UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑Q

(Mark One)

~~(Mark One)~~
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
~~For the quarterly period ended September 30, 2016~~
OR

For the quarterly period ended September 30, 2017

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

For the transition period to

Nevada

46‑3657681

(State or other jurisdiction of

incorporation or organization)

~~46‑3657681~~
(I.R.S. Employer

Identification No.)

Large accelerated filer	☐		Accelerated filer ☒	☒
Non‑accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐

ELDORADO RESORTS, INC.

QUARTERLY REPORT FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, ~~2016~~2017

TABLE OF CONTENTS

			Page
PART I. FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS
	Consolidated ~~Income Statement~~Balance Sheets at September 30, 2017 (unaudited) and December 31, 2016	2
	Consolidated Statements of Operations for the Three and Nine ~~Months~~months Ended September 30, ~~2016~~2017 and ~~2015~~2016 (unaudited)	3
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine ~~Months~~months Ended September 30, ~~2016~~2017 and ~~2015~~2016 (unaudited)	4
	Consolidated Statements of Cash Flows for the Nine ~~Months~~months Ended September 30, ~~2016~~2017 and ~~2015~~2016 (unaudited)	5
	Condensed Notes to Unaudited Consolidated Financial Statements	6
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24 33
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40 53
Item 4.	CONTROLS AND PROCEDURES	40 53
PART II. OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	40 54
Item 1A.	RISK FACTORS	41 54
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	44 56
Item 3.	DEFAULTS UPON SENIOR SECURITIES	45 56
Item 4.	MINE SAFETY DISCLOSURES	45 56
Item 5.	OTHER INFORMATION	45 56
Item 6.	EXHIBITS	45 57
SIGNATURES		45 58

~~Table of Contents~~

PART ~~I-FINANCIAL~~I-FINANCIAL INFORMATION

Item 1. Financial Statements.

ELDORADO RESORTS, INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)


	September 30,		December 31,		September 30,		December 31,
	2016		2015		2017		2016
	(unaudited)				(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	44,609	$	78,278	$	134,903	$	61,029
Restricted cash		2,395		5,271		21,307		2,414
Marketable securities						17,461		—
Accounts receivable, net		17,061		9,981		33,129		14,694
Due from affiliates						71		—
Inventories		11,477		11,742		16,505		11,055
Prepaid income taxes		74		112		5,353		69
Prepaid expenses and other		16,322		10,795		28,749		12,492
Assets held for sale						143,496		—
Total current assets		91,938		116,179		400,974		101,753
INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES		1,286		1,286
PROPERTY AND EQUIPMENT, NET		609,795		625,416		1,446,354		612,342
GAMING LICENSES AND OTHER INTANGIBLES, NET		488,421		492,033		954,962		487,498
GOODWILL		66,826		66,826		746,482		66,826
NON-OPERATING REAL PROPERTY		14,218		16,314		18,069		14,219
OTHER ASSETS, NET		6,390		6,954		18,416		11,406
Total assets	$	1,278,874	$	1,325,008	$	3,585,257	$	1,294,044
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	4,539	$	4,524	$	1,068	$	4,545
Accounts payable		22,701		17,005		28,328		21,576
Due to affiliates		169		129		30		259
Accrued property, gaming and other taxes		16,772		19,424		40,772		18,790
Accrued payroll and related		15,146		17,852		57,814		14,588
Accrued interest		7,707		14,978		13,193		14,634
Deferred proceeds for assets held for sale						20,000		—
Accrued other liabilities		30,601		31,798		57,080		27,648
Liabilities related to assets held for sale						6,790		—
Total current liabilities		97,635		105,710		225,075		102,040
LONG-TERM DEBT, LESS CURRENT PORTION		786,112		861,713		2,224,054		795,881
DEFERRED INCOME TAXES		91,229		78,797		251,978		90,385
OTHER LONG-TERM LIABILITIES		7,001		8,121		30,215		7,287
		981,977		1,054,341		2,731,322		995,593
COMMITMENTS AND CONTINGENCIES (Notes 1 and 10)
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' EQUITY:
Common stock, 100,000,000 shares authorized, 47,105,744 and 46,817,829 issued and outstanding, par value $0.00001 as of September 30, 2016 and December 31, 2015, respectively		—		—
Common stock, 100,000,000 shares authorized, 76,804,618 and 47,105,744 issued and outstanding, par value $0.00001 as of September 30, 2017 and December 31, 2016, respectively						—		—
Paid-in capital		173,285		170,897		745,117		173,879
Retained earnings		123,600		99,758		108,806		124,560
Accumulated other comprehensive income		12		12		12		12
Total stockholders’ equity		296,897		270,667		853,935		298,451
Total liabilities and stockholders’ equity	$	1,278,874	$	1,325,008	$	3,585,257	$	1,294,044

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

~~Table of Contents~~

ELDORADO RESORTS, INC.

CONSOLIDATED ~~INCOME STATEMENT~~STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

(unaudited)



	Three Months Ended				Nine Months Ended				Three Months Ended						Nine Months Ended
	September 30,				September 30,				September 30,						September 30,
	2016		2015		2016		2015		2017			2016			2017			2016
REVENUES:
Casino	$	184,604	$	156,357	$	532,141	$	460,807	$	367,930		$	184,604		$	825,833		$	532,141
Pari-mutuel commissions		3,527		3,781		7,104		8,042		5,162			3,527			9,945			7,104
Food and beverage		38,029		24,040		108,735		69,717		56,356			38,029			132,307			108,735
Hotel		28,001		9,193		73,843		24,671		38,536			28,001			85,473			73,843
Other		12,095		6,165		33,994		17,464		15,052			12,095			35,196			33,994
		266,256		199,536		755,817		580,701		483,036			266,256			1,088,754			755,817
Less-promotional allowances		(24,691)		(15,996)		(69,371)		(47,077)		(38,162	)		(24,691	)		(87,776	)		(69,371	)
Net operating revenues		241,565		183,540		686,446		533,624		444,874			241,565			1,000,978			686,446
EXPENSES:
Casino		103,272		90,398		299,908		268,282		184,790			103,272			428,543			299,908
Pari-mutuel commissions		3,506		3,625		7,761		8,414		4,601			3,506			9,793			7,761
Food and beverage		21,046		12,461		61,557		36,384		26,457			21,046			66,711			61,557
Hotel		7,956		2,340		23,064		6,843		10,138			7,956			24,767			23,064
Other		7,298		4,079		19,990		10,513		7,792			7,298			18,689			19,990
Marketing and promotions		11,323		7,816		30,664		22,321		24,634			11,323			54,845			30,664
General and administrative		34,094		23,285		98,129		69,882		68,585			34,094			155,778			98,129
Corporate		4,426		3,652		15,684		11,713		7,718			4,426			21,734			15,684
Depreciation and amortization		15,810		13,954		47,597		42,454		29,122			15,810			69,635			47,597
Total operating expenses		208,731		161,610		604,354		476,806		363,837			208,731			850,495			604,354
GAIN (LOSS) ON SALE OR DISPOSAL OF PROPERTY		25		(6)		(740)		(2)
GAIN (LOSS) ON SALE OF ASSET OR DISPOSAL OF PROPERTY										4			25			(51	)		(740	)
ACQUISITION CHARGES		(4,750)		(380)		(5,326)		(717)		(2,094	)		(4,750	)		(89,172	)		(5,326	)
EQUITY IN INCOME OF UNCONSOLIDATED AFFILIATE		—		2,548		—		3,136
EQUITY IN LOSS OF UNCONSOLIDATED AFFILIATE										(23	)		—			(305	)		—
OPERATING INCOME		28,109		24,092		76,026		59,235		78,924			28,109			60,955			76,026
OTHER EXPENSE:
Interest expense, net		(12,589)		(14,482)		(38,375)		(48,946)		(29,183	)		(12,589	)		(69,380	)		(38,375	)
Loss on early retirement of debt, net		—		(1,790)		(155)		(1,790)		(10,030	)		—			(37,347	)		(155	)
Total other expense		(12,589)		(16,272)		(38,530)		(50,736)		(39,213	)		(12,589	)		(106,727	)		(38,530	)
NET INCOME BEFORE INCOME TAXES		15,520		7,820		37,496		8,499
PROVISION FOR INCOME TAXES		(5,838)		(2,421)		(13,654)		(4,469)
NET INCOME	$	9,682	$	5,399	$	23,842	$	4,030
Net Income per share of Common Stock:
Basic	$	0.21	$	0.12	$	0.51	$	0.09
Diluted	$	0.20	$	0.12	$	0.50	$	0.09
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES										39,711			15,520			(45,772	)		37,496
(PROVISION) BENEFIT FOR INCOME TAXES										(11,595	)		(5,838	)		27,625			(13,654	)
INCOME (LOSS) FROM CONTINUING OPERATIONS										28,116			9,682			(18,147	)		23,842
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAXES										1,438			—			2,393			—
NET INCOME (LOSS)									$	29,554		$	9,682		$	(15,754	)	$	23,842

Income (loss) per common share attributable to common stockholders - basic:
Income (loss) from continuing operations									$	0.36		$	0.21		$	(0.28	)	$	0.51
Income from discontinued operations, net of income taxes										0.02			—			0.03			—
Net income (loss) attributable to common stockholders									$	0.38		$	0.21		$	(0.25	)	$	0.51

Income (loss) per common share attributable to common stockholders - diluted:
Income (loss) from continuing operations									$	0.36		$	0.20		$	(0.28	)	$	0.50
Income from discontinued operations, net of income taxes										0.02			—			0.03			—
Net income (loss) attributable to common stockholders									$	0.38		$	0.20		$	(0.25	)	$	0.50

Weighted Average Basic Shares Outstanding		47,193,120		46,516,614		47,106,706		46,509,369		76,902,070			47,193,120			63,821,705			47,106,706
Weighted Average Diluted Shares Outstanding		47,834,644		46,763,589		47,737,592		46,620,959		77,959,689			47,834,644			64,768,174			47,737,592

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

~~Table of Contents~~

ELDORADO RESORTS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,


2016

2015

2016

2015

NET INCOME

$
9,682

$
5,399

$
23,842

$
4,030

Other Comprehensive Income, net of tax:

Other Comprehensive Income

—

—

—

—

Comprehensive Income, net of tax

$
9,682

$
5,399

$
23,842

$
4,030

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017			2016
NET INCOME (LOSS)	$	29,554	$	9,682	$	(15,754	)	$	23,842
Other Comprehensive Income (Loss), net of tax:
Other Comprehensive Income		—		—		—			—
Comprehensive Income (Loss), net of tax	$	29,554	$	9,682	$	(15,754	)	$	23,842

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

~~Table of Contents~~

ELDORADO RESORTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)


	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	23,842	$	4,030
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income					$	(15,754	)	$	23,842
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		47,597		42,454		69,635			47,597
Amortization of debt issuance costs and discount (premium)		2,614		(5,259)
Equity in income of unconsolidated affiliate		—		(3,136)
Loss on early retirement of debt, net		155		1,790
Amortization of deferred financing costs, discount and debt premium						5,041			2,614
Equity in loss of unconsolidated affiliate						305			—
Loss on early extinguishment of debt						37,347			155
Change in fair value of acquisition related contingencies		1		52		36			1
Stock-based compensation expense		2,749		1,155
Loss on sale or disposal of property		740		2
Stock compensation expense						4,454			2,749
Loss on disposal of assets						51			740
Provision for bad debts		308		46		397			308
Provision for deferred income taxes		12,432		3,206
(Benefit) provision for deferred income taxes						(25,535	)		12,432
Change in operating assets and liabilities:
Restricted cash		2,876		4,094		200			2,876
Sale of trading securities						272			—
Accounts receivable		(7,388)		(2,137)		(6,939	)		(7,388	)
Inventories		265		69
Prepaid expenses and other		(5,489)		(310)
Accounts payable		3,735		642
Inventory						17			265
Prepaid expenses and other assets						2,054			(5,489	)
Interest payable		(7,271)		(20,593)		(1,441	)		(7,271	)
Income taxes payable		—		(34)
Accrued and other liabilities and due to affiliates		(4,916)		(5,543)
Income taxes receivable/payable						(1,268	)		—
Accounts payable and accrued liabilities						2,959			(1,181	)
Net cash provided by operating activities		72,250		20,528		71,831			72,250
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, net of payables		(32,949)		(24,414)
Purchase of property and equipment, net						(53,181	)		(32,949	)
Reimbursement of capital expenditures from West Virginia regulatory authorities						251			4,113
Restricted cash						1,617			—
Proceeds from sale of property and equipment						—			1,560
Net cash used in business combinations		(491)		—		(1,343,659	)		(491	)
Net proceeds from sale of property and equipment		1,560		6
Cash escrow deposit required for acquisition		—		(55,460)
Decrease in restricted cash due to credit support deposit		—		2,500
Reimbursement of capital expenditures from West Virginia regulatory authorities		4,113		—
Decrease (increase) in other assets, net		564		(944)
Decrease in other assets, net						—			564
Net cash used in investing activities		(27,203)		(78,312)		(1,394,972	)		(27,203	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Senior Notes		—		375,000
Proceeds from issuance of New Term Loan						1,450,000			—
Proceeds from issuance of 6% Senior Notes						875,000			—
Borrowings under New Revolving Credit Facility						166,953			—
Payments under Term Loan		(3,188)		425,000		(1,062	)		(3,188	)
Net payments under Revolving Credit Facility		(74,500)		16,937
Retirement of long-term debt		—		(728,664)
Payments under New Term Loan						(448,125	)		—
Payments under New Revolving Credit Facility						(166,953	)		—
Borrowings (payments) under Revolving Credit Facility						41,000			(74,500	)
Payments under Revolving Credit Facility						(29,000	)		—
Retirement of Term Loan						(417,563	)		—
Retirement of Revolving Credit Facility						(41,000	)		—
Debt premium proceeds						27,500			—
Payment of other long-term obligation						(23	)		—
Payments on capital leases		(204)		(29)		(347	)		(204	)
Debt issuance costs		(463)		(25,223)		(51,338	)		(463	)
Taxes paid related to net share settlement of equity awards		(1,366)		—		(10,927	)		(1,366	)
Call premium on early retirement of debt		—		(44,090)
Proceeds from exercise of stock options		1,005		—		2,900			1,005
Net cash (used in) provided by financing activities		(78,716)		18,931
DECREASE IN CASH AND CASH EQUIVALENTS		(33,669)		(38,853)
Net cash provided by (used in) financing activities						1,397,015			(78,716	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS						73,874			(33,669	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		78,278		87,604		61,029			78,278
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	44,609	$	48,751	$	134,903		$	44,609
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest	$	43,000	$	74,806	$	67,840		$	43,000
Cash paid during period for income taxes		1,406		1,102		714			1,406
NON-CASH FINANCING ACTIVITIES
Payables for capital expenditures		1,961		194		2,286			1,961

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

~~Table of Contents~~

ELDORADO RESORTS, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Basis of Presentation

Organization

The accompanying unaudited consolidated financial statements include the accounts of Eldorado Resorts, Inc. (“ERI” or the “Company”), a Nevada corporation formed in September 2013, and its consolidated subsidiaries. ~~ERI was formed~~The Company acquired Mountaineer, Presque Isle Downs and Scioto Downs in September ~~2013~~2014 pursuant to ~~be the parent company following the~~a merger ~~of wholly-owned subsidiaries of the Company into Eldorado HoldCo LLC (“HoldCo”~~(the “MTR Merger”)~~, a Nevada limited liability company formed in 2009 that is the parent company of Eldorado Resorts LLC (“Resorts”), and~~ with MTR Gaming Group, Inc. (“MTR Gaming”)~~, a Delaware corporation incorporated~~ and in 1988 (the “Merger”). Effective upon the consummation of the Merger on September 19, 2014 (the “Merger Date”), MTR Gaming and HoldCo each became a wholly-owned subsidiary of ERI and, as a result of such transactions, Resorts became an indirect wholly-owned subsidiary of ERI. The Merger has been accounted for as a reverse acquisition of MTR Gaming by HoldCo under accounting principles generally accepted in the United States (“US GAAP”). As a result, HoldCo is considered the acquirer of MTR Gaming for accounting purposes. Intercompany accounts and transactions have been eliminated in consolidation.

On November ~~24,~~ 2015 (the “Reno Acquisition Date”), Resorts consummated the acquisition of all of the assets and properties of Circus Circus Reno (“Circus Reno”) and the 50% membership interest in the joint venture (the “Silver Legacy Joint Venture”) owned by Galleon, Inc. (collectively, the “Circus Reno/Silver Legacy Purchase” or the “Reno Acquisition”) pursuant to a Purchase and Sale Agreement, dated as of July 7, 2015 (the “Purchase Agreement”), entered into with Circus Circus Casinos, Inc. and Galleon, Inc., each an affiliate of MGM Resorts International, with respect to the acquisition. On the Reno Acquisition Date, Resorts also exercised its right to acquire the 3.8% interest in Eldorado Limited Liability Company (“ELLC”) held by certain affiliates and shareholders of the Company. As a result of these transactions, ELLC and CC-Reno, LLC, a newly formed Nevada limited liability company, became wholly-owned subsidiaries of ERI, and Silver Legacy Joint Venture became an indirect wholly‑owned subsidiary of ERI. The accompanying unaudited consolidated financial statements for periods prior to the Reno Acquisition Date do not include the results of operations forit acquired Circus Reno and ~~report~~the interests in the Silver Legacy ~~Joint Venture as an investment in an unconsolidated affiliate.~~that it did not own prior to such date (the “Reno Acquisition”).

~~Resorts owns~~Throughout the three and ~~operates~~nine months ended September 30, 2017, ERI owned and operated the following properties:

Eldorado Resort Casino Reno ~~a premier~~(“Eldorado Reno”)—A 814-room hotel, casino and entertainment facility ~~centrally~~connected via an enclosed skywalk to Silver Legacy and Circus Reno located in downtown Reno, Nevada (“that includes 1,125 slot machines and 46 table games;

Silver Legacy Resort Casino (“Silver Legacy”)—A 1,711-room themed hotel and casino connected via an enclosed skywalk to Eldorado ~~Reno”~~Reno and Circus Reno that includes 1,187 slot machines, 63 table games and a 13 table poker room;

Circus Circus Reno (“Circus Reno”)~~, which opened for business in 1973. Resorts also owns~~ —A 1,571-room hotel-casino and entertainment complex connected via an enclosed skywalk to Eldorado Reno and Silver Legacy that includes 720 slot machines and 26 table games;

Eldorado Resort Casino Shreveport (“(“Eldorado ~~Shreveport”~~Shreveport”)~~, a 403‑room~~—A 403-room, all suite art ~~deco‑style~~deco-style hotel and ~~a tri‑level~~tri-level riverboat dockside casino ~~complex~~ situated on the Red River in Shreveport, Louisiana ~~which commenced operations under its previous owners in December 2000.~~

~~Prior to the Reno Acquisition Date, Resorts owned a 48.1% interest in the Silver Legacy Joint Venture which owns the Silver Legacy Resort Casino (“Silver Legacy”), a major themed hotel~~that includes 1,397 slot machines, 52 table games and casino situated between and seamlessly connected at the mezzanine level to the Eldorado Reno and Circus Reno. Resorts acquired the remaining interest in Silver Legacy in 2015 as well as acquiring Circus Reno.an eight table poker room;

MTR Gaming operates as a hospitality and gaming company with racetrack, gaming and hotel properties in West Virginia, Pennsylvania and Ohio. MTR Gaming, through its wholly-owned subsidiaries, owns and operates Mountaineer Casino, Racetrack & Resort ~~in Chester,~~(“Mountaineer”)—A 357-room hotel, casino and entertainment facility and live thoroughbred horse racing located on the Ohio River at the northern tip of West Virginia ~~(“Mountaineer”),~~ ’s northwestern panhandle that includes 1,505 slot machines, 36 table games and a 10 table poker room;

Presque Isle Downs & Casino (“Presque Isle Downs”)—A casino and live thoroughbred horse racing facility with 1,596 slot machines, 32 table games and a seven table poker room located in Erie, ~~Pennsylvania (“Presque Isle Downs”),~~Pennsylvania; and

Eldorado Gaming Scioto Downs (“(“Scioto ~~Downs”~~Downs”) in—A modern “racino” offering 2,245 video lottery terminals (“VLT”), harness racing and a 118-room third party hotel connected to Scioto Downs located 15 minutes from downtown Columbus, Ohio. ~~Scioto Downs, through~~

In addition, on May 1, 2017, the Company consummated its ~~subsidiary, RacelineBet,~~acquisition of Isle of Capri Casinos, Inc.~~, also operates Racelinebet.com,~~ and acquired the following properties:

Isle Casino Hotel—Black Hawk (“Isle Black Hawk”)—A land-based casino on an approximately 10-acre site in Black Hawk, Colorado that includes 993 slot machines, 27 table games, a ~~national account wagering service~~nine table poker room and a 238-room hotel;

Lady Luck Casino—Black Hawk (“Lady Luck Black Hawk”)—A land-based casino across the intersection from Isle Casino Hotel in Black Hawk, Colorado, that ~~offers online~~includes 430 slot machines, 10 table games, five poker tables and ~~telephone wagering~~a 164-room hotel with a parking structure connecting Isle Casino Hotel-Black Hawk and Lady Luck Casino-Black Hawk;

Isle Casino Racing Pompano Park (“Pompano”)—A casino and harness racing track on ~~horse races as~~an approximately 223-acre owned site in Pompano Beach, Florida, that includes 1,459 slot machines and a ~~marketing affiliate~~45 table poker room;

Isle Casino Bettendorf (“Bettendorf”)—A land-based single-level casino located off of ~~TwinSpires.com,~~Interstate 74 in Bettendorf, Iowa that includes 978 slot machines and 20 table games with two hotel towers with 509 hotel rooms;

Isle Casino Waterloo (“Waterloo”)—A single-level land-based casino in Waterloo, Iowa that includes 940 slot machines, 25 table games, and a 194-room hotel;

Isle of Capri Casino Hotel Lake Charles (“Lake Charles”)—A gaming vessel on an ~~affiliate~~approximately 19 acre site in Lake Charles, Louisiana, with 1,160 slot machines, 49 table games, including 13 poker tables and two hotels offering 493 rooms;

Isle of ~~Churchill Downs, Inc.~~Capri Casino Lula (“Lula”)—Two dockside casinos in Lula, Mississippi with 879 slot machines and 20 table games, two on-site hotels with a total of 486 rooms and a 28-space RV Park;

•

Lady Luck Casino Vicksburg (“Vicksburg”)—A dockside casino in Vicksburg, Mississippi that includes 619 slot machines, nine table games and a hotel with a total of 89 rooms;

Isle of Capri Casino Boonville (“Boonville”)—A single-level dockside casino in Boonville, Missouri that includes 893 slot machines, 20 table games and a 140-room hotel;

Isle Casino Cape Girardeau (“Cape Girardeau”)—A dockside casino and pavilion and entertainment center in Cape Girardeau, Missouri that includes 881 slot machines, 20 table games and four poker tables;

Lady Luck Casino Caruthersville (“Caruthersville”)—A riverboat casino located along the Mississippi River in Caruthersville, Missouri that includes 513 slot machines and nine table games;

Isle of Capri Casino Kansas City (“Kansas City”)—A dockside casino located close to downtown Kansas City, Missouri offering 967 slot machines and 18 table games; and

Lady Luck Casino Nemacolin (“Nemacolin”)—A casino property located on the 2,000-acre Nemacolin Woodlands Resort in Western Pennsylvania that includes 600 slot machines and 28 table games.

On August 22, 2016, Isle entered into an agreement to sell Lake Charles for aggregate consideration of $134.5 million, subject to certain adjustments. The transaction (the “Lake Charles Disposition”) remains subject to Louisiana Gaming Control Board approval and other customary closing conditions and, if obtained, the transaction is expected to be completed by December 31, 2017.

~~Agreement to Acquire~~Acquisition of Isle of Capri Casinos, Inc.

On ~~September 19, 2016,~~May 1, 2017 (the “Isle Acquisition Date”), the Company ~~entered into an~~completed its acquisition of Isle of Capri Casinos, Inc. pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) dated as of September 19, 2016 with Isle of Capri Casinos, Inc., a Delaware corporation (“Isle” or “Isle of Capri”), Eagle I Acquisition Corp., a Delaware corporation and a direct ~~wholly owned~~wholly-owned subsidiary of the Company, ~~(“Merger Sub A”),~~ and Eagle II

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Acquisition Company LLC, a Delaware limited liability company and a direct ~~wholly owned~~wholly-owned subsidiary of the Company ~~(“Merger Sub B”~~(the “Isle Acquisition” or the “Isle Merger”). ~~The~~As a result of the Isle Merger, ~~Agreement provides for, among other things, (1) the merger~~Isle became a wholly-owned subsidiary of ~~Merger Sub A with~~ ERI and, into Isle, with Isle as the surviving entity (the “First Step Merger”), and (2) a subsequent merger whereby Isle will merge with and into Merger Sub B, with Merger Sub B as the surviving entity (the “Second Step Merger” and together with the First Step Merger, the “Mergers”). Isle’s stockholders may elect to exchange each share of Isle common stock held by such stockholder, at the effective time of the ~~First Step~~Isle Merger, ~~for either~~each outstanding share of Isle’s stock converted into the right to receive $23.00 in cash or 1.638 shares of ~~Company~~ERI common ~~stock. Elections are~~stock (the “Stock Consideration”), at the election of the applicable Isle shareholder and subject to proration ~~and reallocation~~ such that the outstanding shares of Isle common stock ~~will be~~were exchanged for aggregate consideration comprised of 58% cash, or $552.0 million, and 42% ~~Company~~ERI common stock, or 28.5 million newly issued shares of ERI common stock. The First Step Merger is subject to adoption of the Merger Agreement by holders of at least two-thirds of Isle’s outstanding common stock and the issuance of Company stock pursuant to the Merger Agreement is subject to approval of holders of a majority of the Company’s outstanding common stock. Each party’s obligation to consummate the Mergers is subject to customary conditions, including, among others: (i) stockholder approval of both the Company and Isle as described above; (ii) receipt of required approvals of gaming authorities; and (iii) absence of any order or legal requirement that prohibits or makes the Mergers illegal. The waiting period under the Hart-Scott-Rodino Act terminated on October 21, 2016. The obligation of the Company to consummate the Mergers is subject to the absence of a material adverse effect on Isle and the obligation of Isle to consummate the Mergers is subject to the absence of a material adverse effect on the Company. The obligation of the Company to consummate the Mergers is not subject to a financing condition.total purchase consideration was $1.93 billion (See Note 2).

Additionally, the Merger Agreement contains certain termination rights for both the Company and Isle including, among others, a mutual termination right if the Mergers have not been consummated on or prior to June 19, 2017 (which may be extended for an additional 90 days by either the Company or Isle if all of the conditions precedent other than the receipt of required gaming approvals have been satisfied). Upon the termination of the Merger Agreement under certain circumstances, the Company or Isle may be required to pay a termination fee of $60 million or $30 million, respectively. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement.

In connection with the ~~execution of the Merger Agreement, on September 19, 2016, Recreational Enterprises, Inc. (“REI”),~~Isle Acquisition, the Company and Isle entered into a voting agreement and GFIL Holdings, LLC (“GFIL”), the Company and Isle entered into a voting agreement pursuant to which, REI has agreed, among other things, to vote all of its shares of Company common stock in favor of the issuance of shares of Company common stock as stock consideration in the Mergers and GFIL has agreed, among other things, to vote all of its shares of Isle common stock in favor of the Mergers and adoption of the Merger Agreement.

Upon completion of the Mergers, the Company will add 12 additional properties to its portfolio after giving effect to the planned dispositions of Isle of Capri Casino Hotel Lake Charles and Lady Luck Casino Marquette. On August 22, 2016, Isle entered into an agreement to sell Isle of Capri Casino Hotel Lake Charles for aggregate consideration of $134.5 million, subject to certain adjustments. On October 13, 2016, Isle entered into an agreement to sell Lady Luck Casino Marquette for cash consideration of approximately $40.0 million, subject to certain adjustments.

~~In connection with entering into the Merger Agreement, on September 19, 2016, the Company entered into~~completed a debt financing commitment letter with JPMorgan Chase Bank, N.A. as modified by the five separate written joinders to the Commitment Letter entered into by ERI and JPMorgan Chase Bank, N.A. with each of Macquarie Capital Funding LLC, KeyBank, National Association, Capital One, National Association, SunTrust Bank and U.S. Bank National Association and certain affiliates of such parties (the “Commitment Letter”). The Commitment Letter provides for:transaction comprised of: (a) a senior secured credit facility in an aggregate principal amount of $1.75 billion ~~comprised of~~with a (i) a term loan facility of ~~up to~~ $1.45 billion and (ii) a revolving credit facility of ~~$300~~$300.0 million and (b) ~~an amount equal to at least $375~~$375.0 million ~~in gross proceeds from the issuance and sale by the Company~~ of senior unsecured notes or, if the notes are not issued and sold on or prior to the date of the consummation of the Mergers, an amount equal to at least $375 million in senior unsecured bridge loans under a senior unsecured credit facility.notes. The proceeds of such borrowings ~~may be~~were used ~~(w)~~(v ) to pay the cash portion of the consideration payable in the ~~Mergers, (x)~~Isle Merger, (w) refinance all of Isle’s existing credit facilities, ~~and~~(x) redeem or otherwise repurchase all of Isle’s senior and senior subordinated notes, (y) refinance the Company’s existing credit facility and (z) pay transaction fees and expenses related to the ~~foregoing. The availability~~foregoing (See Note 7 for further discussion of the ~~borrowings is subject~~refinancing transaction and terms of such indebtedness).

Acquisition charges attributed to the ~~satisfaction~~Isle Acquisition are reported on the accompanying statement of ~~certain customary conditions.~~operations related to legal, accounting, financial advisory services, severance, stock awards and other costs totaling $2.1 million and $89.2 million for the three and nine months ended September 30, 2017, respectively, and $4.7 million for the three and nine months ended September 30, 2016. As of September 30, 2017, $0.2 million of accrued costs and expenses related to the Isle Acquisition are included in accrued other liabilities. Additionally, we recognized a loss of $27.3 million for the nine months ended September 30, 2017 related to the extinguishment of Isle debt and the payment of interest and call premiums in conjunction with the Isle Acquisition.

The presentation of information herein for periods prior to the Isle Acquisition Date and after the Isle Acquisition Date are not fully comparable because the results of operations for Isle are not included for periods prior to the Isle Acquisition Date. Summary financial results of Isle for the three and nine months ended January 22, 2017 are included in Isle’s Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission (“SEC”). In conjunction with the Isle Acquisition, Isle is no longer required to file quarterly and annual reports with the SEC, and terminated its registration on May 11, 2017.

Reclassifications

Certain reclassifications of prior year presentations have been made to conform to the current period presentation.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company and its subsidiaries have been prepared in accordance ~~under~~with accounting principles generally accepted in the United States for interim financial

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information with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, all of which are normal and recurring, considered necessary for a fair presentation and have been included herein. The results of operations for these interim periods are not necessarily indicative of the operating results for other quarters, for the full year or any future period.

The executive decision ~~makers~~maker of our Company ~~review~~reviews operating results, ~~assess~~assesses performance and ~~make~~makes decisions on a “significant market” basis. The Company’s management views each of its properties as an operating segment. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate, and their management and reporting structure. ~~The~~Prior to the Isle Acquisition, the Company’s principal operating activities ~~occur~~occurred in three geographic regions: Nevada, Louisiana and parts of the eastern United States. The Company ~~has~~ aggregated its operations into three reportable segments based on the similar characteristics of the operating segments within the regions in which they ~~operate. We, therefore, consider Eldorado Reno, Silver Legacy~~operated. Following the Isle Acquisition, the Company’s principal operating activities occur in four geographic regions and ~~Circus Reno as Nevada, Eldorado Shreveport as Louisiana,~~reportable segments based on the similar characteristics of the operating segments within the regions in which the Company operates: West, Midwest, South, and ~~Scioto Downs, Presque Isle Downs~~East (See Note 12 for the list of properties included in each segment for the three and ~~Mountaineer as Eastern.~~nine months ended September 30, 2017 and 2016).

These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015.~~ 2016.

~~Reclassifications~~Summary of Significant Accounting Policies - Updates

~~Certain reclassifications~~Marketable securities consist primarily of ~~prior year presentations have been made~~trading securities held by the Company’s captive insurance subsidiary. The trading securities are primarily debt and equity securities that are purchased with the intention to ~~conform to~~resell in the near term. The trading securities are carried at fair value with changes in fair value recognized in current period ~~presentation.~~income in the accompanying statements of operations. This accounting policy was implemented as of the Isle Acquisition Date.

Recently Issued Accounting Pronouncements – New Developments

In ~~August 2016,~~May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2016-15, “Classification~~No. 2017-09, which amends the scope of ~~Certain Cash Receipts~~modification accounting for share-based payment arrangements. An entity should account for the effects of a modification unless the fair value, vesting conditions, and ~~Cash Payments”. This new guidance is intended to reduce diversity in practice in how certain cash receipts~~classification of the awards are the same immediately before and ~~payments are classified in~~after the statement of cash flows, including debt prepayment or extinguishment costs, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, and distributions from certain equity method investees.modification. The ~~guidance~~standard is effective for the financial statements issued for annual periods and interim ~~and~~periods within those annual periods, beginning after December 15, 2017, and early adoption is permitted. ~~The guidance requires application using a retrospective transition method.~~ We anticipate adopting this accounting standard during the first quarter of 2018, and are ~~currently~~ evaluating the impact ~~of adopting this guidance~~ on our consolidated financial statements.

In May ~~2016, the~~ 2014 (amended January 2017), FASB issued ASU ~~2016-12, “Revenue from Contracts with Customers~~ –Narrow-Scope Improvements and Practical Expedients.” This pronouncement addresses narrow-scope improvements to the guidance on collectability, noncash consideration, and completed contracts at transition. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. ~~This update affects the guidance in ASU 2014-09, Revenue~~No. 2014‑09, “Revenue from Contracts with Customers, ~~(Topic 606),~~” which ~~is not yet effective.~~provides guidance for revenue recognition. The ~~effective date~~new standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and ~~transition requirements~~eliminates existing industry guidance, including revenue recognition guidance specific to the gaming industry. The FASB has also recently issued several amendments to the standard, including narrow-scope improvements and practical expedients (ASU 2016-12) and clarification on accounting for ~~the amendments in this update are the same as the effective date~~ and ~~transition requirements for Topic 606. We are currently evaluating the impact of adopting this guidance on our consolidated financial statements~~identifying performance obligations (ASU 2016-10).

~~In April 2016, the~~ ~~FASB~~ ~~issued~~ ~~ASU~~ ~~2016-10, “Revenue from Contracts with Customers~~ – ~~Identifying Performance Obligations and Licensing.” This pronouncement was issued to proactively address areas in which diversity in practice potentially could arise, as well as to~~ ~~reduce~~ ~~the cost and complexity of applying certain aspects~~ The core principle of the ~~guidance both at implementation and on an ongoing basis. The update~~ ~~guidance expands how~~revenue model indicates that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ~~This update affects~~The standard is designed to create greater comparability for financial statement users across industries and jurisdictions and also requires enhanced disclosures. The guidance is effective for interim and annual periods beginning after December 15, 2017, and should be applied using the full retrospective method or retrospectively with the cumulative effect initially applying the guidance ~~in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which~~recognized at the date of initial application. While early adoption is ~~not yet effective. The effective date~~permitted for interim and transition requirements for the amendments in this update are the same as the effective date and transition requirements for Topic 606. We are currently evaluating the impact of adopting this guidance on our consolidated financial statements.

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In March 2016, the FASB issued ASU 2016-09, “Compensation—Stock Compensation.” This ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. These areas include income tax consequences, classification of awards as either equity or a liability, and classification on the statement of cash flow. The effective date is for annual ~~and interim~~ periods beginning after December 15, 2016, ~~with early adoption permitted.~~we anticipate adopting this standard on January 1, 2018, on a full retrospective basis. We ~~elected to early adopt this ASU prospectively~~are currently in the ~~first quarter~~process of ~~2016. Under~~evaluating the full impact adoption of ASU 2014‑09 (as amended) will have on our consolidated financial statements, including any new ~~guidance, we~~considerations with respect to the Isle Acquisition. We anticipate this new standard will likely have a material impact on our consolidated financial statements.

We expect the most significant effect upon adoption of ASU 2014-09 (as amended) will likely be related to 1) the accounting for our customer loyalty program (no longer will be recorded at cost, and a deferred revenue model will likely be used to account for the classification and timing of revenue recognized, as well as the classification of related expenses for loyalty point redemptions) and 2) the elimination of promotional allowances (the presentation of goods and services provided to our customers without charge,

included in gross revenue with a corresponding reduction in ~~income tax expense~~promotional allowances, will no longer be reported as revenue and will be recognized based on relative standalone selling prices for transactions with more than one performance obligation). As a result, we expect that our liability associated with the customer loyalty program will increase, and our gaming revenues will be significantly reduced as the goods and services provided to customers without charge that currently are included in both gross revenues and promotional allowances will be presented on a net basis, with the majority of ~~$0.1 million~~the impact resulting in a decrease in casino revenues. The quantitative effects of these changes have not yet been fully determined and ~~$0.8 million for the three and nine months ended September 30, 2016, respectively. There were no excess tax benefits for the three and nine months ended September 30, 2015.~~are still being analyzed.

In February 2016, the FASB issued ASU No. 2016-02 which addresses the recognition and measurement of leases. Under the new guidance, for all leases (with the exception of short-term leases), at the commencement date, lessees will be required to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Further, the new lease guidance simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and liabilities, which no longer provides a source for off balance sheet financing. The effective date for this update is for the annual and interim periods beginning after December 15, 2018 with early adoption permitted. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the ~~financial statements. We are currently evaluating the impact of adopting this accounting standard on our~~ consolidated financial statements.

~~In September 2015,~~Currently, we do not have any material capital leases nor any material operating leases where we are the ~~FASB issued~~lessor. Our operating leases, primarily relating to certain ground leases and slot machines or VLTs, will be recorded on the balance sheet as an ROU asset with a corresponding lease liability, which will be amortized using the effective interest rate method as payments are made. The ROU asset will be depreciated on a straight-line basis and recognized as lease expense. The qualitative and quantitative effects of adoption of ASU ~~2015-16, Business Combinations (Topic 805): Simplifying~~2016-02 are still being analyzed, and we are in the ~~Accounting for Measurement-Period Adjustments. This ASU eliminates~~process of evaluating the ~~requirement that an acquirer in a business combination account for measurement-period adjustments retrospectively. Instead, an acquirer~~full effect the new guidance will recognize a measurement-period adjustment during the period in which it determines the amount of the adjustment. The guidance is effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, it is effective for fiscal years beginning after December 15, 2016. We have ~~adopted this guidance, and it had no impact~~ on our consolidated financial statements ~~for~~including any new considerations with respect to the ~~three and nine months ended September 30, 2016.~~Isle Acquisition.

In January 2015, the FASB issued ASU No. 2015‑1, “Income Statement—Extraordinary and Unusual Items” (Subtopic 225‑20) which eliminates the concept of accounting of Extraordinary Items, previously defined as items that are both unusual and infrequent, which were reported as a separate item on the income statement, net of tax, after income from continuing operations. The elimination of this concept is intended to simplify accounting for unusual items and more closely align with international accounting practices. This amendment is effective for annual periods beginning after December 15, 2015 and for subsequent interim and annual periods thereafter. Early adoption is permitted. We believe that the effects, if any, of the adoption of this guidance will not have a material impact on our consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014‑15, “Presentation of Financial Statements—Going Concern” (Subtopic 205‑40) which amends the current guidance in ASC Topic 205 by adding Subtopic 40. Subtopic 40 requires management to evaluate whether there are conditions or events that in aggregate would raise substantial doubt about an entity’s ability to continue as a going concern for one year from the date the financial statements are issued or available to be issued. If substantial doubt existed, management would be required to make certain disclosures related to nature of the substantial doubt and under certain circumstances, how that substantial doubt would be mitigated. This amendment is effective for annual periods ending after December 15, 2016 and for subsequent interim and annual periods thereafter. Early adoption is permitted. We will complete our evaluation during the fourth quarter ending December 31, 2016; however, we currently do not anticipate adoption of this guidance to have a material impact on our consolidated financial statements.

Note 2. ~~Reno~~Isle Acquisition and ~~Final~~Preliminary Purchase Price Accounting

On ~~November 24, 2015,~~May 1, 2017, the Company ~~acquired all~~completed its acquisition of ~~the assets and properties of Circus Reno and the 50% membership interest in the Silver Legacy Joint Venture owned by Galleon, Inc. As of June 30, 2016, the Company~~

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~~finalized its accounting related to the Circus Reno/Silver Legacy Purchase.~~ Isle. The total purchase consideration ~~was $223.6 million as presented~~ in the ~~following table.~~Isle Merger was determined with reference to the fair value on the date of the Merger Agreement as follows:

Purchase consideration calculation (dollars in thousands)

Silver Legacy

Circus Reno

Total
Cash consideration paid by ERI for MGM’s 50% equity interest and MGM’s member note

$
56,500

$
16,000

$
72,500
Fair value of ERI’s preexisting 50% equity interest

56,500

—

56,500
Settlement of Silver Legacy’s long-term debt (1)

87,854

—

87,854
Prepayment penalty(1)

1,831

—

1,831
Closing Silver Legacy and Circus Reno net working capital (2)

6,124

2,111

8,235
Reverse member note(3)

(6,107)

—

(6,107)
Deferred tax liability

2,769

—

2,769
Purchase consideration

$
205,471

$
18,111

$
223,582

Purchase consideration calculation (dollars in thousands, except shares and stock price)	Shares		Per share
Cash paid for outstanding Isle common stock (1)					$	552,050
Shares of ERI common stock issued for Isle common stock (2)		28,468,182	$	19.12		544,312
Cash paid by ERI to retire Isle's long-term debt (3)						828,000
Shares of ERI common stock for Isle equity awards (4)						10,383
Purchase consideration					$	1,934,745

(1)

~~Represents $5.0 million of short-term debt, $75.5 million of long-term debt, the remaining 50%~~The cash component of the ~~$11.5 million of member notes (net of discount), and accrued interest. Additionally, the Company paid a $1.8 million prepayment penalty as a result~~consideration represents 58% of the ~~early payoff~~aggregate consideration paid in the Isle Merger. The Merger Agreement provided that Isle stockholders could elect to exchange each share of Isle common stock for either $23.00 in cash or 1.638 shares of ERI common stock, subject to proration such that the ~~Silver Legacy long-term debt.~~outstanding shares of Isle common stock will be exchanged for aggregate consideration comprised of 58% cash and 42% ERI common stock. See discussion of Stock Consideration component in note (2) below.

(2)

~~Per~~The Stock Consideration component of the ~~Purchase and Sale Agreement,~~consideration represents 42% of the ~~purchase price was $72.5 million plus the Final Closing Net Working Capital (as defined~~aggregate consideration paid in the ~~Purchase~~Isle Merger. The Merger Agreement provided that 58% of the aggregate consideration would be paid by ERI in cash, as described in note (1) above. The remaining 42% of the aggregate consideration was paid in shares of ERI common stock. The total Stock Consideration and ~~Sale Agreement). As agreed by both parties,~~per share consideration above were based on the ~~final working capital adjustment~~ERI stock price on April 28, 2017 (the last business day prior to Isle Acquisition Date) which was ~~$8.2 million.~~$19.12 per share.

(3)

~~Represents 50%~~In addition to the cash paid to retire the principal amounts outstanding of ~~the $11.5~~Isle’s long-term debt, ERI paid $26.6 million ~~of member notes (net of discount) due to ERI,~~in premiums and ~~related accrued~~ interest. ~~This amount was settled in conjunction with the final, agreed-upon purchase consideration.~~

(4)

This amount represents consideration paid for the replacement of Isle’s outstanding equity awards. As discussed in Note 1, Isle’s outstanding equity awards were replaced by ERI equity awards with similar terms. A portion of the fair value of ERI awards issued represents consideration transferred, while a portion represents compensation expense based on the vesting terms of the equity awards.

~~The transaction was accounted for using the acquisition method. No goodwill resulted from the recording of this transaction.~~

~~Final~~Preliminary Purchase Price ~~Allocation – Silver Legacy and Circus Reno~~Accounting

The following table summarizes the ~~allocation~~preliminary accounting of the ~~final~~estimated purchase consideration to the identifiable assets acquired and liabilities assumed in the ~~Circus Reno/Silver Legacy Purchase.~~Isle Acquisition as of the Isle Acquisition Date, with the excess recorded as goodwill. The fair values were based on management’s analysis, including preliminary work performed by ~~third‑party~~third-party valuation specialists. The following table summarizes the ~~final~~preliminary purchase price ~~allocation~~accounting of the acquired assets and ~~assumed~~ liabilities as of September 30, 2017 (dollars in thousands):

Silver Legacy

Circus Reno

Total
Current and other assets, net

$
21,625

$
2,115

$
23,740
Property and equipment

168,037

14,996

183,033
Intangible assets(1)

5,000

1,000

6,000
Other noncurrent assets

10,809

—

10,809
Net assets acquired

$
205,471

$
18,111

$
223,582

Current and other assets, net	~~(1)~~	$	134,143
Property and equipment			853,331
Goodwill			679,656
Intangible assets (i)			470,811
Other noncurrent assets			11,025
Assets held for sale			143,592
Total assets			2,292,558
Current liabilities			(138,475	)
Deferred income taxes (ii)			(187,127	)
Other noncurrent liabilities			(26,762	)
Liabilities related to assets held for sale			(5,449	)
Total liabilities			(357,813	)
Net assets acquired		$	1,934,745

(i)	Intangible assets consist of gaming licenses, trade names, ~~which are non-amortizable,~~ and ~~loyalty programs which are amortized over one year.~~player relationships.

(ii)	Deferred tax liabilities were derived based on fair value adjustments for property and equipment and identified intangibles.

~~During the three months ended June 30, 2016, the Company finalized its valuation procedures~~Valuation methodologies under both a market and adjusted the preliminary purchase price allocations, as disclosed in the March 31, 2016 Form 10-Q and December 31, 2015 Form 10-K, to their updated values. The finalized purchase price allocations resulted in a $1.3 million decrease in property and equipment. This change related to management refining certain assumptions used in the valuation of property and equipment to its fair value. Accordingly, the Company adjusted depreciation expense from the Reno Acquisition Date through June 30, 2016, based on the revised measurement of property and equipment. The depreciation expense adjustment was not material.

~~Valuation methods~~income approach used for the identifiable net assets acquired in the ~~Reno~~Isle Acquisition make use of Level 1 and Level 3 inputs including quoted prices in active markets and discounted cash flows using current interest ~~rates.~~rates and are provisional pending development of a final valuation.

Trade receivables and payables, inventory and other current and noncurrent assets and liabilities were valued at the existing carrying values as they represented the estimated fair value of those items at the ~~Reno~~Isle Acquisition Date, based on management’s ~~judgments~~judgement and estimates.

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~~The fair value estimate of property and equipment utilized a combination of the cost and market approaches, depending on the characteristics of the asset classification.~~ The fair value of land was determined using the market approach, which ~~considers sales~~arrives at an indication of ~~comparable assets and applies compensating factors~~value by comparing the site being valued to sites that have been recently acquired in arm’s-length transactions. The market data is then adjusted for any significant differences, ~~specific~~ to the ~~particular assets. With respect to personal property components of~~extent known, between the ~~assets (gaming equipment, furniture, fixtures~~identified comparable sites and ~~equipment, computers, and vehicles)~~ the ~~cost approach was used, which is based on replacement or reproduction costs of the asset.~~site being valued. Building and site improvements were valued using the cost approach using a direct cost model built on estimates of replacement cost.

~~Trade names~~ With respect to personal property components of the assets, personal property assets with an active and identifiable secondary market such as riverboats, gaming equipment, computer equipment and vehicles were valued using the ~~relief‑from‑royalty method. The loyalty program was~~market approach. Other personal property assets such as furniture, fixtures, computer software, and restaurant equipment were valued using the cost approach which is based on replacement or reproduction costs of the asset.

The cost approach is an estimation of fair value developed by computing the current cost of replacing a ~~comparative~~property and subtracting any depreciation resulting from one or more of the following factors: physical deterioration, functional obsolescence, and/or economic obsolescence. The income approach incorporates all tangible and intangible property and served as a ceiling for the fair values of the acquired assets of the ongoing business enterprise, while still taking into account the premise of highest and best use. In the instance where the business enterprise value developed via the income approach was exceeded by the initial fair values of the underlying assets, an adjustment to reflect economic obsolescence was made to the tangible assets on a pro rata basis to reflect the contributory value of each individual asset to the enterprise as a whole.

The fair value of the gaming licenses was determined using the excess earnings or replacement cost methodology based on the respective states’ legislation. The excess earnings methodology, which is an income approach methodology that allocates the projected cash flows of the business to the gaming license intangible assets less charges for the use of other identifiable assets of Isle including working capital, fixed assets and other intangible assets. This methodology was considered appropriate as the gaming licenses are the primary asset of Isle and the licenses are linked to each respective facility. Under the respective state’s gaming legislation, the property specific licenses can only be acquired if a theoretical buyer were to acquire each existing facility. The existing licenses could not be acquired and used for a different facility. The properties’ estimated future cash flows were the primary assumption in the respective valuations. Cash flow estimates included net gaming revenue, gaming operating expenses, general and administrative expenses, and tax expense. The replacement cost methodology is a cost approach methodology based on replacement or reproduction cost of the gaming license as an indicator of fair value.

Trademarks are valued using the relief from royalty method, which presumes that without ownership of such trademarks, ERI would have to make a stream of payments to a brand or franchise owner in return for the right to use their name. By virtue of this asset, ERI avoids any such payments and record the related intangible value of ERI’s ownership of the brand name. The primary assumptions in the valuation ~~method. Management~~included revenue, pre-tax royalty rate, and tax expense.

ERI has preliminarily assigned ~~trade names~~ an indefinite useful life to the gaming licenses, in accordance with its review of the applicable guidance of ASC Topic ~~No.~~ 350, ~~Intangibles—Goodwill~~“Intangibles-Goodwill and ~~Other~~Other” (“ASC 350”). The standard required ~~management~~ERI to consider, among other things, the expected use of the asset, the expected useful life of other related asset or asset group, any legal, regulatory, or contractual provisions that may limit the useful life, ~~the Company’s~~ERI’s own historical experience in renewing similar arrangements, the effects of obsolescence, demand and other economic factors, and the maintenance expenditures required to obtain the expected cash flows. In that analysis, ~~management~~ERI determined that no legal, regulatory, contractual, competitive, economic or other factors limit the useful lives of these intangible assets. The ~~loyalty program is being amortized~~acquired Isle properties currently have licenses in Pennsylvania, Iowa, Missouri, Mississippi, Florida and Colorado. The renewal of each state’s gaming license depends on a ~~straight‑line basis over a one year~~number of factors, including payment of certain fees and taxes, providing certain information to the state’s gaming regulator, and meeting certain inspection requirements. However, ERI’s historical experience has not indicated, nor does ERI expect, any limitations regarding its ability to continue to renew each license. No other competitive, contractual, or economic factor limits the useful ~~life.~~lives of these assets. Accordingly, ERI has preliminarily concluded that the useful lives of these licenses are indefinite.

For the period from the Isle Acquisition Date through September 30, 2017, Isle generated net revenue of $335.3 million and net income of $30.7 million.

Unaudited Pro Forma Information

The following unaudited pro forma information presents the results of operations of the Company for the ~~three and~~ nine months ended September 30, ~~2015,~~2017 and 2016, which give effect to the Isle Acquisition, the Lake Charles Disposition, and Isle’s sale of the Lady Luck Casino Marquette, which closed on March 13, 2017, as if ~~the Reno Acquisition~~each of such transactions had occurred on January 1, ~~2015~~2016 (in ~~thousands except per share data).~~thousands):

Three Months Ended

Nine Months Ended

September 30, 2015

September 30, 2015

Net revenues

$
242,993

$
687,126

Net income

9,896

11,773

Net income per common share:

Basic

$
0.21

$
0.25

Diluted

$
0.21

$
0.25

Weighted shares outstanding:

Basic

46,550,042

46,550,042

Diluted

46,865,603

47,007,451

	Nine Months Ended
	September 30, 2017		September 30, 2016
Net revenues	$	1,291,998	$	1,317,185
Net income from continuing operations		77,918		22,097
Net income		84,310		28,645

These pro forma results do not necessarily represent the results of operations that would have been achieved if the ~~Reno~~Isle Acquisition had taken place on January 1, ~~2015,~~2016, nor are they indicative of the results of operations for future periods. The pro forma amounts include the historical operating results of the Company ~~the Silver Legacy~~ and ~~Circus Reno~~Isle prior to the ~~Reno~~Isle Acquisition, with adjustments factually supportable and directly attributable to the ~~Reno~~Isle Acquisition.

Note 3. ~~Investment~~Discontinued Operations

On August 22, 2016, Isle entered into a definitive agreement to sell its casino and hotel property in ~~Unconsolidated Affiliates~~

~~Hotel Partnership.~~Lake Charles, Louisiana, for $134.5 million, subject to a customary purchase price adjustment, to an affiliate of Laguna Development Corporation, a Pueblo of a Laguna-owned business based in Albuquerque, New Mexico. The ~~Company holds a 42.1% variable interest in a partnership with~~transaction remains subject to Louisiana Gaming Control Board approval and other ~~investors to develop a new 118-room Hampton Inn & Suites hotel~~customary closing conditions and, if obtained, the transaction is expected to be ~~developed at Scioto Downs. Pursuant~~completed by December 31, 2017. Isle received a $20.0 million deposit related to ~~the terms of the partnership agreement, the Company contributed $1.0 million of~~this transaction, which is reflected in restricted cash ~~and 2.4 acres of a leasehold immediately adjacent to~~ ~~The Brew Brothers~~ microbrewery and restaurant at Scioto Downs. The partnership will be responsible for the construction of the hotel at an estimated cost of $15.0 million and other investor members have been identified to operate the hotel upon completion. The Company is not the primary beneficiary, and therefore, the entity is accounted for under the equity method of accounting. At September 30, 2016, the Company’s investment in the partnership was $1.3 million, classified as “Investment in and advances to unconsolidated affiliates”within current assets in the consolidated balance ~~sheets, representing~~sheet as of September 30, 2017.

As of the ~~Company’s maximum exposure to loss.~~

~~Silver Legacy Joint Venture.~~ Effective March 1, 1994, ELLC and Galleon entered into the Silver Legacy Joint Venture pursuant to a joint venture agreement to develop the Silver Legacy. The Silver Legacy consists of a casino and hotel located in Reno, Nevada, which began operations on July 28, 1995. Prior to the RenoIsle Acquisition Date, ~~each partner owned a 50% interest in~~Lake Charles met the ~~Silver Legacy Joint Venture. Also prior to~~requirements for presentation as assets held for sale and discontinued operation under generally accepted accounting principles. Accordingly, the ~~Reno Acquisition Date, Resorts~~

operations of Lake Charles have been classified as discontinued operations and as assets held for sale for all periods presented.

~~Table~~The results of ~~Contents~~

~~owned a 48.1% interest in the Silver Legacy Joint Venture by means of its 96.2% ownership of ELLC, which owned a 50% interest in the Silver Legacy Joint Venture.~~

On the Reno Acquisition Date, Resorts consummated the Reno Acquisition of the other 50% membership interest in the Silver Legacy Joint Venture owned by Galleon, Inc. pursuant to the Purchase Agreement and also exercised its right to acquire the 3.8% interest in ELLC held by certain affiliates of the Company. As a result of these transactions, ELLC became a wholly-owned subsidiary of ERI and Silver Legacy became an indirect wholly‑owned subsidiary of ERI. In conjunction with the Reno Acquisition, we recorded a $35.6 million gain related to the valuation of our pre-acquisition investment in the Silver Legacy Joint Venture.

As consideration for the noncontrolling interest, the Company issued 373,135 shares of common stock. Subsequent to this action, the Company owned 100% of ELLC. The Company valued the shares at the market price on the day the shares were issued to the noncontrolling interest holders. The value of the total consideration paid was $3.6 million.

On December 16, 2013, the Silver Legacy Joint Venture entered into a new senior secured term loan facility totaling $90.5 million (the “New Silver Legacy Credit Facility”) to refinance its indebtedness under its then existing senior secured term loan and Silver Legacy Second Lien Notes. The New Silver Legacy Credit Facility was scheduled to mature on November 16, 2017, which was the maturity date of the original Silver Legacy credit facility. In connection with the Circus Reno/Silver Legacy Purchase, all amounts outstanding under the New Silver Legacy Credit Facility were paid in full and the cash collateral securing such obligations were released.

~~Equity in income related to the Silver Legacy Joint Venture for the three and nine months ended September 30, 2015 was $2.5 million and $3.1 million, respectively.~~discontinued operations are summarized as follows (in thousands):

	Discontinued Operations
	Three Months Ended			May 1 - September 30,
	September 30, 2017			2017
Net revenues	$	25,871		$	44,306

Pretax income from discontinued operations	$	2,388		$	3,927
Income tax provision from discontinued operations		(950	)		(1,534	)
Income from discontinued operations	$	1,438		$	2,393

~~Summarized results of operations~~

The assets and liabilities held for ~~the Silver Legacy Joint Venture in 2015 prior to the Reno Acquisition~~sale were as follows (in thousands):

Three months ended

Nine months ended


September 30, 2015

September 30, 2015


(unaudited)

Net revenues

$
38,028

$
97,665

Operating expenses

(29,953)

(82,850)

Operating income

8,075

14,815

Other expense

(2,801)

(8,319)

Net income

$
5,274

$
6,496

	September 30,
	2017
Assets:
Accounts receivable, net	$	632
Inventories		452
Prepaid expenses and other		833
Property and equipment, net		59,347
Goodwill		36,353
Gaming licenses and other intangibles, net		45,659
Other assets, net		220
Assets held for sale	$	143,496

Liabilities:
Accounts payable	$	1,960
Accrued payroll and related		1,639
Accrued property, gaming and other taxes		1,181
Accrued other liabilities		2,010
Liabilities related to assets held for sale	$	6,790

Note 4. Stock-Based Compensation

~~The Company has authorized common stock of 100,000,000 shares, par value $0.00001 per share.~~

The Company accounts for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Total stock-based compensation expense recognized was $0.7 million and $0.3 million for the three months ended September 30, 2016 and 2015, respectively, and $2.7 million and $1.2 million for the nine months ended September 30, 2016 and 2015, respectively. These amounts are included in corporate expenses in the Company’s consolidated statements of operations.

The Board of Directors (“BOD”) adopted the Eldorado Resorts, Inc. 2015 Equity Incentive Plan (“2015 Plan”) on January 23, 2015 and our shareholders subsequently approved the adoption of the 2015 Plan on June 23, 2015. The Plan permits the granting of stock options, including incentive stock options (“ERI Stock Options”), stock appreciation rights, ~~(“SARs”),~~ restricted stock or restricted stock units (“RSUs”), performance awards, and other stock-based awards and dividend equivalents. ERI Stock Options primarily vest ratably over three years and RSUs granted to employees and executive officers primarily vest and become non-forfeitable upon the third anniversary of the date of grant. RSUs granted to non-employee directors vest immediately and are delivered upon the date that is the earlier of termination of service on the BOD or the consummation of a change of control of the Company. The performance awards relate to the achievement of defined levels of performance and are generally measured over a one or two-year performance period depending upon the award agreement. If the performance award levels are achieved, the awards earned will vest and

~~Table of Contents~~

become payable at the end of the vesting period, defined as either a one or two calendar year period following the performance period. Payout ranges are from 0% up to 200% of the award target.

~~On January 22, 2016,~~Pursuant to the ~~Company granted 367,519 RSUs~~Merger Agreement, the outstanding equity awards of Isle were converted into comparable equity awards of ERI stock as follows:

Isle stock options. Each option or other right to ~~executive officers and key employees, and 34,920 RSUs~~acquire Isle common stock (each an “Isle Stock Option”) that was outstanding immediately prior to ~~non-employee members~~the Isle Acquisition Date (whether vested or unvested), as of the ~~BOD~~Isle Acquisition Date, (i) continued to vest or accelerate (if unvested), as the case may be, in accordance with the applicable Isle stock plan, the award agreement pursuant to which such Isle Stock Option was granted and, if applicable, any other relevant agreements (such as an employment agreement), (ii) ceased to represent an option or right to acquire shares of Isle common stock, and (iii) was converted into an option or right to purchase that number of shares ERI common stock equal to the number of shares of Isle common stock subject to the Isle Stock Option multiplied by the Stock Consideration at an exercise price equal to the exercise price of the Isle Stock Option divided by the Stock Consideration,

subject to the same restrictions and other terms as are set forth in the Isle equity incentive plan, the award agreement pursuant to which such Isle Stock Option was granted and, if applicable, any other relevant agreements (such as an employment agreement).

Isle restricted stock awards. Each share of Isle common stock subject to vesting, repurchase or lapse restrictions (each an “Isle Restricted Share”) that was outstanding under any Isle equity plan or otherwise immediately prior to the Isle Acquisition Date, as of the Isle Acquisition Date, continued to vest or accelerate (if unvested), as the case may be, in accordance with the applicable Isle stock plan, the award agreement pursuant to which such Isle Restricted Share was granted, and, if applicable, any other relevant agreements (such as an employment agreement) and was exchanged for shares of ERI common stock (in an amount equal to the Stock Consideration, with aggregated fractional shares rounded to the nearest whole share) and remain subject to the same restrictions and other terms as are set forth in the Isle stock plan, the award agreement pursuant to which such Isle Restricted Share was granted, and, if applicable, any other relevant agreements (such as an employment agreement).

Isle performance stock units. Each performance stock unit (each, an “Isle PSU”) that was outstanding immediately prior to the Isle Acquisition Date, as of the Isle Acquisition Date, (i) continued to vest or accelerate (if unvested), as the case may be, in accordance with the applicable Isle stock plan, the award agreement pursuant to which such Isle PSU was granted, and, if applicable, any other relevant agreements (such as an employment agreement), (ii) was converted into a number of performance stock units in respect of shares of ERI common stock, in an amount equal to the Stock Consideration (with aggregated fractional shares rounded to the nearest whole share) at the target level of performance, and (iii) remain subject to the same restrictions and other terms as are set forth in the Isle stock plan, the award agreement pursuant to which such Isle PSU was granted, and, if applicable, any other relevant agreements (such as an employment agreement).

Isle restricted stock units. Each restricted stock unit, deferred stock unit or phantom unit in respect of a share of Isle common stock granted under the ~~2015 Plan.~~ applicable Isle stock plan or otherwise, including any such units held in participant accounts under any employee benefit or compensation plan or arrangement of Isle, other than an Isle PSU (each an “Isle RSU”) that was outstanding immediately prior to the Isle Acquisition Date, as of the Isle Acquisition Date, (i) continued to vest or accelerate (if unvested), as the case may be, in accordance with the applicable Isle stock plan, the award agreement pursuant to which such Isle RSU was granted, and, if applicable, any other relevant agreements (such as an employment agreement or applicable employee benefit plan), (ii) was converted into a number of restricted stock units, deferred stock units or phantom units, as applicable, in respect of shares of ERI common stock, in an amount equal to the Stock Consideration (with aggregated fractional shares rounded to the nearest whole share), and (iii) remain subject to the same restrictions and other terms as are set forth in the Isle stock plan, the award agreement pursuant to which such Isle RSU was granted, and, if applicable, any other relevant agreements (such as an employment agreement or applicable employee benefit plan).

The ~~RSUs had a fair value of $10.77 per unit which~~Company accounts for stock-based compensation in accordance with ASC Topic 718, “Compensation—Stock Compensation” (“ASC 718”). Total stock-based compensation expense from continuing operations was $1.4 million and $0.7 million for the ~~NASDAQ closing price on that date. An additional 9,794 RSUs were also granted to key employees during the nine~~three months ended September 30, ~~2016.~~

~~A summary of the RSU activity~~2017 and 2016, respectively, and $4.5 million and $2.7 million for the nine months ended September 30, 2017 and 2016, ~~is as follows:~~

Weighted-Average

Weighted-Average

Equity

Grant Date

Remaining

Aggregate


Awards

Fair Value

Contractual Life

Fair Value

(in years)

(in millions)

Unvested outstanding as of December 31, 2015

827,383
(1)
$
4.09

2.12

$
3.4

Granted

412,233
(2)

10.81

Vested

(245,934)

5.63

Unvested outstanding as of September 30, 2016

993,682

$
6.49

1.67

$
6.5

~~(1)~~

~~Includes 475,409 of performance awards at 135% of target and 351,974 time-based awards at 100% of target all of which were granted in 2015. There were no RSU grants in 2014.~~

~~(2)~~

~~Includes 178,172 of performance awards at 100% of target and 234,061 time-based awards at 100% of target.~~

As of September 30, 2016, the Company had approximately $3.0 million of unrecognized compensation expense related to unvested RSUs that is expected to be recognized over a weighted-average period of approximately 1.67 years.

respectively. In the first quarter of 2016, the Company’s chief operating officer terminated employment and the chief financial officer retired. In conjunction with the termination and retirement, unvested RSUs totaling 167,511, which were outstanding as of December 31, 2015, immediately vested representing an additional $0.5 million included in stock compensation expense during the first quarter of 2016. Additionally, severance costs totaling $1.4 million were recognized in the first quarter of 2016.

These amounts are included in corporate expenses and, in the case of certain property positions, general and administrative expenses in the Company’s consolidated statements of operations. We recognized a reduction in income tax expense of $0.2 million and $0.1 million for the three months ended September 30, 2017 and 2016, respectively, and $0.8 million for both the nine months ended September 30, 2017 and 2016, respectively, for excess tax benefits related to stock-based compensation.

On ~~September 19, 2014, as a result~~January 27, 2017, the Company granted 298,761 RSUs to executive officers and key employees, and 46,282 RSUs to non-employee members of the ~~Merger, all outstanding MTR Gaming stock options (“MTR Stock Options”) vested (to~~BOD under the ~~extent not already vested) and converted into an option or right~~2015 Plan. The RSUs had a fair value of $15.50 per unit which was the NASDAQ closing price on that date. An additional 42,161 RSUs were also granted to ~~purchase~~key employees during the ~~same number~~nine months ended September 30, 2017.

A summary of ~~shares~~the RSU activity for the nine months ended September 30, 2017 is as follows:

				Weighted-		Weighted-
				Average		Average
	Equity			Grant Date		Remaining		Aggregate
	Awards			Fair Value		Contractual Life		Fair Value
						(in years)		(in millions)
Unvested outstanding as of December 31, 2016		982,370		$	6.45		1.41	$	6.3
Granted (1)		387,204			15.95
Exchanged (2)		860,557			18.94
Forfeited		(11,870	)		15.74
Vested		(851,764	)		18.37
Unvested outstanding as of September 30, 2017		1,366,497		$	9.49		1.06	$	13.0

��

(1)	Includes 100,829 of performance awards at 100% of target and 286,375 time-based awards at 100% of target.

(2)	Represents exchanged Isle RSUs as a result of the Isle Acquisition based on the average of the ERI share price on the grant dates.

As of ~~ERI common stock (at~~September 30, 2017, the ~~same exercise price per share as in effect prior~~Company had approximately $6.4 million of unrecognized compensation expense related to ~~such conversion). All other terms, except vesting requirements, applicable~~unvested RSUs that is expected to ~~such stock options remain the same.~~be recognized over a weighted-average period of approximately 1.06 years.

A summary of the ERI Stock Option activity for the nine months ended September 30, 2017 is as follows:

										Weighted-
				Range of				Weighted- Average		Average Remaining		Aggregate
	Options			Exercise Prices				Exercise Price		Contractual Life		Intrinsic Value
										(in years)		(in millions)
Outstanding as of December 31, 2016		169,300		$	2.44	$	16.27	$	9.94		0.86	$	1.2
Exchanged (1)		1,351,168			6.87		15.60		10.12
Expired		(51,700	)		2.44		3.94		2.97
Exercised		(1,095,660	)		6.87		16.27		10.03
Outstanding as of September 30, 2017		373,108		$	3.94	$	15.60	$	11.15		1.10	$	5.4

(1)	Represents exchanged Isle Stock Options as a result of the Isle Acquisition.

As a result of the Isle Acquisition, we exchanged 1,351,168 non-qualified stock options, which have a maximum term of ten years ~~ended December 31, 2014~~from the grant date and ~~2015 and~~are exercisable in yearly installments of 20% commencing one year after the grant date. The options have a weighted average per share Isle Acquisition Date fair value of $9.90 utilizing the Black-Scholes-Merton option pricing model with the range of assumptions disclosed in the following table:

Weighted average expected volatility	40.0	%
Expected dividend yield	0.0	%
Weighted average expected term (in years)	0.66
Weighted average risk-free interest rate	1.08	%

Weighted average volatility is calculated using the historical volatility of our stock price over a range of dates equal to the expected term of the grant’s options. The weighted average expected term is calculated using historical data that is representative of the option for which the fair value is to be determined. The expected term represents the period of time that options granted are expected to be outstanding. The weighted average risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant for the approximate period of time equivalent to the grant’s expected term. The Company’s unrecognized compensation cost for unvested options was $0.3 million as of September 30, 2017.

A summary of the ERI Restricted Stock Awards activity for the nine months ended September 30, ~~2016~~2017 is as follows:

Weighted-Average

Range of

Weighted-Average

Remaining

Aggregate

Options

Exercise Prices

Exercise Price

Contractual Life

Intrinsic Value

(in years)

(in millions)

Outstanding and Exercisable as of December 31, 2014

398,200

$
2.44
-
$16.27

$
7.88

4.54

$
0.2

Expired

(86,000)

$11.30

$
11.30

Outstanding and Exercisable as of December 31, 2015

312,200

$
2.44
-
$16.27

$
6.94

3.47

$
1.3

Exercised

(132,900)

$
2.44
-
$3.94

$
2.89

Outstanding and Exercisable as of September 30, 2016

179,300

$
2.44
-
$16.27

$
9.94

2.72

$
0.7

				Weighted-		Weighted-
				Average		Average
				Grant Date		Remaining		Aggregate
	Restricted Stock			Fair Value		Contractual Life		Fair Value
						(in years)		(in millions)
Outstanding as of December 31, 2016		—		$	—		—	$	—
Exchanged (1)		180,374			19.23
Forfeited		(1,602	)		19.13
Vested		(167,963	)		19.24
Outstanding as of September 30, 2017		10,809		$	19.13		0.70	$	0.1

(1)	Represents exchanged Isle Restricted Stock Awards as a result of the Isle Acquisition.

The Company’s unrecognized compensation cost for unvested restricted stock awards was $0.1 million as of September 30, 2017

~~Table of Contents~~

Note 5. ~~Goodwill,~~Other and Intangible Assets, ~~Non-Operating Real Property and Other,~~ net

~~Goodwill,~~Other and intangible assets, ~~non-operating real property and other,~~ net, ~~consisted of~~include the following amounts (in thousands):


	September 30,		December 31,		September 30,			December 31,
	2016		2015		2017			2016			Useful Life
	(unaudited)				(unaudited)
Goodwill	$	66,826	$	66,826	$	746,482		$	66,826		Indefinite

Gaming license (indefinite-lived)	$	482,074	$	482,074
Gaming licenses					$	846,374		$	482,074		Indefinite
Trade names						95,850			3,100		Indefinite
Trade names		9,800		9,800		6,700			6,700		1 - 3.5 years
Loyalty programs		7,700		7,700		21,461			7,700		1 - 3 years
Subtotal		499,574		499,574		970,385			499,574
Accumulated amortization trade names		(3,897)		(2,462)		(5,811	)		(4,376	)
Accumulated amortization loyalty programs		(7,256)		(5,079)		(9,612	)		(7,700	)
Total gaming licenses and other intangible assets	$	488,421	$	492,033	$	954,962		$	487,498

Non-operating real property	$	14,218	$	16,314	$	18,069		$	14,219

Land held for development	$	906	$	906	$	906		$	906
Other		5,484		6,048		17,510			10,500
Total other assets, net	$	6,390	$	6,954	$	18,416		$	11,406

Goodwill represents the excess of the purchase ~~price~~prices of acquiring MTR Gaming and Isle over the fair market value of the net assets acquired, in the amount of $66.8 million was recorded as of September 30, 2016. For financial reporting purposes, goodwill is not amortized, but is reviewed no less than annually or when events or circumstances indicate the carrying value might exceed the market value to determine if there has been an impairment in the recorded value.acquired.

~~Included in gaming~~Gaming licenses ~~is the Eldorado Shreveport gaming license recorded at $20.6 million at both September 30, 2016 and December 31, 2015. The license represents an~~represent intangible ~~asset~~assets acquired from the purchase of a gaming entity located in a gaming jurisdiction where competition is limited, such as when only a limited number of gaming operators are allowed to operate in the jurisdiction. Also included in gaming licenses are the gaming and racing licenses of Mountaineer, Presque Isle Downs and Scioto Downs recorded at $461.5 million at both September 30, 2016 and December 31, 2015. Total gaming licenses of $482.1 million reflects the fair value of these licenses calculated as of September 30, 2016 and December 31, 2015, and theseThese gaming license rights are not subject to amortization as the Company has determined that they have an indefinite useful ~~life.~~lives.

Trade names related to the Merger are amortized on a straight‑line basis over a 3.5 year useful life. Trade names related to the Reno Acquisition are non-amortizable, and loyalty programs are amortized on a straight‑line basis over a one year useful life. Amortization expense with respect to trade names and the loyalty program for the three and nine months ended September 30, ~~2016~~2017 amounted to $1.7 million and $3.3 million, respectively, and $1.2 million and $3.6 ~~million, respectively, and $1.5 million and $5.0~~ million for the three and nine months ended September 30, ~~2015,~~2016, respectively, which is included in depreciation and amortization expense in the consolidated statements of operations. Such amortization expense is expected to be ~~$0.9~~$1.6 million for the remainder of ~~2016, $1.9 million for the year ended~~ December 31, 2017 and ~~$0.4~~$5.0 million, $4.6 million and $1.5 million for the ~~year~~years ended December 31, ~~2018.~~

~~The Company’s indefinite-lived gaming licenses~~2018, 2019 and trade names are reviewed no less than annually or when events or circumstances indicate the carrying value might exceed the market value to determine if there has been an impairment in the recorded value.

Non-operating real property totaled $14.2 million at September 30, 2016 and $16.3 million at December 31, 2015. The $2.1 million decrease was primarily due to the Company recording a $2.1 million sale of land (non-operating) at Presque Isle Downs during the three and nine months ended September 30, 2016. This transaction resulted in a $0.1 million gain net of costs.

2020, respectively.

Note 6. Income Taxes

Prior to the Merger Date, HoldCo was taxed as a partnership under the Internal Revenue Code pursuant to which income taxes were primarily the responsibility of the partners. On September 19, 2014, in connection with the Merger, the Company became a C corporation subject to federal and state corporate-level income taxes at prevailing corporate tax rates. The Company and its subsidiaries file US federal tax returns and various state and local income tax returns. With few exceptions, the Company is no longer subject to US federal or state and local tax examinations by tax authorities for years before 2013.

The Company estimates an annual effective income tax rate based on projected results for the year and applies this rate to income before taxes to calculate income tax expense. Any refinements made due to subsequent information that affects the estimated annual effective income tax rate are reflected as adjustments in the current period. For years prior to 2016, the income tax provision resulted in an effective tax rate that had an unusual relation to pretax income (loss). This was due to the federal and state valuation allowances on deferred tax assets as discussed below.

For the three and nine months ended September 30, 2016, the difference between the effective rate and the statutory rate is attributed primarily to state and local income taxes less the benefit of the early adoption of ASU 2016-09 (Stock Compensation) and tax credits.

For the three and nine months ended September 30, 2015, the difference between the effective rate and the statutory rate is attributed primarily to the federal and state valuation allowances on deferred tax assets. As a result of net operating losses and the net deferred tax asset position (after exclusion of certain deferred tax liabilities that generally cannot be offset against deferred tax assets, known as “Naked Credits”), the Company provided for a full valuation allowance against substantially all of the net federal and state deferred tax assets.

For income tax purposes, the Company amortizes or depreciates certain assets that have been assigned an indefinite life for book purposes. The incremental amortization or depreciation deductions for income tax purposes result in an increase in certain deferred tax liabilities that cannot be used as a source of future taxable income for purposes of measuring the Company's need for a valuation allowance against the net deferred tax assets. Therefore, we expect to record ~~non cash~~non-cash deferred tax expense as we amortize these assets for tax purposes.

For the three months ended September 30, 2017, the Company’s tax expense from continuing operations was $11.6 million and for the nine months ended September 30, 2017, the Company’s tax benefit from continuing operations was $27.6 million. For the three and nine months ended September 30, 2016, the Company’s tax expense from continuing operations was $5.8 million and $13.7 million, respectively. For the three and nine months ended September 30, 2017, the difference between the effective rate and the statutory rate is attributed primarily to non-deductible transaction costs incurred and changes in the effective state tax rate associated with the acquisition of Isle of Capri Casinos, Inc., state and local income taxes and the release of the valuation allowance against certain Pennsylvania deferred tax assets. For the three and nine months ended September 30, 2016, the ~~Company’s~~difference between the effective rate and the statutory rate is attributed primarily to state and local income taxes less excess tax ~~expense was $5.8 million~~benefits associated with stock compensation and ~~$13.7 million, respectively. For the three and nine months ended September 30, 2015, the Company’s~~ tax ~~expense was $2.4 million and $4.5 million, respectively.~~credits. As of September 30, ~~2016~~2017 and ~~2015,~~2016, there were no unrecognized tax benefits and the Company does not expect a significant increase or decrease to the total amounts of unrecognized tax benefits within the next twelve months.

~~In October 2016,~~The Company and its subsidiaries file US federal income tax returns and various state and local income tax returns. The Company does not have tax sharing agreements with the other members within the consolidated ERI group. With few exceptions, the Company is no longer subject to US federal or state and local tax examinations by tax authorities for years before 2009.

The Company was notified by the Internal Revenue Service in October of 2016 that ~~our~~its federal tax return for the year ended December 31, 2014 ~~was~~had been selected for examination. ~~We anticipate~~In September 2017, the IRS informed the Company that they completed the examination ~~will commence~~of the tax return and made no changes. However, the Company may be subject to audit in ~~late 2016 or early 2017.~~the future and the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with the Company’s expectations, we would be required to adjust our provision for income taxes in the period such resolution occurs. While the Company believes its reported results are materially accurate, any significant adjustments could have a material adverse effect on the Company’s results of operations, cash flows and financial position.

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Note 7. ~~Long‑Term~~Long-Term Debt

Long‑term debt consisted of the following (in thousands):

					September 30,			December 31,
	September 30,		December 31,		2017			2016
	2016		2015		(unaudited)
	(unaudited)
Senior Notes	$	375,000	$	375,000
New Term Loan					$	1,001,875		$	—
Less: Unamortized discount and debt issuance costs						(20,316	)		—
Net						981,559			—
6% Senior Notes						875,000			—
Plus: Unamortized debt premium						27,359
Less: Unamortized debt issuance costs		(8,398)		(8,957)		(21,268	)		—
Net		366,602		366,043		881,091			—

7% Senior Notes						375,000			375,000
Less: Unamortized discount and debt issuance costs						(7,421	)		(8,141	)
Net						367,579			366,859
New Revolving Credit Facility						—			—
Less: Unamortized debt issuance costs						(9,118	)		—
Net						(9,118	)		—
Term Loan		419,688		422,875		—			418,625
Less: Unamortized discount and debt issuance costs		(13,087)		(14,465)		—			(12,578	)
Net		406,601		408,410		—			406,047

Revolving Credit Facility		19,000		93,500		—			29,000
Less: Unamortized debt issuance costs		(2,165)		(2,533)		—			(2,023	)
Net		16,835		90,967		—			26,977

Capital leases		613		817		1,061			543
Long-term notes payable						2,950			—
Less: Current portion		(4,539)		(4,524)		(1,068	)		(4,545	)
Total long-term debt	$	786,112	$	861,713	$	2,224,054		$	795,881

~~Scheduled maturities~~In connection with the Isle Acquisition, the Company completed a debt financing transaction comprised of: (a) a senior secured credit facility in an aggregate principal amount of ~~long‑~~$1.75 billion with a (i) term ~~debt are $22.0~~loan facility of $1.45 billion and (ii) revolving credit facility of $300.0 million and (b) $375.0 million of 6% senior unsecured notes. The proceeds of such borrowings were used (v ) to pay the cash portion of the consideration payable in the Isle Merger, (w) refinance all of Isle’s existing credit facilities, (x) redeem or otherwise repurchase all of Isle’s and senior and senior subordinated notes, (y) refinance the Company’s existing credit facility and (z) pay transaction fees and expenses related to the foregoing.

On September 13, 2017, the Company issued an additional $500.0 million in ~~2020, $395.3 million in 2022~~aggregate principal amount of its 6% Senior Notes (as defined below) at an issue price equal to 105.5% of the principal amount. The 6% Senior Notes were issued as additional notes under the New Indenture dated March 29, 2017 (as defined below), as supplemented by the Supplemental Indenture dated as of May 1, 2017 (the “Supplemental Indenture”) between the Company, the guarantors party thereto and U.S. Bank National Association, pursuant to which the Company previously issued $375.0 million ~~in 2023. Debt~~aggregate principal amount of 6% Senior Notes. The additional 6% Senior Notes formed part of a single class of securities together with the initial 6% Senior Notes for all purposes under the New Indenture, including waivers, amendments, redemptions and offers to purchase.

The Company used the proceeds of the offering to repay all of the outstanding borrowings under the New Revolving Credit Facility (as defined below) totaling $78.0 million and used the remainder to repay outstanding borrowings totaling $444.5 million under the New Term Loan plus related accrued interest.

Amortization of the debt issuance costs and the discount and premium associated with our indebtedness totaled $2.0 million and $5.0 million for the three and nine months ended September 30, 2017, respectively. Amortization of the debt issuance costs and the discount associated with our indebtedness totaled $0.9 million and $2.6 million, respectively, for the ~~issuance of the Senior Notes, Term Loan~~three and ~~Revolving Credit Facility (as such terms are defined below) in July 2015 totaled $26.3 million.~~nine months ended September 30, 2016. Amortization of debt issuance costs is computed using the effective interest method and is included in interest expense. ~~Amortization~~

In accordance with ASC Topic 470-50, “Debt Modifications and Extinguishments” (“ASC 470-50”), the Company recognized a loss totaling $27.3 million for the nine months ended September 30, 2017 as a result of the ~~debt issuance costs and~~refinance of the ~~discount associated with the Senior Notes and~~Prior Credit Facility (as defined below) ~~totaled $0.9 million and $2.6~~in May 2017. The Company also recognized a loss totaling $10.0 million for the three ~~and~~months ended September 30, 2017 as a result of the issuance of additional 6% Senior Notes in September 2017 resulting in a combined total loss of $37.3 million for the nine months ended September 30, ~~2016, respectively,~~2017.

Scheduled maturities of long‑term debt are $375.0 million in 2023, $1.0 billion in 2024, and ~~$0.7~~$875.0 million ~~for the three and nine months ended September 30, 2015.~~in 2025.

In 2015, amortization of Resorts’ bond costs was computed using the straight‑line method, which approximated the effective interest method, over the term of the bonds, and was included in interest expense. Amortization expense with respect to deferred financing costs on Resorts senior secured notes amounted to $0.1 million and $0.5 million for three and nine months ended September 30, 2015, respectively.

~~We are~~The Company is a holding company with no independent assets or operations. Our 6% Senior Notes and 7% Senior Notes are fully and unconditionally guaranteed, on a joint and several basis, by ~~substantially all of our subsidiaries. Any subsidiaries which have not guaranteed such notes are “minor” (as defined in Rule 3-10(h) of Regulation S-X).~~the subsidiary guarantors. As of September 30, ~~2016,~~2017, there were no significant restrictions on the ability of our subsidiaries to distribute cash to us or our guarantor subsidiaries.

~~Refinancing Transaction and~~ Senior Notes

7.0% Senior Notes

On July 23, 2015, the Company issued at par $375.0 million in aggregate principal amount of 7.0% senior notes due 2023 (“7% Senior Notes”) pursuant to the ~~indenture,~~Indenture, dated as of July 23, 2015 (the “Indenture”), ~~at an issue price equal to 100.0% of~~between the ~~aggregate principal amount of the Senior Notes.~~Company and U.S. Bank, National Association, as Trustee. The Senior Notes are guaranteed by all of the Company’s direct and indirect restricted subsidiaries. CC-Reno, LLC and the Silver Legacy Joint Venture became guarantors in June 2016 upon receipt of the required gaming regulatory approval which occurred in May 2016. The7% Senior Notes will mature on August 1, 2023, with interest payable semi-annually in arrears on February 1 and August 1 of each year.

The Company used the net proceeds from the Senior Notes offering together with borrowings under the Term Loan and the Revolving Credit Facility (as defined below) to (i) purchase or otherwise redeem (a) all of the outstanding Resorts senior secured notes and (b) all of the outstanding MTR second lien notes, (ii) pay a portion of the purchase price for the Circus Reno/Silver Legacy Purchase and repay all amounts outstanding under the Silver Legacy Joint Venture credit facility, and (iii) pay fees and costs associated with such transactions. Net proceeds from the Senior Notes offering totaling $50.0 million were used for the Circus Reno/Silver Legacy Purchase on the Reno Acquisition Date. As a result of the July 2015 refinancing, we recognized a $2.0 million net loss on the early retirement of debt.

On or after August 1, 2018, the Company may redeem all or a portion of the 7% Senior Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of the principal amount) set forth below plus accrued and unpaid interest and additional interest, if any, on the 7% Senior Notes redeemed, to the applicable redemption date, if redeemed during the twelve month period beginning on August 1 of the years indicated below:

Year	Percentage
2018		105.250	%
2019		103.500	%
2020		101.750	%
2021 and thereafter		100.000	%

Prior to August 1, 2018, the Company may redeem all or a portion of the 7% Senior Notes at a price equal to 100% of the 7% Senior Notes redeemed plus accrued and unpaid interest to the redemption date, plus a make-whole premium. At any time prior to August 1, 2018, the Company is also entitled to redeem up to 35% of the original aggregate principal amount of the 7% Senior Notes with proceeds of certain equity financings at a redemption price equal to 107% of the principal amount of the 7% Senior Notes redeemed, plus accrued and unpaid interest. If the Company experiences certain change of control events (as defined in the Indenture), it must offer to repurchase the 7% Senior Notes at 101% of their principal amount, plus accrued and unpaid interest to the applicable repurchase date. If the Company sells assets under certain circumstances and does not use the proceeds for specified purposes, the Company must offer to repurchase the 7% Senior Notes at 100% of their principal amount, plus accrued and unpaid interest to the applicable repurchase date.

The 7% Senior Notes are subject to redemption imposed by gaming laws and regulations of applicable gaming regulatory authorities.

The Indenture contains certain covenants limiting, among other things, the Company’s ability and the ability of its subsidiaries (other than its unrestricted subsidiaries) to:

pay dividends or distributions or make certain other restricted payments or investments;

incur or guarantee additional indebtedness or issue disqualified stock or create subordinated indebtedness that is not subordinated to the 7% Senior Notes or the guarantees of the 7% Senior Notes;

create liens;

transfer and sell assets;

merge, consolidate, or sell, transfer or otherwise dispose of all or substantially all of the Company’s assets;

enter into certain transactions with affiliates;

·•

~~pay dividends or distributions or make certain other restricted payments or investments;~~

~~incur or guarantee additional indebtedness or issue disqualified stock or create subordinated indebtedness that is not subordinated to the Senior Notes or the guarantees of the Senior Notes;~~

~~create liens;~~

~~transfer and sell assets;~~

~~merge, consolidate, or sell, transfer or otherwise dispose of all or substantially all of the Company’s assets;~~

~~enter into certain transactions with affiliates;~~

engage in lines of business other than the Company’s core business and related businesses; and

create restrictions on dividends or other payments by restricted subsidiaries.

~~create restrictions on dividends or other payments by restricted subsidiaries.~~

These covenants are subject to a number of exceptions and qualifications as set forth in the Indenture. The Indenture also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on such 7% Senior Notes to be declared due and payable. As of September 30, ~~2016,~~2017, the Company was in compliance with all of the covenants under the Indenture relating to the 7% Senior Notes.

6.0% Senior Notes

On March 29, 2017, Eagle II Acquisition Company LLC (“Eagle II”), a wholly-owned subsidiary of the Company, issued $375.0 million aggregate principal amount of 6% Senior Notes due 2025 (the “6% Senior Notes”) pursuant to an indenture, dated as of March 29, 2017 (the “New Indenture”), between Eagle II and U.S. Bank, National Association, as Trustee. The 6% Senior Notes will mature on April 1, 2025, with interest payable semi-annually in arrears on April 1 and October 1, commencing October 1, 2017. The proceeds of the offering, and additional funds in the amount of $1.9 million in respect of interest expected to be accrued on the 6% Senior Notes, were placed in escrow pending satisfaction of certain conditions, including consummation of the Isle Acquisition. In connection with the consummation of the Isle Acquisition on May 1, 2017, the escrowed funds were released and the Company assumed Eagle II’s obligations under the 6% Senior Notes and the New Indenture and certain of the Company’s subsidiaries (including Isle and certain of its subsidiaries) executed guarantees of the Company’s obligations under the 6% Senior Notes.

On September 13, 2017, the Company issued an additional $500.0 million principal amount of its 6% Senior Notes at an issue price equal to 105.5% of the principal amount of the 6% Senior Notes. The additional notes were issued pursuant to the New Indenture that governs the 6% Senior Notes. The Company used the proceeds of the offering to repay $78.0 million of outstanding borrowings under the revolving credit facility and used the remainder to repay $444.5 million outstanding borrowings under the term loan facility and related accrued interest.

On or after April 1, 2020, the Company may redeem all or a portion of the 6% Senior Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of the principal amount) set forth below plus accrued and unpaid interest and additional interest, if any, on the 6% Senior Notes redeemed, to the applicable redemption date, if redeemed during the 12-month period beginning on April 1 of the years indicated below:

Year	Percentage
2020		104.500	%
2021		103.000	%
2022		101.500	%
2023 and thereafter		100.000	%

Prior to April 1, 2020, the Company may redeem all or a portion of the 6% Senior Notes at a price equal to 100% of the 6% Senior Notes redeemed plus accrued and unpaid interest to the redemption date, plus a make-whole premium. At any time prior to August 1, 2018, the Company is also entitled to redeem up to 35% of the original aggregate principal amount of the 6% Senior Notes with proceeds of certain equity financings at a redemption price equal to 106% of the principal amount of the 6% Senior Notes redeemed, plus accrued and unpaid interest. If the Company experiences certain change of control events (as defined in the New Indenture), it must offer to repurchase the 6% Senior Notes at 101% of their principal amount, plus accrued and unpaid interest to the applicable repurchase date. If the Company sells assets under certain circumstances and does not use the proceeds for specified purposes, the Company must offer to repurchase the 6% Senior Notes at 100% of their principal amount, plus accrued and unpaid interest to the applicable repurchase date.

The 6% Senior Notes are subject to redemption imposed by gaming laws and regulations of applicable gaming regulatory authorities.

The New Indenture contains certain covenants limiting, among other things, the Company’s ability and the ability of its subsidiaries (other than its unrestricted subsidiaries) to:

pay dividends or distributions or make certain other restricted payments or investments;

incur or guarantee additional indebtedness or issue disqualified stock or create subordinated indebtedness that is not subordinated to the 6% Senior Notes or the guarantees of the 6% Senior Notes;

create liens;

•

transfer and sell assets;

merge, consolidate, or sell, transfer or otherwise dispose of all or substantially all of the Company’s assets;

enter into certain transactions with affiliates;

engage in lines of business other than the Company’s core business and related businesses; and

create restrictions on dividends or other payments by restricted subsidiaries.

These covenants are subject to a number of exceptions and qualifications as set forth in the New Indenture. The New Indenture also provides for customary events of default which, if any of them occurs, would permit or require the principal of and accrued interest on such 6% Senior Notes to be declared due and payable. As of September 30, 2017, the Company was in compliance with all of the covenants under the New Indenture relating to the 6% Senior Notes.

Refinancing of the Term Loan and Revolving Credit Facility

Credit Facility

On July 23, 2015, the Company entered into a new $425.0 million seven year term loan (the “Term Loan”) and a ~~new~~ $150.0 million five year revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan, the ~~“Credit~~“Prior Credit Facility”).

As of September 30, 2016, the Company had $419.7 million outstanding on the Term Loan and $19.0 million outstanding under the Revolving Credit Facility. The Company had $131.0 million of available borrowing capacity under its Revolving Credit Facility as of September 30, 2016. At September 30, 2016, the interest rate on the Term Loan was 4.25%, and the interest rate on the Revolving Credit Facility was 4.17%.

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base rate plus a spread ranging from 1.5% to 2.25%, in each case with the spread determined based on the Company’s total leverage ratio. Additionally, the Company paid a commitment fee on the unused portion of the Revolving Credit Facility not being utilized in the amount of 0.50% per annum.

On May 1, 2017, all of the outstanding amounts under the Prior Credit Facility were repaid with proceeds of borrowings under the New Credit Facility and the Prior Credit Facility was terminated.

New Credit Facility

On April 17, 2017, Eagle II entered into a new credit agreement by and among Eagle II, as initial borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto dated as of April 17, 2017 (the “New Credit Facility”), consisting of a $1.45 billion term loan facility (the “New Term Loan Facility” or “New Term Loan”) and a $300.0 million revolving credit facility (the “New Revolving Credit Facility”), which was undrawn at closing. The proceeds of the New Term Loan Facility, and additional funds in the amount of $4.5 million in respect of interest expected to be accrued on the New Term Loan Facility, were placed in escrow pending satisfaction of certain conditions, including consummation of the Isle Acquisition. In connection with the consummation of the Isle Acquisition on May 1, 2017, the escrowed funds were released and ERI assumed Eagle II’s obligations under the New Credit Facility and certain of ERI’s subsidiaries (including Isle and certain of its subsidiaries) executed guarantees of ERI’s obligations under the New Credit Facility.

As of September 30, 2017, the Company had $1.0 billion outstanding on the New Term Loan. There were no borrowings outstanding under the New Revolving Credit Facility as of September 30, 2017. The Company had $291.6 million of available borrowing capacity, after consideration of $8.4 million in outstanding letters of credit, under its New Revolving Credit Facility as of September 30, 2017. At September 30, 2017, the interest rate on the New Term Loan was 3.42%, and the weighted average interest rate on the New Revolving Credit Facility was 4.12% based upon the weighted average interest rate of borrowings outstanding on our New Revolving Credit Facility as of September 30, 2017.

The Company applied the net proceeds of the New Term Loan Facility and borrowings under the New Revolving Credit Facility, together with the proceeds of the 6% Senior Notes, and cash on hand, to (i) pay the cash portion of the consideration payable in the Isle Merger, (ii) refinance all of the debt outstanding under Isle’s existing credit facility, (iii) redeem or otherwise repurchase all of Isle’s outstanding senior and senior subordinated notes, (iv) refinance the Company’s Prior Credit Facility and (v) pay fees and costs associated with the foregoing.

outstanding under the New Credit Facility with the proceeds of certain casualty events, debt issuances, and asset sales and, depending on its consolidated total leverage ratio, the Company may be required to apply a portion of its excess cash flow to repay amounts outstanding under the New Credit Facility.

The interest rate per annum applicable to loans under the New Revolving Credit Facility are, at our option, either (i) LIBOR plus a margin ranging from 1.75% to 2.50% or (ii) a base rate plus a margin ranging from 0.75% to 1.50%, which margin is based on our total leverage ratio. The interest rate per annum applicable to the loans under the New Term Loan Facility is, at our option, either (i) LIBOR plus 2.25%, or (ii) a base rate plus 1.25%; provided, however, that in no event will LIBOR be less than zero or the base rate be less than 1.00% over the term of the New Term Loan Facility or the New Revolving Credit Facility. Additionally, the Company pays a commitment fee on the unused portion of the Revolving Credit Facility not being utilized in the amount of 0.50% per annum.

The New Credit Facility contains a number of customary covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability and the ability of the subsidiary guarantors to incur debt; create liens on collateral; engage in mergers, consolidations or asset dispositions; pay dividends or make distributions; make investments, loans or advances; engage in certain transactions with affiliates or subsidiaries; or modify their lines of business.

The New Credit Facility is secured by substantially all of the Company’s personal property assets and substantially all personal property assets of each subsidiary that guaranties the New Credit Facility (other than certain subsidiary guarantors designated as immaterial) (the ~~“Credit~~“New Credit Facility Guarantors”), whether owned on the closing date of the New Credit Facility or thereafter acquired, and mortgages on the real property and improvements owned or leased us or the New Credit Facility Guarantors. The New Credit Facility is also secured by a pledge of all of the equity owned by usthe Company and the New Credit Facility Guarantors (subject to certain gaming law restrictions). The credit agreement governing the New Credit Facility contains a number of customary covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability and the ability of the New Credit Facility Guarantors to incur additional indebtedness, create liens on collateral, engage in mergers, consolidations or asset dispositions, make distributions, make investments, loans or advances, engage in certain transactions with affiliates or subsidiaries or make capital expenditures.

The ~~credit agreement governing the~~New Credit Facility also includes certain financial covenants, including the requirements that we maintain throughout the ~~Company maintains~~term of the New Credit Facility and measured as of the end of each fiscal quarter, and solely with respect to loans under the New Revolving Credit Facility, a maximum ~~total leverage ratio and a minimum interest coverage ratio (adjusting over time). The Company is required to maintain a maximum~~consolidated total leverage ratio of not more than 6.50 to 1.00 for the period beginning on the closing date and ending with the fiscal quarter ending December 31, 2018, 6.00 to 1.00 ~~from~~for the period beginning with the fiscal quarter beginning January 1, ~~2016 to~~2019 and ending with the fiscal quarter ending December 31, ~~2017~~2019, and ~~5.00~~5.50 to 1.00 for the period beginning with the fiscal quarter beginning January 1, 2020 and thereafter. ~~In addition, the~~The Company iswill also be required to maintain ~~a minimum~~an interest coverage ratio in an amount not less than 2.00 to 1.00 measured on the last day of each fiscal quarter beginning on the closing date, and ending with the fiscal quarter ending December 31, 2018, 2.50 to 1.00 for the period beginning with the fiscal quarter beginning January 1, 2019 and ending with the fiscal quarter ending December 31, 2019, and 2.75 to 1.00 ~~from~~for the period beginning with the fiscal quarter beginning January 1, ~~2016 through December 31, 2016~~2020 and ~~3.00 to 1.00~~ thereafter. A default of the financial ratio covenants shall only become an event of default under the Term Loan if the lenders providing the Revolving Credit Facility take certain affirmative actions after the occurrence of a default of such financial ratio covenants.

The ~~credit agreement governing the~~New Credit Facility contains a number of customary events of default, including, among others, for the non-payment of principal, interest or other amounts, the inaccuracy of certain representations and warranties, the failure to perform or observe certain covenants, a cross default to our other indebtedness including the ~~Senior~~ Notes, certain events of bankruptcy or ~~insolvency,~~insolvency; certain ERISA events, the invalidity of certain loan documents, certain changes of control and the loss of certain classes of licenses to conduct gaming. If any event of default occurs, the lenders under the New Credit Facility would be entitled to take various actions, including accelerating amounts ~~due~~outstanding thereunder and taking all actions permitted to be taken by a secured ~~creditor.~~ creditor. As of September 30, ~~2016,~~2017, the Company was in compliance with the covenants under the New Credit Facility.

Note 8. Fair Value of Financial Instruments

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there is a three‑tier fair value hierarchy, which prioritizes the inputs used in measuring fair values as follows:

Level 1 Inputs: Quoted market prices in active markets for identical assets or liabilities.

~~Level 1: Quoted market prices in active markets for identical assets or liabilities.~~

Level 2 Inputs: Observable market‑based inputs or unobservable inputs that are corroborated by market data.

Level 3 Inputs: Unobservable inputs that are not corroborated by market data.

~~Level 2: Observable market‑based inputs or unobservable inputs that are corroborated by market data.~~

~~Level 3: Unobservable inputs that are not corroborated by market data.~~

The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practical to estimate fair value:

Cash and Cash Equivalents: Cash equivalents include investments in money market funds. Investments in this category can be redeemed immediately at the current net asset value per share. A money market fund is a mutual fund whose investments are primarily in short‑term debt securities designed to maximize current income with liquidity and capital preservation, usually maintaining per share net asset value at a constant amount, such as one dollar. The carrying amounts approximate the fair value because of the short maturity of those ~~instruments.~~instruments (Level 1).

Restricted ~~Cash:~~Cash and Investments: Restricted cash includes unredeemed winning tickets from the Company’s racing operations, funds related to horsemen’s fines and certain simulcasting funds that are restricted to payments for improving horsemen’s facilities and racing purses, ~~at Scioto Downs,~~ cash deposits that serve as collateral for letters of credit, surety

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bonds and short-term certificates of deposit that serve as collateral for certain bonding requirements. ~~Restricted~~The estimated fair values of our restricted cash and investments are based upon quoted prices available in active markets (Level 1), or quoted prices for similar assets in active and inactive markets (Level 2), and represent the amounts we would expect to receive if we sold our restricted cash and investments.

Accounts Receivable and Credit Risk. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of casino accounts receivable. The Company issues markers to approved casino customers following background checks and assessments of creditworthiness. Trade receivables, including casino and hotel receivables, are typically non‑interest bearing. Accounts are written off when management deems the account to be uncollectible. Recoveries of accounts previously written off are recorded when received. An estimated allowance for doubtful accounts is ~~classified~~maintained to reduce the Company’s receivables to their carrying amount, which approximates fair value. The allowance is estimated based on specific review of customer accounts as well as historical collection experience and current economic and business conditions. Management believes that no significant concentrations of credit risk related to receivables existed.

There were no transfers between Level 1 ~~as its carrying value approximates market prices.~~

~~Long‑term Debt: The Senior Notes are classified as~~and Level 2 investments.

Marketable Securities: Marketable securities consist primarily of trading securities held the Company’s captive insurance subsidiary. The estimated fair values of the Company’s marketable securities are determined on an individual asset basis based upon ~~market inputs. The Term Loan under~~quoted prices of identical assets available in active markets (Level 1), quoted prices of identical assets in inactive markets, or quoted prices for similar assets in active and inactive markets (Level 2), and represent the ~~credit facility is classified as Level 2 as it is tied~~amounts we would expect to ~~market rates of interest and its carrying value approximates market value.~~receive if we sold these marketable securities.

Long‑term Debt: The fair value of ~~the Senior Notes was~~our long-term debt or other long-term obligations is estimated based on the quoted market ~~prices at September 30, 2016.~~price of the underlying debt issue (Level 1) or, when a quoted market price is not available, the discounted cash flow of future payments utilizing current rates available to us for the debt of similar remaining maturities (Level 2). Debt obligations with a short remaining maturity have a carrying amount that approximates fair value.

Acquisition-Related Contingent ~~Considerations:~~Consideration: Contingent consideration related to the July 2003 acquisition of Scioto Downs represents the estimate of amounts to be paid to former stockholders of Scioto Downs under certain earn-out provisions. The Company considers the acquisition related contingency’s fair value measurement, which includes forecast assumptions, to be Level 3 within the fair value hierarchy.

The estimated fair values of the Company’s financial instruments are as follows (amounts in thousands):


	September 30, 2016				December 31, 2015				September 30, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair		Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value		Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	$	44,609	$	44,609	$	78,278	$	78,278	$	134,903	$	134,903	$	61,029	$	61,029
Restricted cash		2,395		2,395		5,271		5,271		21,307		21,307		2,414		2,414
Marketable securities										17,461		17,461		—		—
Financial liabilities:
Senior Notes	$	366,602	$	395,625	$	366,043	$	367,500
7% Senior Notes									$	367,579	$	402,187	$	366,859	$	397,500
6% Senior Notes										881,091		916,563		—		—
New Term Loan										981,559		1,003,177		—		—
Other long-term debt										2,950		2,950		—		—
Term Loan		406,601		424,430		408,410		419,796		—		—		406,047		423,858
Revolving Credit Facility		16,835		19,000		90,967		93,500		—		—		26,977		29,000
Acquisition-related contingent considerations		490		490		529		529		460		460		496		496

The following table represents the change in acquisition-related contingent consideration liabilities for the period December 31, ~~2015~~2016 to September 30, ~~2016:~~2017:

Balance as of December 31, 2016	$		496
Amortization of present value discount⁽¹⁾			50
~~Balance as of December 31, 2015~~	$	~~529~~
~~Amortization of present value discount(1)~~		52
Fair value adjustment for change in consideration expected to be paid⁽²⁾		~~(1)~~	4
Settlements		~~(90)~~	(90	)
Balance as of September 30, ~~2016~~2017	$	~~490~~	460

(1)

Changes in present value are included as a component of interest expense in the consolidated statements of operations.

(2)

Fair value adjustments for changes in earn-out estimates are included in general and administrative expense in the consolidated statements of operations.

Note 9. Earnings per Share

The following table illustrates the reconciliation of the numerators and denominators of the basic and diluted net income per share computations for the three and nine months ended September 30, ~~2016~~2017 and ~~2015~~2016 (dollars in thousands, except per share amounts):

									Three Months Ended				Nine Months Ended
	Three Months Ended				Nine Months Ended				September 30,				September 30,
	September 30,				September 30,				2017		2016		2017			2016
	2016		2015		2016		2015		(unaudited)				(unaudited)
	(unaudited)				(unaudited)
Income (loss) from continuing operations									$	28,116	$	9,682	$	(18,147	)	$	23,842
Income from discontinued operations, net of income taxes										1,438		—		2,393			—
Net income available to common stockholders	$	9,682	$	5,399	$	23,842	$	4,030	$	29,554	$	9,682	$	(15,754	)	$	23,842
Shares outstanding:
Weighted average shares outstanding - basic		47,193,120		46,516,614		47,106,706		46,509,369		76,902,070		47,193,120		63,821,705			47,106,706
Effect of dilutive securities:
Stock options		63,157		—		107,790		—		128,696		63,157		85,977			107,790
RSUs		578,367		246,975		523,096		111,590		928,923		578,367		860,492			523,096
Weighted average shares outstanding - diluted		47,834,644		46,763,589		47,737,592		46,620,959		77,959,689		47,834,644		64,768,174			47,737,592
Basic net income per common share	$	0.21	$	0.12	$	0.51	$	0.09
Diluted net income per common share	$	0.20	$	0.12	$	0.50	$	0.09

Income (loss) per common share attributable to common stockholders - basic:
Income (loss) from continuing operations									$	0.36	$	0.21	$	(0.28	)	$	0.51
Income from discontinued operations, net of income taxes										0.02		—		0.03			—
Net income (loss) attributable to common stockholders									$	0.38	$	0.21	$	(0.25	)	$	0.51

Income (loss) per common share attributable to common stockholders - diluted:
Income (loss) from continuing operations									$	0.36	$	0.20	$	(0.28	)	$	0.50
Income from discontinued operations, net of income taxes										0.02		—		0.03			—
Net income (loss) attributable to common stockholders									$	0.38	$	0.20	$	(0.25	)	$	0.50

Note 10. Commitments and Contingencies

Litigation.~~Litigation.~~ The Company is a party to various lawsuits, which have arisen in the normal course of business. Estimated losses are accrued for these lawsuits and claims when the loss is probable and can be estimated. The current liability for the estimated losses associated with those lawsuits is not material to the consolidated financial condition and those estimated losses are not expected to have a material impact on the results of operations.

In connection with the ~~Mergers,~~Isle Merger, a class action lawsuit was filed by a purported stockholder of the Company alleging breach of fiduciary duty by the Company board of directors in connection with the ~~Mergers.~~Isle Merger. The case was filed on November 8, 2016 in the Second Judicial District Court of the State of Nevada and is captioned Assad v. Eldorado Resorts, Inc., et. al, case no. CV 16-02312. The ~~case,~~lawsuit, which ~~purports~~purported to be a class action on behalf of all of the stockholders of the Company, alleged, among other things, breach of fiduciary duty in failing to disclose all material information to stockholders in seeking approval of the issuance of shares of Company Common Stock in the ~~Mergers~~Isle Merger and ~~requests~~requested injunctive ~~relief~~relief. In the suit, the Plaintiff sought to enjoin the shareholder meeting to approve the sale. The request to enjoin the shareholder meeting lawsuit has since been withdrawn and, on May 31, 2017, the Court denied plaintiff’s application for an award of ~~costs incurred~~attorneys’ fees and expenses. This matter was dismissed by the ~~plaintiff~~Court in ~~the action.~~August 2017.

~~Environmental Remediation.~~ ~~In October 2004, the Company acquired~~229 acres of real property, known as the International Paper site, as an alternative site to build Presque Isle Downs. In connection with the acquisition of the International Paper site, the Company entered into a consent order and decree (the “Consent Order”) with the Pennsylvania Department of Environmental Protection (“PaDEP”) and International Paper insulating us from liability for certain pre‑existing contamination, subject to compliance with the Consent Order, which included a proposed environmental remediation plan for the site, which was tied specifically to the use of the property as a racetrack. The proposed environmental remediation plan in the Consent Order was based upon a “baseline environmental report” and management estimated that such remediation would be subsumed within the cost of developing the property as a racetrack. The racetrack was never developed at this site. In October 2005, the Company sold 205 acres to GEIDC who assumed primary responsibility for the remediation obligations under the Consent Order relating to the “South Yard and the Dunn Brickyard” parcels they acquired. However, the Company was advised by the PaDEP that it was not released from its liability and responsibility under the Consent Order for the “Main Site” parcel as its remediation was undertaken by the Company prior to the sale to GEIDC and nearly complete. Pursuant to the sale, the Company purchased an Environmental Risk Insurance Policy in the amount of $10.0 million with respect to the property. The Company secured an Act 2 Release of Liability for the Main Site on January 6, 2006. GEIDC subsequently obtained Act 2 releases for the South Yard and Dunn Brickyard parcels on March 26, 2013 and January 17, 2014, respectively. In October 2015, the Company renewed the insurance policy for a period of one year to seek an expert opinion regarding any continuing liability regarding the property. Having received such an opinion, the Company elected to no longer renew the insurance policy.

~~Regulatory Gaming Assessments.~~ The Pennsylvania Gaming Control Board (the “PGCB”), the Pennsylvania Department of Revenue and the Pennsylvania State Police (collectively, “the Borrowers”), were required to fund the costs they incurred in connection with the initial development of the infrastructure to support gaming operations in Pennsylvania as well as the initial ongoing costs of the Borrowers. The initial funding of these costs was provided from a loan from the Pennsylvania General Fund in the amount of $36.1 million, and further funding was provided from additional loans from the Pennsylvania Property Tax Reserve Fund in the aggregate amount of $63.8 million.

The Pennsylvania Department of Revenue will assess all licensees, including Presque Isle Downs, their proportionate share of amounts represented by the borrowings, which are in the aggregate amount of $99.9 million, once the designated number of Pennsylvania’s slot machine licensees is operational. On July 11, 2011, the PGCB issued an administrative order which established that payments associated with the $63.8 million that was borrowed from the Property Tax Reserve Fund would commence on January 1, 2012. The repayment allocation between all current licensees is based upon equal weighting of (1) cumulative gross slot revenue since inception in relation to the combined cumulative gross slot revenue for all licensees and (2) single year gross slot revenue (during the state’s fiscal year ending June 30) in relation to the combined single year gross slot revenue for all licensees; and amounts paid each year will be adjusted annually based upon changes in the licensee’s proportionate share of gross slot revenue. We have estimated that our total proportionate share of the aggregate $63.8 million to be assessed to the gaming facilities will be $4.1 million and will be paid quarterly over a ten‑year period, which began effective January 1, 2012. For the $36.1 million that was borrowed from the General Fund, payment is scheduled to begin after all fourteen licensees are operational. Although we cannot determine when payment will begin, it has considered a similar repayment model for the General Fund borrowings and estimated that its total proportionate share of the aggregate $36.1 million to all fourteen gaming facilities

~~will approximate between $1.9 million and $2.1 million, which has been accrued in the accompanying consolidated balance sheet at September 30, 2016 and December 31, 2015.~~

The recorded estimate relative to the Property Tax Reserve Fund is subject to revision based upon future changes in the revenue assumptions utilized to develop the estimate. The estimated total obligation at September 30, 2016 and December 31, 2015, was $4.1 million and $4.3 million, respectively, of which the residual total amount, both current and long-term, of $1.9 million and $2.2 million at September 30, 2016 and December 31, 2015, respectively, are appropriately accrued in the accompanying consolidated balance sheet. The Company paid $0.3 million for the nine months ended September 30, 2016.

Agreements with Horsemen and Pari-mutuel Clerks. The Federal Interstate Horse Racing Act and the state racing laws in West Virginia, Ohio and Pennsylvania require that, in order to simulcast races, we have written agreements with the horse owners and trainers at those racetracks. In addition, in order to operate slot machines in West Virginia, we are required to enter into written agreements regarding the proceeds of the slot machines (a “proceeds agreement”) with a representative of a majority of the horse owners and trainers and with a representative of a majority of the pari‑mutuel clerks. In Pennsylvania and Ohio, we must have an agreement with the representative of the horse owners. We have the requisite agreements in place with the horsemen at Mountaineer until December 31, 2018. With respect to the Mountaineer pari‑mutuel clerks, we have a labor agreement in force until November 30, ~~2016,~~2017, which will automatically renew for an additional ~~one year~~one-year period, and a proceeds agreement until April 14, 2018. We are required to have a proceeds agreement in effect on July 1 of each year with the horsemen and the pari‑mutuel clerks as a condition to renewal of our video lottery license for such year. If the requisite proceeds agreement is not in place as of July 1 of a particular year, Mountaineer’s application for renewal of its video lottery license could be denied, in which case Mountaineer would not be permitted to operate either its slot machines or table games. Scioto Downs has the requisite agreement in place with the OHHA until December 31, 2023, with automatic ~~two‑year~~two-year renewals unless either party requests re‑negotiation pursuant to its terms. Presque Isle

Downs has the requisite agreement in place with the Pennsylvania Horsemen’s Benevolent and Protective Association until May 1, 2019. With the exception of the respective Mountaineer, Presque Isle Downs and Scioto Downs horsemen’s agreements and the agreement between Mountaineer and the pari‑mutuel clerks’ union described above, each of the agreements referred to in this paragraph may be terminated upon written notice by either party.

Note 11. Related ~~Parties~~Affiliates

The accompanying balance sheets include the Company’s payable to C.S. &Y. Associates (“CS&Y”) which is an entity partially owned by Recreational Enterprises, Inc. (“REI”). The Company’s Chief Executive Officer and Chairman of the Board, Gary L. Carano, and its Senior Vice President of Regional Operations, Gene Carano, are the directors of REI and members of the Carano family, including Gary L. Carano and Gene Carano, own the equity interests in REI. The Company owns the entire parcel on which Eldorado Reno is located, except for approximately 30,000 square feet which is leased from ~~C. S. & Y. Associates, a general partnership of which Donald L. Carano is a general partner. Mr. Carano is also a major shareholder in the Company. As~~CS&Y. No amounts were due to or due from CS&Y as of September 30, ~~2016 and~~2017. As of December 31, ~~2015,~~2016, the Company’s payable to ~~C. S. & Y Associates amounted to $0.2~~CS&Y totaled $0.3 million ~~and $0.1 million, respectively,~~ and is reflected on the accompanying balance ~~sheets~~sheet under “due to ~~affiliates”. There were no payables~~affiliates.”

The Company holds a 42.1% variable interest in a partnership with other investors that developed a new 118-room Hampton Inn & Suites hotel at Scioto Downs that opened in March 2017. Pursuant to the terms of the partnership agreement, the Company contributed $1.0 million of cash and 2.4 acres of a leasehold immediately adjacent to The Brew Brothers microbrewery and restaurant at Scioto Downs. The partnership constructed the hotel at a cost of $16.0 million and other ~~related parties as~~investor members operate the hotel. As of September 30, ~~2016~~2017, the Company’s receivable from the partnership totaled $71,000 and ~~December 31, 2015.~~

payable to the partnership totaled $30,000 and are reflected on the accompanying balance sheet under “due from affiliates” and “due to affiliates.”

Note 12. Segment Information

~~The following table sets forth, for the periods indicated, certain operating data for our reportable segments. Management views~~We view each of our properties as an operating segment. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, and their management and reporting structure. ~~The~~Prior to the Isle Acquisition, the Company’s principal operating activities ~~occur~~occurred in three geographic regions: Nevada, Louisiana and parts of the eastern United States. The Company ~~has~~ aggregated its ~~operating segments~~operations into three reportable ~~segments: Eldorado Reno, Silver Legacy and Circus Reno~~segments based on the similar characteristics of the operating segments within the regions in which they operated as ~~Nevada, Eldorado Shreveport as Louisiana, and Scioto Downs, Presque Isle and Mountaineer as Eastern.~~

Three months ended

Nine months ended

September 30,

September 30,


2016

2015

2016

2015

(in thousands, unaudited)

Revenues and expenses

Nevada:

Net operating revenues

$
89,676

$
29,002

$
246,608

$
79,961

Expenses, excluding depreciation and corporate

(69,218)

(23,236)

(196,242)

(66,756)

Gain (loss) on sale or disposal of property

12

(16)

(168)

(11)

Equity in income of unconsolidated affiliate

—

2,548

—

3,136

Depreciation

(4,864)

(1,959)

(15,373)

(5,833)

Operating income—Nevada

$
15,606

$
6,339

$
34,825

$
10,497

Louisiana:

Net operating revenues

$
33,984

$
34,651

$
100,514

$
103,919

Expenses, excluding depreciation and amortization

(25,308)

(27,012)

(75,935)

(81,217)

Gain on sale or disposal of property

—

64

50

63

Depreciation and amortization

(1,973)

(1,902)

(5,883)

(5,709)

Operating income—Louisiana

$
6,703

$
5,801

$
18,746

$
17,056

Eastern:

Net operating revenues

$
117,905

$
119,887

$
339,324

$
349,744

Expenses, excluding depreciation, amortization and corporate

(93,969)

(93,756)

(268,896)

(274,666)

Gain (loss) on sale or disposal of property

13

—

(671)

—

Depreciation and amortization

(8,847)

(9,979)

(25,990)

(30,611)

Operating income—Eastern

$
15,102

$
16,152

$
43,767

$
44,467

Corporate:

Corporate expenses

$
(4,426)

$
(3,652)

$
(15,684)

$
(11,713)

Acquisition charges

(4,750)

(380)

(5,326)

(717)

(Loss) gain on sale or disposal of property

—

(54)

49

(54)

Depreciation and amortization

(126)

(114)

(351)

(301)

Operating loss—Corporate

$
(9,302)

$
(4,200)

$
(21,312)

$
(12,785)

Total Reportable Segments

Net operating revenues

$
241,565

$
183,540

$
686,446

$
533,624

Expenses, excluding depreciation and amortization

(192,921)

(147,656)

(556,757)

(434,352)

Gain (loss) on sale or disposal of property

25

(6)

(740)

(2)

Equity in income of unconsolidated affiliate

—

2,548

—

3,136

Acquisition charges

(4,750)

(380)

(5,326)

(717)

Depreciation and amortization

(15,810)

(13,954)

(47,597)

(42,454)

Operating income—Total Reportable Segments

$
28,109

$
24,092

$
76,026

$
59,235

Reconciliations to Consolidated Net Income:

Operating Income—Total Reportable Segments

$
28,109

$
24,092

$
76,026

$
59,235

Unallocated income and expenses:

Interest expense

(12,589)

(14,482)

(38,375)

(48,946)

Loss on early retirement of debt

—

(1,790)

(155)

(1,790)

Provision for income taxes

(5,838)

(2,421)

(13,654)

(4,469)

Net income

$
9,682

$
5,399

$
23,842

$
4,030

Nine Months Ended September 30,


2016

2015


(in thousands, unaudited)

Capital Expenditures







Nevada

$
12,270

$
3,212

Louisiana

4,026

2,491

Eastern (1)

16,278

18,216

Corporate

375

495

Total

$
32,949

$
24,414

follows:

Segment	~~(1)~~	Property	State
Nevada		Eldorado Reno	Nevada
		Silver Legacy	Nevada
		Circus Reno	Nevada

Louisiana		Eldorado Shreveport	Louisiana

Eastern		Presque Isle Downs	Pennsylvania
		Scioto Downs	Ohio
		Mountaineer	West Virginia

Following the Isle Acquisition, the Company’s principal operating activities expanded and now occur in four geographic regions and reportable segments based on the similar characteristics of the operating segments within the regions in which they operate. The following table summarizes our current segments:

Segment	Property	State
West	Eldorado Reno	Nevada
	Silver Legacy	Nevada
	Circus Reno	Nevada
	Isle Black Hawk	Colorado
	Lady Luck Black Hawk	Colorado

Midwest	Waterloo	Iowa
	Bettendorf	Iowa
	Boonville	Missouri
	Cape Girardeau	Missouri
	Caruthersville	Missouri
	Kansas City	Missouri

South	Pompano	Florida
	Eldorado Shreveport	Louisiana
	Lula	Mississippi
	Vicksburg	Mississippi

East	Presque Isle Downs	Pennsylvania
	Nemacolin	Pennsylvania
	Scioto Downs	Ohio
	Mountaineer	West Virginia

The following table sets forth, for the periods indicated, certain operating data for our four reportable segments. Amounts related to pre-acquisition periods (prior to May 1, 2017) conform to prior presentation as the additional operating segments associated with the Isle Acquisition are incremental to the previously disclosed reportable segments.

	Three months ended						Nine months ended
	September 30,						September 30,
	2017			2016			2017			2016
	(in thousands, unaudited)
Revenues and expenses
West:
Net operating revenues	$	132,775		$	89,676		$	293,528		$	246,608
Operating income		32,556			15,606			50,507			34,825
Midwest:
Net operating revenues	$	103,510		$	—		$	171,015		$	—
Operating income		24,261			—			39,669			—
South:
Net operating revenues	$	81,696		$	33,984		$	183,425		$	100,514
Operating income		11,293			6,703			28,280			18,746
East:
Net operating revenues	$	126,720		$	117,905		$	352,644		$	339,324
Operating income		21,140			15,102			54,333			43,767
Corporate:
Net revenues	$	173		$	—		$	366		$	—
Operating loss		(10,326	)		(9,302	)		(111,834	)		(21,312	)
Total Reportable Segments
Net operating revenues	$	444,874		$	241,565		$	1,000,978		$	686,446
Operating income—Total Reportable Segments		78,924			28,109			60,955			76,026
Reconciliations to Consolidated Net Income (Loss):
Operating Income—Total Reportable Segments	$	78,924		$	28,109		$	60,955		$	76,026
Unallocated income and expenses:
Interest expense, net		(29,183	)		(12,589	)		(69,380	)		(38,375	)
Loss on early retirement of debt		(10,030	)		—			(37,347	)		(155	)
(Provision) benefit for income taxes		(11,595	)		(5,838	)		27,625			(13,654	)
Net income (loss) from continuing operations	$	28,116		$	9,682		$	(18,147	)	$	23,842

	Nine Months Ended September 30,
	2017		2016
	(in thousands, unaudited)
Capital Expenditures
West	$	30,498	$	12,270
Midwest		6,545		—
South		4,003		4,026
East (1)		6,791		16,278
Corporate		5,344		375
Total	$	53,181	$	32,949

(1)	Amounts are before any West Virginia capital expenditure reimbursements.

		West		Midwest		South		East		Corporate, Other & Eliminations			Total
Balance sheet as of September 30, 2017 (unaudited)	(in thousands)
Total assets		$	1,282,981	$	1,185,266	$	688,035	$	1,176,264	$	(747,289	)	$	3,585,257
Goodwill			154,467		334,276		190,914		66,825		—			746,482

Balance sheet as of December 31, 2016					—
Total assets		$	377,688	$	—	$	128,427	$	850,904	$	(62,975	)	$	1,294,044
Goodwill			—		—		—		66,826		—			66,826

Note 13. Consolidating Condensed Financial Information

Certain of our wholly-owned subsidiaries have fully and unconditionally guaranteed on a joint and several basis, the payment of all obligations under our 7% Senior Notes, 6% Senior Notes and New Credit Facility.

The following wholly-owned subsidiaries of the Company are guarantors, on a joint and several basis, under the 7% Senior Notes, 6% Senior Notes and New Credit Facility: Isle of Capri Casinos LLC; Eldorado Holdco LLC; Eldorado Resorts LLC; Eldorado Shreveport 1 LLC; Eldorado Shreveport 2 LLC; Eldorado Casino Shreveport Joint Venture; MTR Gaming Group Inc.; Mountaineer Park Inc.; Presque Isle Downs Inc.; Scioto Downs Inc.; Eldorado Limited Liability Company; Circus and Eldorado Joint Venture, LLC; CC Reno LLC; CCR Newco LLC; Black Hawk Holdings, L.L.C.; IC Holdings Colorado, Inc.; CCSC/Blackhawk, Inc.; IOC-Black Hawk Distribution Company, LLC; IOC-Black Hawk County, Inc.; Isle of Capri Bettendorf, L.C.; PPI, Inc.; Pompano Park Holdings LLC; IOC-Lula, Inc.; IOC-Kansas City, Inc.; IOC-Boonville, Inc.; IOC-Caruthersville, LLC; IOC Cape Girardeau, LLC; IOC-Vicksburg, Inc.; IOC-Vicksburg, L.L.C.; Rainbow Casino-Vicksburg Partnership, L.P.; IOC Holdings L.L.C. and St. Charles Gaming Company, L.L.C. Each of the subsidiaries’ guarantees is joint and several with the guarantees of the other subsidiaries.

The consolidating condensed balance sheet as of September 30, 2017 is as follows:

Balance Sheet	Eldorado Resorts, Inc. (Parent Obligor)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating and Eliminating Entries			Eldorado Resorts, Inc. Consolidated
Current assets	$	31,559	$	348,082	$	21,333	$	—		$	400,974
Intercompany receivables		304,637		—		37,077		(341,714	)		—
Investments in subsidiaries		2,312,039		—		—		(2,312,039	)		—
Property and equipment, net		5,437		1,434,717		6,200		—			1,446,354
Other assets		68,346		1,717,934		33,425		(81,776	)		1,737,929
Total assets	$	2,722,018	$	3,500,733	$	98,035	$	(2,735,529	)	$	3,585,257

Current liabilities	$	15,439	$	182,755	$	26,881	$	—		$	225,075
Intercompany payables		—		341,713		—		(341,713	)		—
Long-term debt, less current maturities		1,848,573		350,008		25,473		—			2,224,054
Deferred income tax liabilities		—		333,754		—		(81,776	)		251,978
Other accrued liabilities		4,083		20,792		5,340		—			30,215
Stockholders’ equity		853,923		2,271,711		40,341		(2,312,040	)		853,935
Total liabilities and stockholders’ equity	$	2,722,018	$	3,500,733	$	98,035	$	(2,735,529	)	$	3,585,257

The consolidating condensed balance sheet as of December 31, 2016 is as follows:

Balance Sheet	Eldorado Resorts, Inc. (Parent Obligor)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating and Eliminating Entries			Eldorado Resorts, Inc. Consolidated
Current assets	$	1,800	$	99,554	$	399	$	—		$	101,753
Intercompany receivables		388,050		—		1,186		(389,236	)		—
Investments in subsidiaries		299,437		808,923		—		(1,108,360	)		—
Property and equipment, net		1,965		610,377		—		—			612,342
Other assets		50,591		585,892		11		(56,545	)		579,949
Total assets	$	741,843	$	2,104,746	$	1,596	$	(1,554,141	)	$	1,294,044

Current liabilities	$	22,759	$	79,265	$	16	$	—		$	102,040
Intercompany payables		—		389,236		—		(389,236	)		—
Long-term debt, less current maturities		420,633		375,248		—		—			795,881
Deferred income tax liabilities		—		146,930		—		(56,545	)		90,385
Other accrued liabilities		12		7,275		—		—			7,287
Stockholders’ equity		298,439		1,106,792		1,580		(1,108,360	)		298,451
Total liabilities and stockholders’ equity	$	741,843	$	2,104,746	$	1,596	$	(1,554,141	)	$	1,294,044

The consolidating condensed statement of operations for the nine months ended September 30, 2017 is as follows:

	Eldorado Resorts, Inc. (Parent Obligor)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Entries			Eldorado Resorts, Inc. Consolidated
Revenues:
Gaming and pari-mutuel commissions	$	—		$	820,452		$	15,326		$	—		$	835,778
Non-gaming		—			248,034			4,942			—			252,976
Gross revenues		—			1,068,486			20,268			—			1,088,754
Less promotional allowances		—			(86,858	)		(918	)		—			(87,776	)
Net revenues		—			981,628			19,350			—			1,000,978

Operating expenses:
Gaming and pari-mutuel commissions		—			427,680			10,656			—			438,336
Non-gaming		—			109,518			649			—			110,167
Marketing and promotions		—			53,401			1,444			—			54,845
General and administrative		—			152,717			3,061			—			155,778
Corporate		21,413			(1,791	)		2,112			—			21,734
Management fee		(20,064	)		19,564			500			—			—
Depreciation and amortization		635			68,767			233			—			69,635
Total operating expenses		1,984			829,856			18,655			—			850,495

Loss on sale of asset or disposal of property		(21	)		(30	)		—			—			(51	)
Acquisition charges		(69,628	)		(19,544	)		—			—			(89,172	)
Equity in loss of unconsolidated affiliate		—			(305	)		—			—			(305	)
Operating (loss) income		(71,633	)		131,893			695			—			60,955

Interest expense, net		(49,576	)		(19,110	)		(694	)		—			(69,380	)
Loss on early retirement of debt, net		(37,347	)		—			—			—			(37,347	)
Subsidiary income (loss)		77,197			—			—			(77,197	)		—
(Loss) income before income taxes		(81,359	)		112,783			1			(77,197	)		(45,772	)
Income tax benefit (provision)		64,455			(36,896	)		66			—			27,625
Income (loss) from continuing operations		(16,904	)		75,887			67			(77,197	)		(18,147	)
Income from discontinued operations, net of taxes		1,150			1,243			—			—			2,393
Net income (loss)	$	(15,754	)	$	77,130		$	67		$	(77,197	)	$	(15,754	)

The consolidating condensed statement of operations for the nine months ended September 30, 2016 is as follows:

	Eldorado Resorts, Inc. (Parent Obligor)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating and Eliminating Entries			Eldorado Resorts, Inc. Consolidated
Revenues:
Gaming and pari-mutuel commissions	$	—		$	539,010		$	235	$	—		$	539,245
Non-gaming		—			216,473			99		—			216,572
Gross revenues		—			755,483			334		—			755,817
Less promotional allowances		—			(69,371	)		—		—			(69,371	)
Net revenues		—			686,112			334		—			686,446

Operating expenses:
Gaming and pari-mutuel commissions		—			307,669			—		—			307,669
Non-gaming		—			104,611			—		—			104,611
Marketing and promotions		—			30,661			3		—			30,664
General and administrative		—			98,129			—		—			98,129
Corporate		15,414			270			—		—			15,684
Management fee		(15,496	)		15,496			—		—			—
Depreciation and amortization		330			47,267			—		—			47,597
Total operating expenses		248			604,103			3		—			604,354

Loss on sale of asset or disposal of property		—			(740	)		—		—			(740	)
Acquisition charges		(5,326	)		—			—		—			(5,326	)
Equity in income of unconsolidated affiliates		—			—			—		—			—
Operating (loss) income		(5,574	)		81,269			331		—			76,026

Interest expense, net		(18,607	)		(19,768	)				—			(38,375	)
Loss on early retirement of debt		(155	)		—			—		—			(155	)
Subsidiary income (loss)		61,814						—		(61,814	)		—
Income (loss) before income taxes		37,478			61,501			331		(61,814	)		37,496
Income tax (provision) benefit		(13,636	)		(18	)		—		—			(13,654	)
Net income (loss)	$	23,842		$	61,483		$	331	$	(61,814	)	$	23,842

The consolidating condensed statement of cash flows for the nine months ended September 30, 2017 is as follows:

	Eldorado Resorts, Inc. (Parent Obligor)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Entries		Eldorado Resorts, Inc. Consolidated
Net cash (used in) provided by operating activities	$	(64,426	)	$	131,253		$	5,004		$	—	$	71,831
INVESTING ACTIVITIES:
Purchase of property and equipment, net		(4,128	)		(48,690	)		(363	)		—		(53,181	)
Reimbursement of capital expenditures from West Virginia regulatory authorities		—			251			—			—		251
Restricted cash		—			1,649			(32	)		—		1,617
Net cash (used in) provided by business combinations		(1,385,978	)		37,103			5,216			—		(1,343,659	)
Net cash used in investing activities		(1,390,106	)		(9,687	)		4,821			—		(1,394,972	)
FINANCING ACTIVITIES:
Proceeds from issuance of New Term Loan		1,450,000			—			—			—		1,450,000
Proceeds from issuance of 6% Senior Notes		875,000			—			—			—		875,000
Proceeds from issuance of New Revolving Credit Facility		166,953			—			—			—		166,953
Payments on Term Loan		(1,062	)		—			—			—		(1,062	)
Payments on New Term Loan		(448,125	)		—			—			—		(448,125	)
Payments under New Revolving Credit Facility		(166,953	)		—			—			—		(166,953	)
Borrowings under Revolving Credit Facility		41,000			—			—			—		41,000
Payments under Revolving Credit Facility		(29,000	)		—			—			—		(29,000	)
Retirement of Term Loan		(417,563	)		—			—			—		(417,563	)
Retirement of Revolving Credit Facility		(41,000	)		—			—			—		(41,000	)
Debt premium proceeds		27,500			—			—			—		27,500
Payment of other long-term obligation		(23	)		—			—			—		(23	)
Payments on capital leases		—			(242	)		(105	)		—		(347	)
Debt issuance costs		(51,338	)		—			—			—		(51,338	)
Taxes paid related to net share settlement of equity awards		(10,927	)		—			—			—		(10,927	)
Net proceeds from (payments to) related parties		72,129			(67,904	)		(4,225	)		—		—
Proceeds from exercise of stock options		2,900			—			—			—		2,900
Net cash provided by (used in) financing activities		1,469,491			(68,146	)		(4,330	)		—		1,397,015
INCREASE IN CASH AND CASH EQUIVALENTS		14,959			53,420			5,495			—		73,874
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		812			59,885			332			—		61,029
CASH AND CASH EQUIVALENTS, END OF YEAR	$	15,771		$	113,305		$	5,827		$	—	$	134,903

The consolidating condensed statement of cash flows for the nine months ended September 30, 2016 is as follows:

	Eldorado Resorts, Inc. (Parent Obligor)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Entries		Eldorado Resorts, Inc. Consolidated
Net cash (used in) provided by operating activities	$	(26,531	)	$	98,763		$	18		$		$	72,250
INVESTING ACTIVITIES:
Purchase of property and equipment, net		6			(32,945	)		(10	)		—		(32,949	)
Reimbursement of capital expenditures from West Virginia regulatory authorities		—			4,113			—			—		4,113
Proceeds from sale of property and equipment		—			1,560			—			—		1,560
Net cash used in business combinations		(491	)		—			—			—		(491	)
Increase in other assets		—			564			—			—		564
Net cash used in investing activities		(485	)		(26,708	)		(10	)		—		(27,203	)
FINANCING ACTIVITIES:
Payments under Term Loan		(3,188	)		—			—			—		(3,188	)
Payments under Revolving Credit Facility		(74,500	)		—			—			—		(74,500	)
Payments on capital leases		—			(204	)		—			—		(204	)
Debt issuance costs		(463	)		—			—			—		(463	)
Taxes paid related to net share settlement of equity awards		(1,366	)		—			—			—		(1,366	)
Proceeds from exercise of stock options		1,005			—			—			—		1,005
Net payments to related parties		108,181			(108,249	)		68			—		—
Net cash provided by (used in) financing activities		29,669			(108,453	)		68			—		(78,716	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		2,653			(36,398	)		76			—		(33,669	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		657			77,453			168			—		78,278
CASH AND CASH EQUIVALENTS, END OF YEAR	$	3,310		$	41,055		$	244		$	—	$	44,609

As of

As of

September 30,

December 31,


2016

2015

(unaudited)

(in thousands)

Total Assets





Nevada

$
361,362

$
376,760

Louisiana

128,690

135,403

Eastern

848,463

883,344

Corporate

382,650

495,202

Eliminating entries (1)

(442,291)

(565,701)

Total

$
1,278,874

$
1,325,008

(1)  Reflects the following eliminations for the periods indicated:

Intercompany receivables/payables, inclusive of allocated interest

$
284,744

$
406,325

Net investment in Silver Legacy/Circus Reno

88,314

88,314

Net investment in and advances to Silver Legacy

56,500

56,500

Net investment in and advances to Eldorado Shreveport

7,733

8,482

Net investment in MTR

5,000

5,000

Reclass deferred tax assets against deferred tax liabilities


—


1,080

$
442,291

$
565,701

ITEM 2.

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

General

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

~~General~~

Eldorado Resorts, Inc. (“ERI” or the “Company”), a Nevada corporation, was formed in September 2013 to be the parent company following the merger of wholly-owned subsidiaries of the Company into Eldorado HoldCo LLC (“HoldCo”), a Nevada limited liability company formed in 2009 that is the parent company of Eldorado Resorts LLC (“Resorts”), and MTR Gaming Group, Inc. (“MTR Gaming”), a Delaware corporation incorporated in 1988 (the “Merger”). Effective upon the consummation of the Merger on September 19, 2014 (the “Merger Date”), MTR Gaming and HoldCo each became a wholly-owned subsidiary of ERI and, as a result of such transactions, Resorts became an indirect wholly-owned subsidiary of ERI.

Resorts owns and operates the Eldorado Resort Casino Reno, a premier hotel, casino and entertainment facility centrally located in downtown Reno, Nevada (“Eldorado Reno”), which opened for business in 1973. Resorts also owns Eldorado Resort Casino Shreveport (“Eldorado Shreveport”), a 403‑room all suite art deco‑style hotel and a tri‑level riverboat dockside casino complex situated on the Red River in Shreveport, Louisiana, which commenced operations under its previous owners in December 2000.

Prior to November 24, 2015 (the “Reno Acquisition Date”), Resorts owned a 48.1% interest in the joint venture (the “Silver Legacy Joint Venture”) which owns the Silver Legacy Resort Casino (“Silver Legacy”), a major themed hotel and casino situated between and seamlessly connected at the mezzanine level to the Eldorado Reno and Circus Reno, (collectively, the “Reno Tri-Properties”), a hotel and casino previously owned and operated by Galleon, Inc., an indirect, wholly-owned subsidiary of MGM Resorts International.

On the Reno Acquisition Date, Resorts consummated the acquisition of all of the assets and properties of Circus Circus Reno (“Circus Reno”) and the 50% membership interest in the Silver Legacy Joint Venture owned by Galleon, Inc. (collectively, the “Circus Reno/Silver Legacy Purchase” or the “Reno Acquisition”) pursuant to a Purchase and Sale Agreement, dated as of July 7, 2015 (the “Purchase Agreement”), entered into by certain of our subsidiaries with Circus Circus Casinos, Inc. and Galleon, Inc., each an affiliate of MGM Resorts International, with respect to the acquisition. On the Reno Acquisition Date, Resorts also exercised its right to acquire the 3.8% interest in Eldorado Limited Liability Company (“ELLC”) held by certain affiliates and shareholders of the Company. As a result of these transactions, ELLC and CC-Reno, LLC, a newly formed Nevada limited liability company, became wholly-owned subsidiaries of ERI, and Silver Legacy became an indirect wholly‑owned subsidiary of ERI.

MTR Gaming operates as a hospitality and gaming company with racetrack, gaming and hotel properties in West Virginia, Pennsylvania and Ohio. MTR Gaming, through its wholly-owned subsidiaries, owns and operates Mountaineer Casino, Racetrack & Resort in Chester, West Virginia (“Mountaineer”), Presque Isle Downs & Casino in Erie, Pennsylvania (“Presque Isle Downs”), and Eldorado Gaming Scioto Downs (“Scioto Downs”) in Columbus, Ohio. Scioto Downs, through its subsidiary, RacelineBet, Inc., also operates Racelinebet.com, a national account wagering service that offers online and telephone wagering on horse races as a marketing affiliate of TwinSpires.com, an affiliate of Churchill Downs, Inc.

~~Presentation of Financial Information~~

2013. ERI and its subsidiaries are collectively referred to as “we,” “us,” “our” or the “Company.” The Company acquired Mountaineer, Presque Isle Downs and Scioto Downs in September 2014 pursuant to a merger (the “MTR Merger”) with MTR Gaming Group, Inc. (“MTR Gaming”) and in November 2015 we acquired Circus Reno and the interests in the Silver Legacy that we did not own prior to such date (the “Reno Acquisition”).

Throughout the three and nine months ended September 30, 2017, ERI owned and operated the following properties:

Eldorado Resort Casino Reno (“Eldorado Reno”)—A 814-room hotel, casino and entertainment facility connected via an enclosed skywalk to Silver Legacy and Circus Reno located in downtown Reno, Nevada that includes 1,125 slot machines and 46 table games;

Silver Legacy Resort Casino (“Silver Legacy”)—A 1,711-room themed hotel and casino connected via an enclosed skywalk to Eldorado Reno and Circus Reno that includes 1,187 slot machines, 63 table games and a 13 table poker room;

Circus Circus Reno (“Circus Reno”)—A 1,571-room hotel-casino and entertainment complex connected via an enclosed skywalk to Eldorado Reno and Silver Legacy that includes 720 slot machines and 26 table games;

Eldorado Resort Casino Shreveport (“Eldorado Shreveport”)—A 403-room, all suite art deco-style hotel and tri-level riverboat dockside casino situated on the Red River in Shreveport, Louisiana that includes 1,397 slot machines, 52 table games and an eight table poker room;

Mountaineer Casino, Racetrack & Resort (“Mountaineer”)—A 357-room hotel, casino and entertainment facility and live thoroughbred horse racing located on the Ohio River at the northern tip of West Virginia’s northwestern panhandle that includes 1,505 slot machines, 36 table games and a 10 table poker room;

Eldorado Gaming Scioto Downs (“Scioto Downs”)—A modern “racino” offering 2,245 video lottery terminals (“VLT”), harness racing and a 118-room third party hotel connected to Scioto Downs located 15 minutes from downtown Columbus, Ohio.

In addition, on May 1, 2017, the Company consummated its acquisition of Isle of Capri Casinos, Inc. and acquired the following properties:

Lady Luck Casino—Black Hawk (“Lady Luck Black Hawk”)—A land-based casino across the intersection from Isle Casino Hotel in Black Hawk, Colorado, that includes 430 slot machines, 10 table games, five poker tables and a 164-room hotel with a parking structure connecting Isle Casino Hotel-Black Hawk and Lady Luck Casino-Black Hawk;

Isle Casino Racing Pompano Park (“Pompano”)—A casino and harness racing track on an approximately 223-acre owned site in Pompano Beach, Florida, that includes 1,459 slot machines and a 45 table poker room;

Isle Casino Bettendorf (“Bettendorf”)—A land-based single-level casino located off of Interstate 74 in Bettendorf, Iowa that includes 978 slot machines and 20 table games with two hotel towers with 509 hotel rooms;

Isle Casino Waterloo (“Waterloo”)—A single-level land-based casino in Waterloo, Iowa that includes 940 slot machines, 25 table games and a 194-room hotel;

Isle of Capri Casino Hotel Lake Charles (“Lake Charles”)—A gaming vessel on an approximately 19 acre site in Lake Charles, Louisiana, with 1,160 slot machines, 49 table games, including 13 poker tables and two hotels offering 493 rooms;

Isle of Capri Casino Lula (“Lula”)—Two dockside casinos in Lula, Mississippi with 879 slot machines and 20 table games, two on-site hotels with a total of 486 rooms and a 28-space RV Park;

Lady Luck Casino Vicksburg (“Vicksburg”)—A dockside casino in Vicksburg, Mississippi that includes 619 slot machines, nine table games and a hotel with a total of 89 rooms;

•

Isle of Capri Casino Boonville (“Boonville”)—A single-level dockside casino in Boonville, Missouri that includes 893 slot machines, 20 table games and a 140-room hotel;

Lady Luck Casino Caruthersville (“Caruthersville”)—A riverboat casino located along the Mississippi River in Caruthersville, Missouri that includes 513 slot machines and nine table games;

Isle of Capri Casino Kansas City (“Kansas City”)—A dockside casino located close to downtown Kansas City, Missouri offering 967 slot machines and 18 table games; and

Lady Luck Casino Nemacolin (“Nemacolin”)—A casino property located on the 2,000-acre Nemacolin Woodlands Resort in Western Pennsylvania that includes 600 slot machines and 28 table games.

Acquisition of Isle of Capri Casinos, Inc.

On May 1, 2017 (the “Isle Acquisition Date”), the Company completed its acquisition of Isle of Capri Casinos, Inc. pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) dated as of September 19, 2016 with Isle of Capri Casinos, Inc., a Delaware corporation (“Isle” or “Isle of Capri”), Eagle I Acquisition Corp., a Delaware corporation and a direct wholly-owned subsidiary of the Company, and Eagle II Acquisition Company LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of the Company (the “Isle Acquisition” or the “Isle Merger”). As a result of the Isle Merger, Isle became a wholly-owned subsidiary of ERI and, at the effective time of the Isle Merger, each outstanding share of Isle’s stock converted into the right to receive $23.00 in cash or 1.638 shares of ERI common stock (the “Stock Consideration”), at the election of the applicable Isle shareholder and subject to proration such that the outstanding shares of Isle common stock were exchanged for aggregate consideration comprised of 58% cash, or $552.0 million, and 42% ERI common stock, or 28.5 million newly issued shares of ERI common stock. The total purchase consideration was $1.93 billion.

In connection with the Isle Acquisition, the Company completed a debt financing transaction comprised of: (a) a senior secured credit facility in an aggregate principal amount of $1.75 billion with a (i) term loan facility of $1.45 billion and (ii) revolving credit facility of $300.0 million and (b) $375.0 million of senior unsecured notes. The proceeds of such borrowings were used (v ) to pay the cash portion of the consideration payable in the Isle Merger, (w) refinance all of Isle’s existing credit facilities, (x) redeem or otherwise repurchase all of Isle’s senior and senior subordinated notes, (y) refinance the Company’s existing credit facility and (z) pay transaction fees and expenses related to the foregoing.

The financial information included in this Item 2 for periods prior to the ~~Reno Acquisition Date~~Isle Merger are those of ~~the Company~~ERI and its ~~subsidiaries including Eldorado Reno, Eldorado Shreveport, MTR Gaming and its interest in the Silver Legacy Joint Venture.~~

subsidiaries. The presentation of information herein for periods prior to the ~~period~~Isle Merger and after the ~~Reno Acquisition Date is~~Isle Merger are not fully comparable because the results of operations for ~~Circus Reno~~Isle are not included for ~~the period~~periods prior to the ~~Reno Acquisition Date and the~~Isle Merger. Summary financial results of ~~operations~~Isle for the three and nine months ended January 22, 2017 are included in Isle’s Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission (‘‘SEC’’). In conjunction with the Isle Acquisition, Isle is no longer required to file quarterly and annual reports with the SEC, and terminated its registration on May 11, 2017.

Reportable Segments

The executive decision maker of our Company reviews operating results, assess performance and make decisions on a “significant market” basis. The Company’s management views each of its properties as an operating segment. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate, and their management and reporting structure. Prior to the Isle Acquisition, the Company’s principal operating activities occurred in three geographic regions: Nevada, Louisiana and parts of the ~~Silver Legacy Joint Venture were not consolidated prior to the Reno Acquisition Date.~~

~~Reportable Segments~~

eastern United States. The Company ~~has~~ aggregated its ~~operating segments~~operations into three reportable ~~segments: Eldorado Reno,~~ segments based on the similar characteristics of the operating segments within the regions in which they operated as follows:

Segment	Property	State
Nevada	Eldorado Reno	Nevada
	Silver Legacy	Nevada
	Circus Reno	Nevada

Louisiana	Eldorado Shreveport	Louisiana

Eastern	Presque Isle Downs	Pennsylvania
	Scioto Downs	Ohio
	Mountaineer	West Virginia

Segment	Property	State
West	Eldorado Reno	Nevada
	Silver Legacy	Nevada
	Circus Reno	Nevada
	Isle Black Hawk	Colorado
	Lady Luck Black Hawk	Colorado

Midwest	Waterloo	Iowa
	Bettendorf	Iowa
	Boonville	Missouri
	Cape Girardeau	Missouri
	Caruthersville	Missouri
	Kansas City	Missouri

South	Pompano	Florida
	Eldorado Shreveport	Louisiana
	Lula	Mississippi
	Vicksburg	Mississippi

East	Presque Isle Downs	Pennsylvania
	Nemacolin	Pennsylvania
	Scioto Downs	Ohio
	Mountaineer	West Virginia

Key Performance Metrics

Our primary source of revenue is generated by our gaming operations, but we use our hotels, restaurants, bars, entertainment, retail shops, racing and other services to attract customers to our properties. Our operating results are highly dependent on the volume of customers visiting and staying at our properties. Key performance metrics include volume indicators such as ~~Nevada, Eldorado Shreveport~~table games drop and slot handle, which refer to amounts wagered by our customers. The amount of volume we retain, which is not fully controllable by us, is recognized as ~~Louisiana,~~casino revenues and ~~Scioto Downs, Presque Isle Downs~~is referred to as our win or hold. In addition, hotel occupancy and ~~Mountaineer~~price per room designated by average daily rate (“ADR”) are key indicators for our hotel business. Our calculation of ADR consists of the average price of occupied

rooms per day including the impact of resort fees and complimentary rooms. Complimentary room rates are determined based on an analysis of retail or cash rates for each customer segment and each type of room product to estimate complimentary rates which are consistent with retail rates. Complimentary rates are reviewed at least annually and on an interim basis if there are significant changes in market conditions. Complimentary rooms are treated as ~~Eastern.~~

Significant Factors Impacting Financial Results

The following summary highlights the significant factors impacting our financial results for the three and nine months ended September 30, ~~2016~~2017 and ~~2015.~~2016.

Isle Acquisition – Our results of continuing operations for the three and nine months ended September 30, 2017 include incremental revenues and expenses for five months (May through September 2017) attributable to the twelve properties we acquired in the Isle Acquisition.

Acquisition charges related to the Isle Acquisition for legal, accounting, financial advisory services, severance, stock awards and other costs totaled $2.1 million and $89.2 million for the three and nine months ended September 30, 2017, respectively, and $0.1 million and $0.6 million for the three and nine months ended September 30, 2016.

·•

~~Isle of Capri Acquisition~~Debt Refinancing - On September 19, 2016, the Company and Isle of Capri Casinos, Inc., a Delaware corporation (“Isle” or “Isle of Capri”) entered into an agreement and Plan of Merger (the “Merger Agreement”), whereby the Company will acquire all of the outstanding shares of Isle of Capri for $23.00 in cash or 1.638 shares of Company common stock, at the election of each Isle of Capri stockholder (the “Isle Acquisition”). Elections are subject to proration and reallocation such that the outstanding shares of Isle common stock will be exchanged for aggregated consideration comprised of 58% cash and 42% Eldorado common stock. The consummation of the merger is subject to receipt of approval of the stockholders of the Company and Isle of Capri, the approval of applicable gaming authorities and other customary closing conditions, and is expected to be consummated in the second quarter of 2017. The waiting period under the Hart-Scott-Rodino Act (“HSR Act”) terminated on October 21, 2016. Eldorado has received committed financing for the transaction totaling $2.1 billion. Acquisition charges of $4.7 million, attributed to – In connection with the Isle Acquisition, are reported on the accompanying income statement related to legal, accounting, financial advisory services and other professional services incurred during the three and nine months ended September 30, 2016.

Upon completion of the Isle Acquisition, the Company will add 12 additional properties to its portfolio. On August 22, 2016, Isle entered into an agreement to sell Isle of Capri Casino Hotel Lake Charles for aggregate consideration of $134.5 million, subject to certain adjustments. On October 13, 2016, Isle entered into an agreement to sell Lady Luck Casino Marquette for cash consideration of approximately $40.0 million, subject to certain adjustments.

~~Circus Reno/Silver Legacy Purchase~~ ~~- Pursuant to the Purchase Agreement in November 2015, ERI paid $80.2 million in cash,~~we completed a debt financing transaction comprised ~~of the $72.5 million purchase price plus $7.7 million in estimated working capital adjustments and the assumption of the amounts outstanding under Silver Legacy’s~~of: (a) a senior secured credit facility in an aggregate principal amount of $1.75 billion with a (i) term loan ~~facility. An additional $0.5 million was paid subsequent to the Reno Acquisition Date representing the final working capital adjustment. ERI funded the purchase price for the Reno Acquisition~~facility of $1.45 billion and ~~repaid the borrowings outstanding under the Silver Legacy~~(ii) revolving credit facility ~~using a~~of $300.0 million and (b) $375.0 million of senior unsecured notes. The proceeds of such borrowings were used (v ) to pay the cash portion of the ~~proceeds from~~consideration payable in the ~~sale~~Isle Merger, (w) refinance all of ~~its Senior Notes, borrowings under its revolving~~Isle’s existing credit facilities, (x) redeem or otherwise repurchase all of Isle’s senior and senior subordinated notes, (y) refinance our existing credit facility and ~~cash on hand. Information presented prior to the Reno Acquisition Date does not reflect the results of operations for Circus Reno,~~(z) pay transaction fees and ~~only includes our interest in the Silver Legacy Joint Venture prior to the Reno Acquisition as an investment in an unconsolidated affiliate. As a result, incremental increases in revenues and~~ expenses attributable to the addition of Circus Reno and Silver Legacy are reflected in our results of operations for the three and nine months ended September 30, 2016. The Company recognized acquisition charges of $0.4 million and $0.7 million for the three and nine months ended September 30, 2015, respectively. The Company also recognized $0.1 million and $0.6 million in acquisition charges related to the ~~Reno Acquisition~~foregoing. We recognized a loss totaling $27.3 million for ~~the three and nine months ended September 30, 2016, respectively.~~

~~Execution of Cost Savings Program~~ – Starting in the second quarter of 2015, we identified several areas to improve property level and consolidated margins through operating and cost efficiencies and exercising financial discipline throughout the Company without impacting the player experience. In addition to cost savings relating to duplicative executive compensation, legal and accounting fees and other corporate expenses that have been eliminated as a result of the Merger, we have achieved savings in marketing, food and beverage costs, selling, general and administrative expenses, and other operating departments as a result of operating efficiencies and purchasing power of the combined MTR and Eldorado organization. After a full year of the cost savings program, we exceeded our target of $10 million on an annual basis coming in saving just over $12.5 million. These cost savings, which began in the second quarter of 2015, were reflected in our operating results for the nine months ended months ended September 30, 2016 primarily due to year over year improvements during the first quarter of 2016 compared to the same prior year period. Moreover, in addition to generating incremental revenues, we have realized, and expect additional savings in 2016 resulting from cost synergies across the Reno Tri-Properties as a result of the Reno Acquisition.

~~Refinancing and Reduction in Interest Expense~~ – In July 2015, we successfully refinanced all of our indebtedness, including the debt we assumed in the Merger in 2014. We issued $375.0 million in Senior Notes and entered into a new $425.0 million term loan and a new $150.0 million revolving credit facility, with the net proceeds utilized to, among other things, purchase our Resorts senior secured notes and MTR second lien notes. The refinancing reduced our annualized cash interest payments by approximately $35.0 million. Moreover, as a result of significant reductions in our outstanding indebtedness totaling $77.7 million during the nine months ended September 30, ~~2016,we realized additional savings in interest expense. See~~2017 as a result of the debt refinancing transaction (See “Liquidity and Capital Resources” for more information related to ~~our 2015 refinancing~~the debt refinancing).

On September 13, 2017, we issued an additional $500 million in aggregate principal amount of 6% Senior Notes at an issue price equal to 105.5% of the principal amount. We used the proceeds of the offering to repay all of the outstanding borrowings under the New Revolving Credit Facility totaling $78.0 million and used the remainder to repay outstanding borrowings totaling $444.5 million under the New Term Loan plus related accrued interest. We recognized a loss of $10.0 million for the three months ended September 30, 2017 as a result of the issuance of additional debt and retirement of existing debt.

~~West Virginia Smoking Ban~~ –On August 26, 2014, the Board of Health of Hancock County, West Virginia adopted and approved the Clean Air Regulation Act of 2014 (“Regulation”), which became effective July 1, 2015. The Regulation bans smoking in public places in Hancock County including Mountaineer. To comply with the Regulation upon its effective date, Mountaineer built a 9,300 square foot smoking pavilion which opened on July 1, 2015. During the nine months ended September 30, 2016, we added 61 slot machines bringing our total to 322 slot machines and four table games located in the smoking patio. Notwithstanding our efforts to mitigate the impact of the smoking ban, the Regulation had a negative impact on our business and results of operations at Mountaineer.

Severe Weather – During the third quarter of 2017, Hurricanes Harvey and Irma negatively impacted our South region, specifically our Pompano and Eldorado Shreveport properties, and made travel to those properties impossible or difficult. While Pompano did not sustain any major physical damage, we incurred incremental expenses as a result of the storms and were forced to close the casino for four days and experienced disruption to our business for a longer period of time.

Our West segment’s operations are subject to seasonal variation, with our lowest business volume generally occurring during the winter months. The northern Nevada region experienced record snowfall and severe weather conditions, including major snow storms during eleven of the fourteen weekends in the 2017 first quarter, making travel to Reno from northern California, our main feeder market, difficult or impossible due to road closures. As a result, there was a significant adverse effect on business levels, especially hotel occupancy and gaming volume, and our operating performance for the nine months ended September 30, 2017 compared to the same prior year period.

~~Property Enhancement Capital Expenditures~~– During the fourth quarter of 2015, we began to realize the benefits of our property enhancement initiatives which targeted product and service offering upgrades across our entire portfolio. The completion of these initiatives by year-end 2015 helped drive increased volume to our properties and continues to be well-received by our customers. Most notably, the opening of ~~The Brew Brothers~~, a restaurant and microbrewery at Scioto Downs, provided a meaningful increase in traffic and video lottery terminals (VLT) revenues subsequent to its opening in October 2015. Additionally, we completed a $5.0 million five-phase design and facility enhancement program at Presque Isle Downs that added a new casino center bar, an improved high limit gaming area and new slot product. In 2015, over 200 rooms were remodeled at Eldorado Reno and we completely refurbished the exterior of the Eldorado Shreveport.

Execution of Cost Savings Program – We continue to identify areas to improve property level and consolidated margins through operating and cost efficiencies and exercising financial discipline throughout the Company without impacting the guest experience. In addition to cost savings relating to duplicative executive compensation, legal and accounting fees and other corporate expenses that have ~~continued our property~~been eliminated as a result of the MTR Merger, Reno Acquisition and Isle Acquisition, we have achieved savings in marketing, food and beverage costs, selling, general and administrative expenses, and other operating departments as a result of operating efficiencies and purchasing power of the combined Eldorado organization.

Property Enhancement Capital Expenditures – Property enhancement initiatives ~~in 2016.~~continued throughout 2016 and into 2017. At Presque Isle Downs, we opened a The Brew Brothers in May 2016 and an escalator in July to improve traffic flow to the restaurant. OnIn June ~~30,~~ 2016, we opened a second smoking patio at Scioto Downs which features a casino bar and 119 new VLTs. ~~Construction continues on the 118-room Hampton Inn Hotel at Scioto Downs and is expected to open in the first quarter of 2017.~~ In Shreveport, we ~~are remodeling~~completed the remodel of the second floor of the casino ~~which is expected to be completed~~ in ~~the fourth quarter of~~December 2016 and ~~expect to add~~added approximately 20 new slot ~~machines by the end of 2016.~~machines. We ~~continue to evaluate~~improved the offerings at Mountaineer with a goal of maintaining a positive customer experience while right sizing the property to maximize free cash flow and operational efficiencies.

New ~~York style pizza restaurant.~~

~~New~~ Regulation– Effective January 1, 2016, the Ohio Lottery Commission enacted new regulation which resulted in the establishment of a $1.0 million progressive slot liability and a corresponding decrease in net slot win for the nine months ended September 30, 2016. The changes are non-cash and related to jackpots established in prior years. The net non-cash impact to Scioto Down’s operating income was $0.6 million for the nine months ended September 30, 2016.

~~Table of Contents~~

Results of Operations

The following table highlights the results of our operations (dollars in thousands):


	Three Months Ended						Nine Months Ended						Three Months Ended							Nine Months Ended
	September 30,						September 30,						September 30,							September 30,
	2016		2015		% Change		2016		2015		% Change		2017		2016		% Change			2017			2016		% Change
Net revenues	$	241,565	$	183,540	31.6	%	$	686,446	$	533,624	28.6	%	$	444,874	$	241,565		84.2	%	$	1,000,978		$	686,446		45.8		%
Operating income		28,109		24,092	16.7	%		76,026		59,235	28.3	%		78,924		28,109		180.8	%		60,955			76,026		(19.8	)	%
Net income		9,682		5,399	79.3	%		23,842		4,030	491.6	%
Net income (loss)														29,554		9,682		205.2	%		(15,754	)		23,842		(166.1	)	%

Operating ~~Results.~~Results ~~Net~~. Isle contributed $201.1 million and $335.3 million of net revenues for the three months ended September 30, 2017 and the period from the Isle Acquisition Date through September 30, 2017, respectively, consisting primarily of gaming revenues. Including the incremental Isle net operating revenues, net revenues increased ~~31.6%~~84.2% and ~~28.6%~~45.8%, respectively, for the three and nine months ended September 30, 2016, respectively, over the same prior year periods primarily due to incremental revenues attributable to the aforementioned Reno Acquisition. These increases in net revenues were partially offset by decreases in net revenues in the Louisiana and Eastern segments.

~~Operating income increased 16.7% and 28.3% for the three and nine months ended September 30, 2016, respectively,~~2017 compared to the same prior year ~~periods due to higher overall revenues combined with improved operating margins associated with company-wide cost savings initiatives and property enhancement capital expenditures.~~periods.

~~Net~~Operating income increased ~~79.3% and 491.6%~~180.8% for the three ~~and nine~~ months ended September 30, ~~2016, respectively,~~2017 compared to the same prior year ~~periods as a result~~period. This increase was primarily due to $39.0 million of operating income contributed by Isle for the three months ended September 30, 2017. Operating income decreased 19.8% for the nine months ended September 30, 2017 compared to the same prior year period. This decrease was primarily due to acquisition charges related to the Isle Acquisition totaling $89.2 million for the nine months ended September 30, 2017 and was partially offset by $46.3 million of operating income contributed by Isle for the period from the Isle Acquisition Date through September 30, 2017.

Net income increased 205.2% for the three months ended September 30, 2017 compared to the same prior year period due to the same factors impacting operating income. ~~For~~This increase was partially offset by higher interest expense associated with additional debt in conjunction with the ~~three~~Isle Acquisition, the loss on the early retirement of debt recorded during the current period and by the recorded income tax provision of $11.6 million. Net income decreased 166.1% for the nine months ended September 30, ~~2016, net income was also favorably impacted by decreases in interest expense totaling $1.9~~2017 compared to the same prior year period primarily due to $89.2 million and $10.6 million, respectively, resulting from our refinancing in July 2015 combined with significant debt reductions. This growth in net income for the three and nine months ended September 30, 2016 was partially offset byof acquisition charges ~~of $4.8 million and $5.3 million, respectively, primarily related to~~associated with the Isle Acquisition ~~a $0.8 million~~combined with higher interest expense and the loss on the ~~sale~~early retirement of debt, offsetting incremental operating income and ~~disposal~~income tax benefit of ~~a building and equipment related to the closure of a detached fitness center facility at Mountaineer and incremental depreciation associated with assets purchased in the Reno Acquisition.~~$27.6 million.

Net Revenues and Operating Income (Loss)

The following table highlights our net revenues and operating income (loss) by reportable segment (dollars in thousands):

Net Revenues for the Three Months Ended September 30,

Net Revenues for the Nine Months Ended September 30,

2016

2015

2016

2015

Nevada

$
89,676

$
29,002

$
246,608

$
79,961

Louisiana

33,984

34,651

100,514

103,919

Eastern

117,905

119,887

339,324

349,744

Corporate

—

—

—

—

Total

$
241,565

$
183,540

$
686,446

$
533,624

Operating Income (Loss) for the Three Months Ended September 30,

Operating Income (Loss) for the Nine Months Ended September 30,

2016

2015

2016

2015

Nevada

$
15,606

$
6,339

$
34,825

$
10,497

Louisiana

6,703

5,801

18,746

17,056

Eastern

15,102

16,152

43,767

44,467

Corporate

(9,302)

(4,200)

(21,312)

(12,785)

Total

$
28,109

$
24,092

$
76,026

$
59,235

	Net Revenues for the Three Months Ended September 30,						Net Revenues for the Nine Months Ended September 30,
	2017			2016			2017			2016
West	$	132,775		$	89,676		$	293,528		$	246,608
Midwest		103,510			—			171,015			—
South		81,696			33,984			183,425			100,514
East		126,720			117,905			352,644			339,324
Corporate		173			—			366			—
Total	$	444,874		$	241,565		$	1,000,978		$	686,446

	Operating Income (Loss) for the Three Months Ended September 30,						Operating Income (Loss) for the Nine Months Ended September 30,
	2017			2016			2017			2016
West	$	32,556		$	15,606		$	50,507		$	34,825
Midwest		24,261			—			39,669			—
South		11,293			6,703			28,280			18,746
East		21,140			15,102			54,333			43,767
Corporate		(10,326	)		(9,302	)		(111,834	)		(21,312	)
Total	$	78,924		$	28,109		$	60,955		$	76,026

~~Table of Contents~~

Three Months Ended September 30, ~~2016~~2017 Compared to the Three Months Ended September 30, ~~2015~~2016

Net revenues and operating expenses were as follows (dollars in thousands):


	Three Months Ended								Three Months Ended
	September 30,								September 30,
	2016		2015			Variance	Percent		2017			2016			Variance			Percent
Revenues:
Gaming and Pari-Mutuel Commissions:
Nevada	$	48,067	$	17,313	$	30,754	177.6	%
Louisiana		31,505		32,005		(500)	(1.6)	%
Eastern		108,559		110,820		(2,261)	(2.0)	%
West									$	83,166		$	48,067		$	35,099			73.0		%
Midwest										96,330			—			96,330			100.0		%
South										76,279			31,505			44,774			142.1		%
East										117,317			108,559			8,758			8.1		%
Total Gaming and Pari-Mutuel Commissions		188,131		160,138		27,993	17.5	%		373,092			188,131			184,961			98.3		%
Non-gaming:
Nevada		54,126		16,179		37,947	234.5	%
Louisiana		9,810		9,160		650	7.1	%
Eastern		14,189		14,059		130	0.9	%
West										67,185			54,126			13,059			24.1		%
Midwest										14,161			—			14,161			100.0		%
South										14,261			9,810			4,451			45.4		%
East										14,164			14,189			(25	)		(0.2	)	%
Corporate										173			—			173			100.0		%
Total Non-gaming		78,125		39,398		38,727	98.3	%		109,944			78,125			31,819			40.7		%
Total Gross Revenues		266,256		199,536		66,720	33.4	%		483,036			266,256			216,780			81.4		%
Promotional allowances:
Nevada		(12,517)		(4,490)		8,027	178.8	%
Louisiana		(7,331)		(6,514)		817	12.5	%
Eastern		(4,843)		(4,992)		(149)	(3.0)	%
West										(17,576	)		(12,517	)		5,059			40.4		%
Midwest										(6,981	)		—			6,981			100.0		%
South										(8,844	)		(7,331	)		1,513			20.6		%
East										(4,761	)		(4,843	)		(82	)		(1.7	)	%
Total Promotional Allowances		(24,691)		(15,996)		8,695	54.4	%		(38,162	)		(24,691	)		13,471			54.6		%
Total Net Revenues		241,565		183,540		58,025	31.6	%		444,874			241,565			203,309			84.2		%
Expenses:
Gaming and Pari-Mutuel Commissions:
Nevada		21,536		6,762		14,774	218.5	%
Louisiana		17,143		17,795		(652)	(3.7)	%
Eastern		68,099		69,466		(1,367)	(2.0)	%
West										33,650			21,536			12,114			56.3		%
Midwest										42,681			—			42,681			100.0		%
South										39,243			17,143			22,100			128.9		%
East										73,817			68,099			5,718			8.4		%
Total Gaming and Pari-Mutuel Commissions		106,778		94,023		12,755	13.6	%		189,391			106,778			82,613			77.4		%
Non-gaming
Nevada		25,862		8,982		16,880	187.9	%
Louisiana		1,762		2,061		(299)	(14.5)	%
Eastern		8,676		7,837		839	10.7	%
West										29,317			25,862			3,455			13.4		%
Midwest										4,667			—			4,667			100.0		%
South										4,450			1,762			2,688			152.6		%
East										5,953			8,676			(2,723	)		(31.4	)	%
Total Non-gaming		36,300		18,880		17,420	92.3	%		44,387			36,300			8,087			22.3		%

Marketing and promotions		11,323		7,816		3,507	44.9	%		24,634			11,323			13,311			117.6		%
General and administrative		34,094		23,285		10,809	46.4	%		68,585			34,094			34,491			101.2		%
Corporate		4,426		3,652		774	21.2	%		7,718			4,426			3,292			74.4		%
Depreciation and amortization		15,810		13,954		1,856	13.3	%		29,122			15,810			13,312			84.2		%
Total Operating Expenses	$	208,731	$	161,610	$	47,121	29.2	%	$	363,837		$	208,731		$	155,106			74.3		%

~~quarter~~three months ended September 30, 2017 compared to the same ~~2015~~prior year period. The West segment increased for the three months ended September 30, 2017 compared to the same prior year period principally due to higher hotel, food and beverage revenues as a result of increased visitor traffic and benefitted from the Reno properties’ capital improvements including renovated hotel rooms and new food, beverage and entertainment offerings. The South segment decreased in non-gaming revenues for the three months ended September 30, 2017 compared to the same prior year period primarily due to decreased food and beverage revenues associated with revisions to complimentary food offers. The East segment decreased for the ~~Reno Acquisition. The Louisiana segment reported a 7.1% increase in non-gaming revenues during the third quarter~~three months ended September 30, 2017 compared to the same ~~2015~~prior year period ~~mainly due to increased beverage revenues. The Eastern segment posted a 0.9% increase~~ in non-gaming revenues primarily due to ~~increased~~decreased food and beverage revenues ~~at Scioto Downs related to the opening of~~ ~~TheBrew Brothers~~ ~~in October 2015 partially offset by declines at Mountaineer~~ resulting from ~~strategic changes~~reductions in ~~our promotional offers along with additional volume declines at Mountaineer associated with~~complimentary food offerings and the ~~smoking ban impact.~~ consolidation of restaurants in an effort to maximize capacity utilization.

Promotional ~~Allowances.~~Allowances. Promotional allowances, expressed as a percentage of gaming revenues and pari-mutuel commissions, ~~increased~~decreased to ~~13.1%~~10.2% for the three months ended September 30, ~~2016~~2017 compared to ~~10.0% in~~13.1% for the same ~~2015~~prior year period. ~~Nevada~~This decline was primarily due to strategic revisions to reduce unprofitable promotional offers across all segments combined with the incremental revenues contributed by the Isle properties which historically have lower promotional allowances as a percentage of gaming ~~revenues, increased slightly to 26.0%~~revenues.

Gaming Expenses and Pari-Mutuel Commissions. Isle contributed $88.5 million of gaming expenses and pari-mutuel commissions for the three months ended September 30, ~~2016 compared to 25.9%~~2017 resulting in an increase of 77.4% in gaming expenses and pari-mutuel commissions over the same ~~2015~~prior year period. ~~Louisiana promotional allowances, as a percentage of~~

Excluding incremental Isle gaming ~~revenues, increased to 23.3%~~expenses and pari-mutuel commissions, gaming expenses and pari-mutuel commissions decreased 5.5% for the three months ended September 30, ~~2016 from 20.4%~~2017 compared to the same prior year period primarily due to declines in gaming volume in the ~~same 2015 period mainly due~~South and East segments combined with savings initiatives targeted at reducing variable expenses along with continued synergies related to ~~higher complimentary beverage revenues. Eastern promotional allowances~~the integration of the Tri-Properties in the West segment. Additionally, successful efforts to control costs and maximize departmental profit across all segments also drove the decline in expenses during the current period.

Non-gaming Expenses. Isle contributed $9.9 million of non-gaming expenses for the three months ended September 30, ~~2016 remained at 4.5% as a percentage~~2017 resulting in an increase of 22.3% over the ~~segment’s gaming revenues and pari-mutuel commissions.~~same prior year period.

~~Gaming Expenses and Pari-Mutuel Commissions. Nevada gaming~~Excluding incremental Isle non-gaming expenses, ~~increased $14.8 million~~non-gaming expenses decreased 5.5% for the three months ended September 30, ~~2016~~2017 compared to the same 2015 period primarily due to incremental gaming expenses generated as a result of the Reno Acquisition. Louisiana gaming expenses, including gaming taxes, decreased 3.7% during the third quarter compared to the same 2015 period in conjunction with gaming revenues combined with efforts to reduce variable operating costs. The Eastern segment gaming expenses and pari-mutuel commissions decreased 2.0% for the three months ended September 30, 2016 compared to the same 2015 period primarily due lower gaming taxes at Mountaineer in conjunction with decreased gaming revenues.

~~Non-gaming Expenses. Non-gaming expenses increased $17.4 million for the three months ended September 30, 2016 compared to the same 2015~~prior year period. ~~This growth was driven by higher Nevada non-gaming expenses which increased $16.9 million due to incremental~~Increased expenses associated with higher non-gaming revenues and hotel occupancy in the ~~Reno Acquisition. Non-gaming~~West segment were offset by lower non-gaming expenses in ~~Louisiana declined 14.5% resulting from successful efforts~~the South and East segments. Additionally, the growth in hotel ADR in the West segment contributed to ~~reduce costs, while the Eastern segment increased 10.7% during the three months ended September 30, 2016 compared to the same 2015 period primarily due to the addition of~~ ~~The Brew Brothers~~ ~~at Scioto Downs in October 2015.~~improved non-gaming margins.

Marketing and Promotions ~~Expenses.~~Expenses ~~Consolidated~~. Isle contributed $12.1 million of marketing and promotions expense increased 44.9% for the three months ended September 30, 2016 compared to the same 2015 period. This increase was primarily attributable to incremental expenses in the Nevada segment associated with the Reno Acquisition and the Eastern segment offset by declines in the Louisiana segment.

~~General and Administrative Expenses.~~ Total general and administrative expenses increased 46.4% for the three months ended September 30, 2016 compared to the same 2015 period primarily due to incremental expenses in the Nevada segment associated with the Reno Acquisition and increases in the Eastern segment offset by declines in the Louisiana segment due to continued efforts to decrease variable expenses.

~~Corporate Expenses.~~ Corporate expenses totaled $4.4 million for the three months ended September 30, 2016 compared to $3.7 million for the same 2015 period. This increase was partially due to higher payroll related expenditures at the corporate level subsequent to the Reno Acquisition in addition to an executive team restructuring that took place during the first quarter of 2016, which resulted in the reallocation of property executive management to corporate in order to more fully utilize their skills across defined regions. Additionally, stock compensation expense was higher during the third quarter compared to the same 2015 period due to the Company’s three year vesting schedule resulting in two years of grants versus one year of grants in the same 2015 period and accelerated vesting of restricted stock units associated with management changes at Mountaineer that occurred during the current quarter.

~~Depreciation and Amortization Expense.~~ Total depreciation and amortization expense increased 13.3% for the three months ended September 30, 2016 compared to the same 2015 period mainly due to additional depreciation expense associated with acquired assets in conjunction with the Reno Acquisition. The Nevada, Louisiana and Eastern segments contributed $4.9 million, $2.0 million and $8.8 million, respectively, of depreciation and amortization expense for the three months ended September 30, ~~2016~~2017 resulting in an increase of 117.6% over the same prior year period.

Excluding incremental Isle marketing and promotions expenses, consolidated marketing and promotions expense increased 10.6% for the three months ended September 30, 2017 compared to ~~$2.0~~the same prior year period. This increase was primarily attributable to increased expenses resulting from higher internet advertising spend, new television media production promoting new product offerings in the Reno market and a shift in marketing spend to targeted direct mail and promotional offers across all segments. Additionally, marketing promotional costs associated with casino initiatives are charged to this category to provide consistency among properties following the Isle Acquisition.

General and Administrative Expenses. Isle contributed $35.5 million ~~$1.9 million~~of general and ~~$10.0 million~~administrative expense for the three months ended September 30, 2017 resulting in an increase of 101.2% over the same prior year period.

Excluding incremental Isle general and administrative expenses, consolidated general and administrative expenses decreased 3.0% for the three months ended September 30, 2017 compared to the same 2016 period primarily due to savings in property and general liability insurance costs and payroll and related benefit cost savings programs across all segments.

Corporate Expenses. For the three months ended September 30, 2017 compared to the same prior year period, corporate expenses increased primarily due to payroll and other expenses associated with additional corporate costs driven by growth related to the recent Isle Acquisition. Additionally, corporate costs rose as a result of higher stock compensation expense for the three months ended September 30, 2017 compared to the same prior year period due to the three year vesting schedule associated with our long-term incentive plan established in 2015 resulting in three years of grants and related expense in the current period versus two years of grants and related expense in the same ~~2015~~prior year period.

Depreciation and Amortization Expense. Isle contributed $14.9 million of depreciation expense for the three months ended September 30, 2017 resulting in an increase of 84.2% over the same prior year period.

Excluding incremental Isle depreciation and amortization expense, depreciation and amortization expense decreased 13.5% for the three months ended September 30, 2017 compared to the same prior year period ~~respectively.~~

mainly due to lower depreciation in all segments due to assets becoming fully depreciated.

Nine ~~months~~Months Ended September 30, ~~2016~~2017 Compared to the Nine ~~months~~Months Ended September 30, ~~2015~~2016

Net revenues and operating expenses were as follows (dollars in thousands):


	Nine Months Ended								Nine Months Ended
	September 30,								September 30,
	2016		2015			Variance	Percent		2017			2016			Variance			Percent
Revenues:
Gaming and Pari-Mutuel Commissions:
Nevada	$	132,480	$	48,431	$	84,049	173.5	%
Louisiana		92,702		95,729		(3,027)	(3.2)	%
Eastern		314,063		324,689		(10,626)	(3.3)	%
West									$	178,390		$	132,480		$	45,910			34.7		%
Midwest										159,010			—			159,010			100.0		%
South										170,712			92,702			78,010			84.2		%
East										327,666			314,063			13,603			4.3		%
Total Gaming and Pari-Mutuel Commissions		539,245		468,849		70,396	15.0	%		835,778			539,245			296,533			55.0		%
Non-gaming:
Nevada		148,475		43,757		104,718	239.3	%
Louisiana		28,801		28,184		617	2.2	%
Eastern		39,296		39,911		(615)	(1.5)	%
West										155,417			148,475			6,942			4.7		%
Midwest										23,693			—			23,693			100.0		%
South										35,758			28,801			6,957			24.2		%
East										37,742			39,296			(1,554	)		(4.0	)	%
Corporate										366			—			366			100.0		%
Total Non-gaming		216,572		111,852		104,720	93.6	%		252,976			216,572			36,404			16.8		%
Total Gross Revenues		755,817		580,701		175,116	30.2	%		1,088,754			755,817			332,937			44.0		%
Promotional allowances:
Nevada		(34,347)		(12,227)		22,120	180.9	%
Louisiana		(20,989)		(19,994)		995	5.0	%
Eastern		(14,035)		(14,856)		(821)	(5.5)	%
West										(40,279	)		(34,347	)		5,932			17.3		%
Midwest										(11,688	)		—			11,688			100.0		%
South										(23,045	)		(20,989	)		2,056			9.8		%
East										(12,764	)		(14,035	)		(1,271	)		(9.1	)	%
Total Promotional Allowances		(69,371)		(47,077)		22,294	47.4	%		(87,776	)		(69,371	)		18,405			26.5		%
Total Net Revenues		686,446		533,624		152,822	28.6	%		1,000,978			686,446			314,532			45.8		%
Expenses:
Gaming and Pari-Mutuel Commissions:
Nevada		61,196		20,447		40,749	199.3	%
Louisiana		50,585		53,241		(2,656)	(5.0)	%
Eastern		195,888		203,008		(7,120)	(3.5)	%
West										75,393			61,196			14,197			23.2		%
Midwest										70,561			—			70,561			100.0		%
South										88,577			50,585			37,992			75.1		%
East										203,805			195,888			7,917			4.0		%
Total Gaming and Pari-Mutuel Commissions		307,669		276,696		30,973	11.2	%		438,336			307,669			130,667			42.5		%
Non-gaming
Nevada		75,760		25,582		50,178	196.1	%
Louisiana		5,482		6,099		(617)	(10.1)	%
Eastern		23,369		22,059		1,310	5.9	%
West										74,815			75,760			(945	)		(1.2	)	%
Midwest										7,779			—			7,779			100.0		%
South										10,184			5,482			4,702			85.8		%
East										17,389			23,369			(5,980	)		(25.6	)	%
Total Non-gaming		104,611		53,740		50,871	94.7	%		110,167			104,611			5,556			5.3		%

Marketing and promotions		30,664		22,321		8,343	37.4	%		54,845			30,664			24,181			78.9		%
General and administrative		98,129		69,882		28,247	40.4	%		155,778			98,129			57,649			58.7		%
Corporate		15,684		11,713		3,971	33.9	%		21,734			15,684			6,050			38.6		%
Depreciation and amortization		47,597		42,454		5,143	12.1	%		69,635			47,597			22,038			46.3		%
Total Operating Expenses	$	604,354	$	476,806	$	127,548	26.8	%	$	850,495		$	604,354		$	246,141			40.7		%

~~Non-gaming Revenues.~~ Non-gaming revenues increased $104.7 million for the nine months ended September 30, 2016 compared to the same 2015 period which were driven by incremental non-gaming revenues consisting of food, beverage, hotel, entertainment, retail and other revenues in the Nevadacurrent year. The South segment ~~primarily as a result of the Reno Acquisition combined with an increase in non-gaming revenues at Eldorado Reno. The Louisiana segment reported an increase of 2.2%~~decreased in non-gaming revenues for the nine months ended September 30, ~~2016~~2017 compared to the same ~~2015~~prior year period ~~mainly~~primarily due to ~~higher~~decreased food and beverage ~~revenues. The Eastern segment posted a decrease in non-gaming~~ revenues ~~primarily due to the declines at Mountaineer and Presque Isle Downs resulting from strategic changes in our promotional offers along with additional volume declines at Mountaineer~~ associated with revisions to marketing strategies resulting in fewer complimentary food offers and severe weather negatively impacting visitation in 2017. Non-gaming revenues in the ~~smoking ban impact. Additionally, Presque Isle Downs~~ ~~experienced a decline in non-gaming revenues due to minor construction disruption~~East segment decreased for the nine months ended September 30, ~~2016 related to the transformation of the old Clubhouse Restaurant into a new~~ ~~The Brew Brothers~~ ~~restaurant and installation of a brand new escalator going from the casino floor to the entrance of~~ ~~The Brew Brothers~~. ~~These decreases were partially offset by incremental non-gaming revenues at Scioto Downs for the nine months ended September 30, 2016~~2017 compared to the same ~~2015~~prior year period ~~attributable~~primarily due to decreased food and beverage revenues resulting from reductions in complimentary food offers and the ~~opening~~consolidation of ~~The Brew Brothers~~restaurants in ~~October 2015.~~ an effort to maximize capacity utilization.

Promotional ~~Allowances.~~Allowances. Promotional allowances, expressed as a percentage of gaming revenues and pari-mutuel commissions, ~~increased~~decreased to ~~12.9%~~10.5% for the nine months ended September 30, ~~2016~~2017 compared to ~~10.0% in~~12.9% for the same ~~2015~~prior year period. ~~Nevada~~This decline was primarily due to strategic revisions to promotional offers across all segments combined with the incremental revenues contributed by the Isle properties which historically have lower promotional allowances as a percentage of gaming ~~revenues, increased to 25.9%~~revenues.

Gaming Expenses and Pari-Mutuel Commissions. Isle contributed $148.3 million of gaming expenses and pari-mutuel commissions for the period from the Isle Acquisition Date through September 30, 2017 resulting in an increase of 42.5% over the same prior year period.

Excluding incremental Isle gaming expenses and pari-mutuel commissions, gaming expenses and pari-mutuel commissions decreased 5.7% for the nine months ended September 30, ~~2016 from 25.2%~~2017 compared to the same prior year period primarily due to decreases in gaming volume combined with savings initiatives targeted at reducing variable expenses along with continued synergies related to the integration of the Reno properties in the West segment. Additionally, successful efforts to control costs and maximize departmental profit across all segments also drove the decline in expenses during the current period.

Non-gaming Expenses. Isle contributed $16.5 million of non-gaming expenses for the period from the Isle Acquisition Date through September 30, 2017 resulting in an increase of 5.3% over the same ~~2015~~prior year period. ~~Louisiana promotional allowances, as a percentage of gaming revenues, increased to 22.6%~~

Excluding incremental Isle non-gaming expenses, non-gaming expenses decreased 10.5% for the nine months ended September 30, ~~2016 from 20.9% in~~2017 compared to the same ~~2015~~prior year period across all segments in conjunction with ~~higher beverage complimentaries. The Eastern segment’s promotional allowances~~non-gaming revenue declines.

Marketing and Promotions Expenses. Isle contributed $20.5 million of marketing and promotions expense for the period from the Isle Acquisition Date through September 30, 2017 resulting in an increase of 78.9% over the same prior year period.

Excluding incremental Isle marketing and promotions expenses, consolidated marketing and promotions expense increased 11.8% for the nine months ended September 30, ~~2016 declined to 4.5% as a percentage of the segment’s gaming revenues and pari-mutuel commissions~~2017 compared to ~~4.6% in~~ the same ~~2015~~prior year period. ~~Reductions~~This increase was primarily attributable to increased marketing promotional costs associated with casino initiatives that are charged to this category to provide consistency among properties following the Isle Acquisition. Additionally, expenses resulting from higher internet advertising spend, new television media production promoting new product offerings and a shift in ~~promotional allowances, as a percentage of gaming revenues~~marketing spend to targeted direct mail and ~~pari-mutuel commissions in the Eastern segment were due to continued strategic revisions to our~~ promotional offers across all segments.

General and Administrative Expenses. Isle contributed $59.8 million of marketing and promotions expense for the period from the Isle Acquisition Date through September 30, 2017 resulting in an ~~effort to~~ increase ~~margins and maximize profitability.~~of 58.7% over the same prior year period.

~~Gaming Expenses~~Excluding incremental Isle general and ~~Pari-Mutuel Commissions. Nevada gaming~~administrative expenses, ~~increased $40.7 million~~consolidated general and administrative expenses decreased 2.2% for the nine months ended September 30, ~~2016~~2017 compared to the same ~~2015~~2016 period. Savings associated with lower property and general liability insurance costs were partially offset by higher expenses associated with information systems maintenance contracts and professional services. These incremental costs resulted from information technology infrastructure projects targeted at consolidating systems for future savings and efficiencies.

Corporate Expenses. For the nine months ended September 30, 2017 compared to the same prior year period, ~~primarily~~corporate costs increased due to ~~incremental gaming~~payroll and other expenses ~~generated as a result of~~associated with additional corporate costs driven by growth related to the ~~Reno Acquisition along with an increase in gaming expenses at Eldorado Reno in conjunction with increased gaming revenues. Louisiana gaming expenses decreased 5.0%~~Isle acquisition and higher stock compensation expense for the nine months ended September 30, ~~2016~~2017 compared to the same 2015 period as a result of lower gaming revenues combined with efforts to reduce variable operating costs including payroll expenditures and slot participation fees. The Eastern segment’s gaming expenses and pari-mutuel commissions declined for the nine months ended September 30, 2016 compared to the same 2015 period primarily due lower gaming taxes at Mountaineer in conjunction with decreased gaming revenues.

~~Non-gaming Expenses~~. Non-gaming expenses increased $50.9 million for the nine months ended September 30, 2016 compared to the same 2015 period. This growth was driven by higher Nevada non-gaming expenses which increased $50.2 million due to incremental expenses associated with the Reno Acquisition. Non-gaming expenses in the Louisiana segment declined 10.1% mainly due to successful efforts to control costs while the Eastern segment’s non-gaming expenses increased 5.9% for the nine months ended September 30, 2016 compared to the same 2015 period as a result of incremental revenues generated by the addition of ~~The Brew Brothers~~ ~~at Scioto Downs in October 2015.~~

~~Marketing and Promotions Expenses.~~ Consolidated marketing and promotions expense increased 37.4% for the nine months ended September 30, 2016 compared to the same 2015 period. This increase was primarily attributable to incremental expenses in the Nevada segment associated with the Reno Acquisition offset by a decline in the Louisiana segment due to efforts to reduce advertising and promotional costs to maximize profitability. Marketing and promotions expense increased in the Eastern segment for the nine months ended September 30, 2016 compared to the same 2015 period resulting from additional spending related to sponsorships, marketing and promotional campaigns.

~~General and Administrative Expenses.~~ Total general and administrative expenses increased 40.4% for the nine months ended September 30, 2016 compared to the same 2015 period primarily due to incremental expenses in the Nevada segment resulting from the operation of the properties purchased in the Reno Acquisition offset by declines in the Louisiana and Eastern segments as the properties continued to decrease variable expenses via cost savings initiatives.

~~Corporate Expenses.~~ Corporate expenses totaled $15.7 million for the nine months ended September 30, 2016 compared to $11.7 million for the same 2015 period. This increase was partially due to higher payroll related expenditures at the corporate level subsequent to the Reno Acquisition in addition to an executive team restructuring that took place during the first quarter of 2016. This restructuring resulted in the reallocation of property executive management to corporate in order to more fully utilize their skills across defined regions. This increase was partially

offset by declines in general and administrative costs at the property level for the nine months ended September 30, 2016 compared to the same 2015 period. Additionally, $1.5 million of severance costs were recorded for the nine months ended September 30, 2016 along with $0.9 million of additional stock-based compensation expense as a result of severance related restricted stock units becoming fully vested during the current period. Also, stock compensation expense was higher for the nine months ended September 30, 2016 compared to the same 2015prior year period due to the ~~Company’s~~ three year vesting schedule associated with ~~the Company’s~~our long-term incentive plan established in 2015 resulting in ~~two~~three years of grants and related expense in the current period versus ~~one year~~two years of grants and related expense in the same ~~2015~~prior year period.

Depreciation and Amortization ~~Expense.~~Expense. Isle contributed $24.4 million of depreciation expense for the period from the Isle Acquisition Date through September 30, 2017 resulting in an increase of 46.3% over the same prior year period. ~~Total~~

Excluding incremental Isle depreciation and amortization expense, ~~increased 12.1%~~depreciation and amortization expense decreased 6.9% for the nine months ended September 30, ~~2016~~2017 compared to the same ~~2015~~prior year period mainly due to ~~additional~~lower depreciation ~~expense associated with acquired~~in all segments due to assets in conjunction with the Reno Acquisition. The Nevada, Louisiana and Eastern segments contributed $15.4 million, $5.9 million and $26.0 million, respectively, of depreciation and amortization expense for the nine months ended September 30, 2016 compared to $5.8 million, $5.7 million and $30.6 million in the same 2015 period, respectively. becoming fully depreciated.

Supplemental Unaudited Presentation of Consolidated Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA for the Three and Nine Months Ended September 30, ~~2016~~2017 and ~~2015~~2016

Adjusted EBITDA (defined below), a non GAAP financial measure, has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry and we believe that this non GAAP supplemental information will be helpful in understanding the Company’s ongoing operating results. Adjusted EBITDA represents operating income (loss) before depreciation and amortization, stock based compensation, ~~(gain) loss on the sale or disposal of property,~~transaction expenses, severance ~~expenses, equity in income of unconsolidated affiliate, acquisition charges, S-1 expenses~~expense and other ~~regulatory gaming assessments, including the impact of the change in regulatory reporting requirements, to the extent that such items existed in the periods presented.~~expenses. Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with US GAAP, is unaudited and should not be considered an alternative to, or more meaningful than, net income (loss) as an indicator of our operating performance. Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, debt principal repayments and certain regulatory gaming assessments, which can be significant. As a result, Adjusted EBITDA should not be considered as a measure of our liquidity. Other companies that provide EBITDA information may calculate EBITDA differently than we do. The definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements.

The following table summarizes our Adjusted EBITDA for our operating segments for the three and nine months ended September 30, ~~2016~~2017 and ~~2015,~~2016, in addition to reconciling Adjusted EBITDA to operating income (loss) in accordance with US GAAP (unaudited, in thousands):

Three Months Ended September 30, 2016

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation(3)

Transaction Expenses

Severance Expense

Other(4)

Adjusted EBITDA

Nevada

$
15,606

$
4,864

$
—

$
—

$
153

$
(12)

$
20,611

Louisiana

6,703

1,973

—

—

—

—

8,676

Eastern

15,102

8,847

—

—

263

(70)

24,142

Corporate

(9,302)

126

717

4,750

—

—

(3,709)

Total

$
28,109

$
15,810

$
717

$
4,750

$
416

$
(82)

$
49,720

Three Months Ended September 30, 2015

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Transaction Expenses

Severance Expense

Other(4)

Adjusted EBITDA

Nevada

$
6,339

$
1,959

$
—

$
—

$
—

$
(2,532)

$
5,766

Louisiana

5,801

1,902

—

—

—

(64)

7,639

Eastern

16,152

9,979

—

—

31

(83)

26,079

Corporate

(4,200)

114

334

380

65

54

(3,253)

Total Excluding Pre-Reno Acquisition

24,092

13,954

334

380

96

(2,625)

36,231

Pre-Reno Acquisition (1)

10,819

2,659

—

—

—

—

13,478

Total Including Pre-Reno Acquisition (5)

$
34,911

$
16,613

$
334

$
380

$
96

$
(2,625)

$
49,709

	Three Months Ended September 30, 2017
	Operating Income (Loss)			Depreciation and Amortization		Stock-Based Compensation		Transaction Expenses		Severance Expense		Other (6)			Adjusted EBITDA
West	$	32,556		$	7,654	$	67	$	—	$	59	$	43		$	40,379
Midwest		24,261			7,995		67		—		133		(9	)		32,447
South		11,293			6,055		29		—		220		5			17,602
East		21,140			6,732		5		—		64		(39	)		27,902
Corporate		(10,326	)		686		1,207		2,094		—		72			(6,267	)
Total	$	78,924		$	29,122	$	1,375	$	2,094	$	476	$	72		$	112,063

��

	Three Months Ended September 30, 2016
	Operating Income (Loss)			Depreciation and Amortization		Stock-Based Compensation		Transaction Expenses		Severance Expense		Other (6)			Adjusted EBITDA
Excluding Pre-Acquisition:
West	$	15,606		$	4,864	$	—	$	—	$	153	$	(12	)	$	20,611
Midwest		—			—		—		—		—		—			—
South		6,703			1,973		—		—		—		—			8,676
East		15,102			8,847		—		—		263		(70	)		24,142
Corporate		(9,302	)		126		717		4,750		—		—			(3,709	)
Total Excluding Pre-Acquisition	$	28,109		$	15,810	$	717	$	4,750	$	416	$	(82	)	$	49,720

Pre-Acquisition (3):
West	$	7,160		$	2,236	$	6	$	—	$	—	$	—		$	9,402
Midwest		22,536			10,058		41		—		—		(952	)		31,683
South		7,378			4,269		21		—		—		—			11,668
East		(917	)		694		—		—		—		—			(223	)
Corporate		(8,115	)		322		1,200		805		—		—			(5,788	)
Total Pre-Acquisition	$	28,042		$	17,579	$	1,268	$	805	$	—	$	(952	)	$	46,742

Including Pre-Acquisition:
West	$	22,766		$	7,100	$	6	$	—	$	153	$	(12	)	$	30,013
Midwest		22,536			10,058		41		—		—		(952	)		31,683
South		14,081			6,242		21		—		—		—			20,344
East		14,185			9,541		—		—		263		(70	)		23,919
Corporate		(17,417	)		448		1,917		5,555		—		—			(9,497	)
Total Including Pre-Acquisition (2)	$	56,151		$	33,389	$	1,985	$	5,555	$	416	$	(1,034	)	$	96,462

~~Table of Contents~~

	Nine Months Ended September 30, 2017
	Operating Income (Loss)			Depreciation and Amortization		Stock-Based Compensation		Transaction Expenses		Severance Expense		Other (6)			Adjusted EBITDA
Excluding Pre-Acquisition:
West	$	50,507		$	18,868	$	119	$	—	$	255	$	16		$	69,765
Midwest		39,669			12,961		153		—		135		(2	)		52,916
South		28,280			12,649		70		—		223		5			41,227
East		54,333			23,885		9		—		86		206			78,519
Corporate		(111,834	)		1,272		4,063		89,172		289		50			(16,988	)
Total Excluding Pre-Acquisition	$	60,955		$	69,635	$	4,414	$	89,172	$	988	$	275		$	225,439

Pre-Acquisition (1):
West	$	9,525		$	3,694	$	8	$	—	$	—	$	4		$	13,231
Midwest		34,819			11,952		51		—		5		29			46,856
South		19,165			5,694		26		—		—		33			24,918
East		(1,072	)		952		—		—		—		—			(120	)
Corporate		(8,811	)		371		1,631		286		549		(22	)		(5,996	)
Total Pre-Acquisition	$	53,626		$	22,663	$	1,716	$	286	$	554	$	44		$	78,889

Including Pre-Acquisition:
West	$	60,032		$	22,562	$	127	$	—	$	255	$	20		$	82,996
Midwest		74,488			24,913		204		—		140		27			99,772
South		47,445			18,343		96		—		223		38			66,145
East		53,261			24,837		9		—		86		206			78,399
Corporate		(120,645	)		1,643		5,694		89,458		838		28			(22,984	)
Total Including Pre-Acquisition (2)	$	114,581		$	92,298	$	6,130	$	89,458	$	1,542	$	319		$	304,328

Nine Months Ended September 30, 2016

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation(3)

Transaction Expenses

Severance Expense

Other(4)

Adjusted EBITDA

Nevada

$
34,825

$
15,373

$
—

$
—

$
153

$
168

$
50,519

Louisiana

18,746

5,883

—

—

—

(50)

24,579

Eastern (2)

43,767

25,990

—

—

264

1,066

71,087

Corporate

(21,312)

351

2,749

5,324

1,461

(49)

(11,476)

Total

$
76,026

$
47,597

$
2,749

$
5,324

$
1,878

$
1,135

$
134,709

Nine Months Ended September 30, 2015

Operating Income (Loss)

Depreciation and Amortization

Stock-Based Compensation

Transaction Expenses

Severance Expense

Other(4)

Adjusted EBITDA

Nevada

$
10,497

$
5,833

$
—

$
—

$
63

$
(3,125)

$
13,268

Louisiana

17,056

5,709

—

—

25

(63)

22,727

Eastern

44,467

30,611

—

—

127

(203)

75,002

Corporate

(12,785)

301

1,155

717

75

55

(10,482)

Total Excluding Pre-Reno Acquisition

59,235

42,454

1,155

717

290

(3,336)

100,515

Pre-Reno Acquisition (1)

18,603

9,100

—

—

20

—

27,723

Total Including Pre-Reno Acquisition (5)

$
77,838

$
51,554

$
1,155

$
717

$
310

$
(3,336)

$
128,238

	Nine Months Ended September 30, 2016
	Operating Income (Loss)			Depreciation and Amortization		Stock-Based Compensation		Transaction Expenses (5)		Severance Expense		Other (4)(6)			Adjusted EBITDA
Excluding Pre-Acquisition:
West	$	34,825		$	15,373	$	—	$	—	$	153	$	168		$	50,519
Midwest		—			—		—		—		—		—			—
South		18,746			5,883		—		—		—		(50	)		24,579
East (4)		43,767			25,990		—		—		264		1,066			71,087
Corporate		(21,312	)		351		2,749		5,324		1,461		(49	)		(11,476	)
Total Excluding Pre-Acquisition	$	76,026		$	47,597	$	2,749	$	5,324	$	1,878	$	1,135		$	134,709

Pre-Acquisition (3):
West	$	20,269		$	6,528	$	32	$	—	$	—	$	—		$	26,829
Midwest		65,403			29,034		129		—		—		(247	)		94,319
South		33,557			12,525		69		—		—		—			46,151
East		(3,460	)		2,861		—		—		—		—			(599	)
Corporate		(23,635	)		1,118		3,058		805		870		—			(17,784	)
Total Pre-Acquisition	$	92,134		$	52,066	$	3,288	$	805	$	870	$	(247	)	$	148,916

Including Pre-Acquisition:
West	$	55,094		$	21,901	$	32	$	—	$	153	$	168		$	77,348
Midwest		65,403			29,034		129		—		—		(247	)		94,319
South		52,303			18,408		69		—		—		(50	)		70,730
East (4)		40,307			28,851		—		—		264		1,066			70,488
Corporate		(44,947	)		1,469		5,807		6,129		2,331		(49	)		(29,260	)
Total Including Pre-Acquisition (2)	$	168,160		$	99,663	$	6,037	$	6,129	$	2,748	$	888		$	283,625

(1)

Figures for Isle are the four months ended April 30, 2017, the day before the Company acquired Isle on May 1, 2017. The Company reports its financial results on a calendar fiscal year. Prior to the Company’s acquisition of Isle, Isle’s fiscal year typically ended on the last Sunday in April. Isle’s fiscal 2017 and 2016 were 52-week years, which commenced on April 25, 2016 and April 27, 2015, respectively. Such figures were prepared by the Company to reflect Isle’s unaudited consolidated historical net revenues and Adjusted EBITDA for periods corresponding to the Company’s fiscal quarterly calendar. Such figures are based on the unaudited internal financial statements and have not been reviewed by the Company’s auditors and do not conform to GAAP.

(2)

Total figures for 2016 and 2017 include combined results of operations for Isle and the Company for periods preceding the date that the Company acquired Isle. Such presentation does not conform with GAAP or the Securities and Exchange Commission rules for proforma presentation; however, we believe that the additional financial information will be helpful to investors in comparing current results with results of prior periods. This is non-GAAP data and should not be considered a substitute for data prepared in accordance with GAAP, but should be viewed in addition to the results of operations reported by the Company.

(3)

Figures are for Isle for the three and nine months ended September 30, ~~2015 represent~~2016. Such figures were prepared by the ~~results of Silver Legacy~~Company to reflect Isle’s unaudited consolidated historical net revenues, operating income and ~~Circus Reno~~Adjusted EBITDA for periods corresponding to the ~~period beginning on July 1, 2015 and January 1, 2015, respectively, and ending on November 24, 2015, the date that the Reno Acquisition was consummated.~~Company’s fiscal quarterly calendar. Such figures are based on the unaudited ~~historical~~ internal financial statements ~~of such entities~~ and have not been reviewed by the Company’s ~~auditors.~~auditors and do not conform to GAAP.

~~(2)~~

(4)

Effective January 1, 2016, the Ohio Lottery Commission enacted a regulatory change which resulted in the establishment of a $1.0 million progressive slot liability and a corresponding decrease in net slot win in during the first quarter of 2016. The changes are non-cash and related primarily to prior years. The net non-cash impact to Adjusted EBITDA was $0.6 million for the nine months ended September 30, 2016.

(5)

~~(3)~~

~~Included in stock-based compensation expense~~Transaction expenses for the three and nine months ended September 30, 2017 represent acquisition costs related to the Isle Acquisition. Transaction expenses for the three and nine months ended September 30, 2016 ~~is $0.2 million~~represent acquisition costs related to the Reno Acquisition and ~~$0.5 million, respectively,~~includes a credit of ~~additional stock-based compensation expense as a result of severance~~$2.0 thousand related ~~restricted stock units becoming fully vested during the three and nine months ended September 30, 2016.~~to S-1 offering costs.

~~(4)~~

(6)

Other is comprised of (gain) loss on the sale or disposal of property, equity in ~~income~~loss of unconsolidated affiliate and other regulatory gaming assessments, including the item listed in footnote ~~(2)~~(4) above.

~~(5)~~

Results of operations for the three and nine months ended September 30, 2015 include the operations of Silver Legacy and Circus Reno, which were acquired by ERI on November 24, 2015, as if the acquisition occurred on January 1, 2015. Such presentation does not conform with GAAP or the Securities and Exchange Commission rules for pro forma presentation; however, we have included the combined information because we believe it provides a meaningful comparison for the periods presented.

next twelve months.

ERI is a holding company and its only significant assets are ownership interests in its subsidiaries. ERI’s ability to fund its obligations depends on the cash flow of its subsidiaries and the ability of its subsidiaries to distribute or otherwise make funds available to ERI.

AtAs of September 30, ~~2016,~~2017, we had consolidated cash and cash equivalents of ~~$47.0~~$156.2 million, including restricted cash of ~~$2.4~~$21.3 million.

Operating Cash ~~Flow.~~Flow. For the nine months ended September 30, ~~2016,~~2017, cash flows provided by operating activities totaled ~~$72.3~~$71.8 million compared to ~~$20.5~~$72.3 million during the same prior year period. The ~~increase~~decrease in operating cash was primarily due to ~~the increase in net income, including incremental net income~~transaction costs associated with the ~~Reno~~Isle Acquisition offset by a benefit in income taxes in the ~~refinancing of our debt resulting in lower interest expense and~~current year combined with changes in the balance sheet accounts in the normal course of business.

Investing Cash ~~Flow.~~Flow and Capital Expenditures. Net cash flows used in investing activities totaled ~~$27.2 million~~$1.4 billion for the nine months ended September 30, ~~2016,~~2017 compared to ~~$78.3~~$27.2 million for the same prior year period. Net cash flows used in investing activities for the nine months ended September 30, ~~2016,~~2017 was primarily ~~consisted of $32.9~~due to cash paid to acquire Isle in addition to $53.2 million in capital expenditures for various property enhancement and maintenance projects and equipment ~~purchases partially offset by West Virginia’s reimbursement of capital expenditures totaling $4.1 million.~~purchases.

Financing Cash ~~Flow.~~Flow. Net cash flows provided by financing activities for the nine months ended September 30, 2017 totaled $1.4 billion compared to $78.7 million used in financing activities for the nine months ended September 30, ~~2016, totaled $78.7 million~~2016. This increase was primarily related to the issuance of debt associated with the Isle Acquisition, the refinancing of our Term Loan and ~~primarily consisted of net payments totaling $74.5 million on the~~ Revolving Credit Facility in May 2017 and ~~$3.2 million~~the issuance of additional 6% Senior Notes in September 2107. This increase was partially offset by net payments made on ~~the Term Loan.~~

~~Capital Expenditures~~

~~For~~our credit facilities throughout the nine months ended September 30, 2016, additions to property and equipment aggregated $32.9 million, which included $12.3 million in Nevada, $4.0 million in Louisiana, $16.3 million, before $4.1 million in reimbursements from West Virginia regulatory authorities, attributable to the Eastern properties and $0.4 million at corporate.2017.

Under legislation approved by the state of West Virginia in July 2011, Mountaineer participates in a modernization fund which provides for reimbursement from amounts paid to the West Virginia Lottery Commission in an amount equal to $1 for each $2 expended for certain qualifying capital expenditures having a useful life of more than three years and placed into service after July 1, 2011. Qualifying capital expenditures include the purchase of slot machines and related equipment to the extent such slot machines are retained by Mountaineer at its West Virginia location for not less than five years. Any unexpended balance from a given fiscal year will be available for one additional fiscal year, after which time the remaining unused balance carried forward will be forfeited. As of September 30, 2016, Mountaineer remains eligible for $3.4 million under annual modernization fund grants that expire in varying dates through June 30, 2018. We can make no assurances Mountaineer will be able to make qualifying capital expenditure purchases sufficient to receive reimbursement of the available funds prior to their expiration nor that the modernization funds will continue to be available.

~~We anticipate spending on capital expenditures for the remainder of 2016 to be approximately $23.1 million.~~

Debt Obligations

~~Refinancing Transaction and~~7% Senior Notes

On July 23, 2015, the Company issued at par $375.0 million in aggregate principal amount of 7.0% senior notes due 2023 ~~(the “Senior~~(“7% Senior Notes”) pursuant to the indenture, dated as of July 23, 2015 (the “Indenture”), ~~at an issue price equal to 100.0% of~~between the ~~aggregate principal amount of the Senior Notes.~~Company and U.S. Bank, National Association, as Trustee. The Senior Notes are guaranteed by all of the Company’s direct and indirect restricted subsidiaries. CC-Reno, LLC and the Silver Legacy Joint Venture became guarantors in June 2016 upon receipt of gaming approval which occurred in May 2016. The7% Senior Notes will mature on August 1, 2023, with interest payable semi-annually in arrears on February 1 and August 1 of each year.

Venture credit facility, and (iii) pay fees and costs associated with such transactions. Net proceeds from the Senior Notes offering totaling $50.0 million were used for the Circus Reno/Silver Legacy Purchase on the Reno Acquisition Date. As a result of the July 2015 refinancing, we recognized a $2.0 million net loss on the early retirement of debt.


Year	Percentage	Percentage
2018	105.250%		105.250	%
2019	103.500%		103.500	%
2020	101.750%		101.750	%
2021 and thereafter	100.000%		100.000	%

pay dividends or distributions or make certain other restricted payments or investments;

~~pay dividends or distributions or make certain other restricted payments or investments;~~

~~incur or guarantee additional indebtedness or issue disqualified stock or create subordinated indebtedness that is not subordinated to the Senior Notes or the guarantees of the Senior Notes;~~

incur or guarantee additional indebtedness or issue disqualified stock or create subordinated indebtedness that is not subordinated to the 7% Senior Notes or the guarantees of the 7% Senior Notes;

~~create liens;~~

create liens;

~~transfer and sell assets;~~

transfer and sell assets;

~~merge, consolidate, or sell, transfer or otherwise dispose of all or substantially all of the Company’s assets;~~

merge, consolidate, or sell, transfer or otherwise dispose of all or substantially all of the Company’s assets;

~~enter into certain transactions with affiliates;~~

enter into certain transactions with affiliates;

~~engage in lines of business other than the Company’s core business and related businesses; and~~

engage in lines of business other than the Company’s core business and related businesses; and

create restrictions on dividends or other payments by restricted subsidiaries.

Year	Percentage
2020		104.500	%
2021		103.000	%
2022		101.500	%
2023 and thereafter		100.000	%

pay dividends or distributions or make certain other restricted payments or investments;

incur or guarantee additional indebtedness or issue disqualified stock or create subordinated indebtedness that is not subordinated to the 6% Senior Notes or the guarantees of the 6% Senior Notes;

transfer and sell assets;

merge, consolidate, or sell, transfer or otherwise dispose of all or substantially all of the Company’s assets;

enter into certain transactions with affiliates;

engage in lines of business other than the Company’s core business and related businesses; and

create restrictions on dividends or other payments by restricted subsidiaries.

The Term Loan ~~bears~~bore interest at a rate per annum of, at the Company’s option, either (x) LIBOR plus 3.25%, with a LIBOR floor of 1.0%, or (y) a base rate plus 2.25%. Borrowings under the Revolving Credit Facility ~~bear~~bore interest at a rate per annum of, at the Company’s option, either (x) LIBOR plus a spread ranging from 2.5% to 3.25% or (y) a base rate plus a spread ranging from 1.5% to 2.25%, in each case with the spread determined based on the Company’s total leverage ratio. Additionally, the Company paid a commitment fee on the unused portion of the Revolving Credit Facility not being utilized in the amount of 0.50% per annum.

On May 1, 2017, all of the outstanding amounts under the Prior Credit Facility were repaid with proceeds of borrowings under the New Credit Facility (as defined below) and the Prior Credit Facility was terminated.

New Credit Facility

On April 17, 2017, Eagle II entered into a new credit agreement by and among Eagle II, as initial borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto dated as of April 17, 2017 (the “New Credit Facility”), consisting of a $1.45 billion term loan facility (the “New Term Loan Facility” or the “New Term Loan”) and a $300.0 million revolving credit facility (the “New Revolving Credit Facility”), which was undrawn at closing. The proceeds of the New Term Loan Facility, and additional funds in the amount of $4.5 million in respect of interest expected to be accrued on the New Term Loan Facility, were placed in escrow pending satisfaction of certain conditions, including consummation of the Isle Acquisition. In connection with the consummation of the Isle Acquisition on May 1, 2017, the escrowed funds were released and ERI assumed Eagle II’s obligations under the New Credit Facility and certain of ERI’s subsidiaries (including Isle and certain of its subsidiaries) executed guarantees of ERI’s obligations under the New Credit Facility.

The Company applied the net proceeds of the New Term Loan Facility and borrowings under the New Revolving Credit Facility totaling $135 million, together with the proceeds of the 6% Senior Notes, and cash on hand, to (i) pay the cash portion of the consideration payable in the Isle Acquisition, (ii) refinance all of the debt outstanding under Isle’s existing credit facility, (iii) redeem or otherwise repurchase all of Isle’s outstanding 5.875% Senior Notes due 2021 and 8.875% Senior Subordinated Notes due 2020, (iv) repay all amounts outstanding under the Company’s Prior Credit Facility and (v) pay fees and costs associated with the Isle Acquisition and such financing transactions.

The Company’s obligations under the New Revolving Credit Facility will mature on April 17, 2022. The Company’s obligations under the New Term Loan Facility will mature on April 17, 2024. The Company was required to make quarterly principal payments in an amount equal to $3.6 million on the New Term Loan Facility on the last day of each fiscal quarter beginning on June 30, 2017. The Company satisfied this requirement as a result of the principal prepayment of $444.5 million on September 13, 2017 in conjunction with the issuance of the additional 6% Senior Notes. In addition, the Company is required to make mandatory payments of amounts outstanding under the New Credit Facility with the proceeds of certain casualty events, debt issuances, and asset sales and, depending on its consolidated total leverage ratio, the Company is required to apply a portion of its excess cash flow to repay amounts outstanding under the New Credit Facility.

The New Credit Facility is secured by substantially all of the Company’s personal property assets and substantially all personal property assets of each subsidiary that guaranties the New Credit Facility (other than certain subsidiary guarantors designated as immaterial) (the ~~“Credit~~“New Credit Facility Guarantors”), whether owned on the closing date of the New Credit Facility or thereafter acquired, and mortgages on the real property and improvements owned or leased us or the New Credit Facility Guarantors. The New Credit Facility is also secured by a pledge of all of the equity owned by us and the New Credit Facility Guarantors (subject to certain gaming law restrictions). The credit agreement governing the New Credit Facility contains a number of customary covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability and the ability of the New Credit Facility Guarantors to incur additional indebtedness, create liens on collateral, engage in mergers, consolidations or asset dispositions, make distributions, make investments, loans or advances, engage in certain transactions with affiliates or subsidiaries or make capital expenditures.

The ~~credit agreement governing~~New Credit Facility contains a number of customary covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability and the ability of the subsidiary guarantors to incur debt; create liens on collateral; engage in mergers, consolidations or asset dispositions; pay dividends or make distributions; make investments, loans or advances; engage in certain transactions with affiliates or subsidiaries; or modify their lines of business.

The New Credit Facility also includes certain financial covenants, including the requirements that we maintain throughout the ~~Company maintain~~term of the New Credit Facility and measured as of the end of each fiscal quarter, and solely with respect to loans under the New Revolving Credit Facility, a maximum ~~total leverage ratio and a minimum interest coverage ratio (adjusting over time). The Company is required to maintain a maximum~~consolidated total leverage ratio of not more than 6.50 to 1.00 for the period beginning on the closing date and ending with the fiscal quarter ending December 31, 2018, 6.00 to 1.00 ~~from~~for the period beginning with the fiscal quarter beginning January 1, ~~2016 to~~2019 and ending with the fiscal quarter ending December 31, ~~2017~~2019, and ~~5.00~~5.50 to 1.00 for the period beginning with the fiscal quarter beginning January 1, 2020 and thereafter. ~~In addition, the~~The Company iswill also be required to maintain ~~a minimum~~an interest coverage ratio in an amount not less than 2.00 to 1.00 measured on the last day of each fiscal quarter beginning on the closing date, and ending with the fiscal quarter ending December 31, 2018, 2.50 to 1.00 for the period beginning with the fiscal quarter beginning January 1, 2019 and ending with the fiscal quarter ending December 31, 2019, and 2.75 to 1.00 ~~from~~for the period beginning with the fiscal quarter beginning January 1, ~~2016 through December 31, 2016~~2020 and ~~3.00 to 1.00~~ thereafter. A default of the financial ratio covenants shall only become an event of default under the Term Loan if the lenders providing the Revolving Credit Facility take certain affirmative actions after the occurrence of a default of such financial ratio covenants.

events, the invalidity of certain loan documents, certain changes of control and the loss of certain classes of licenses to conduct gaming. If any event of default occurs, the lenders under the New Credit Facility would be entitled to take various actions, including accelerating amounts ~~due~~outstanding thereunder and taking all actions permitted to be taken by a secured creditor. As of September 30, ~~2016,~~2017, the Company was in compliance with the covenants under the New Credit Facility.

~~Debt Commitment Letter~~

In connection with entering into the Merger Agreement, on September 19, 2016, the Company entered into a debt financing commitment letter with JPMorgan Chase Bank, N.A., as modified by the five separate written joinders to the Commitment Letter entered into by ERI and JPMorgan Chase Bank, N.A. with each of Macquarie Capital Funding LLC, KeyBank, National Association, Capital One, National Association, SunTrust Bank and U.S. Bank National Association and certain affiliates of such parties (the “ Commitment Letter”). The Commitment Letter provides for : (a) a senior secured credit facility in an aggregate principal amount of $1.75 billion comprised of (i) a term loan facility of up to $1.45 billion and (ii) a revolving credit facility of $300 million and (b) an amount equal to at least $375 million in gross proceeds from the issuance and sale by the Company of senior unsecured notes or, if the notes are not issued and sold on or prior to the date of the consummation of the Mergers, an amount equal to at least $375 million in senior unsecured bridge loans under a senior unsecured credit facility. The proceeds of such borrowings may be used (w) to pay consideration in the Mergers, (x) refinance all of Isle’s existing credit facilities and senior and senior subordinated notes, (y) refinance the Company’s existing credit facility and (z) pay transaction fees and expenses related to the foregoing. The availability of the borrowings is subject to the satisfaction of certain customary conditions.

Contractual Obligations

~~There~~Other than the previously discussed 6% Senior Notes, New Credit Facility and Isle leases for real estate and various equipment, there have been no material changes ~~during~~for the three and nine months ended September 30, ~~2016~~2017 to our contractual obligations as disclosed in our Annual Report on Form 10‑K for the year ended December 31, ~~2015.~~

2016.

Other Liquidity Matters

The Pennsylvania Gaming Control Board (the “PGCB”), the Pennsylvania Department of Revenue and the Pennsylvania State Police (collectively “the Borrowers”), were required to fund the costs they incurred in connection with the initial development of the infrastructure to support gaming operations in Pennsylvania as well as the initial ongoing costs of the Borrowers. The initial funding of these costs was provided from a loan from the Pennsylvania General Fund in the amount of $36.1 million, and further funding was provided from additional loans from the Pennsylvania Property Tax Reserve Fund in the aggregate amount of $63.8 million.

The Pennsylvania Department of Revenue will assess all licensees, including Presque Isle Downs, their proportionate share of amounts represented by the borrowings, which are in the aggregate amount of $99.9 million, once the designated number of Pennsylvania’s slot machine licensees is operational. On July 11, 2011, the PGCB issued an administrative order which established that payments associated with the $63.8 million that was borrowed from the Property Tax Reserve Fund would commence on January 1, 2012. The repayment allocation between all current licensees is based upon equal weighting of (i) cumulative gross slot revenue since inception in relation to the combined cumulative gross slot revenue for all licensees and (ii) single year gross slot revenue (during the state’s fiscal year ending June 30) in relation to the combined single year gross slot revenue for all licensees; and amounts paid each year will be adjusted annually based upon changes in the licensee’s proportionate share of gross slot revenue. We have estimated that our total proportionate share of the aggregate $63.8 million to be assessed to the gaming facilities will be $4.1 million and will be paid quarterly over a ten‑year period, which began effective January 1, 2012. For the $36.1 million that was borrowed from the General Fund, payment is scheduled to begin after all fourteen licensees are operational. Although we cannot determine when payment will begin, we have considered a similar repayment model for the General Fund borrowings and estimated that our total proportionate share of the aggregate $36.1 million to all fourteen gaming facilities will approximate between $1.9 million and $2.1 million, which has been accrued in the accompanying consolidated balance sheet at September 30, 2016 and December 31, 2015.

The recorded estimate relative to the Property Tax Reserve Fund is subject to revision based upon future changes in the revenue assumptions utilized to develop the estimate. Our estimated total obligation at September 30, 2016 and December 31, 2015, was $4.1 million and $4.3 million, respectively, of which the residual total amount, both current and long-term, of $1.9 million and $2.2 million at September 30, 2016 and December 31, 2015, respectively, are appropriately accrued in the accompanying consolidated balance sheet. The Company paid $0.3 million for the nine months ended September 30, 2016.

We are faced with certain contingencies involving litigation and environmental remediation and compliance. These commitments and contingencies are discussed in “Part II, Item 1. Legal Proceedings” and Note 10 to our unaudited consolidated financial statements, both of which are included elsewhere in this report. In addition, new competition may have a material adverse effect on our revenues, and could have a similar adverse effect on our liquidity. See “Part I, Item 1A. Risk Factors—Risks Related to Our Business” which is included in our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~

2016 and “Part II, Item IA. Risk Factors” which is included in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.

Critical Accounting Policies

Our critical accounting policies disclosures are included in our Annual Report on Form 10‑K for the year ended December 31, ~~2015. Management believes~~2016. Except as described in footnotes 1 and 3 to the accompanying condensed notes of these consolidated financial statements, we believe there have been no material changes since December 31, ~~2015.~~2016. We have not substantively changed the application of our policies and there have been no material changes in assumptions or estimation techniques used as compared to prior periods.

Off‑Balance Sheet Arrangements

We are not party to any off‑balance sheet arrangements.

Cautionary Statement Regarding Forward‑Looking Information

This report includes “forward‑looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward‑looking statements include statements regarding our strategies, objectives and plans for future development or acquisitions of properties or operations, as well as expectations, future operating results and other information that is not historical information.

When used in this report, the terms or phrases such as “anticipates,” “believes,” “projects,” “plans,” “intends,” “expects,” “might,” “may,” “estimates,” “could,” “should,” “would,” “will likely continue,” and variations of such words or similar expressions are intended to identify forward‑looking statements. Forward‑looking statements in this report include, among other things, statements concerning:

projections of future results of operations or financial condition;

expectations regarding our business and results of operations of our existing casino properties and prospects for future development;

expenses and our ability to operate efficiently and our ability to achieve benefits and synergies associated with the Isle Acquisition;

expectations regarding trends that will affect our market and the gaming industry generally and the impact of those trends on our business and results of operations;

our ability to comply with the covenants in the agreements governing our outstanding indebtedness;

our ability to meet our projected debt service obligations, operating expenses, and maintenance capital expenditures;

expectations regarding availability of capital resources;

·•

~~projections of future results of operations or financial condition;~~

~~expectations regarding the consummation of the Mergers and the timing of such transactions;~~

~~expectations regarding our business and results of operations of our existing casino properties and prospects for future development;~~

~~expenses and our ability to operate efficiently;~~

~~expectations regarding trends that will affect our market and the gaming industry generally and the impact of those trends on our business and results of operations;~~

~~our ability to comply with the covenants in the agreements governing our outstanding indebtedness;~~

~~our ability to meet our projected debt service obligations, operating expenses, and maintenance capital expenditures;~~

~~expectations regarding availability of capital resources;~~

our intention to pursue development opportunities and acquisitions and obtain financing for such development and acquisitions; and

the impact of regulation on our business and our ability to receive and maintain necessary approvals for our existing properties and future projects.

~~the impact of regulation on our business and our ability to receive and maintain necessary approvals for our existing properties and future projects.~~

Any forward‑looking statement is based upon a number of estimates and assumptions that, while considered reasonable by us, is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control, and are subject to change. Actual results of operations may vary materially from any forward‑looking statement made herein. Forward‑looking statements should not be regarded as a representation by us or any other person that the forward‑looking statements will be achieved. Undue reliance should not be placed on any forward‑looking statements. Some of the contingencies and uncertainties to which any forward‑looking statement contained herein is subject include, but are not limited to, the following:

~~our substantial indebtedness and significant financial commitments could adversely affect our results of operations and our ability to service such obligations;~~

~~restrictions and limitations in agreements governing our debt could significantly affect our ability to operate our business and our liquidity;~~

~~our facilities operate in very competitive environments and we face increasing competition;~~

~~our dependence on our Nevada, Louisiana, West Virginia, Pennsylvania and Ohio casinos for substantially all of our revenues and cash flows;~~

~~our operations are particularly sensitive to reductions in discretionary consumer spending and are affected by changes in general economic and market conditions;~~

~~our gaming operations are highly regulated by governmental authorities and the cost of complying or the impact of failing to comply with such regulations;~~

~~changes in gaming taxes and fees in jurisdictions in which we operate;~~

~~Table of Contents~~

~~risks relating to pending claims or future claims that may be brought against us;~~

~~changes in interest rates and capital and credit markets;~~

~~our ability to comply~~our substantial indebtedness, including indebtedness incurred in connection with ~~certain covenants in our debt documents;~~

~~the effect of disruptions to our information technology and other systems and infrastructure;~~

~~construction factors relating to maintenance and expansion of operations;~~

~~our ability to attract and retain customers;~~

~~weather or road conditions limiting access to our properties;~~

~~the effect of war, terrorist activity, natural disasters and other catastrophic events;~~

~~the intense competition to attract and retain management and key employees in the gaming industry; and~~

~~the other factors set forth in Part I, Item 1A. “Risk Factors” included in our Annual Report on Form 10‑K for the year ended December 31, 2015.~~

~~Additionally,~~ the Isle Acquisition, and significant financial commitments could adversely affect our results of operations and our ability to service such obligations;

restrictions and limitations in agreements governing our debt could significantly affect our ability to operate our business and our liquidity;

our facilities operate in very competitive environments and we face increasing competition;

the ~~related~~ability to successfully integrate ERI’s and Isle’s operations, technologies and employees;

the ability to realize growth opportunities and cost synergies from the Isle Merger, ~~Agreement~~ and ~~provisions therein, will create additional~~ any future acquisitions, in a timely manner or at all;

our operations are particularly sensitive to reductions in discretionary consumer spending and are affected by changes in general economic and market conditions;

our gaming operations are highly regulated by governmental authorities and the cost of complying or the impact of failing to comply with such regulations;

changes in gaming taxes and fees in jurisdictions in which we operate;

risks ~~uncertainties~~relating to pending claims or future claims that may be brought against us;

changes in interest rates and capital and credit markets;

our ability to comply with certain covenants in our debt documents;

the effect of disruptions to our information technology and other ~~important factors including but not limited to:~~

~~limitations placed on the ability of ERI to operate its business in accordance with the terms of the Merger~~ ~~Agreement~~;

the potential impact of the announcement or consummation of the proposed transactions on the Company’s relationships with third parties, which may make it more difficult to maintain business and operational relationships;

~~the receipt of regulatory and stockholder approvals;~~

~~the ability to satisfy other conditions to the closing of the Mergers for any other reason;~~

~~the availability of financing contemplated by the financing commitment obtained by ERI or otherwise;~~

~~changes in or developments with respect to any litigation or investigation;~~

the risk that each of ERI’s and Isle’s executive officers and directors have financial interests in the Mergers that may be different from, or in addition to, the interests of ERI stockholders and Isle stockholders;

~~the potential that failure to consummate the Mergers could negatively impact the stock price and the future business and financial results of ERI;~~

~~the ability to successfully integrate ERI’s and Isle’s operations, technologies and employees;~~

~~the ability to realize growth opportunities and cost synergies from the proposed Mergers in a timely manner or at all;~~

~~diversion of management time from each of ERI’s ongoing operations;~~

~~the incurrence of significant transaction and merger-related costs; and~~

the substantial amount of debt expected to be incurred in connection with the proposed Mergers and ERI’s ability to repay or refinance it, incur additional debt in the future or obtain a certain debt coverage ratio.

39systems and infrastructure;

construction factors relating to maintenance and expansion of operations;

~~Table of Contents~~our ability to attract and retain customers;

weather or road conditions limiting access to our properties;

the effect of war, terrorist activity, natural disasters and other catastrophic events;

the intense competition to attract and retain management and key employees in the gaming industry; and

the other factors set forth in Part I, Item 1A. “Risk Factors” included in our Annual Report on Form 10‑K for the year ended December 31, 2016.

In light of these and other risks, uncertainties and assumptions, the forward‑looking events discussed in this report might not occur. Any forward‑looking statement speaks only as of the date on which that statement is made. We do not intend to update publicly any forward‑looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as may be required by law.

ITEM 3. ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. We do not hold any market risk sensitive instruments for trading purposes. Our primary exposure to market risk is interest rate risk, specifically long‑term U.S. treasury rates and the applicable spreads in the high‑yield investment risk, short‑term and long‑term LIBOR rates, and short‑term Eurodollar rates, and their potential impact on our long‑term debt. We attempt to limit our exposure to interest rate risk by managing the mix of our long‑term fixed‑rate borrowings and short‑term borrowings under the Credit Facility. We do not currently utilize derivative financial instruments for trading or speculative purposes. (See also “Liquidity and Capital Resources” above for additional information related to the refinancing of our long‑term debt.)

As of September 30, ~~2016,~~2017, our long‑term variable‑rate borrowings totaled ~~$438.7 million comprised of $419.7 million~~$1.0 billion under the New Term Loan and ~~$19.0 million under the Revolving Credit Facility and~~ represented approximately ~~54%~~44% of our long‑term debt.

In conjunction with the issuance of $500 million of additional 6% Senior Notes and the retirement of variable rate debt, this percentage declined from 54% as of December 31, 2016. Based on these changes, as of September 30, 2017 the weighted average interest rate on our variable and fixed rate debt was 3.63% and 6.3%, respectively.

There was no material change in interest rate risk for the nine months ended September 30, ~~2016.~~

~~ITEM 4. CONTROLS AND PROCEDURES.~~

2017 other than as previously discussed in Liquidity and Capital Resources section in Item 2.

ITEM 4.

CONTROLS AND PROCEDURES.

(a)

Evaluation of Disclosure Controls and Procedures

We have established and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports that we file under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, evaluated and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a‑ 15(e) and 15d‑15(e)) as of the end of the period covered by this Quarterly Report on Form 10‑Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10‑Q are effective to ensure that the information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized, evaluated and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

(b)

Changes in Internal Controls

~~There~~Except as noted below, there were no changes in our internal control over financial reporting during the period covered by this Quarterly Report on Form 10‑Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On May 1, 2017, we completed the acquisition of Isle. See Part I, Item 1, Condensed Notes to Unaudited Consolidated Financial Statements, Note 2: Isle Acquisition and Preliminary Purchase Price Accounting, for a discussion of the acquisition and related financial data. The Company is in the process of integrating Isle and our internal controls over financial reporting. As a result of these integration activities, certain controls will be evaluated and may be changed. Excluding the Isle Acquisition, there were no changes in our internal control over financial reporting that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

~~PART II~~PART II

OTHER INFORMATION

ITEM 1. ~~LEGAL PROCEEDINGS~~

LEGAL PROCEEDINGS

We are a party to various lawsuits, which have arisen in the normal course of our business. Estimated losses are accrued for these lawsuits and claims when the loss is probable and can be estimated. The current liability for the

estimated losses associated with those lawsuits is not material to our consolidated financial condition and those estimated losses are not expected to have a material impact on our results of operations.

Legal matters are discussed in greater detail in “Part I, Item 3. Legal Proceedings” and Note 16 to our Consolidated Financial statements included in our Annual Report on Form 10‑K for the year ended December 31, ~~2015.~~2016.

ITEM 1A. ~~RISK FACTORS~~

RISK FACTORS

A description of our risk factors can be found in “Part I, Item 1A. Risk Factors” included in our Annual Report on Form 10‑K for the year ended December 31, ~~2015. Except as set forth below, there~~2016. There have been no material changes to those risk factors during the nine months ended September 30, ~~2016.~~2017, except for the following additional risk factors related to the Isle Acquisition.

We face substantial competition in the hotel and casino industry and expect that such competition will continue

The ~~Merger Agreement subjects~~gaming industry is characterized by an increasingly high degree of competition among a large number of participants, including land‑based casinos, dockside casinos, riverboat casinos, casinos located on racing tracks and casinos located on Native American reservations and other forms of legalized gaming. We also compete, to a lesser extent, with other forms of legalized gaming and entertainment such as online computer gambling, bingo, pull tab games, card parlors, sports books, fantasy sports websites, “cruise-to-nowhere” operations, pari-mutuel or telephonic betting on horse racing and dog racing, state-sponsored lotteries, jai-alai, and, in the ~~Company to restrictions on its business activities during~~future, may compete with gaming at other venues. In addition, we compete more generally with other forms of entertainment for the ~~pendency~~discretionary spending of our customers.

Gaming competition is intense in most of the ~~Mergers.~~

~~The Merger Agreement subjects the Company~~ ~~to restrictions on its business activities~~markets in which we operate. States that already have legalized casino gaming may further expand gaming, and ~~obligates the Company to generally operate its businesses~~other states that have not yet legalized gaming may do so in the ~~ordinary course~~future. Legalized casino gaming in ~~all material respects during the pendency of the Mergers. These restrictions~~these states and on Native American reservations near our markets or changes to gaming laws in states in which we have operations and in states surrounding our operations could ~~prevent~~ ~~the Company from pursuing attractive business opportunities that arise prior to the completion of the Mergers~~increase competition and ~~are outside the ordinary course of business, and could otherwise have an adverse effect on ERI’s and~~ ~~Isle’s results of operations, cash flows and financial position.~~

Delay or failure to complete the Mergers would prevent the Company from realizing the anticipated benefits of the Mergers and each company would also remain liable for significant transaction costs, including legal, accounting and financial advisory fees.

Any delay in completing the Mergers may reduce the synergies and other benefits anticipated by the Company if it successfully completes the Mergers within the expected timeframe and integrates the businesses of the Company and Isle. In addition, the market price of each company’s common stock may reflect various market assumptions as to whether and when the Mergers will be completed. Consequently, the completion of, the failure to complete, or any delay in the completion of the Mergers could result in significant changes in the market price of the Company’s common stock. In addition, the Company has incurred and will continue to incur significant costs relating to the Mergers, such as legal, accounting, financial advisor and printing fees, that will be required to be paid whether or not the Mergers are consummated. Further, the Company may be required to pay a termination fee depending on the circumstances surrounding the termination.

Whether or not the Mergers are completed, the pendency of the transaction could cause disruptions in the businesses of the Company, which could have an adverse effect on its businesses and financial results.

~~These disruptions could include the following:~~

current and prospective employees of the Company may experience uncertainty about their future roles with the combined company or consider other employment alternatives, which might adversely affect the Company’s ability to retain or attract key managers and other employees;

current and prospective customers of the Company may anticipate changes in how they are served or the benefits offered by the Company’s loyalty reward program and may, as a result, choose to discontinue their patronage of the Company; and

~~the attention of management of the Company may be diverted from the operation of its business.~~

~~Obtaining required approvals and satisfying closing conditions may delay or prevent completion of the Mergers and may significantly reduce the benefits anticipated to be realized from the Mergers or~~ could adversely affect ~~the market price~~our operations. There has been significant competition in our markets as a result of the ~~Company~~expansion of facilities by existing market participants, the entrance of new gaming participants into a market or ~~its future business and financial results.~~

~~Completion of~~legislative changes in prior years. For example, in Pennsylvania – a jurisdiction in which we currently operate two casinos – the ~~Mergers is subject~~Governor signed legislation in October 2017 expanding gaming to ~~various closing conditions, including (a) Isle’s stockholders adopting the Merger Agreement, (b)~~ ~~ERI’s stockholders approving the issuance of ERI shares as consideration in the Mergers, (c) the approval or expiration or termination of any applicable waiting period under the HSR Act~~, (d) obtaining certain gaming approvals to the standards set forth in the Merger Agreement and (e) each of Isle and ERI’s receipt of a tax opinion to the effect that the Mergers will be treated as a “reorganization” within the meaning of Section 368(a) of the Code. If such conditions are not satisfied, the Mergers will not be consummated unless such conditions are validly

waived. Such conditions may jeopardize or delay completion of the Mergers or may reduce the anticipated benefits of the Mergers. Further, no assurance can be given that the required consents and approvals will be obtained or that the required conditions to closing will be satisfied. Even if all such consents and approvals are obtained, no assurance can be given as to the terms, conditions and timing of the consents and approvals or that they will satisfy the terms of the Merger Agreement. On October 21, 2016, the waiting period under the HSR Act was terminated early by the Federal Trade Commission.

The Mergers are subject to the receipt of approvals, consents or clearances that may impose conditions that could have an adverse effect on ERI or, if not obtained, could prevent completion of the transactions.

Completion of the Mergers is conditioned upon the receipt of certain governmental approvals, including, without limitation, antitrust and gaming regulatory approvals. Although each party has agreed to use its respective reasonable best efforts to obtain the requisite governmental approvals, there can be no assurance that these approvals will be obtained and that the other conditions to completing the Mergers will be satisfied. In addition, the governmental authorities from which the regulatory approvals are required may impose conditions on the completion of the Mergers or require changes to the terms of the Merger Agreement or other agreements to be entered into in connection with the Merger Agreement. Such conditions or changes and the process of obtaining regulatory approvals could have the effect of delaying or impeding consummation of the Mergers or of imposing additional costs or limitations on ERI or Isle following completion of the Mergers, any of which might have an adverse effect on ERI or Isle.

~~Gaming regulatory approvals may not be received, may take longer than expected or may impose conditions that are not presently anticipated or cannot be met.~~

ERI and Isle must obtain approval of the Mergers, which approvals must be duly obtained without the imposition of material restrictions or conditions and be in full force and effect, from a variety of gaming regulatory authorities. These approvals may not be received at all, may not be received in a timely fashion, and/or may contain conditions on the completion of the Mergers. In addition, these regulatory bodies may impose conditions on the granting of such approvals. Such conditions and the process of obtaining regulatory approvals could have the effect of delaying completion of the Mergers or of imposing additional costs or limitations on ERI following the Mergers.

If the financing contemplated by the Commitment Letter is not available, or alternative financing cannot be secured, the Mergers may not be completed and ERI may be required to pay a termination fee to ~~Isle.~~

ERI intends to finance the cash required in connection with the Mergers, including expenses in connection with the Mergers, with debt financing in accordance with the terms of the Commitment Letter. The Commitment Letter providesallow for ~~(a) a senior secured credit facility in an aggregate principal amount of $1.75 billion comprised of (i) a term loan facility of~~ up to ~~$1.45 billion~~ten (10) additional casino locations, video gaming terminals (VGTs) at truck stops, interactive gaming (iGaming), gaming at airports and (ii) a revolving credit facility of $300.0 million and (b) an amount equal to at least $375.0 million in gross proceeds from the issuance and sale by ERI of senior unsecured notes or, if the notes are not issued and sold on or prior to the date of the consummation of the Mergers, an amount equal to at least $375.0 million in senior unsecured bridge loans under a senior unsecured credit facility. In the event some or all of the financing contemplated by the Commitment Letter is not available, ERI is obligated to use its reasonable best efforts to obtain alternative financing from alternative institutions in an amount sufficient to enable ERI to consummate the Mergers, refinance the outstanding indebtedness of Isle described in the prior paragraph and pay all fees and expenses of Isle in connection with the Mergers and the other transactions contemplated by the Merger Agreement. If financing cannot be obtained, the Mergers may not be completed. If ERI is unable to obtain funding from its financing sources for the cash required in connection with the Mergers, and Isle is otherwise ready, willing and able to close the Mergers, ERI may be liable to Isle for a financing failure fee of $60.0 million or may be compelled to specifically perform its obligations to consummate the transaction.

~~Litigation challenging the Mergers could delay or prevent the completion of the Mergers.~~

One of the conditions to the Mergers is that no temporary restraining order, preliminary or permanent injunction, or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Mergers will be in effect; nor will there be any law, statute, ordinance, rule, regulation, order, policy, guideline or agency requirement enacted, entered, promulgated, enforced or deemed applicable by any governmental entity that prohibits or makes illegal the consummation of the Mergers. Although neither ERI nor Isle has been notified of any litigation filed challenging the Mergers, there can be no assurance that claims will not be filed by stockholders of ERI or Isle seeking damages relating to, or otherwise challenging, the

Mergers. If any such litigation is filed and the plaintiffs in any such action secure injunctive or other relief prohibiting, delaying or otherwise adversely affecting ERI’s and Isle’s ability to consummate the Mergers, then such injunctive or other relief may prevent the Mergers from becoming effective within the expected time frame or at all. If consummation of the Mergers is prevented or delayed, it could result in substantial costs to ERI. In addition, ~~ERI could incur significant costs in connection with such lawsuits, including costs associated with the indemnification of Isle’s directors and officers.~~

~~The integration of ERI and~~ ~~Isle following the Mergers may present significant challenges and impair ERI’s ability to realize the anticipated benefits of the Mergers in the anticipated time frame or at all.~~

~~ERI’s ability to realize the anticipated benefits of the Mergers will depend, to a large extent, on ERI’s ability to integrate~~ ~~Isle’s business into ERI in the anticipated time frame or at all.~~ ERI may face significant challenges in combining Isle’s operations into its operations in a timely and efficient manner. The combination of two independent businesses is a complex, costly and time-consuming process. As a result, ~~ERI will be required to devote significant management attention and resources to integrating the business practices and operations of Isle into~~ ~~those of ERI. The integration process may disrupt the business and, if implemented ineffectively or inefficiently, would preclude realization of the full benefits expected by ERI and~~ ~~Isle. The failure to successfully integrate Isle into~~ ~~ERI and to manage the challenges presented by the integration process successfully may result in an interruption of, or loss of momentum in, the business of ERI or~~ ~~Isle, which may have the effect of depressing the market price of ERI common stock following the Effective Time (as defined in the Merger Agreement).~~

~~ERI may be unable to realize anticipated cost synergies or may incur additional costs.~~

ERI expects to realize cost synergies from combining the sales and general and administrative functions of Isle and ERI. However, ERI will be required to incur costs, including severance and related expenses, to realize the anticipated cost savings. While ERI’s management believes the combined entity will benefit from cost synergies, ~~ERI may be unable to realize all of these cost synergies within the time frame expected or at all. In addition, ERI may incur additional or unexpected costs in order to realize these cost synergies.~~

The Mergers may not be accretive and may cause dilution to the combined company’s earnings per share, which may negatively affect the price of the common stock of the combined company following completion of the Mergers.

~~ERI currently anticipates that the Mergers will be accretive to the earnings per share of the combined company in 2017.~~potentially sports wagering. This expectation is based on preliminary estimates and assumes certain synergies expected to be realized by the combined company over a 12-month period following the completion of the Mergers and the previously announced dispositions of Isle of Capri Casino Hotel Lake Charles and Lady Luck Casino Marquette. Such estimates and assumptions could materially change due to additional transaction-related costs, delays in regulatory approvals, the failure to realize any or all of the benefits expected in the Mergers or other factors beyond the control of ERI. All of these factors could delay, decrease or eliminate the expected accretive effect of the Mergers and cause resulting dilution to the combined company’s earnings per share or to the price of the common stock of the combined company.

~~Unanticipated costs relating to the Mergers could reduce ERI’s future earnings per share.~~

We believe that we have reasonably estimated the likely incremental costs of the combined operations of ERI and Isle following the Mergers. However, it is possible that unexpected transaction costs such as taxes, fees or professional expenses or unexpected future operating expenses such as unanticipated costs to integrate the two businesses, increased personnel costs or increased taxes, as well as other types of unanticipated adverse developments,expansion could have a material adverse effect on Lady Luck Casino at Nemacolin Woodlands Resort in Farmington and Presque Isle Downs in Erie and our gaming operations at Mountaineer and Scioto Downs. Additionally, gaming facilities in Ohio that commenced operations in recent years present significant competition for Mountaineer, Presque Isle Downs and Scioto Downs.

Casino gaming is currently prohibited in several jurisdictions from which the ~~results of operations~~Shreveport/Bossier City market draws customers, primarily Texas. The Texas legislature has from time to time considered proposals to legalize gaming, and financial condition of ERI following the Mergers. In addition, if actual costs are materially different than expected costs, the Mergers could have a significant dilutive effect on ERI’s earnings per share.

~~ERI~~there can be no assurance that casino gaming will ~~have a substantial amount of debt outstanding following the Mergers and may incur additional indebtedness~~not be approved in Texas in the future, which could ~~restrict ERI’s ability~~have a material adverse effect on Eldorado Shreveport. Additionally, since visitors from California comprise a significant portion of our customer base in Reno, we also compete with Native American gaming operations in California. Native American tribes are allowed to ~~pay dividends~~operate slot machines, lottery games and ~~fund working capital~~banking and ~~planned capital expenditures.~~

~~ERI expects~~percentage games on Native American lands. Although many existing Native American gaming facilities in northern California are modest compared to ~~incur approximately $2.2 billion~~the Nevada properties, a number of ~~debt, which includes ERI’s $375 million of debt currently outstanding wich will not be taken out,~~Native American tribes have established large‑scale gaming facilities in ~~order to complete the Mergers and related transactions.~~California. In addition, ~~ERI will~~various forms of internet gaming have been approved in Nevada, New Jersey and Delaware, and legislation permitting internet gaming has been proposed by the ~~ability~~federal government and other states. The expansion of internet gaming in Nevada and other jurisdictions could result in significant additional competition.

Increased competition may require us to ~~incur additional debt under its $300 million revolving credit facility~~make substantial capital expenditures to maintain and ~~may be required~~enhance the competitive positions of our properties to ~~incur~~

~~additional indebtedness to finance~~increase the ~~cash portion of the merger consideration if the sale of Isle of Capri Casino Hotel Lake Charles and/or the sale of Lady Luck Casino Marquette is not consummated prior~~attractiveness and add to the ~~closing~~appeal of ~~the Mergers. This amount of leverage could have important consequences, including:~~

~~ERI may be required to use a substantial portion of ERI’s cash flow from operations to make interest payments on~~ ~~ERI’s debt, which will reduce funds available for operations, future business opportunities and dividends;~~

~~ERI may have limited flexibility to react to changes in ERI’s business and its industry;~~

~~it may be more difficult for ERI to satisfy its other obligations;~~

~~ERI may have a limited ability to borrow additional funds or to sell assets to raise funds if needed for working capital, capital expenditures, acquisitions or other purposes;~~

~~ERI may become more vulnerable to general adverse economic and industry conditions, including changes in interest rates; and~~

~~ERI may be at a disadvantage compared to its competitors that have less debt.~~

Future interest expense will be significantly higher than historic interest expense as a result of higher levels of indebtedness incurred to consummate the Mergers. ERI’s ability to make payments on its debt and potential to pay dividends on its common stock, which ERI has not historically done, will depend on its ability to generate cash in the future, which will depend on many factors beyond its control. ~~ERI cannot assure you that:~~

~~its business will generate sufficient cash flow from operations to service and repay its debt, pay dividends on its common stock and fund working capital and planned capital expenditures;~~

future borrowings will be available under its credit facilities or any future credit facilities in an amount sufficient to enable it to repay its debt, pay dividends on its common stock and fund working capital and planned capital expenditures; or

~~it will be able to refinance any of its debt on commercially reasonable terms or at all.~~

~~If ERI cannot generate sufficient cash from its operations to meet its debt service~~our facilities. Because we are highly leveraged, after satisfying our obligations ~~ERI may need to reduce or delay capital expenditures, the development of its business generally and any acquisitions. If ERI becomes unable to meet its debt service and repayment obligations,~~ ~~ERI would be in default~~ under the terms of its credit agreement, which would allow its lenders to declare all outstanding borrowings to be due and payable. If the amounts outstanding under its credit facilities were to be accelerated, ERI cannot assure you that its assets would be sufficient to repay in full the money owed.

~~Delay or failure to consummate the sale of the Isle of Capri Casino Hotel Lake Charles or the Lady Luck Casino Marquette may require ERI to incur additional debt to repay~~our outstanding indebtedness, ~~of Isle or otherwise adversely impact the financial condition of the combined company.~~

On August 22, 2016, Isle entered into an agreement to sell Isle of Capri Casino Hotel Lake Charles for aggregate consideration of $134.5 million, subject to certain adjustments. On October 13, 2016, Isle entered into an agreement to sell Lady Luck Casino Marquette for cash consideration of approximately $40.0 million, subject to certain adjustments. The consummation of each transaction is subject to satisfaction of customary conditions, including receipt of regulatory approval, the accuracy of the representations and warranties, compliance with covenants, delivery of certain closing deliverables and the absence of any governmental order or action seeking to prohibit the consummation of the transaction. Although Isle expects the sale of Isle of Capri Casino Hotel Lake Charles to be consummated in late fiscal 2017 or early fiscal 2018 and the sale of Lady Luck Casino Marquette to be consummated in fiscal 2018, there can be no assurance that we will have sufficient funds to undertake these expenditures or that we will be able to obtain sufficient financing to fund such expenditures. If we are unable to make such expenditures, our competitive position could be negatively affected.

Our operations in certain jurisdictions depend on agreements with third parties.

Our operations in several jurisdictions depend on agreements with third parties. If we are unable to renew these agreements on satisfactory terms as they expire, our business may be disrupted and, in the event of disruptions in multiple jurisdictions, could have a material adverse effect on our financial condition and results of operations. For example, Iowa law requires that each gambling venue in Iowa must have a licensed “Qualified Sponsoring Organization,” or QSO, which is a tax-exempt non-profit organization. The QSO must donate the profits it receives from casino operations to educational, civic, public, charitable, patriotic or religious uses. Each of our three Iowa properties has an agreement with a local QSO. We have the right to renew our agreements for Bettendorf and Waterloo when they expire in 2025 and 2018, respectively.

We have a management agreement with Nemacolin Woodlands Resort, the owner of the gaming license issued by the Pennsylvania Gaming Control Board allowing operation of a casino at the resort. Under the terms of this agreement, we constructed and currently operate a casino at the resort. Our management agreement is subject to a buy-out provision on or after December 31, 2021, as well as other terms and conditions which could result in termination of the management agreement. The base term of the agreement is ten years, with four, five-year renewal options. Additionally, each party to the ~~timing~~management agreement has certain termination rights. If the management agreement is terminated, we will no longer have the right to manage our casino at Nemacolin Woodlands Resort.

Our information technology and other systems are subject to cyber security risk including misappropriation of ~~the closing~~customer information or other breaches of ~~either sale or that the closings will occur on the terms set forth~~information security.

We collect information relating to our guests and employees for various business purposes, including marketing and promotional purposes. The collection and use of personal data are governed by privacy laws and regulations enacted in the ~~purchase agreements relating~~United States. We rely on information technology and other systems to maintain and transmit this personal and financial information, credit card settlements, credit card funds transmissions, mailing lists and reservations information. Our information and processes are subject to the ~~sales,~~ever-changing threat of compromised security, in the form of a risk of potential breach, system failure, computer virus, or ~~at all. In the event that the closing~~unauthorized or fraudulent use by customers, company employees, or employees of ~~either sale is delayed~~third party vendors. The steps we take to deter and mitigate these risks may not be successful, and any resulting compromise or ~~does not occur, ERI may be required to incur additional indebtedness to repay debt outstanding under Isle’s credit agreement~~loss of data or ~~outstanding notes, which~~systems could adversely impact, operations or regulatory compliance and could result in remedial expenses, fines, litigation, and loss of reputation, potentially impacting our financial results.

In addition, third party service providers and other business partners process and maintain proprietary business information and data related to our guests, suppliers and other business partners. Our information technology and other systems that maintain and transmit this information, or those of service providers or business partners, may also be compromised by a malicious third party penetration of our network security or that of a third party service provider or business partner, or impacted by intentional or unintentional actions or inactions by our employees or those of a third party service provider or business partner. As a result, our business information, guest, supplier, and other business partner data may be lost, disclosed, accessed or taken without their consent.

Any such loss, disclosure or misappropriation of, or access to, guests’ or business partners’ information or other breach of our information security can result in legal claims or legal proceedings, including regulatory investigations and actions, may have a serious impact on our reputation and may adversely affect our businesses, operating results and financial condition. Furthermore, the loss, disclosure or misappropriation of our business information may adversely affect our reputation, businesses, operating results and financial condition.

Some of our casinos are located on leased property. If we default on one or more leases, the applicable lessors could terminate the affected leases and we could lose possession of the affected casino.

We lease certain parcels of land on which several of our properties are located. As a ground lessee, we have the right to use the leased land; however, we do not hold fee ownership in the underlying land. Accordingly, with respect to the leased land, we will have no interest in the land or improvements thereon at the expiration of the ground leases. Moreover, since we do not completely control the land underlying the property, a landowner could take certain actions to disrupt our rights in the land leased under the long-term leases which are beyond our control. If the entity owning any leased land chose to disrupt our use either permanently or for a significant period of time, then the value of our assets could be impaired and our business and operations could be adversely affected. If we were to default on any one or more of these leases, the applicable lessors could terminate the affected leases and we could lose possession of the affected land and any improvements on the land, including the hotels and casinos. This would have a significant adverse effect on our business, financial condition and results of operations as we would then be unable to operate all or portions of the ~~combined company.~~affected facilities and may result in the default under our New Credit Facility.

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

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

~~Table of Contents~~

~~ITEM 3. DEFAULTS UPON SENIOR SECURITIES.~~

None.

ITEM 4. ~~MINE SAFETY DISCLOSURES.~~

MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. ~~OTHER INFORMATION.~~

OTHER INFORMATION.

None.

ITEM 6.

EXHIBITS.

~~ITEM 6. EXHIBITS.~~

Exhibit Number	Description of Exhibit	Method of Filing

~~2.1~~	~~Agreement and Plan of Merger by and among Isle of Capri Casinos, Inc., Eldorado Resorts, Inc., Eagle I Acquisition Corp. and Eagle II Acquisition Company LLC, dated as of September 19, 2016.~~	~~Previously filed on Form 8-K filed on September 22, 2016~~

~~10.1~~	~~Commitment Letter, dated September 19, 2016, from JPMorgan Chase Bank, N.A.~~10.1	~~Previously filed on Form 8-K filed on September 22, 2016~~

~~10.3~~	~~Voting~~Amendment Agreement, dated as of ~~September 19, 2016,~~August 15, 2017 by and between among ~~Isle of Capri Casinos, Inc., Eldorado Resorts, Inc.~~the Company and ~~Recreational Enterprises, Inc.~~	~~Previously filed on Form 8-K filed on September 22, 2016~~

~~10.4~~	~~Voting~~JPMorgan Chase, N.A. as Administrative Agent in connection with the Credit Agreement, dated as of ~~September 19, 2016, by and among Isle of Capri Casinos, Inc., Eldorado Resorts, Inc. and GFIL Holdings, LLC.~~	~~Previously filed on Form 8-K filed on September 22, 2016~~

~~31.1~~	~~Certification of Gary L. Carano pursuant to Rule 13a‑14a and Rule 15d‑14(a)~~April 17, 2017	Filed herewith.

~~31.2~~ 31.1	Certification of ~~Thomas R. Reeg~~Gary L. Carano pursuant to Rule 13a‑14a and Rule 15d‑14(a)	Filed herewith.

~~32.1~~ 31.2	Certification of ~~Gary L. Carano in accordance with 18 U.S.C. Section 1350~~Thomas R. Reeg pursuant to Rule 13a‑14a and Rule 15d‑14(a)	Filed herewith.

~~32.2~~ 32.1	Certification of ~~Thomas R. Reeg~~Gary L. Carano in accordance with 18 U.S.C. Section 1350	Filed herewith.

32.2	Certification of Thomas R. Reeg in accordance with 18 U.S.C. Section 1350	Filed herewith.

101.1	XBRL Instance Document	Filed herewith.

101.2	XBRL Taxonomy Extension Schema Document	Filed herewith.

101.3	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.

101.4	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

101.5	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith.

101.6	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.

SIGNAT~~SIGNATURES~~URES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~Table of Contents~~

		ELDORADO RESORTS, INC.


Date: November ~~9, 2016~~7, 2017		/s/ Gary L. Carano
		Gary L. Carano
		Chief Executive Officer and Chairman of the Board


Date: November ~~9, 2016~~7, 2017		/s/ Thomas R. Reeg
		Thomas R. Reeg
		President and Chief Financial Officer
		(Principal Financial Officer)


	Three Months Ended		Nine Months Ended
	September 30, 2015		September 30, 2015
Net revenues	$	242,993	$	687,126
Net income		9,896		11,773
Net income per common share:
Basic	$	0.21	$	0.25
Diluted	$	0.21	$	0.25
Weighted shares outstanding:
Basic		46,550,042		46,550,042
Diluted		46,865,603		47,007,451


			Weighted-Average		Weighted-Average
	Equity		Grant Date		Remaining	Aggregate
	Awards		Fair Value		Contractual Life	Fair Value
					(in years)		(in millions)
Unvested outstanding as of December 31, 2015	827,383	(1)	$	4.09	2.12	$	3.4
Granted	412,233	(2)		10.81
Vested	(245,934)			5.63
Unvested outstanding as of September 30, 2016	993,682		$	6.49	1.67	$	6.5


	As of		As of
	September 30,		December 31,
	2016		2015
	(unaudited)
	(in thousands)
Total Assets
Nevada	$	361,362	$	376,760
Louisiana		128,690		135,403
Eastern		848,463		883,344
Corporate		382,650		495,202
Eliminating entries (1)		(442,291)		(565,701)
Total	$	1,278,874	$	1,325,008

(1) Reflects the following eliminations for the periods indicated:

Intercompany receivables/payables, inclusive of allocated interest	$	284,744	$	406,325
Net investment in Silver Legacy/Circus Reno		88,314		88,314
Net investment in and advances to Silver Legacy		56,500		56,500
Net investment in and advances to Eldorado Shreveport		7,733		8,482
Net investment in MTR		5,000		5,000
Reclass deferred tax assets against deferred tax liabilities		—		1,080
	$	442,291	$	565,701


	Three Months Ended September 30, 2016
	Operating Income (Loss)		Depreciation and Amortization		Stock-Based Compensation(3)		Transaction Expenses		Severance Expense		Other(4)		Adjusted EBITDA

Nevada	$	15,606	$	4,864	$	—	$	—	$	153	$	(12)	$	20,611
Louisiana		6,703		1,973		—		—		—		—		8,676
Eastern		15,102		8,847		—		—		263		(70)		24,142
Corporate		(9,302)		126		717		4,750		—		—		(3,709)
Total	$	28,109	$	15,810	$	717	$	4,750	$	416	$	(82)	$	49,720

	Three Months Ended September 30, 2015
	Operating Income (Loss)		Depreciation and Amortization		Stock-Based Compensation		Transaction Expenses		Severance Expense		Other(4)		Adjusted EBITDA

Nevada	$	6,339	$	1,959	$	—	$	—	$	—	$	(2,532)	$	5,766
Louisiana		5,801		1,902		—		—		—		(64)		7,639
Eastern		16,152		9,979		—		—		31		(83)		26,079
Corporate		(4,200)		114		334		380		65		54		(3,253)
Total Excluding Pre-Reno Acquisition		24,092		13,954		334		380		96		(2,625)		36,231
Pre-Reno Acquisition (1)		10,819		2,659		—		—		—		—		13,478
Total Including Pre-Reno Acquisition (5)	$	34,911	$	16,613	$	334	$	380	$	96	$	(2,625)	$	49,709