Other	169		2,615		2,784
Total current assets held for sale	9,560		46,338		55,898
Property and equipment, net	23,877		28,087		51,964
Operating lease right-of-use assets, net	5,980		55,815		61,795
Goodwill	—		77,645		77,645
Intangible assets, net	1,064		38,506		39,570
Other assets	5		6,488		6,493
Total assets held for sale	$	40,486	$	252,879	$	293,365
LIABILITIES
Current liabilities
Current portion of finance leases	$	104	$	—	$	104
Current portion of operating leases	436		27,203		27,639
Accounts payable	1,291		992		2,283
Accrued payroll and related	1,092		1,231		2,323
Other accrued liabilities	2,413		5,353		7,766
Total current liabilities related to assets held for sale	5,336		34,779		40,115
Non-current finance leases	193		—		193
Non-current operating leases	5,206		28,892		34,098
Other long-term obligations	—		66		66
Total liabilities related to assets held for sale	$	10,735	$	63,737	$	74,472

Revenues and pretax income generated by the assets held for sale were as follows:


	Three Months Ended March 31, 2023				Three Months Ended March 31, 2022
(In thousands)	Maryland Casino Resort		Distributed Gaming		Maryland Casino Resort		Distributed Gaming
Revenues	$	18,128	$	90,401	$	17,892	$	90,768
Pretax income	5,117		7,543		4,488		8,364

Note 3 — Property and Equipment

Property and equipment, net, consisted of the following:


(In thousands)	(In thousands)	March 31, 2022		December 31, 2021		(In thousands)	March 31, 2023		December 31, 2022
Land	Land	$	125,240	$	125,240	Land	$	125,240	$	125,240
Building and improvements	Building and improvements	940,370		937,759		Building and improvements	924,670		923,157
Furniture and equipment	Furniture and equipment	251,101		246,323		Furniture and equipment	174,239		244,735
Construction in process	Construction in process	19,640		16,347		Construction in process	32,292		23,224
Property and equipment	Property and equipment	1,336,351		1,325,669		Property and equipment	1,256,441		1,316,356
Accumulated depreciation	Accumulated depreciation	(445,726)		(421,449)		Accumulated depreciation	(444,133)		(475,625)
Property and equipment, net	Property and equipment, net	$	890,625	$	904,220	Property and equipment, net	$	812,308	$	840,731

Depreciation expense for property and equipment, including finance leases, was ~~$24.4~~$22.2 million and ~~$25.0~~$24.4 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

The Company reviews the carrying amounts of its long-lived assets, other than goodwill and indefinite-lived intangible assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. ~~Due to the significant impact of the COVID-19 pandemic on the Company’s operations, the Company decided to keep operations of its Colorado Belle property suspended.~~ Based on the results of its interim impairment assessments conducted during the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the Company concluded that there was no impairment of the Company’s long-lived assets.

To the extent the Company becomes aware of new facts and circumstances that would result in a triggering event, the Company will revise its cash flow projections accordingly, as its estimates of future cash flows are highly dependent upon certain assumptions, including, but not limited to, the nature, timing, and extent of elimination or change of the restrictions on the Company’s operations and the extent and timing of the economic recovery globally, nationally, and specifically within the gaming industry. If such assumptions are not accurate, the Company may be required to record impairment charges in future periods, whether in connection with its regular review procedures, or earlier, if an indicator of an impairment is present prior to such evaluation.

Note 34 — Goodwill and Intangible Assets

The Company tests goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year, and whenever events or circumstances indicate that it is more likely than not that the carrying value of a reporting unit exceeds its fair value. Finite-lived intangible assets are evaluated for potential impairment whenever there is an indicator that the carrying value of an asset group may not be recoverable. Based on the results of its interim impairment assessments conducted during the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the Company concluded that there was no impairment of the Company’s goodwill and intangible assets.

The following table summarizes goodwill ~~activity~~balances by reportable segment:


(In thousands)	(In thousands)	Nevada Casino Resorts		Nevada Locals Casinos		Maryland Casino Resort		Distributed Gaming		Total Goodwill		(In thousands)	Nevada Casino Resorts		Nevada Locals Casinos		Maryland Casino Resort		Nevada Taverns		Distributed Gaming		Total Goodwill
Balance, December 31, 2021 and March 31, 2022		$	22,105	$	38,187	$	—	$	98,104	$	158,396
Balance, December 31, 2022												Balance, December 31, 2022	$	22,105	$	38,187	$	—	$	20,459	$	77,645	$	158,396
Balance, March 31, 2023												Balance, March 31, 2023	$	22,105	$	38,187	$	—	$	20,459	$	—	$	80,751

Intangible assets, net, consisted of the following:


		March 31, 2022										March 31, 2023
(In thousands)	(In thousands)	Useful Life (Years)	Gross Carrying Value		Cumulative Amortization		Cumulative Impairment		Intangible Assets, Net		(In thousands)	Useful Life (Years)	Gross Carrying Value		Cumulative Amortization		Cumulative Impairment		Intangible Assets, Net
Indefinite-lived intangible assets	Indefinite-lived intangible assets										Indefinite-lived intangible assets
Trade names	Trade names	Indefinite	$	53,690	$	—	$	(6,890)	$	46,800	Trade names	Indefinite	$	53,690	$	—	$	(6,890)	$	46,800
			53,690		—		(6,890)		46,800				53,690		—		(6,890)		46,800
Amortizing intangible assets	Amortizing intangible assets										Amortizing intangible assets
Customer relationships		4-16	81,105		(37,346)		—		43,759
Player relationships	Player relationships	2-14	42,990		(39,973)		—		3,017		Player relationships	2-14	42,990		(40,616)		—		2,374
Non-compete agreements	Non-compete agreements	2-5	9,840		(8,543)		—		1,297		Non-compete agreements	2-5	3,957		(3,413)		—		544
Gaming license (1)		15	2,100		(1,245)		—		855
In-place lease value	In-place lease value	4	1,170		(1,170)		—		—		In-place lease value	4	1,170		(1,170)		—		—
Leasehold interest	Leasehold interest	4	570		(570)		—		—		Leasehold interest	4	570		(570)		—		—
Other	Other	4-25	1,814		(1,373)		—		441		Other	4-25	45		(45)		—		—
			139,589		(90,220)		—		49,369				48,732		(45,814)		—		2,918
Balance, March 31, 2022			$	193,279	$	(90,220)	$	(6,890)	$	96,169
Balance, March 31, 2023											Balance, March 31, 2023		$	102,422	$	(45,814)	$	(6,890)	$	49,718

~~(1)Relates to Rocky Gap.~~

December 31, 2021
(In thousands) Useful Life (Years) Gross Carrying Value Cumulative Amortization Cumulative Impairment Intangible Assets, Net
Indefinite-lived intangible assets
Trade names Indefinite $ 53,690 $ — $ (6,890) $ 46,800
53,690 — (6,890) 46,800
Amortizing intangible assets
Customer relationships 4-16 81,105 (35,879) — 45,226
Player relationships 2-14 42,990 (39,812) — 3,178
Non-compete agreements 2-5 9,840 (8,349) — 1,491
Gaming license (1)
15 2,100 (1,210) — 890
In-place lease value 4 1,170 (1,155) — 15
Leasehold interest 4 570 (570) — —
Other 4-25 1,814 (1,356) — 458
139,589 (88,331) — 51,258
Balance, December 31, 2021 $ 193,279 $ (88,331) $ (6,890) $ 98,058

~~(1)Relates to Rocky Gap.~~


	December 31, 2022
(In thousands)	Useful Life (Years)	Gross Carrying Value		Cumulative Amortization		Cumulative Impairment		Intangible Assets, Net
Indefinite-lived intangible assets
Trade names	Indefinite	$	53,690	$	—	$	(6,890)	$	46,800
		53,690		—		(6,890)		46,800
Amortizing intangible assets
Customer relationships	4-16	81,105		(41,743)		—		39,362
Player relationships	2-14	42,990		(40,455)		—		2,535
Non-compete agreements	2-5	9,840		(9,114)		—		726
In-place lease value	4	1,170		(1,170)		—		—
Leasehold interest	4	570		(570)		—		—
Other	4-25	1,366		(1,237)		—		129
		137,041		(94,289)		—		42,752
Balance, December 31, 2022		$	190,731	$	(94,289)	$	(6,890)	$	89,552

Total amortization expense related to intangible assets was $~~1.9~~1.3 million and ~~$2.2~~$1.9 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

Note 5 — Accrued Liabilities

Accrued liabilities consisted of the restrictions on the Company’s operations and the extent and timing of the economic recovery globally, nationally, and specifically within the gaming industry. If such assumptions are not accurate, the Company may be required to record impairment charges in future periods, whether in connection with its regular review procedures, or earlier, if an indicator of an impairment is present prior to such evaluation.following:


(In thousands)	March 31, 2023		December 31, 2022
Interest	$	12,089	$	6,036
Gaming liabilities	10,632		10,952
Other accrued liabilities	5,833		5,027
Accrued taxes, other than income taxes	5,738		9,291
Deposits	2,388		2,059
Total current accrued liabilities	$	36,680	$	33,365

910

Note ~~4 — Accrued Liabilities~~

~~Accrued liabilities consisted of the following:~~

(In thousands) March 31, 2022 December 31, 2021
Interest $ 13,173 $ 6,168
Gaming liabilities 11,232 12,311
Accrued taxes, other than income taxes 9,609 9,035
Other accrued liabilities 8,706 5,549
Deposits 4,492 2,284
Total current accrued liabilities $ 47,212 $ 35,347

~~Note 5~~6 — Long-Term Debt

Long-term debt, net, consisted of the following:


(In thousands)	(In thousands)	March 31, 2022		December 31, 2021		(In thousands)	March 31, 2023		December 31, 2022
Term Loan	Term Loan	$	625,000	$	650,000	Term Loan	$	575,000	$	575,000
2026 Unsecured Notes	2026 Unsecured Notes	375,000		375,000		2026 Unsecured Notes	335,461		335,461
Finance lease liabilities	Finance lease liabilities	2,887		3,005		Finance lease liabilities	2,041		2,157
Notes payable	Notes payable	168		602		Notes payable	66		90
Total long-term debt and finance leases	Total long-term debt and finance leases	1,003,055		1,028,607		Total long-term debt and finance leases	912,568		912,708
Unamortized discount	Unamortized discount	(10,778)		(11,689)		Unamortized discount	(7,176)		(7,899)
Unamortized debt issuance costs	Unamortized debt issuance costs	(5,080)		(5,392)		Unamortized debt issuance costs	(3,510)		(3,790)
Total long-term debt and finance leases after debt issuance costs and discount	Total long-term debt and finance leases after debt issuance costs and discount	987,197		1,011,526		Total long-term debt and finance leases after debt issuance costs and discount	901,882		901,019
Current portion of long-term debt and finance leases	Current portion of long-term debt and finance leases	(655)		(1,057)		Current portion of long-term debt and finance leases	(477)		(555)
Long-term debt, net and finance leases	Long-term debt, net and finance leases	$	986,542	$	1,010,469	Long-term debt, net and finance leases	$	901,405	$	900,464

Senior Secured Credit Facility

In October 2017, the Company entered into a senior secured credit facility consisting of a $900 million senior secured first lien credit facility (consisting of an $800 million term loan (the “Term Loan”) maturing on October 20, 2024 and a $100 million revolving credit facility (the “Revolving Credit Facility”)) with JPMorgan Chase Bank, N.A. (as administrative agent and collateral agent), the lenders party thereto and the other entities party thereto (the “Credit Facility”). The Revolving Credit Facility was subsequently increased from $100 million to $200 million in 2018, increasing the total Credit Facility capacity to ~~$1.0~~$1 billion. On October 12, 2021, the Company further modified the terms of the Revolving Credit Facility by increasing its size to $240 million and extending the maturity date from October 20, 2022 to April 20, 2024. The Company incurred $0.7 million in debt modification costs and fees related to this modification of the Revolving Credit Facility that have been deferred and are being amortized over the term of the Revolving Credit Facility using the straight-line method.

As of March 31, ~~2022,~~2023, the Company had ~~$625~~$575 million in principal amount of outstanding Term Loan borrowings under its Credit Facility, no outstanding letters of credit and no borrowings under the Revolving Credit Facility, such that the full borrowing availability of $240 million under the Revolving Credit Facility was available to the Company. The weighted-average effective interest rate on the Company’s outstanding borrowings under the Credit Facility was ~~approximately 3.75%~~7.53% for the three months ended March 31, ~~2022.~~2023.

The Company made multiple prepayments of the principal under the Term Loan during the years ended December 31, 2022 and 2021, thereby eliminating the requirement to make any further quarterly installment payments prior to maturity. ~~During the three months ended~~ As of March 31, ~~2022, the Company prepaid an additional $25 million of~~ 2023, t~~principal under the Term Loan, which~~ ~~reduced the~~he final installment payment due at the maturity date of October 20, 2024 ~~to $625 million~~. ~~During the three months ended March 31, 2022, t~~heis $575 million. The Company recorded a non-cash charge ~~in the amount~~ of $0.2 million for the accelerated amortization of the debt issuance costs and discount related to the prepayment of the Term ~~Loan.~~Loan for the three months ended March 31, 2022.

The Company was in compliance with its financial and other covenants under the Credit Facility as of March 31, ~~2022.~~2023.

Senior Unsecured Notes

On April 15, 2019, the Company issued $375 million in principal amount of 7.625% Senior Notes due 2026 (“2026 Unsecured

Notes”) in a private placement to institutional buyers at face value. The 2026 Unsecured Notes bear interest at 7.625%, payable semi-annually on April 15th and October 15th of each year.

During the year ended December 31, 2022, the Company repurchased $39.5 million in principal amount of 2026 Unsecured Notes in open market transactions, thereby reducing the final principal payment due at maturity to $335.5 million.

Note 67 — Shareholders’ Equity and Stock Incentive Plans

Share Repurchase Program

On ~~March 12, 2019,~~August 3, 2021, the Company’s Board of Directors authorized ~~the~~a share repurchase program of up$50 million, which was re-authorized on May 3, 2022 and subsequently increased to ~~$25~~$75 million ~~worth of shares of common stock, subject to available liquidity, general market and economic conditions, alternate uses for the capital and other factors.~~on November 1, 2022. Share repurchases may be made from time to time in open market transactions, block trades or in private transactions in accordance with applicable securities laws and regulations and other 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.

On August 3, 2021, the Company’s Board of Directors increased this authorization to $50 million. In December 2021, the Company repurchased 226,485 shares of its common stock pursuant to its share repurchase program in open market transactions at an average price of $46.87 per share, resulting in a charge to accumulated deficit of $10.6 million. In March 2022, the Company repurchased 268,791 shares of its common stock pursuant to its share repurchase program in open market transactions at an average price of $56.54 per share, resulting in a charge to accumulated deficit of $15.2 million. As of March 31, ~~2022,~~2023, the Company had ~~$24.2~~$61.5 million of remaining share repurchase availability under its ~~August 3, 2021~~November 1, 2022 authorization.

The Company did not repurchase any of its shares during the three months ended March 31, 2023. The following table includes the Company’s share repurchase ~~authorization. On May 3, 2022,~~activity for the ~~Company’s Board of Directors re-authorized its $50 million~~three months ended March 31, 2022:


	Three Months Ended March 31,
	2022
(In thousands, except per share data)
Shares repurchased (1)	269
Total cost, including brokerage fees	$	15,196
Average repurchase price per share (2)	$	56.54

(1)All repurchased shares were retired and constitute authorized but unissued shares.

(2)Figures in the table may not recalculate exactly due to rounding. Average repurchase price per share ~~repurchase program.~~is calculated based on unrounded numbers.

Stock Options

The following table summarizes the Company’s stock option activity:


		Stock Options				Stock Options
		Shares	Weighted-Average Exercise Price			Shares	Weighted-Average Exercise Price
Outstanding at January 1, 2022		2,141,494	$	11.31
Outstanding at January 1, 2023					Outstanding at January 1, 2023	2,071,994	$	11.35
Granted	Granted	—	$	—	Granted	—	$	—
Exercised	Exercised	(36,000)	$	9.80	Exercised	(41,140)	$	16.37
Cancelled	Cancelled	—	$	—	Cancelled	—	$	—
Expired	Expired	—	$	—	Expired	—	$	—
Outstanding at March 31, 2022		2,105,494	$	11.33
Exercisable at March 31, 2022		2,105,494	$	11.33
Outstanding at March 31, 2023					Outstanding at March 31, 2023	2,030,854	$	11.25
Exercisable at March 31, 2023					Exercisable at March 31, 2023	2,030,854	$	11.25

There was no share-based compensation expense related to stock options for the three months ended March 31, ~~2022~~2023 and ~~the Company recorded share-based compensation expense of $0.2 million for the three months ended March 31, 2021.~~2022. The Company did not have any remaining unrecognized share-based compensation expense related to stock options as of March 31, ~~2022~~2023 and ~~2021.~~2022.

Restricted Stock Units

The following table summarizes the Company’s activity related to time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”):


		RSUs			PSUs					RSUs			PSUs
		Shares	Weighted-Average Grant Date Fair Value		Shares (1)		Weighted-Average Grant Date Fair Value			Shares	Weighted-Average Grant Date Fair Value		Shares (1)		Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2022		815,420	$	18.17	705,577	(2)	$	13.84
Outstanding at January 1, 2023									Outstanding at January 1, 2023	547,671	$	26.09	1,076,159	(2)	$	17.17
Granted	Granted	97,447	$	53.51	83,579		$	53.51	Granted	137,126	$	41.92	114,898	(1)	$	41.92
Performance adjustment		—	$	—	534,383	(3)	$	—
Vested	Vested	(338,644)	$	15.79	(247,380)	(4)	$	12.51	Vested	(265,689)	$	20.98	(733,574)	(3)	$	8.86
Cancelled	Cancelled	(18,693)	$	14.95	—		$	—	Cancelled	—	$	—	(8,699)	(4)	$	53.51
Outstanding at March 31, 2022		555,530	$	25.93	1,076,159		$	19.79
Outstanding at March 31, 2023									Outstanding at March 31, 2023	419,108	$	34.50	448,784		$	36.40

(1) The number of shares for the PSUs listed as granted represents the “target” number of PSUs granted to each recipient eligible to vest if the Company meets its “target” performance goals for the applicable period. The actual number of

PSUs eligible to vest for those PSUs will vary depending on whether or not the Company meets or exceeds the applicable threshold, target, or maximum performance goals for the PSUs, with 200% of the “target” number of PSUs eligible to vest at “maximum” performance levels.

(2) Includes ~~171,194 shares of PSUs granted in March 2019 that were certified below target during the three months ended March 31, 2021 and vested during the three months ended~~ ~~March 31, 2022. Also includes~~ PSUs granted in March 2020 and March 2021 at ~~“target.”~~200% of the target and PSUs granted in March 2022 at target.

(3) Represents PSUs granted in March 2020 that vested in March 2023 at 200% of the target PSUs.

(4) The Company’s financial results for the applicable performance goals were certified during the three months ended March 31, ~~2022~~2023 and ~~200%~~89.6% of the target PSUs granted in March ~~2020 and March 2021~~2022 were deemed ~~“earned” and will be eligible to vest on March 14, 2023 and 2024, respectively.~~

~~(4) Includes 171,194 shares~~“earned.” This resulted in the reduction of the PSUs granted in March ~~2019 and 76,186 shares~~2022 to the number of PSUs ~~granted in March 2020 that vested during the three months ended March 31, 2022.~~eligible to vest from 83,579 to 74,880.

Share-based compensation expense related to RSUs was ~~$1.6~~$1.8 million and ~~$1.3~~$1.6 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Share-based compensation expense related to PSUs was $1.5 million ~~and $1.2 million~~ for each of the three months ended March 31, ~~2022~~2023 and ~~2021, respectively.~~2022.

As of March 31, ~~2022,~~2023, there was ~~$12.5~~$12.2 million and ~~$11.3~~$9.7 million of ~~unamortized~~unrecognized share-based compensation expense related to RSUs and PSUs, respectively, which is expected to be recognized over a weighted-average period of ~~2.2~~1.8 years foand 1.6 years for~~r both~~ RSUs and ~~PSUs.~~PSUs, respectively. As of March 31, ~~2021,~~2022, there was $12.5 million and $11.3 million ~~and $6.2 million~~ of ~~unamortized~~unrecognized share-based compensation expense related to RSUs and PSUs, respectively, which is expected to be recognized over a weighted-average period of ~~2.4~~2.2 years for both RSUs and PSUs.

As of March 31, ~~2022,~~2023, a total of ~~3,152,416~~4,010,605 shares of the Company’s common stock remained available for grants of awards under the Golden Entertainment, Inc. 2015 Incentive Award Plan, which includes the annual increase in the number of shares available for grant on January 1, ~~2022~~2023 of ~~1,153,210~~1,127,160 shares.

Note 78 — Income Tax

The Company’s effective income tax rates were ~~(105.1)%~~19.3% and ~~(2.9)~~(105.1)% for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~Income~~The Company recorded income tax ~~benefit~~expense of ~~$18.5 million and $0.3~~$2.8 million for the three months ended March 31, ~~2022~~2023 and ~~2021, respectively, primarily related to~~income tax benefit of $18.5 million for the ~~change in valuation allowance against the Company’s deferred tax assets during the periods.~~three months ended March 31, 2022.

The Company performs a continuing evaluation of its deferred tax asset valuation allowance on a quarterly basis. ~~The Company has concluded that, as of~~During the three months ended March 31, 2022, the Company concluded that it iswas more likely than not that the Company ~~will~~would 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~~assets, which resulted in a partial reversal of the deferred tax asset valuation allowance ~~is based upon consideration~~in that period. The partial reversal of ~~several factors, including~~ the ~~Company’s three-year cumulative pre-tax book~~deferred tax asset valuation allowance during the three months ended March 31, 2022 resulted in the negative effective income ~~position~~tax rate and ~~its forecast~~income tax benefit for that period. The effective income tax rate and the income tax expense for the three months ended March 31, 2023 differed from the federal tax rate of ~~future profitability.~~21% primarily due to the limitation on tax deductions for executive compensation in excess of $1 million under Section 162(m) of the Internal Revenue Code.

As of March 31, ~~2022,~~2023, the Company’s 2017 and 2018 federal tax returns were under audit by the IRS.

As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had no material uncertain tax positions.

Note 89 — Financial Instruments and Fair Value Measurements

Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, 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 valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

Financial assets and liabilities are classified 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.

Financial Instruments

The carrying values of the Company’s cash and cash equivalents, accounts receivable, other current assets and accounts payable

approximate fair value because of the short duration of these financial instruments.

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


		March 31, 2022						March 31, 2023
(In thousands)	(In thousands)	Carrying Amount		Fair Value		Fair Value Hierarchy	(In thousands)	Carrying Amount		Fair Value		Fair Value Hierarchy
Term Loan	Term Loan	$	625,000	$	621,094	Level 2	Term Loan	$	575,000	$	575,000	Level 2
2026 Unsecured Notes	2026 Unsecured Notes	375,000		390,450		Level 2	2026 Unsecured Notes	335,461		338,312		Level 2
Finance lease liabilities	Finance lease liabilities	2,887		2,887		Level 3	Finance lease liabilities	2,041		2,041		Level 3
Notes payable	Notes payable	168		168		Level 3	Notes payable	66		66		Level 3
Total debt	Total debt	$	1,003,055	$	1,014,599		Total debt	$	912,568	$	915,419


		December 31, 2021						December 31, 2022
(In thousands)	(In thousands)	Carrying Amount		Fair Value		Fair Value Hierarchy	(In thousands)	Carrying Amount		Fair Value		Fair Value Hierarchy
Term Loan	Term Loan	$	650,000	$	650,813	Level 2	Term Loan	$	575,000	$	575,000	Level 2
2026 Unsecured Notes	2026 Unsecured Notes	375,000		390,938		Level 2	2026 Unsecured Notes	335,461		330,630		Level 2
Finance lease liabilities	Finance lease liabilities	3,005		3,005		Level 3	Finance lease liabilities	2,157		2,157		Level 3
Notes payable	Notes payable	602		602		Level 3	Notes payable	90		90		Level 3
Total debt	Total debt	$	1,028,607	$	1,045,358		Total debt	$	912,708	$	907,877

The estimated fair value of the Company’s Term Loan and 2026 Unsecured Notes is based on a relative value analysis performed as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022. The finance lease liabilities and notes payable are fixed-rate debt, are not traded and do not have observable market inputs, and therefore, their fair value is estimated to be equal to the carrying value.

Note 910 — Commitments and Contingencies

Participation Agreements

The Company enters into certain slot placement contracts in the form of participation agreements. Under participation agreements, the Company and the business location each hold a state issued gaming license in order to be able to receive a percentage of gaming revenue earned on the Company’s slot machines. The business location retains a percentage of the gaming revenue generated from the Company’s slot machines. The Company is considered to be the principal in these arrangements and therefore, records its share of revenue generated under participation agreements on a gross basis with the business location’s share of revenue recorded as gaming expenses.

The aggregate contingent payments recognized by the Company as gaming expenses under participation agreements were ~~$52.8~~$53.3 million and ~~$54.1~~$52.8 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

Legal Matters and Other

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 records reserves. Although lawsuits, claims, investigations and other legal proceedings are inherently uncertain and their results cannot be predicted with certainty, the Company believes that the resolution of its currently pending matters should not have a material adverse effect on its business, financial condition, results of operations or liquidity. Regardless of the outcome, legal proceedings can have an adverse impact on the Company because of defense costs, diversion of management resources and other factors. In addition, it is possible that an unfavorable resolution of one or more such proceedings could in the future materially and adversely affect the Company’s business, financial condition, results of operations or liquidity in a particular period.

In January 2021, the Company was affected by a ransomware cyber-attack that temporarily disrupted the Company’s access to certain information located on the Company’s network and incurred expenses relating thereto. The Company’s financial information and business operations were not materially affected. The Company implemented a variety of measures to further

enhance its cybersecurity protections and minimize the impact of any future cyber incidents. The Company has insurance related to this event and has recovered a portion of the costs it incurred to remediate this matter, which amounts were received and recorded during 2021 and the three months ended March 31, 2022.

In September 2018, the Company entered into an agreement with American Wagering, Inc. and William Hill U.S. HoldCo, Inc. (collectively, “William Hill”), which contemplated that William Hill would be obligated to make a one-time payment to the Company in the event of a change of control transaction with respect to William Hill. Under this agreement, as amended, the April 22, 2021 acquisition of William Hill PLC by Caesars Entertainment, Inc. (“Caesars”) constituted the change of control event triggering this payment. On May 26, 2021, the Company, William Hill and Caesars executed an amendment to the agreement requiring William Hill and Caesars, as the acquiring party, to make an initial payment in the amount of $60 million by July 15, 2021 and to provide for a second contingent payment in the event of a sale of the William Hill business in the United Kingdom, as discussed below. The Company received this initial payment in July 2021 and recognized $60 million in non-operating income for the year ended December 31, 2021.

The May 26, 2021 amendment also provides for a contingent payment to be paid by Caesars to the Company of up to $15 million in the event Caesars completes a sale of the William Hill business in the United Kingdom. Under the amendment, the amount of this contingent payment is calculated in accordance with the terms set forth in the amendment and will depend on the amount of proceeds Caesars would receive from the sale, if any. In September 2021, Caesars announced that it executed an agreement to sell the non-US assets of William Hill to 888 Holdings Plc. In April 2022, Caesars announced that it lowered the sales price initially released in September 2021. Based upon the revised sales price announced by Caesars, as of March 31, 2022, the Company does not expect to receive any additional payments related to the contingency.

Note 1011 — Segment Information

The Company conducts its business through 4five reportable segments: Nevada Casino Resorts, Nevada Locals Casinos, Maryland Casino Resort, Nevada Taverns, and Distributed Gaming.

The Nevada Casino Resorts segment is comprised of destination casino resort properties offering a variety of food and beverage outlets, entertainment venues and other amenities. The casino resort properties in this segment cater primarily to a regional drive-in customer base seeking a value-oriented vacation experience, with guests typically traveling from Southern California or

Arizona. The Company’s casino resort properties in Nevada have a significantly larger number of hotel rooms compared to the other casino properties in its portfolio. While hotel stays at these casino resorts are typically longer, the overall frequency of visitation from guests is lower when compared to the Nevada Locals Casinos.

The Nevada Locals Casinos segment is comprised of casino properties that cater to local customers who generally live within a five-mile radius. The Company’s locals casino properties typically experience a higher frequency of customer visits compared to its casino resort properties in Nevada and Maryland, with many of the customers visiting the Company’s Nevada Locals Casinos on a weekly basis. The casino properties within this reportable segment have no or a limited number of hotel rooms and offer fewer food and beverage outlets or other amenities, with revenues primarily generated from slot machine play.

The Maryland Casino Resort segment is comprised of the Rocky Gap casino resort, which is geographically disparate from the Company’s Nevada properties, operates in a separate regulatory jurisdiction and has only a limited number of hotel rooms compared to the Nevada Casino Resorts. Rocky Gap caters to a regional drive-in customer base traveling from mid-Atlantic areas (Maryland, Virginia, Washington DC, Pennsylvania, West Virginia) and offers a full range of amenities, including various food and beverage outlets, signature golf course, spa and pool. As discussed in “Note 1 — Nature of Business and Basis of Presentation” and “Note 2 — Assets Held for Sale,” on August 24, 2022, the Company entered into definitive agreements to sell Rocky Gap. The Rocky Gap Transactions are required by their terms to close concurrently and the Company expects the Rocky Gap Transactions to close during the second quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and closing conditions.

The Nevada Taverns segment is comprised of branded tavern locations, where the Company controls the food and beverage operations as well as the slot machines located within the tavern. The Company’s branded taverns offer a casual, upscale environment catering to local patrons offering superior food, craft beer and other alcoholic beverages, and are typically limited to 15 slot machines.

The Distributed Gaming segment is comprised of the operation of slot machines and amusement devices in ~~approximately 1,100~~nearly 1,000 third party non-casino locations, such as restaurants, bars, taverns, convenience stores, liquor stores and grocery stores, across Nevada and Montana with a limited number of slot machines in each location. Distributed Gaming operations cater to local residents with high frequency visitation to these locations. The Company places its slot machines and amusement devices in locations where it believes they will receive maximum customer traffic. As ~~part~~discussed in “Note 1 — Nature of Business and Basis of Presentation” and “Note 2 — Assets Held for Sale,” on March 3, 2023, the Company entered into definitive agreements to sell the Distributed Gaming ~~segment,~~Operations and classified the assets related to Distributed Gaming as held for sale as of March 31, 2023. The sale of the Nevada Distributed Gaming Operations is contingent upon the closing of the sale of the Montana Distributed Gaming Operations. The Company ~~owns~~expects the Distributed Gaming Transactions to close during the fourth quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and operates a limited number of branded tavern locations, where it controls the food and beverage operations as well as the slot machines located within the tavern. The Company’s branded taverns offer a casual, upscale environment catering to local patrons offering superior food, craft beer and other alcoholic beverages, and are typically limited to 15 slot machines.closing conditions.

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 segments because these costs are not easily allocable and to do so would not be practical.

The Company presents Adjusted EBITDA in its segment disclosures because it is the primary metric used by the Company’s chief operating decision makers in measuring both the Company’s past and future expectations of performance. Further, the Company’s

annual performance plan used to determine compensation of its executive officers and employees is tied to the Adjusted EBITDA metric. Adjusted EBITDA represents each segment’s earnings before interest and other non-operating income (expense), income taxes, depreciation and amortization, impairment of goodwill and intangible assets, ~~acquisition and~~ severance expenses, preopening and related expenses, gain or loss on disposal of assets, share-based compensation expenses, non-cash lease expense, and other non-cash charges that are deemed to be not indicative of the Company’s core operating results, calculated before corporate overhead (which is not allocated to each reportable segment).

Due to the Company’s use of Adjusted EBITDA as its measure of profit for its reportable segments, the Company includes a reconciliation of the total of the Company’s consolidated Adjusted EBITDA to the Company’s consolidated net income determined in accordance with GAAP. The Company also discloses Adjusted EBITDA at the reportable segment level, as set forth in the table below:

Three Months Ended March 31,
(In thousands) 2022 2021
Revenues
Nevada Casino Resorts
Gaming $ 44,230 $ 38,826
Food and beverage 21,384 14,965
Rooms 22,029 15,628
Other 8,792 5,386
Nevada Casino Resorts revenues $ 96,435 $ 74,805
Nevada Locals Casinos
Gaming $ 29,381 $ 29,536
Food and beverage 6,179 5,513
Rooms 2,244 1,478
Other 2,085 2,018
Nevada Locals Casinos revenues $ 39,889 $ 38,545
Maryland Casino Resort
Gaming $ 14,457 $ 13,032
Food and beverage 1,648 1,442
Rooms 1,473 1,292
Other 314 334
Maryland Casino Resort revenues $ 17,892 $ 16,100
Distributed Gaming
Gaming $ 102,719 $ 95,606
Food and beverage 13,245 11,884
Other 3,258 2,419
Distributed gaming revenues $ 119,222 $ 109,909
Corporate and Other 206 337
Total revenues $ 273,644 $ 239,696

Three Months Ended March 31,
(In thousands) 2022 2021
Adjusted EBITDA
Nevada Casino Resorts $ 33,575 $ 26,655
Nevada Locals Casinos 20,038 19,552
Maryland Casino Resort 5,572 4,873
Distributed Gaming 22,053 20,880
Corporate and Other (13,913) (12,462)
Total Adjusted EBITDA 67,325 59,498
Adjustments
Depreciation and amortization (26,276) (27,186)
Change in non-cash lease expense (181) (439)
Share-based compensation (3,672) (3,005)
Gain (loss) on disposal of assets 41 (209)
Loss on debt extinguishment and modification (181) —
Preopening and related expenses (1)
(55) (120)
Other, net (4,296) (2,168)
Interest expense, net (15,118) (16,048)
Income tax benefit 18,479 297
Net Income $ 36,066 $ 10,620


	Three Months Ended March 31,
(In thousands)	2023		2022
Revenues
Nevada Casino Resorts
Gaming	$	42,293	$	44,230
Food and beverage	24,231		21,384
Rooms	26,210		22,029
Other	7,442		8,792
Nevada Casino Resorts revenues	$	100,176	$	96,435
Nevada Locals Casinos
Gaming	$	29,649	$	29,381
Food and beverage	6,691		6,179
Rooms	2,822		2,244
Other	2,076		2,085
Nevada Locals Casinos revenues	$	41,238	$	39,889
Maryland Casino Resort
Gaming	$	14,514	$	14,457
Food and beverage	1,866		1,648
Rooms	1,545		1,473
Other	203		314
Maryland Casino Resort revenues	$	18,128	$	17,892
Nevada Taverns
Gaming	$	13,025	$	14,322
Food and beverage	13,305		13,053
Other	1,263		1,079
Nevada Taverns revenue	$	27,593	$	28,454
Distributed Gaming
Gaming	$	88,606	$	88,397
Food and beverage	178		192
Other	1,617		2,179
Distributed Gaming revenues	$	90,401	$	90,768
Corporate and other	515		206
Total revenues	$	278,051	$	273,644


	Three Months Ended March 31,
(In thousands)	2023		2022
Adjusted EBITDA
Nevada Casino Resorts	$	31,711	$	33,575
Nevada Locals Casinos	20,160		20,038
Maryland Casino Resort	5,128		5,572
Nevada Taverns	8,538		10,778
Distributed Gaming	9,784		11,275
Corporate and other	(13,154)		(13,913)
Total Adjusted EBITDA	62,167		67,325
Adjustments
Depreciation and amortization	(23,508)		(26,276)
Non-cash lease expense	(33)		(181)
Share-based compensation	(3,893)		(3,672)
Gain on disposal of assets	86		41
Loss on debt extinguishment	—		(181)
Preopening and related expenses (1)	(384)		(55)
Other, net	(1,785)		(4,296)
Interest expense, net	(18,236)		(15,118)
Income tax (provision) benefit	(2,784)		18,479
Net Income	$	11,630	$	36,066

(1) Preopening and related expenses consist of labor, food, utilities, training, initial licensing, rent and organizational costs incurred in connection with the opening of branded tavern and casino locations as well as food and beverage and other venues within the casino locations.

Assets

The Company’s assets by reportable segment consisted of the following amounts:
(In thousands) Nevada Casino Resorts Nevada Locals Casinos Maryland Casino Resort Distributed Gaming Corporate and Other Consolidated
Balance at March 31, 2022 $ 808,374 $ 166,486 $ 41,600 $ 403,218 $ 184,461 $ 1,604,139
Balance at December 31, 2021 $ 811,016 $ 165,362 $ 41,403 $ 411,342 $ 186,441 $ 1,615,564


(In thousands)	Nevada Casino Resorts		Nevada Locals Casinos		Maryland Casino Resort		Nevada Taverns		Distributed Gaming		Corporate and Other		Consolidated
Balance at March 31, 2023	$	782,939	$	160,393	$	40,486	$	137,853	$	252,879	$	125,334	$	1,499,884

Balance at December 31, 2022	$	784,242	$	164,580	$	39,562	$	145,065	$	258,260	$	116,961	$	1,508,670

Note 1112 — Related Party Transactions

~~The Company historically leased its~~ A portion of the Company’s office headquarters building 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. On May 24, 2021 the building was sold to an independent third party, and therefore this ~~lease~~ is no longer with a related party. The rent expense for the office headquarters building prior to the sale of the building to an independent third party was $0.3 million for the three months ended March 31, 2021. ~~Additionally, a portion of the office headquarters building was~~ sublet to Sartini Enterprises, Inc., a company controlled by Mr. Sartini. Rental income for each of the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 for the sublet portion of the office headquarters building was ~~insignificant.~~less than $0.1 million. No amount was owed to the Company under such sublease as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022. In addition, ~~Golden~~the Company and Sartini Enterprises, Inc. participate in certain cost-sharing arrangements. ~~The~~No amount was due and payable by the Company or to the Company under such arrangements ~~was insignificant~~ as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022. Mr. Sartini serves as the Chairman of the Board and Chief Executive Officer of the Company and is co-trustee of 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.

In November 2018, the Company entered into a lease agreement for ~~additional~~ office space in a building adjacent to the Company’s office headquarters building to be constructed and owned by a company 33% beneficially owned by Mr. Sartini, 5%3% beneficially owned by ~~a trust for the benefit~~Mr. Arcana, and 1.67% beneficially owned by each of Mr. Sartini’s ~~immediate family members~~three children (including Blake L. Sartini II) ~~for which Mr. Sartini serves as trustee, and 3% beneficially owned by Mr. Arcana.~~. The lease commenced in August 2020 and expires on December 31, 2030. The rent expense for the space was $0.1 million for each of the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022. Additionally, the lease agreement includes a right of first refusal for additional space on the second floor of the building.

From time to time, the Company’s executive officers and employees use a private aircraft leased to Sartini Enterprises, Inc. for

1617

Company business purposes pursuant to aircraft time-sharing, co-user and cost-sharing agreements between the Company and Sartini Enterprises, Inc., all of which have been approved by the Audit Committee of the Board of Directors. The aircraft time-sharing, co-user and cost-sharing agreements specify the maximum expense reimbursement that Sartini Enterprises, Inc. can charge the Company under the applicable regulations of the Federal Aviation Administration for the use of the aircraft and the flight crew. Such costs include fuel, landing fees, hangar and tie-down costs away from the aircraft’s operating base, flight planning and weather contract services, crew costs and other related expenses. The Company’s compliance department regularly reviews these reimbursements. The Company ~~did not use the aircraft and did not incur any costs~~ incurred $0.1 million under the aircraft time-sharing, co-user and cost-sharing agreements with Sartini Enterprises, Inc. ~~during~~for the three months ended March 31, 2023 and the Company did not incur any costs under the aircraft time-sharing, co-user and cost-sharing agreements with Sartini Enterprises, Inc. for the three months ended March 31, 2022. The Company ~~paid $0.2 million under such agreements for the three months ended March 31, 2021.~~ ~~The Company was~~is owed less than $0.1 million under such agreements as of March 31, ~~2022~~ 2023 and t~~and no amount was~~he Company owed ~~to or due from the Company~~$0.1 million under such agreements as of December 31, ~~2021.~~

~~Note 12 — Subsequent Events~~

The Company’s management evaluates subsequent events through the date of issuance of the consolidated financial statements. Other than the re-authorization of the Company’s share repurchase program discussed in “~~Note 6 — Shareholders’ Equity and Stock Incentive Plans~~,” there have been no subsequent events that occurred during such period that would require adjustment to or disclosure in the consolidated financial statements as of and for the three months ended March 31, 2022.

1718

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,” “us” and “our” refer to Golden Entertainment, Inc. together with 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, ~~2021~~2022 (the “Annual Report”) previously filed with the Securities and Exchange Commission (“SEC”).

Forward-Looking Statements

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, 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,” “may,” “plan,” “project,” “potential,” “seek,” “should,” “think,” “will,” “would” and similar expressions, or they may use future dates. In addition, forward-looking statements include statements regarding the ~~impact~~Rocky Gap Transactions and Distributed Gaming Transactions (defined below), including the anticipated timing of the ~~2019 novel coronavirus (“COVID-19”) pandemic on our business;~~ closing of the transactions and satisfaction of regulatory and other conditions; our strategies, objectives, business opportunities and plans for future expansion, developments or acquisitions; anticipated future growth and trends in our business or key markets; projections of future financial condition, operating results, income, capital expenditures, costs or other financial items; anticipated regulatory and legislative changes; and other characterizations of future events or circumstances as well as other statements that are not statements of historical fact. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. These forward-looking statements are subject to assumptions, risks and uncertainties that may change at any time, and readers are therefore cautioned that actual results could differ materially from those expressed in any forward-looking statements. Factors that could cause our actual results to differ materially include: risks and uncertainties related to the ~~uncertainty~~Rocky Gap Transactions and Distributed Gaming Transactions, including the failure to obtain, or delays in obtaining, required regulatory approvals or clearances; the failure to satisfy any of the ~~extent, duration~~closing conditions to the Rocky Gap Transactions and ~~effects of the COVID-19 pandemic and the response of governments;~~ Distributed Gaming Transactions on a timely basis or at all; changes in national, regional and local economic and market conditions; legislative and regulatory matters (including the cost of compliance or failure to comply with applicable laws and regulations); increases in gaming taxes and fees in the jurisdictions in which we operate; ~~our ability to realize the anticipated cost savings, synergies and other benefits of our casino and other acquisitions;~~ litigation; increased competition; our ability to renew our distributed gaming contracts; reliance on key personnel (including our Chief Executive Officer, President and Chief Financial Officer, and Chief Operating Officer); the level of our indebtedness and our ability to comply with covenants in our debt instruments; the uncertainty of the extent, duration and effects of the COVID-19 pandemic and the response of governments; terrorist incidents; natural disasters; severe weather conditions (including weather or road conditions that limit access to our properties); the effects of environmental and structural building conditions; the effects of disruptions to our information technology and other systems and infrastructure; factors affecting the gaming, entertainment and hospitality industries generally; and other factors identified under the heading “Risk Factors” in our Annual Report 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.

Overview

We own and operate a diversified entertainment platform, consisting of a portfolio of gaming assets that focus on casino and distributed gaming operations (including gaming in our branded taverns). Our portfolio includes ten casino properties located in Nevada and Maryland. The Nevada Taverns segment is comprised of the operation of our branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area. Our distributed gaming operations involve the installation, maintenance and operation of slot machines and amusement devices in non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores and grocery stores in Nevada and ~~Montana, as well as~~Montana.

Rocky Gap Sale

On August 24, 2022, we entered into definitive agreements to sell Rocky Gap Casino Resort (“Rocky Gap”) to Century Casinos, Inc. (“Century”) and VICI Properties, L.P. (“VICI”), an affiliate of VICI Properties Inc., for aggregate consideration of $260.0 million (the “Rocky Gap Transactions”). Specifically, Century agreed to acquire the ~~operation~~operations of ~~branded taverns targeting local patrons located primarily~~Rocky Gap from us for $56.1 million in ~~the greater Las Vegas, Nevada metropolitan area.~~

~~Impact of COVID-19~~

~~In response~~cash (subject to adjustment based on Rocky Gap’s working capital and cage cash at closing), subject to the ~~COVID-19 pandemic, during~~conditions and terms set forth therein, and VICI agreed to acquire the week of March 16, 2020 the Governors of Nevada, Maryland and Montana issued emergency executive orders mandating temporary closures of all of our properties and suspension of our distributed gaming operations at third-party locations. We re-opened our casino properties and resumed our distributed gaming operations during the second and third quarters of 2020. However, the implementation of protocols intendedreal estate assets relating to ~~protect team members, gaming patrons and guests~~Rocky Gap from ~~potential COVID-19 exposure continued to limit our operations post re-opening. While some of these restrictions were~~ ~~eased during 2021, our properties and distributed gaming operations may be subject to temporary, complete or partial closures~~us for $203.9 million in ~~the future and it is unknown how the uncertainties associated with the pandemic will continue to~~

1819

~~impact~~cash, subject to the conditions and terms set forth therein. The Rocky Gap Transactions are required by their terms to close concurrently and we expect the Rocky Gap Transactions to close during the second quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and closing conditions.

Distributed Gaming Operations Sale

On March 3, 2023, we entered into definitive agreements to sell our ~~operations. Further, as a result~~distributed gaming operations in Nevada and Montana (the “Distributed Gaming Operations”) to J&J Ventures Gaming, LLC (“J&J Gaming”), for aggregate consideration of $322.5 million. Specifically, J&J Gaming will acquire our Distributed Gaming Operations in Nevada for $213.5 million in cash plus purchased cash, comprised of cash and cash equivalents related to such operations at the time of closing (subject to adjustment based on working capital and purchased cash at closing) and our Distributed Gaming Operations in Montana for $109 million in cash plus purchased cash, comprised of cash and cash equivalents related to such operations at the time of closing (subject to adjustment based on working capital and purchased cash at closing), subject to the conditions and terms set forth therein (the “Distributed Gaming Transactions”). The sale of the ~~impact~~Nevada Distributed Gaming Operations is contingent upon the closing of the ~~pandemic, the operations~~sale of the ~~Colorado Belle property remain suspended.~~Montana Distributed Gaming Operations. We expect the Distributed Gaming Transactions to close during the fourth quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and closing conditions.

We anticipate being able to fund our operations over the next 12 months with the cash provided by our operating activities and, if needed, supplemented by the cash we currently have available and the borrowing capacity available under our $240 million revolving credit facility (the “Revolving Credit Facility”). To further enhance our liquidity position or to finance any future acquisition or other business investment initiatives, we may obtain additional financing, which could consist of debt, convertible debt or equity financing from public or private credit and capital markets.

Operations

We conduct our business through ~~four~~five reportable segments: Nevada Casino Resorts, Nevada Locals Casinos, Maryland Casino Resort, Nevada Taverns, and Distributed Gaming.

The following table sets forth certain information regarding our operations by reportable segment as of March 31, ~~2022~~2023 (certain amenities at our casino properties may remain closed ~~or operate in~~as a ~~limited capacity).~~result of the impact of the COVID-19 pandemic):


		Location	Casino Space (Sq. ft.)	Slot Machines	Table Games	Hotel Rooms		Location	Casino Space (Sq. ft.)	Slot Machines	Table Games	Hotel Rooms
Nevada Casino Resorts	Nevada Casino Resorts						Nevada Casino Resorts
The STRAT Hotel, Casino & SkyPod (“The STRAT”)	The STRAT Hotel, Casino & SkyPod (“The STRAT”)	Las Vegas, NV	80,000	711	45	2,429	The STRAT Hotel, Casino & SkyPod (“The STRAT”)	Las Vegas, NV	80,000	743	39	2,429
Aquarius Casino Resort (“Aquarius”)	Aquarius Casino Resort (“Aquarius”)	Laughlin, NV	57,000	1,095	29	1,906	Aquarius Casino Resort (“Aquarius”)	Laughlin, NV	69,750	1,095	29	1,906
Edgewater Hotel & Casino Resort (“Edgewater”)		Laughlin, NV	52,864	643	20	1,052
Colorado Belle Hotel & Casino Resort (“Colorado Belle”) (1)		Laughlin, NV	—	—	—	—

Edgewater Casino Resort (“Edgewater”)							Edgewater Casino Resort (“Edgewater”)	Laughlin, NV	57,457	630	13	1,037
Colorado Belle Casino Resort (“Colorado Belle”) (1)							Colorado Belle Casino Resort (“Colorado Belle”) (1)	Laughlin, NV	—	—	—	—
Nevada Locals Casinos	Nevada Locals Casinos						Nevada Locals Casinos
Arizona Charlie’s Boulder	Arizona Charlie’s Boulder	Las Vegas, NV	55,200	648	—	303	Arizona Charlie’s Boulder	Las Vegas, NV	41,969	606	—	303
Arizona Charlie’s Decatur	Arizona Charlie’s Decatur	Las Vegas, NV	47,500	713	10	259	Arizona Charlie’s Decatur	Las Vegas, NV	67,360	710	10	259
Gold Town Casino	Gold Town Casino	Pahrump, NV	10,000	188	—	—	Gold Town Casino	Pahrump, NV	10,000	185	—	—
Lakeside Casino & RV Park	Lakeside Casino & RV Park	Pahrump, NV	10,000	156	—	—	Lakeside Casino & RV Park	Pahrump, NV	11,009	176	—	—
Pahrump Nugget Hotel Casino (“Pahrump Nugget”)	Pahrump Nugget Hotel Casino (“Pahrump Nugget”)	Pahrump, NV	19,875	326	9	69	Pahrump Nugget Hotel Casino (“Pahrump Nugget”)	Pahrump, NV	22,528	342	9	69

Maryland Casino Resort	Maryland Casino Resort						Maryland Casino Resort
Rocky Gap Casino Resort (“Rocky Gap”)		Flintstone, MD	25,447	630	16	198

Rocky Gap							Rocky Gap	Flintstone, MD	25,447	630	16	198
Nevada Taverns							Nevada Taverns
64 branded tavern locations							64 branded tavern locations	Nevada	—	1,018	—	—
Distributed Gaming	Distributed Gaming						Distributed Gaming
Nevada distributed gaming	Nevada distributed gaming	Nevada	—	7,291	—	—	Nevada distributed gaming	Nevada	—	6,928	—	—
Nevada taverns		Nevada	—	1,033	—	—
Montana distributed gaming	Montana distributed gaming	Montana	—	3,527	—	—	Montana distributed gaming	Montana	—	3,678	—	—
Totals	Totals		357,886	16,961	129	6,216	Totals		385,520	16,741	116	6,201

(1)The operations of the Colorado Belle remain suspended.

Nevada Casino Resorts

Our Nevada Casino Resorts segment is comprised of destination casino resort properties offering a variety of food and beverage

outlets, entertainment venues and other amenities. The casino resort properties in this segment cater primarily to a regional drive-in customer base seeking a value-oriented vacation experience, with guests typically traveling from Southern California or Arizona. Our casino resort properties in Nevada have a significantly larger number of hotel rooms compared to the other casino properties in our portfolio. While hotel stays at these casino resorts are typically longer, the overall frequency of visitation from guests is lower when compared to our Nevada Locals Casinos.

The STRAT: The STRAT is our premier casino resort property, located on Las Vegas Boulevard on the north end of the Las Vegas Strip. The STRAT comprises a casino, a hotel ~~a retail center~~ and the iconic SkyPod, which includes indoor and outdoor observation decks, thrill rides and the SkyJump attraction. In addition to hotel rooms, gaming and sportsbook facilities in an 80,000 square foot casino, The STRAT offers ~~nine~~ten restaurants, two rooftop pools, a fitness center, retail shops and entertainment facilities.

Laughlin casinos: We own and operate three casino resorts in Laughlin, Nevada, which is located approximately 90 miles from Las Vegas on the western bank of the Colorado River. In addition to hotel rooms, gaming and sportsbook facilities, the Aquarius has nine restaurants and the Edgewater offers ~~six~~five restaurants. The Edgewater also offers dedicated entertainment venues, including the Edge Pavilion and the Laughlin Event Center. As noted above, the operations of the Colorado Belle remain suspended.

Nevada Locals Casinos

Our Nevada Locals Casinos segment is comprised of casino properties that cater to local customers who generally live within a five-mile radius. Our locals casino properties typically experience a higher frequency of customer visits compared to our casino resort properties in Nevada and Maryland, with many of our customers visiting our Nevada Locals Casinos on a weekly basis. The casino properties within this reportable segment have no or a limited number of hotel rooms and offer fewer food and beverage outlets or other amenities, with revenues primarily generated from slot machine play.

Arizona Charlie’s casinos: Our Arizona Charlie’s Boulder and Arizona Charlie’s Decatur casino properties primarily serve local Las Vegas gaming patrons, and provide an alternative experience to the Las Vegas Strip. In addition to hotel rooms, gaming, sportsbook and bingo facilities, Arizona Charlie’s Boulder offers five restaurants and an RV park with 221 RV hook-up sites and Arizona Charlie’s Decatur offers five restaurants.

Pahrump casinos: We own and operate three casino properties in Pahrump, Nevada, which is located approximately 60 miles from Las Vegas and is a gateway to Death Valley National Park. In addition to gaming, sportsbook and bingo facilities at our Pahrump casino properties, Pahrump Nugget offers 69 hotel rooms, a bowling center and a 5,200 square foot banquet and event center, and Lakeside Casino & RV Park offers 159 RV hook-up sites.

Maryland Casino Resort

Our Maryland Casino Resort segment is comprised of our AAA Four Diamond Award® winning Rocky Gap casino resort, which is geographically disparate from our Nevada properties, operates in a separate regulatory jurisdiction and has only a limited number of hotel rooms compared to our Nevada Casino Resorts. Rocky Gap caters to a regional drive-in customer base traveling from mid-Atlantic areas (i.e., Maryland, Virginia, Washington DC, Pennsylvania and West Virginia). Rocky Gap is situated on approximately 270 acres in the Rocky Gap State Park in Maryland, which we lease from the Maryland Department of Natural Resources (the “Maryland DNR”) under a 40-year ground lease expiring in 2052 (plus a 20-year renewal option). In addition to hotel rooms and gaming, Rocky Gap offers a full range of amenities, including ~~three restaurants,~~various food and beverage outlets, a Jack Nicklaus signature golf course, spa and ~~pool.~~pool and an event and conference center.

On August 24, 2022, we entered into definitive agreements to sell Rocky Gap for aggregate consideration of $260.0 million. The Rocky Gap Transactions are required by their terms to close concurrently and we expect the Rocky Gap Transactions to close during the second quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and closing conditions.

Nevada Taverns

Our Nevada Taverns segment is comprised of branded tavern locations, where we control the food and beverage operations as well as the slot machines located within the tavern. Our branded taverns offer a casual, upscale environment catering to local patrons offering superior food, craft beer and other alcoholic beverages, and are typically limited to 15 slot machines. Most of our branded taverns are located in the greater Las Vegas, Nevada metropolitan area and cater to local patrons seeking more convenient entertainment establishments than traditional casino properties. Our tavern patrons are typically younger than traditional casino customers, which diversifies our customer demographic. Our tavern brands include PT’s Pub, PT’s Gold, PT’s Ranch, PT’s Place, Sean Patrick’s, SG Bar, Sierra Gold, and Sierra Junction. As of March 31, 2023, we owned and operated 64 branded taverns, which offered a total of over 1,000 onsite slot machines. We continue to look for opportunities to pursue additional tavern openings and acquisitions.

Distributed Gaming

Our Distributed Gaming segment is comprised of the operation of slot machines and amusement devices in ~~approximately 1,100~~nearly 1,000 third-party non-casino locations, such as restaurants, bars, taverns, convenience stores, liquor stores and grocery stores, across Nevada and Montana, with a limited number of slot machines in each location. We own and operate over ~~11,800~~10,600 slot machines and amusement devices as part of our Distributed Gaming segment, with the majority of gaming devices offered at these locations being video poker machines. Distributed Gaming operations cater to local residents with high frequency visitation to these locations. We place our slot machines and amusement devices in locations where we believe they will receive maximum customer traffic.

~~As part~~In August 2017, we became licensed as a video gaming terminal operator in Illinois. In October 2022, we surrendered our video gaming terminal operator license in Illinois due to inactivity. In October 2018, we received a conditional license to operate in Pennsylvania, providing for potential expansion.

Nevada law limits distributed gaming operations (also known as “restricted gaming” operations) to certain types of ~~our Distributed Gaming segment, we own~~non-casino locations, including grocery stores, drug stores, convenience stores, restaurants, bars, taverns and ~~operate a limited number of branded tavern locations,~~liquor stores, where ~~we control~~gaming is incidental to the ~~food~~primary business being conducted at the location and beverage operations as well as the slot machines located within the tavern. Our branded taverns offer a casual, upscale environment catering to local patrons offering superior food, craft beer and other alcoholic beverages, andgames are ~~typically~~generally limited to 15 or fewer slot machines and no other forms of gaming activity. The gaming area in these business locations is typically small, and in many instances, segregated from the primary business area, including the use of alcoves in grocery stores and drug stores and installation of slot machines into the physical bar (also known as “bar top” slot machines) in bars and taverns. Such segregation provides greater oversight and supervision of the slot machines. ~~Most~~Under Montana law, distributed gaming operations are limited to business locations licensed to sell alcoholic beverages for on-premises consumption only, with such locations generally restricted to offering a maximum of 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 Pub, PT’s Gold, PT’s Place, PT’s Ranch, Sean Patrick’s, Sierra Gold and SG Bar. As of March 31, 2022, we owned and operated 65 branded taverns, which offered a total of over 1,000 onsite20 slot machines. ~~We continue to look for opportunistic and accretive opportunities to pursue additional tavern openings and acquisitions.~~

In Nevada, we generally enter into two types of slot placement contracts as part of our ~~Distributed Gaming~~distributed gaming business: space lease agreements and participation agreements. Under space lease agreements, we pay a fixed monthly rental fee for the right to install, maintain and operate our slot machines at a business location and we are the sole holder of the applicable gaming license that allows us to operate such slot machines. Under participation agreements, the business location retains a percentage of the gaming revenue generated from our slot machines, and as a result both the business location and Golden are required to hold a state-issued gaming license. In Montana, our slot and amusement device placement contracts are all participation agreements.

On March 3, 2023, we entered into definitive agreements to sell our Distributed Gaming Operations for aggregate consideration of $322.5 million. The sale of the Nevada Distributed Gaming Operations is contingent upon the closing of the sale of the Montana Distributed Gaming Operations. We expect the Distributed Gaming Transactions to close during the fourth quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and closing conditions.

Results of Operations

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 months ended March 31, ~~2022~~2023 and ~~2021.~~2022.


		Three Months Ended March 31,					Three Months Ended March 31,
(In thousands)	(In thousands)	2022		2021		(In thousands)	2023		2022
Revenues	Revenues					Revenues
Gaming	Gaming	$	190,787	$	177,000	Gaming	$	188,087	$	190,787
Food and beverage	Food and beverage	42,456		33,804		Food and beverage	46,271		42,456
Rooms	Rooms	25,746		18,398		Rooms	30,577		25,746
Other	Other	14,655		10,494		Other	13,116		14,655
Total revenues	Total revenues	273,644		239,696		Total revenues	278,051		273,644
Expenses	Expenses					Expenses
Gaming	Gaming	105,651		96,372		Gaming	106,926		105,651
Food and beverage	Food and beverage	31,457		23,541		Food and beverage	34,022		31,457
Rooms	Rooms	12,474		9,610		Rooms	14,781		12,474
Other operating	Other operating	3,976		2,696		Other operating	3,830		3,976
Selling, general and administrative	Selling, general and administrative	60,910		53,591		Selling, general and administrative	62,036		60,910
Depreciation and amortization	Depreciation and amortization	26,276		27,186		Depreciation and amortization	23,508		26,276
(Gain) loss on disposal of assets		(41)		209
Gain on disposal of assets						Gain on disposal of assets	(86)		(41)
Preopening expenses	Preopening expenses	55		120		Preopening expenses	384		55
Total expenses	Total expenses	240,758		213,325		Total expenses	245,401		240,758
Operating income	Operating income	32,886		26,371		Operating income	32,650		32,886
Non-operating expense	Non-operating expense					Non-operating expense
Interest expense, net	Interest expense, net	(15,118)		(16,048)		Interest expense, net	(18,236)		(15,118)
Loss on debt extinguishment and modification		(181)		—
Loss on debt extinguishment						Loss on debt extinguishment	—		(181)
Total non-operating expense, net	Total non-operating expense, net	(15,299)		(16,048)		Total non-operating expense, net	(18,236)		(15,299)
Income before income tax benefit		17,587		10,323
Income tax benefit		18,479		297
Income before income tax (provision) benefit						Income before income tax (provision) benefit	14,414		17,587
Income tax (provision) benefit						Income tax (provision) benefit	(2,784)		18,479
Net income	Net income	$	36,066	$	10,620	Net income	$	11,630	$	36,066

Three Months Ended March 31, ~~2022~~2023 Compared to Three Months Ended March 31, ~~2021~~2022

Revenues

The ~~$33.9~~$4.4 million, or ~~14%,~~ ~~increase~~ ~~in revenues for the three months ended March 31, 2022 compared to the prior year period resulted from~~ ~~increases~~ ~~of $13.8 million, $8.7 million, $7.3 million and $4.1 million in gaming, food and beverage, room, and other revenues, respectively. The~~2%, increase in revenues for the three months ended March 31, ~~2022 was primarily due~~2023 compared to anthe prior year period resulted from increases of $3.8 million and $4.8 million in food and beverage and rooms revenues, respectively, offset by decreases of $2.7 million and $1.5 million in gaming and other revenues, respectively. The increase in ~~occupancy of our hotel~~food and beverage and rooms revenues for ~~certain resort casino properties and guest visitation along with~~ ~~further easing of COVID-19 mitigation measures during~~ the three months ended March 31, ~~2022 as compared~~2023 was primarily related to the ~~prior~~addition of new food and beverage outlets and an increase in average daily rates during the current year period. The decrease in gaming and other revenues was primarily driven by a decrease in the overall visitation to our properties during the current year period.

Operating Expenses

The ~~$21.3~~$6.0 million, or ~~16%~~4%,increase in operating expenses for the three months ended March 31, ~~2022~~2023 compared to the prior year period resulted from increases of ~~$9.3~~$1.3 million, ~~$7.9 million, $2.8~~$2.6 million and ~~$1.3~~$2.3 million in gaming, food and beverage, ~~room,~~ and rooms operating expenses, respectively, offset by a decrease of $0.2 million in other operating ~~expenses, respectively.~~expenses. The increase in operating expenses ~~for~~was primarily attributable to higher labor costs and cost of goods incurred during the three months ended March 31, ~~2022~~ 2023~~was primarily driven by an increase in occupancy of our hotel rooms and guest visitation due to the easing of COVID-19 mitigation measures.~~.

Selling, General and Administrative Expenses

The ~~$7.3~~$1.1 million, or ~~14%~~2%, increase in selling, general and administrative (“SG&A”) expenses for the three months ended March 31, ~~2022~~2023 compared to the prior year period was primarily attributable to the ~~further easing~~increase in payroll and related expenses as well as an increase in costs related to utilities and maintenance contracts. SG&A expenses are comprised of ~~COVID-19 mitigation measures~~ ~~during the three months ended~~ ~~March 31, 2022~~. ~~In the prior year period,~~ ~~our operations continued to be subject to mandatory capacity limitation requirements~~marketing and ~~the other COVID-19 related protocols discussed above, which resulted in lower~~advertising,

2123

~~payroll and other expenses. SG&A expenses are comprised of marketing and advertising,~~ utilities, building rent, maintenance contracts, corporate office overhead, information technology, legal, accounting, third-party service providers, executive compensation, share-based compensation, payroll expenses and payroll taxes.

Depreciation and Amortization

The decrease in depreciation and amortization expenses for the three months ended March 31, ~~2022~~2023 of ~~$0.9~~$2.8 million, or 3%11%, compared to the prior year period was primarily related to ceasing of depreciation and amortization for assets classified as held for sale discussed in “Note 2 — Assets Held for Sale” in Part I, Item 1: Financial Statements. In addition, long-lived assets acquired in connection with the American Casino ~~and~~ Entertainment Properties, LLC acquisition ~~being~~became fully depreciated and ~~amortized.~~amortized during the current year period. The decrease in depreciation and amortization expensesfor the three months ended March 31, 2023 was offset by the acceleration of depreciation on certain of our casino resort properties and depreciation on new assets placed in service.

~~(Gain) Loss~~Gain on Disposal of Assets

Gain on disposal of assets for the three months ended March 31, 2023 and 2022 was primarily driven by sales of used ~~equipment in our Distributed Gaming segment. Loss of $0.2 million for the comparable prior year period primarily related to the disposals of property and~~gaming equipment in our Distributed Gaming segment.

Preopening Expenses

Preopening expenses consist of labor, food, utilities, training, initial licensing, rent and organizational costs incurred in connection with the opening of branded tavern and casino locations as well as food and beverage and other venues within our casino locations. Preopening expenses for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 primarily related to new branded tavern openings within our ~~planned expansion into new markets for our Distributed Gaming~~Nevada Taverns segment.

Non-Operating Expense, Net

The ~~decrease of $0.7 million, or 5%,~~increase in non-operating expense, net, of $2.9 million, or 19%, for the three months ended March 31, ~~2022~~ ~~over~~2023 compared to the prior year period ~~was driven~~ primarily ~~by the decrease~~related to a $3.1 million, or 21%, increase in interest expense ~~net, in the amount of $0.9 million~~ due to the ~~prepayment of our term loan borrowings, partially~~increase in interest rates. The increase was offset by a ~~non-cash charge in the amount of~~ $0.2 million ~~for~~decrease in loss on debt extinguishment, since we did not prepay debt during the ~~accelerated amortization of the debt issuance costs and discount, as discussed in “Note 5 — Long-Term Debt” in Part I, Item 1: Financial Statements.~~current year period.

Income Taxes

The effective income tax ~~rates~~ ~~were~~rate was 19.3% for the three months ended March 31, 2023, which differed from the federal income tax rate of 21% primarily due to the limitation on tax deductions for executive compensation in excess of $1 million under Section 162(m) of the Internal Revenue Code. The effective income tax rate was (105.1)~~% and (2.9)~~% for the three months ended March 31, 2022, ~~and 2021, respectively,~~ which differed from the federal tax rate of 21% primarily due ~~primarily~~ to the change in valuation allowance.

Revenues and Adjusted EBITDA by Reportable Segment

To supplement our consolidated financial statements presented in accordance with United States generally accepted accounting principles (“GAAP”), we use Adjusted EBITDA because it is the primary metric used by our chief operating decision makers and investors in measuring both our past and future expectations of performance. Adjusted EBITDA provides useful information to the users of our financial statements by excluding specific expenses and gains that we believe are not indicative of our core operating results. Furthermore, our annual performance plan used to determine compensation for our executive officers and employees is tied to the Adjusted EBITDA metric. It is also a measure of operating performance 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.

We define “Adjusted EBITDA” as earnings before interest and other non-operating income (expense), income taxes, depreciation and amortization, impairment of goodwill and intangible assets, ~~acquisition and~~ severance expenses, preopening and related expenses, gain or loss on disposal of assets, share-based compensation expenses, ~~change in~~ non-cash lease expense, and other non-cash charges that are deemed to be not indicative of our core operating results, calculated before corporate overhead (which is not allocated to each reportable segment).

2224

The following table presents our total revenues and Adjusted EBITDA by reportable segment and a reconciliation of net income to Adjusted EBITDA:


		Three Months Ended March 31,					Three Months Ended March 31,
(In thousands)	(In thousands)	2022		2021		(In thousands)	2023		2022
Revenues	Revenues					Revenues
Nevada Casino Resorts	Nevada Casino Resorts	$	96,435	$	74,805	Nevada Casino Resorts	$	100,176	$	96,435
Nevada Locals Casinos	Nevada Locals Casinos	39,889		38,545		Nevada Locals Casinos	41,238		39,889
Maryland Casino Resort	Maryland Casino Resort	17,892		16,100		Maryland Casino Resort	18,128		17,892
Nevada Taverns						Nevada Taverns	27,593		28,454
Distributed Gaming	Distributed Gaming	119,222		109,909		Distributed Gaming	90,401		90,768
Corporate and Other		206		337
Corporate and other						Corporate and other	515		206
Total Revenues	Total Revenues	$	273,644	$	239,696	Total Revenues	$	278,051	$	273,644

Adjusted EBITDA	Adjusted EBITDA					Adjusted EBITDA
Nevada Casino Resorts	Nevada Casino Resorts	$	33,575	$	26,655	Nevada Casino Resorts	$	31,711	$	33,575
Nevada Locals Casinos	Nevada Locals Casinos	20,038		19,552		Nevada Locals Casinos	20,160		20,038
Maryland Casino Resort	Maryland Casino Resort	5,572		4,873		Maryland Casino Resort	5,128		5,572
Nevada Taverns						Nevada Taverns	8,538		10,778
Distributed Gaming	Distributed Gaming	22,053		20,880		Distributed Gaming	9,784		11,275
Corporate and Other		(13,913)		(12,462)
Corporate and other						Corporate and other	(13,154)		(13,913)
Total Adjusted EBITDA	Total Adjusted EBITDA	$	67,325	$	59,498	Total Adjusted EBITDA	$	62,167	$	67,325

Net income	Net income	$	36,066	$	10,620	Net income	$	11,630	$	36,066
Adjustments	Adjustments					Adjustments
Depreciation and amortization	Depreciation and amortization	26,276		27,186		Depreciation and amortization	23,508		26,276
Change in non-cash lease expense		181		439
Non-cash lease expense						Non-cash lease expense	33		181
Share-based compensation	Share-based compensation	3,672		3,005		Share-based compensation	3,893		3,672
(Gain) loss on disposal of assets		(41)		209
Loss on debt extinguishment and modification		181		—
Gain on disposal of assets						Gain on disposal of assets	(86)		(41)
Loss on debt extinguishment						Loss on debt extinguishment	—		181
Preopening and related expenses (1)	Preopening and related expenses (1)	55		120		Preopening and related expenses (1)	384		55
Other, net	Other, net	4,296		2,168		Other, net	1,785		4,296
Interest expense, net	Interest expense, net	15,118		16,048		Interest expense, net	18,236		15,118
Income tax benefit		(18,479)		(297)
Income tax provision (benefit)						Income tax provision (benefit)	2,784		(18,479)
Adjusted EBITDA	Adjusted EBITDA	$	67,325	$	59,498	Adjusted EBITDA	$	62,167	$	67,325

(1)Preopening and related expenses consist of labor, food, utilities, training, initial licensing, rent and organizational costs incurred in connection with the opening of branded tavern and casino locations as well as food and beverage and other venues within our casino locations.

Nevada Casino Resorts

~~Revenues and Adjusted EBITDA~~For the three months ended March 31, 2023, revenues increased by ~~$21.6~~$3.7 million, or ~~29%~~4%, compared to the prior year period. This increase resulted from increases of $2.8 millionand ~~$6.9~~$4.2 million ~~or 26%,~~in food and beverage and rooms revenues, respectively, offset by decreases of $1.9 million and$1.4 million in gaming and other revenues. The increase in food and beverage and rooms revenues for the three months ended March 31, ~~2022~~2023 was primarily driven by the addition of new food and beverage outlets and an increase in average daily rates. The decrease in gaming and other revenues was primarily driven by a decrease in the overall visitation to our Nevada Casino Resorts properties during the current year period.

Adjusted EBITDA decreased by $1.9 million, or 6%, for the three months ended March 31, 2023 compared to the prior year period primarily due to higher labor costs and cost of goods in the current year period.

Nevada Locals Casinos

For the three months ended March 31, 2023, revenues increased by $1.3 million, or 3%, and Adjusted EBITDA remained

relatively consistent with the prior year period with an $0.1 million, or 1%, increase. The increase in revenues for the three months ended March 31, 2023 was primarily attributable to an increase in patron visitation which resulted in higher occupancy at a higher average daily rate and increases in food and beverage revenues.

Maryland Casino Resort

For the three months ended March 31, 2023, revenues were relatively consistent with the prior year period with an $0.2 million, or 1%, increase. Adjusted EBITDA decreased $0.4 million, or 8%, for the three months ended March 31, 2023 compared to the prior year period primarily due to an increase in ~~occupancy~~labor costs and cost of ~~our hotel rooms due to the further easing of COVID-19 mitigation measures.~~goods.

Nevada ~~Locals Casinos~~Taverns

Revenues ~~and Adjusted EBITDA increased~~decreased by ~~$1.3~~$0.9 million, or 3%, and ~~$0.5~~Adjusted EBITDA decreased by $2.2 million, or 2%21%, ~~respectively,~~ for the three months ended March 31, ~~2022~~2023 as compared to the prior year period. The decrease in revenue for the three months ended March 31, 2023, is primarily attributable to the decrease in visitation to our tavern locations during the current year period. The decrease in Adjusted EBITDA for the three months ended March 31, 2023 was attributable to higher labor costs and cost of goods compared to the prior year period.

Distributed Gaming

Revenues decreased by $0.4 million, or less than 1%, for the three months ended March 31, 2023 as compared to the prior year period primarily due to a decrease in other revenue in the amount of $0.6 million related to certain nonrecurring items recognized during the prior year period. Adjusted EBITDA decreased by $1.5 million, or 13%, for the three months ended March 31, 2023 compared to the prior year period primarily due to an increase in ~~demand for gaming~~labor costs, higher cost of goods, and ~~guest visitation and a related increase in occupancy of our hotel rooms due to the further easing of COVID-19 mitigation measures.~~

~~Maryland Casino Resort~~

~~Revenues and Adjusted EBITDA increased by $1.8 million, or 11%, and $0.7 million, or 14%, respectively, for the three months ended March 31, 2022 compared to the prior year period primarily due to~~ an increase in ~~demand for~~costs of providing gaming related services to third parties under our space lease and ~~guest visitation and a related increase in occupancy of our hotel rooms due to the further easing of COVID-19 mitigation measures.~~

~~Distributed Gaming~~

Revenues and Adjusted EBITDA increased by $9.3 million, or 8%, and $1.2 million, or 6%, respectively, for the three months ended March 31, 2022 compared to the prior year period primarily due to an increase in demand for gaming and further easing of COVID-19 mitigation measures.participation agreements.

Adjusted EBITDA Margin

For the three months ended March 31, ~~2022,~~2023 Adjusted EBITDA as a percentage of segment revenues (or Adjusted EBITDA margin) was ~~35%~~32%, ~~50%~~49%, 28%, 31%, and ~~18%~~11% for Nevada Casino Resorts, Nevada Locals Casinos, Maryland Casino, Nevada Taverns, and Distributed Gaming, respectively, as compared to Adjusted EBITDA margins of ~~36%~~35%, ~~51%~~50%, ~~30%~~31%, 38%, and ~~19%~~12%, respectively, for the prior year period. The lower Adjusted EBITDA margins for the three months ended March 31, ~~2021.~~ ~~The~~2023 were primarily attributable to increases in labor costs and cost of goods. In addition, lower Adjusted EBITDA margins in our Distributed Gaming segment reflect the fixed and variable amounts paid to third parties under our space lease and participation agreements as expenses. ~~In the event our Adjusted EBITDA margins demonstrate new trends and developments in future periods, we may be required to identify additional reportable segments in future filings.~~

Liquidity and Capital Resources

As of March 31, ~~2022,~~2023, we had ~~$202.3~~$156.2 million in cash and cash ~~equivalents.~~equivalents, which included $45.7 million of cash and cash equivalents related to assets held for sale. In addition, we had $5.0 million in short-term cash investments that will convert into cash during the three months ending June 30, 2023. We ~~currently~~ believe that our cash and cash equivalents, cash flows from operations and borrowing availability under our $240 million revolving credit facility (the “Revolving Credit Facility”) will be sufficient to meet our capital requirements during the next 12 months. As of March 31, ~~2022,~~2023, we had borrowing availability of $240 million under our ~~revolving credit facility (refer~~Revolving Credit Facility. As discussed above, we have entered into definitive agreements to “~~Note 5 — Long-Term Debt~~”sell Rocky Gap for aggregate consideration of $260.0 million in ~~Part I, Item 1: Financial Statements~~cash, which transactions are expected to close during the second quarter of 2023, and to sell Distributed Gaming Operations for ~~additional information regarding our revolving credit facility).~~aggregate consideration of $322.5 million in cash plus purchased cash, comprised of cash and cash equivalents related to such operations at the time of closing, which transactions are expected to close during the fourth quarter of 2023, in each case subject to the satisfaction or waiver of customary regulatory approvals and closing conditions.

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 by our operations to be adversely affected.

To further enhance our liquidity position or to finance any future acquisition or other business investment initiatives, we may obtain additional financing, which could consist of debt, convertible debt or equity financing from public and/or private credit and capital markets.

Cash Flows

Net cash provided by operating activities was ~~$43.5~~$54.5 million and ~~$52.2~~$43.5 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. The ~~$8.7~~$11.0 million, or ~~17%~~25%, ~~decrease~~increase in operating cash flows for the three months ended March 31, ~~2022~~2023 compared to the prior year period primarily related to the timing of working capital spending.

Net cash used in investing activities was ~~$10.7~~$24.9 million and ~~$4.7~~$10.7 million for the three months ended March 31, 2023 and 2022, ~~and 2021, respectively~~.respectively. The ~~$6.0~~$14.2 million, or ~~128%~~132%, increase in net cash used in investing activities for the three months ended March 31, ~~2022~~2023 compared to the prior year period related to the increase in our capital ~~expenditures.~~expenditures, primarily at The STRAT.

Net cash used in financing activities was $~~51.1~~15.5 million and ~~$5.7~~$51.1 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. The $~~45.4~~35.6 million, or ~~796%~~70%, ~~increase~~decrease in net cash used in financing activities during the three months ended March 31, ~~2022~~2023 compared to the prior year period primarily related to ~~the~~the prepayment of outstanding ~~term loan~~Term Loan borrowings with a principal amount of ~~$25.0~~$25.0 million ~~(refer to~~ ~~“Note 5 — Long-Term Debt”~~ ~~in Part I, Item 1: Financial Statements),~~and $15.2 million in open market repurchases of our common stock pursuant to ~~the~~our share repurchase program ~~and $10.3~~during the three months ended March 31, 2022. The decrease in net cash used in financing activities was partially offset by a $5.1 million increase in cash paid for tax withholding on option exercises and the vesting of ~~RSUs.~~RSUs and PSUs during the current year period.

Long-Term Debt

Refer to “Note 56 — Long-Term Debt” in Part I, Item 1: Financial Statements ~~and Supplemental Data~~ of this Quarterly Report for discussion of our debt instruments.

Share Repurchase Program

On March 12, 2019, our Board of Directors authorized the repurchase of up to $25 million worth of shares of common stock, subject to available liquidity, general market and economic conditions, alternate uses for the capital and other factors. 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.

Refer to
“Note 7 — Shareholders’ Equity and Stock Incentive Plans”

~~On August 3, 2021,~~ in Part I, Item 1: Financial Statements of this Quarterly Report for additional information regarding our ~~Board of Directors increased the March 12, 2019 authorization to $50 million. In December 2021, we repurchased 226,485 shares of our~~share repurchase program and common stock purchases made pursuant to our share repurchase program in open market transactions at an average price of $46.87 per share, resulting in a charge to accumulated deficit of $10.6 million. In March 2022, we repurchased 268,791 shares of our common stock pursuant to our share repurchase program in open market transactions at an average price of $56.54 per share, resulting in a charge to accumulated deficit of $15.2 million. As of March 31, 2022, we had $24.2 million of remaining share repurchase availability under our August 3, 2021 share repurchase authorization. On May 3, 2022, our Board of Directors re-authorized our $50 million share repurchase program.

Other Items Affecting Liquidity

The outcome of the following specific matters, including our commitments and contingencies, may also affect our liquidity.

Commitments, Capital Spending and Development

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 operating cash flows and ~~borrowings under our revolving credit facility.~~Revolving Credit Facility.

Refer to “Note 910 — Commitments and Contingencies” in Part I, Item 1: Financial Statements for additional information regarding commitments and contingencies that may also affect our liquidity.

Other Opportunities

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 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.

Critical Accounting Policies and Estimates

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 and assumptions 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, 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. We believe that our estimates and assumptions are reasonable, based upon information presently available; however, actual results may differ from these estimates under different assumptions or conditions.

A description of our critical accounting 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. For a more extensive discussion of our accounting policies, refer to “Note 2 — Summary of Significant Accounting Policies” in Part II, Item 8: Financial Statements and Supplemental Data in our Annual Report. There were no material changes to our critical accounting policies and estimates during the three months ended March 31, ~~2022.~~2023.

~~Commitments and Contractual Obligations~~

~~For the three months ended March 31, 2022, there were no material changes in our commitments under contractual obligations as compared to those disclosed in~~ ~~Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Other Items Affecting Liquidity – Contractual Obligations~~ ~~in our Annual Report other than those discussed in~~ ~~Part I, Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Long-Term Debt~~.

Seasonality

We believe that our businesses are affected by seasonal factors, including holidays, weather and travel conditions. Our casino properties, branded taverns and distributed gaming businesses in Nevada have historically experienced lower revenues during the summer as a result of fewer tourists due to higher temperatures, as well as increased vacation activity by local residents. Rocky Gap typically experiences higher revenues during summer months and may be significantly adversely impacted by inclement weather during winter months. Our Nevada branded taverns and distributed gaming operations typically experience higher revenues during the fall which corresponds with several professional sports seasons. Our Montana distributed gaming operations typically experience higher revenues during the winter due to the inclement weather in the state and less opportunity for outdoor activities, in addition to the impact from professional sports seasons during the fall. While other factors like unemployment levels, market competition and the diversification of our business may either offset or magnify seasonal effects, some seasonality is likely to continue, which could result in significant fluctuation in our quarterly operating results.

Recently Issued Accounting Pronouncements

See “Note 1 — Nature of Business and Basis of Presentation” in Part I, Item 1: Financial Statements for information regarding recently issued accounting pronouncements.

Regulation and Taxes

The casino and distributed gaming 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.

Off Balance Sheet Arrangements

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary exposure to market risk is interest rate risk associated with our variable rate long-term debt. As of March 31, ~~2022,~~2023, our variable rate long-term debt primarily comprised our indebtedness under the Credit Facility (refer to “Note 56 — Long-Term Debt” in Part I, Item 1: Financial Statements).

As of March 31, ~~2022,~~2023, we had ~~$625~~$575 million in principal amount of outstanding ~~term loan~~Term Loan borrowings under the Credit Facility with no outstanding borrowings under our $240 million Revolving Credit Facility. Our primary interest rate under the Credit Facility is the Eurodollar rate plus an applicable margin. The weighted-average effective interest rate on our outstanding borrowings under the Credit Facility was ~~approximately~~ ~~3.75%~~7.53% for the three months ended March 31, ~~2022.~~2023. Assuming the outstanding balance under our Credit Facility remained constant over a year, a 50 basis point increase in the applicable interest rate would increase interest incurred, prior to effects of capitalized interest, by ~~$3.1~~$2.9 million over a twelve-month period.

As of March 31, ~~2022,~~2023, our investment portfolio included ~~$202.3~~$156.2 million in cash and cash equivalents and ~~we did not hold any~~$5.0 million in short-term ~~investments.~~cash investments that will convert into cash during the three months ending June 30, 2023.

We continue to evaluate the potential impact of the eventual replacement of the LIBOR benchmark interest ~~rate, which was set to begin transitioning out at the end of 2021.~~rate. While some LIBOR rates ~~will~~are now be extended through June 2023, ~~or 18 months beyond the original 2021 deadline,~~ lenders are ~~not~~no longer allowed to issue new loans and other financial

instruments that are linked to ~~LIBOR beyond 2021.~~LIBOR. Although we are not able to predict what will become a widely accepted benchmark in place of LIBOR, or the exact impact such a transition may have, our current expectation is that this transition will not have a material impact on our business, financial condition or results of operations.

ITEM 4. CONTROLS AND PROCEDURES

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 March 31, ~~2022,~~2023, 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 our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, ~~2022.~~2023.

During the quarter ended March 31, ~~2022,~~2023, there 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.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

A discussion of our legal proceedings is contained in “Note 910 — Commitments and Contingencies — Legal Matters and Other” in Part I, Item 1: Financial Statements.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K, which factors could materially affect our business, financial condition, liquidity or future results. ~~There~~Except as set forth below, there have been no material changes to the risk factors described in the “Risk Factors” section in our Annual Report. The ~~risks~~risk set forth below or described in our Annual Report 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.

Inability to complete the sale of Distributed Gaming Operations could negatively impact our business, financial condition, results of operations or prospects.

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

~~Issuer Purchase~~The closing of ~~Equity~~the Distributed Gaming Transactions is subject to a number of closing conditions and there can be no assurance that these conditions will be satisfied on the timeline we expect or at all. The Distributed Gaming Transactions may also be terminated in certain specified circumstances, including if the sale is not completed by the end of 2023 (subject to certain extensions under certain circumstances). While the sale of Distributed Gaming Operations is pending or if the sale is not completed, we may be subject to several risks including:

~~From time to time, we repurchase shares~~•the current trading price of our common stock ~~pursuant~~may reflect a market assumption that the Distributed Gaming Transactions will be completed;

•we have incurred and expect to ~~our share repurchase program authorized by our Board~~continue to incur significant transaction costs in connection with the sale of Directors on March 12, 2019. This authorization was increased on August 3, 2021 from $25 million to $50 million, and as of March 31, 2022, we had $24.2 million of remaining share repurchase availability Distributed Gaming Operations whether or not the sale is completed;

•under ~~this share repurchase authorization. On May 3, 2022, our Board of Directors re-authorized our $50 million share repurchase program. There is no minimum number of shares that~~the definitive agreements for the Distributed Gaming Transactions, we are ~~required~~subject to ~~repurchase~~certain restrictions on the conduct of the Distributed Gaming business prior to the completion of the sale, which restrictions could adversely affect our ability to realize certain business strategies or take advantage of certain business opportunities;

•the negative perception of investors, vendors, customers, or employees if the sale is not consummated; and

•the ~~repurchase program~~attention of our management may be ~~suspended or discontinued at any time without prior notice (refer to~~ “~~Note 6~~ — ~~Shareholders’ Equity~~directed toward the completion of the pending sale and ~~Stock Incentive Plans”~~ ~~in Part I, Item 1: Financial Statements for additional information regarding~~related matters, and their focus may be diverted from our ~~share repurchase program). All~~day-to-day business operations.

Any of these risks could have a material adverse effect on our ~~share repurchases during the first quarter~~business, financial condition, results of ~~2022 were made through open market transactions. The following table presents our common stock purchases made pursuant to our share repurchase program during the three months ended March 31, 2022:~~

Total Number of Shares Purchased Average Price per Share Total Number of Shares Purchased as Part of a Publicly Announced Program
Approximate Dollar Value That May Yet Be Purchased Under the Program
(in millions)
Period
January 1-31, 2022 — $ — — $ 39.4
February 1-28, 2022 — $ — — $ 39.4
March 1-31, 2022 268,791 $ 56.54 268,791 $ 24.2 (1)

~~(1) Our Board of Directors increased the amount authorized for share repurchases to $50 million on May 3, 2022.~~operations and prospects.

2729

ITEM 5. OTHER INFORMATION

On May 3, 2022, our Board of Directors approved an amendment to our Seventh Amended and Restated Bylaws to revise Article 3, Shareholders, to provide that we will have no obligation to assist or incur liability for any shareholder (other than a shareholder who is an active officer, director or employee of Golden) in any gaming application or approval relating to the shares held by such shareholder. The foregoing summary is qualified in its entirety by the full text of the Eighth Amended and Restated Bylaws, which are filed as Exhibit 3.1 hereto and are incorporated herein by reference.

~~On May 3, 2022,~~January 9, 2023, we entered into the Third Amendment to Employment Agreement by and between Golden Entertainment, Inc. and Blake L. Sartini, which provides for, among other things, (1) an increase to Mr. Sartini’s annual base salary rate from $1,000,000 to $1,050,000, or such amount as may from time to time be determined by the Compensation Committee of the Board of Directors, and (2) an increase to Mr. Sartini’s annual incentive target bonus from 125% to 150% of his annual base salary.

On May 3, 2022, we entered into the Fourth Amendment to Employment Agreement by and between Golden Entertainment, Inc. and Charles Protell, which provides for, among other things, (1) an increase to Mr. Protell’s annual base salary rate from $750,000 to $785,000, or such amount as may from time to time be determined by the Compensation Committee of the Board of Directors and (2) an increase to Mr. Protell’s annual incentive target bonus from 100% to 115% of his annual base salary.

On May 3, 2022, we entered into the Fourth Amendment to Employment Agreement by and between Golden Entertainment, Inc. and Stephen Arcana, which provides for, among other things, (1) an increase to Mr. Arcana’s annual base salary rate from $600,000 to $630,000, or such amount as may from time to time be determined by the Compensation Committee of the Board of Directors, and (2) an increase to Mr. Arcana’s annual incentive target bonus from 100% to 115% of his annual base salary.

~~On May 3, 2022, we entered into the Second~~ Amendment to Amended and Restated Employment Agreement by and between Golden Entertainment, Inc. and Blake L. Sartini II, which provides for, among other things, ~~(1)~~ an increase to Mr. Sartini II’s annual base salary rate from ~~$425,000~~$450,000 to ~~$450,000,~~$475,000, or such amount as may from time to time be determined by the Compensation Committee of ~~the~~ Board of ~~Directors, and (2) an increase to Mr. Sartini II’s annual incentive target bonus from 50% to 85% of his annual base salary.~~Directors.

~~Copies~~A copy of the ~~amendments~~amendment to the employment ~~agreements~~agreement with ~~Messrs. Sartini, Arcana, Protell and~~Mr. Sartini II ~~are~~is filed as ~~exhibits~~an exhibit to this Quarterly Report on ~~Form~~form 10-Q and ~~are~~is incorporated herein by reference.

2830

ITEM 6. EXHIBITS


Exhibits						Description

~~3.1~~2.1						~~Eighth Amended~~Membership Interest Purchase Agreement (Montana), dated as of March 3, 2023, by and ~~Restated Bylaws~~among J&J Ventures Gaming of Montana, LLC, Golden Holdings, Inc., Golden Entertainment, Inc. and J&J Ventures Gaming, LLC. (incorporated by reference to Exhibit 2.1 to Golden Entertainment, Inc.’s Form 8-K dated March 3 , 2023 and filed on March 6 , 2023).

2.2						Membership Interest Purchase Agreement (Nevada), dated as of March 3, 2023, by and among J&J Ventures Gaming of Nevada, LLC, Golden Gaming, LLC and Golden Entertainment, Inc. (incorporated by reference to Exhibit 2.2 to Golden Entertainment, Inc.’s Form 8-K dated March 3, 2023 and filed on March 6, 2023).

10.1#						Third Amendment to Employment Agreement, dated as of ~~May~~ 3 ~~, 2022, by and between Golden Entertainment, Inc. and Blake L. Sartini~~

~~10.2#~~						~~Fourth Amendment to Employment Agreement, dated as of May 3, 2022, by and between Golden Entertainment, Inc. and Charles~~ H. ~~Protell~~

~~10.3#~~						~~Fourth Amendment to Employment Agreement, dated as of May 3, 2022, by and between Golden Entertainment, Inc. and Stephen~~ A. ~~Arcana~~

~~10.4#~~						~~Second Amendment to Employment Agreement, dated as of May~~ 3 ~~, 2022,~~January 9, 2023, by and between Golden Entertainment, Inc. and Blake L. Sartini II

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						Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						Inline XBRL Taxonomy Extension Calculation Definition Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

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

2931

SIGNATURES

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.



			GOLDEN ENTERTAINMENT, INC.
			(Registrant)

Dated: May ~~6, 2022~~10, 2023			/s/ BLAKE L. SARTINI
			Blake L. Sartini
			Chairman of the Board and Chief Executive Officer
			(Principal Executive Officer)

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

			/s/ THOMAS E. HAAS
			Thomas E. Haas
			Senior Vice President of Accounting
			(Principal Accounting Officer)

3032


	Total Number of Shares Purchased	Average Price per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program	Approximate Dollar Value That May Yet Be Purchased Under the Program (in millions)
Period
January 1-31, 2022	—	$	—	—	$	39.4
February 1-28, 2022	—	$	—	—	$	39.4
March 1-31, 2022	268,791	$	56.54	268,791	$	24.2	(1)