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

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

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

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

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

As of ~~November 6, 2018,~~May 7, 2019, the registrant had ~~27,991,425~~27,750,608 shares of common stock, $0.01 par value per share, outstanding.

	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
ASSETS
Current assets
Cash and cash equivalents	$	132,367		$	90,579		$	108,259		$	116,071
Accounts receivable, net		15,146			14,692
Accounts receivable, net of allowance of $624 and $503								16,129			12,779
Prepaid expenses		16,802			19,397			21,358			17,722
Inventories		5,852			5,594			7,080			6,759
Other		2,294			2,817			3,327			3,428
Total current assets		172,461			133,079			156,153			156,759
Property and equipment, net		886,534			895,241			1,023,182			894,953
Operating lease right-of-use assets, net								163,044			—
Goodwill		158,134			158,134			182,870			158,134
Intangible assets, net		144,815			157,692			151,998			141,128
Deferred income taxes		7,893			7,787
Other assets		20,423			13,242			12,936			15,595
Total assets	$	1,390,260		$	1,365,175		$	1,690,183		$	1,366,569
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt and capital leases	$	8,859		$	9,759
Current portion of long-term debt and finance leases							$	9,907		$	10,480
Current portion of operating leases								36,050			—
Accounts payable		19,933			19,470			24,189			27,812
Accrued taxes, other than income taxes		6,374			6,664			8,835			6,540
Accrued payroll and related		15,775			22,570			22,589			19,780
Accrued liabilities		18,135			20,373			22,462			18,848
Total current liabilities		69,076			78,836			124,032			83,460
Long-term debt, net		960,470			963,200
Long-term debt, net and finance leases								1,104,961			960,563
Non-current operating leases								142,444			—
Deferred income taxes								1,942			2,593
Other long-term obligations		3,277			3,226			1,482			4,801
Total liabilities		1,032,823			1,045,262			1,374,861			1,051,417
Commitments and contingencies (Note 11)
Commitments and contingencies (Note 10)
Shareholders' equity
Common stock, $.01 par value; authorized 100,000 shares; 27,952 and 26,413 common shares issued and outstanding, respectively		280			264
Common stock, $.01 par value; authorized 100,000 shares; 27,743 and 26,779 common shares issued and outstanding, respectively								277			268
Additional paid-in capital		432,618			399,510			455,696			435,245
Accumulated deficit		(75,461	)		(79,861	)		(140,651	)		(120,361	)
Total shareholders' equity		357,437			319,913			315,322			315,152
Total liabilities and shareholders' equity	$	1,390,260		$	1,365,175		$	1,690,183		$	1,366,569

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Revenues
Gaming	$	127,764		$	86,644		$	394,173		$	262,079		$	143,792		$	133,863
Food and beverage		41,999			15,169			128,024			45,061			49,758			42,603
Rooms		28,104			2,237			81,737			5,646			31,287			26,127
Other		12,470			3,610			37,735			10,642			15,055			12,196
Total revenues		210,337			107,660			641,669			323,428			239,892			214,789
Expenses
Gaming		76,465			61,434			232,663			185,575			82,348			77,688
Food and beverage		34,508			13,170			103,451			39,346			38,214			33,592
Rooms		13,109			601			36,965			1,574			14,401			11,565
Other operating		3,805			1,242			11,456			4,057			6,434			3,996
Selling, general and administrative		47,479			19,439			135,858			56,334			56,947			44,206
Depreciation and amortization		23,330			7,539			71,421			21,499			27,265			25,237
Acquisition expenses		1,123			2,975			2,429			5,041
Acquisition and severance expenses														1,544			1,299
Preopening expenses		21			282			858			1,128			778			448
Gain on contingent consideration		—			(1,719	)		—			(1,719	)
Loss on disposal of property and equipment		774			308			1,069			308
Loss on disposal of assets														247			77
Total expenses		200,614			105,271			596,170			313,143			228,178			198,108
Operating income		9,723			2,389			45,499			10,285			11,714			16,681
Non-operating income (expense)
Interest expense, net		(16,291	)		(1,885	)		(47,100	)		(5,568	)		(18,135	)		(14,743	)
Change in fair value of derivative		1,222			—			5,895			—			(2,248	)		3,211
Total non-operating expense, net		(15,069	)		(1,885	)		(41,205	)		(5,568	)		(20,383	)		(11,532	)
Income (loss) before income tax benefit		(5,346	)		504			4,294			4,717			(8,669	)		5,149
Income tax benefit		2,222			8,051			106			10,893
Income tax benefit (provision)														651			(1,219	)
Net income (loss)	$	(3,124	)	$	8,555		$	4,400		$	15,610		$	(8,018	)	$	3,930

Weighted-average common shares outstanding
Basic		27,655			22,266			27,405			22,280			27,570			27,149
Dilutive impact of stock options and restricted stock units		—			1,825			1,787			1,167			—			2,379
Diluted		27,655			24,091			29,192			23,447			27,570			29,528
Net income (loss) per share
Basic	$	(0.11	)	$	0.38		$	0.16		$	0.70		$	(0.29	)	$	0.14
Diluted	$	(0.11	)	$	0.36		$	0.15		$	0.67		$	(0.29	)	$	0.13

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

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

	Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2019			2018
Cash flows from operating activities
Net income	$	4,400		$	15,610		$	(8,018	)	$	3,930
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		71,421			21,499			27,265			25,237
Amortization of debt issuance costs and discounts on debt		3,799			561			1,261			1,267
Share-based compensation		7,063			5,352			4,140			1,844
Loss on disposal of property and equipment		1,069			308			247			77
Gain on revaluation of contingent consideration		—			(1,719	)
Change in fair value of derivative		(5,895	)		—			2,248			(3,211	)
Deferred income taxes		(106	)		(10,798	)		(651	)		373
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(454	)		(1,419	)		(1,734	)		646
Income taxes		—			2,142
Income taxes receivable								193			846
Prepaid expenses		2,494			(2,209	)		(980	)		2,542
Inventories and other current assets		266			(455	)		527			797
Other assets		(486	)		(559	)
Accounts payable and other accrued expenses		(10,312	)		5,322			277			(5,359	)
Accrued taxes, other than income taxes		(290	)		(2,065	)		1,523			807
Other liabilities		52			236
Other								465			263
Net cash provided by operating activities		73,021			31,806			26,763			30,059
Cash flows from investing activities
Purchase of property and equipment		(48,939	)		(18,383	)
Deposit paid for asset purchase		(800	)		(2,467	)
Asset purchase		(300	)		(196	)
Purchase of property and equipment, net of change in construction payables								(27,094	)		(10,242	)
Acquisition of business, net of cash acquired								(148,952	)		—
Proceeds from disposal of property and equipment								26			—
Other investing activities								(45	)		28
Net cash used in investing activities		(50,039	)		(21,046	)		(176,065	)		(10,214	)
Cash flows from financing activities
Repayments of term loans		(6,000	)		(9,000	)		(2,000	)		(2,000	)
Repayments of revolving credit facility		—			(4,000	)
Borrowings under revolving credit facility		—			1,000			145,000			—
Repayments of notes payable		(321	)		(3,049	)		(855	)		(109	)
Proceeds from leased equipment obligation		—			742
Principal payments under capital leases		(838	)		(608	)
Debt issuance costs		(95	)		—
Proceeds from issuance of common stock		27,242			168
Principal payments under finance leases								(367	)		(229	)
Proceeds from issuance of common stock, net of issuance costs								—			25,608
Tax withholding on share-based payments		(820	)		—			(288	)		—
Stock issuance costs		(362	)		—
Net cash provided by (used in) financing activities		18,806			(14,747	)
Net cash provided by financing activities								141,490			23,270
Cash and cash equivalents
Net increase (decrease) for the period		41,788			(3,987	)
Change in cash and cash equivalents								(7,812	)		43,115
Balance, beginning of period		90,579			46,898			116,071			90,579
Balance, end of period	$	132,367		$	42,911		$	108,259		$	133,694
Supplemental cash flow disclosures
Cash paid for interest	$	44,648		$	5,073		$	16,579		$	14,615
Cash received for income taxes, net								(193	)		—
Non-cash investing and financing activities
Payables incurred for capital expenditures	$	3,680		$	4,317		$	4,064		$	1,652
Notes payable issued for property and equipment		—			717
Assets acquired under capital lease obligations		237			3,015
Impairment of right-of-use asset								12,272			—
Common stock issued in connection with acquisition								16,608			—

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

Golden Entertainment, Inc. and its wholly-owned subsidiaries (collectively, the “Company”) own and operate a diversified entertainment platform, consisting of a portfolio of gaming assets that focus on resort casino operations and distributed gaming (including ~~tavern~~ gaming in the Company’s ~~wholly-owned~~branded taverns). ~~The Company’s common stock is traded on the Nasdaq Global Market, and the Company’s ticker symbol is “GDEN.”~~

The Company conducts its business through two reportable operating segments: Casinos and Distributed Gaming.

The Company’s Casinos segment involves the operation of ~~eight~~ten resort casino properties in Nevada and Maryland, comprising the Stratosphere Casino, Hotel & Tower (the “Stratosphere”), Arizona Charlie’s Decatur and Arizona Charlie’s Boulder in Las Vegas, Nevada, the Aquarius Casino Resort (the “Aquarius”) in Laughlin, Nevada, the Pahrump Nugget Hotel Casino (“Pahrump Nugget”), Gold Town Casino and Lakeside Casino & RV Park in Pahrump, Nevada, and the Rocky Gap Casino Resort in Flintstone, Maryland (“Rocky Gap”). The casino properties in Las Vegas and Laughlin, Nevada were added to the Company’s casino portfolio in October 2017 as a result of the Company’s acquisition of American Casino & Entertainment Properties LLC (“American”), as further described below.comprising:

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

On ~~October 20, 2017,~~January 14, 2019, the Company completed the acquisition of all of the outstanding equity interests of American (the “American Acquisition”). The results of operations of American and its subsidiaries have been included in the Company’s results subsequent to that date. See Note 3, ~~Acquisitions, for information regarding the American Acquisition.~~

In January 2018, the Company completed an underwritten public offering pursuant to its universal shelf registration statement, in which certain of the Company’s shareholders resold an aggregate of 6.5 million shares of the Company’s common stock, and the Company sold 975,000 newly issued shares of its common stock pursuant to the exercise in full of the underwriters’ over-allotment option to purchase additional shares. The Company’s net proceeds from the offering were approximately $25.6 million after deducting underwriting discounts and offering expenses.

~~In July 2018, the Company entered into an agreement to acquire all of the outstanding equity interests~~ of Edgewater Gaming, LLC and Colorado Belle Gaming, LLC, which own the Edgewater ~~Hotel & Casino Resort~~ and Colorado Belle ~~Hotel & Casino Resort~~ in Laughlin, Nevada, as further described in Note 3,2, Acquisitions, below.

On March 12, 2019, the Company’s Board of Directors authorized the repurchase of up to $25.0 million additional shares of common stock, which replaced the prior share repurchase program authorized in November 2018. Share repurchases may be made from time to time in open market transactions, block trades or in private transactions in accordance with applicable securities laws and regulations and other legal requirements, including compliance with the Company’s finance agreements. There is no minimum number of shares that the Company is required to repurchase and the repurchase program may be suspended or discontinued at any time without prior notice.

The unaudited consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial information. Accordingly, certain information normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) has been condensed and/or omitted. For further information, please refer to the audited consolidated financial statements of the Company for the year ended December 31, ~~2017~~2018 and the notes thereto included in the Company’s Annual Report on Form 10-K previously filed with the SEC. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s results for the periods presented. Results for interim periods should not be considered indicative of the results to be expected for the full year.

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

The Company is the lessee under non-cancelable real estate and, equipment leases and space lease agreements. Beginning on January 1, 2019 (the date of the Company's adoption of Topic 842, as defined and discussed further in "Accounting Standards Issued and Adopted", below), operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term. The Company’s lease terms may include options to extend or terminate the lease. The Company assesses these options using a threshold of reasonably certain. For leases where the Company is reasonably certain to renew, those option periods are included within the lease term and, therefore, the measurement of

the right-of-use asset and lease liability. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value guarantees, restrictions or covenants.

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

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

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

~~During the quarter ended June 30, 2018, the Company completed an analysis associated with planned renovations of certain assets acquired in the American Acquisition (see Note 3,~~ ~~Acquisitions~~). As a result, effective April 1, 2018, the Company changed its estimated useful lives on certain buildings and land improvements to better reflect the estimated periods during which these assets will remain in service. The estimated useful lives of buildings and building improvements that previously averaged ten years were increased to an average of 19 years. The effect of this change in estimated useful lives on the Company’s results of operations for the three months ended September 30, 2018 was to reduce depreciation expense by $2.1 million, reduce net loss by $2.5 million, and reduce both basic and diluted loss per share by $0.09. The effect of this change in estimated useful lives on the Company’s results of operations for the nine months ended September 30, 2018 was to reduce depreciation expense by $4.3 million, increase net income by $4.2 million, and increase basic and diluted earnings per share by $0.15 and $0.14, respectively.

For all periods, basic net income per share is calculated by dividing net income by the weighted-average common shares outstanding. Diluted net income per share in profitable periods reflects the effect of all potentially dilutive common shares outstanding by dividing net income by the weighted-average of all common and potentially dilutive shares outstanding. Due to the net loss for the quarter ended ~~September 30, 2018,~~March 31, 2019, the effect of all potential common share equivalents was anti-dilutive, and therefore all such shares were excluded from the computation of diluted weighted average shares outstanding for this period. The amount of potential common share equivalents were ~~1,870,290~~1,047,804 for quarter ended ~~September 30, 2018.~~March 31, 2019.

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

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

The standard did not materially impact the Company’s consolidated net earnings and had no impact on cash flows. The effect of adopting Topic 842 on the January 1, 2019 consolidated balance sheet is as follows:

In ~~May 2014 (amended January 2017),~~June 2018, the Financial Accounting Standards Board (“FASB”) issued ~~a comprehensive new revenue recognition model, Accounting Standards Update (“ASU”) 2014-09,~~ ~~Revenue from Contracts with Customers~~ which created a new Topic 606 (“ASC 606”). The guidance is intended to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP applicable to revenue transactions. Existing industry guidance was eliminated, including revenue recognition guidance specific to the gaming industry. The Company adopted the standard as of January 1, 2018, following the full retrospective approach. The accompanying financial statements and related disclosures reflect the effects of the new revenue standard. The most significant impacts of the adoption are summarized in Note 2, ~~Revenue Recognition~~.

~~In February 2016, the FASB issued~~ ASU ~~2016-02,~~ ~~Leases~~, which replaces the existing guidance. ASU 2016-02 requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. ASU 2016-02 is effective for annual periods beginning after December 15, 2018 and interim periods therein, with early adoption permitted. The Company ~~has begun planning its assessment and implementation process, including determining the completeness of its lease population, and is currently~~ evaluating the impact of this guidance on its consolidated financial statements and disclosures. While the income statement is not expected to be materially impacted, the Company expects adoption to have a material impact on the balance sheet ~~due to recognition of right-of-use assets and lease liabilities~~. The Company also anticipates expanded footnote disclosures related to its leases under the new guidance. The Company’s evaluation of ASU 2016-02 and related guidance pertaining to improvements to ASU 2016-02, including ASU 2018-10 and ASU 2018-11, is ongoing and may identify additional impacts on its consolidated financial statements and related disclosures prior to adoption.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash~~ Flows, which reduced the diversity on how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The standard became effective for the Company as of January 1, 2018, and the adoption did not have a material impact on the Company’s financial statements and disclosures.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations~~, which clarified the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions of assets or businesses. The standard became effective for the Company as of January 1, 2018, and the adoption did not have a material impact on the Company’s financial statements and disclosures.

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation – Stock Compensation~~, which amends the scope of modification accounting for share-based payment arrangements. ASU 2017-09 provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The standard became effective for the Company as of January 1, 2018, and the adoption did not have a material impact on the Company’s financial statements and disclosures.

~~In June 2018, the FASB issued ASU~~No. 2018-07, Compensation – Stock Compensation, which expands previous guidance to include all share-based payment arrangements related to the acquisition of goods and services from both non-employees and employees. ~~ASU 2018-07 is effective for annual periods beginning after December 15, 2018 and interim periods therein, with early adoption permitted.~~ The Company ~~is currently evaluating~~adopted the standard as of January 1, 2019, and the adoption did not have a material impact ~~of this guidance~~ on ~~its consolidated~~the Company’s financial statements and disclosures.

See Note 2,~~018,~~Summary of Significant Accounting Policies, to the ~~FASB issued ASU 2018-13,~~ ~~Fair Value Measurement~~, which eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. ASU 2018-13 is effective for annual periods beginning after December 15, 2019 and interim periods therein, with early adoption permitted. The Company is currently evaluating the impact of this guidance on itsCompany’s audited consolidated financial statements ~~and disclosures.~~

~~In August 2018,~~for the ~~FASB~~year ended December 31, 2018 for a discussion of accounting standards issued ~~ASU 2018-15,~~ ~~Intangibles-Goodwill and Other-Internal-Use Software~~, which provides guidance on implementation costs incurred in a cloud computing arrangement that is a service contract. ASU 2018-15 is effective for annual periods beginning after December 15, 2019 and interim periods therein, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and disclosures.

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

Revenue from contracts with customers primarily consists of casino wagers, room sales, food and beverage transactions, rental income from the Company’s retail tenants and entertainment sales. These contracts can be written, oral or implied by customary business practices.

Casino gaming revenues are the aggregate of gaming wins and losses. The commissions rebated to premium players for cash discounts and other cash incentives to patrons related to gaming play are recorded as a reduction to casino gaming revenues. Gaming contracts include a performance obligation to honor the patron’s wager and typically include a performance obligation to provide a product or service to the patron on a complimentary basis to incentivize gaming or in exchange for points earned under the Company’s loyalty programs.

The Company generally enters into three types of slot and amusement device placement contracts as part of its distributed gaming business: space agreements, revenue share agreements and participation agreements. Under space agreements, the Company pays a fixed monthly rental fee for the right to install, maintain and operate the Company’s slots at a business location. Under these agreements, the Company recognizes all gaming revenue and records fixed monthly rental fees as gaming expenses in the consolidated statement of operations. Under revenue share agreements, the Company pays the business location a percentage of the gaming revenue generated from the Company’s slots placed at the location. With regard to both space and revenue share agreements, the Company holds the applicable gaming license to conduct gaming at the location (although revenue share locations are required to obtain separate regulatory approval to receive a percentage of the gaming revenue). Under participation agreements, the business location holds the applicable gaming license and retains a percentage of the gaming revenue that it generates from the Company’s slots. In Montana, the Company’s slot and amusement device placement contracts are all revenue share agreements. In its distributed gaming business, the Company considers its customer to be the gaming player since the Company controls all aspects of the slot machines. Due to the maintaining of control of the services directly before they are transferred to the customer, the Company is considered to be the principal in these transactions and therefore records revenue on a gross basis.

For wagering contracts that include complimentary products and services provided by the Company to incentivize gaming, the Company allocates the stand-alone selling price of each product and service to the respective revenue type. Complimentary products or services provided under the Company's control and discretion that are supplied by third parties are recorded as an operating expense.

~~For wagering contracts that include products and services provided to a patron in exchange for points earned under the Company’s loyalty programs, Golden Rewards®, ace|PLAY®, Gold Mine Rewards~~^TM ~~and Rocky Gap Rewards Club~~^TM, the Company allocates the estimated stand-alone selling price of the points earned to the loyalty program liability. The loyalty program liability is a deferral of revenue until redemption occurs under ASC 606. Upon redemption of loyalty program points for Company-owned products and services, the stand-alone selling price of each product or service is allocated to the respective revenue type. For redemptions of points with third parties, the redemption amount is deducted from the loyalty program liability and paid directly to the third party. Any discounts received by the Company from the third party in connection with this transaction are recorded to other revenue.

After allocation to the other revenue types for products and services provided to patrons as part of a wagering contract, the residual amount is recorded to casino gaming revenue as soon as the wager is settled. As all wagers have similar characteristics, the Company accounts for its gaming contracts collectively on a portfolio basis versus an individual basis.

Revenue from leases is primarily recorded to other revenues and is generated from base rents through long-term leases with retail tenants. Base rent, adjusted for contractual escalations, is recognized on a straight-lined basis over the term of the related lease. Overage rent is paid by a tenant when its sales exceed an agreed upon minimum amount and is not recognized by the Company until the threshold is met.

Food, beverage and retail revenues are recorded at the time of sale. Room revenue is recorded at the time of occupancy. Sales taxes and surcharges collected from customers and remitted to governmental authorities are presented on a net basis.

The Company provides numerous products and services to its customers. There is often a timing difference between the cash payment by the customers and recognition of revenue for each of the associated performance obligations. The Company has the following main types of gaming liabilities associated with contracts with gaming customers: (1) outstanding chip liability, and (2) loyalty program liabilities.

The outstanding chip liability represents the collective amounts owed to patrons in exchange for gaming chips in their possession. Outstanding chips are expected to be recognized as revenue or redeemed for cash within one year of being purchased. The loyalty program liabilities represent a deferral of revenue until patron redemption of points earned. The loyalty program points are expected to be redeemed and recognized as revenue within one year of being earned. As of September 30, 2018 and December 31, 2017, the amount of gaming liabilities was $11.4 million and $12.2 million, respectively.

Customer deposits and other deferred revenue represent cash deposits made by customers for future non-gaming services to be provided by the Company. With the exception of tenant deposits, which are tied to the terms of the lease and typically extend beyond a year, the majority of these customer deposits and other deferred revenue are expected to be recognized as revenue or refunded to the customer within one year of the date the deposit was recorded.

The adoption of ASC 606 principally affected the presentation of promotional allowances and how the Company measured the liability associated with its loyalty programs. The promotional allowances line item was eliminated from the consolidated statement of operations with amounts being deducted from the respective revenue line items, and the cost of providing such complimentaries is no longer included in gaming expense. Additionally, the valuation of points associated with the Company’s loyalty programs was changed from cost to fair value, with the Company recording an ~~increase to the loyalty point liability.~~

Furthermore, as a result of the adoption of the new standard, certain adjustments and other reclassifications to and between revenue categories and to and between expense categories were required; however, the amounts associated with such adjustments did not have a significant impact on the Company’s previously reported operating income or net income.

The Company elected to adopt the full retrospective method to apply the new guidance to each prior reporting period presented as if it had been in effect since January 1, 2015, with a pre-tax cumulative effect of the adoption recognized as a decrease in retained earnings of $1.1 million on January 1, 2017, related to its loyalty program point liability.

Adoption of the new standard did not have a significant impact on the Company’s previously reported net revenues, expenses, operating income, and net income. The impact of adoption of the new standard to previously reported selected financial statement information was as follows:

On ~~October 20, 2017,~~January 14, 2019, the Company completed the acquisition of ~~all of the outstanding equity interests of American~~Edgewater Gaming, LLC and Colorado Belle Gaming, LLC (the “Acquired Entities”) from Marnell Gaming, LLC (“Marnell”) for ~~aggregate consideration of $787.6~~$156.2 million in cash (after giving effect to the post-closing ~~adjustments)~~adjustment provisions in the purchase agreement) and the issuance ~~by the Company~~ of ~~approximately 4.0 million~~911,002 shares ~~of its common stock to W2007/ACEP Holdings, LLC (“ACEP Holdings”), a former American equity holder. The fair value~~ of the Company’s common stock ~~issued~~ to ~~ACEP Holdings was $101.5 million, based on the closing price~~certain assignees of Marnell (the “Acquisition”). The results of operations of the Acquired Entities are included in the Company’s ~~common stock on October 20, 2017 of $25.08 per share.~~results subsequent to the acquisition date.

In connection with the Acquisition, ~~Method of Accounting~~the Company borrowed $145.0 million under its revolving credit facility.

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

The following is a summary of the components of the purchase price paid by the Company to Marnell in the Acquisition (after taking into account the adjustment to the cash portion of the purchase price pursuant to the post-closing adjustment provisions of the purchase agreement, as described above):

Under ASC 805, the purchase price of the acquisition is allocated to the identified tangible and intangible assets acquired and liabilities assumed based on their estimated fair values asat the acquisition date which are determined ~~by management based on its judgment~~in accordance with ~~assistance from~~the applicable accounting guidance for business combinations and with the services of third-party ~~appraisals.~~valuation consultants. The excess of the purchase price over the ~~net book value of the assets acquired and the liabilities assumed has been~~fair values is recorded as ~~goodwill. The~~goodwill which is expected to be deductible for tax purposes.

During the measurement period, which may be up to one year from the acquisition date, the Company ~~has recognized~~may record adjustments to the assets acquired and liabilities assumed ~~in the American Acquisition based on fair value estimates~~with a corresponding offset to goodwill. Balances subject to adjustment primarily include current assets, property and equipment, intangible assets, liabilities, as well as tax-related matters, including tax basis of ~~the date of the acquisition. The determination of the fair value of the~~ acquired assets and ~~assumed liabilities (and~~liabilities.

The following table summarizes the ~~related determination~~preliminary allocation of ~~estimated lives of depreciable tangible and identifiable intangible assets) was completed in~~ the ~~second quarter of 2018. There were no measurement period adjustments that were material to the Company’s consolidated financial statements.~~purchase price:

The following table summarizes the preliminary amounts assigned to property and equipment and estimated useful life by category:

The following table summarizes the preliminary values assigned to acquired intangible assets and estimated useful lives by category:

The following unaudited pro forma combined financial information has been prepared by management for illustrative purposes only and does not purport to represent what the results of operations, financial condition or other financial information of the Company would have been if the ~~American~~ Acquisition had occurred on January 1, ~~2016,~~2018, or what such results or financial condition will be for any future periods. The unaudited pro forma combined financial information is based on preliminary estimates and assumptions and on the information available at the time of the preparation thereof. These preliminary estimates and assumptions may change, be revised or prove to be materially different, and the estimates and assumptions may not be representative of facts existing at the time of the ~~American~~ Acquisition. The unaudited pro forma combined financial information does not reflect non-recurring charges that will be incurred in connection with the ~~American~~ Acquisition, nor any cost savings and synergies expected to result from the ~~American~~ Acquisition (and associated costs to achieve such savings or synergies), nor any costs associated with severance, restructuring or integration activities resulting from the ~~American~~ Acquisition.

The following table summarizes certain unaudited pro forma combined financial information derived from a combination of the historical consolidated financial statements of the Company and of ~~American~~the Acquired Entities for the three ~~and nine~~ months ended ~~September 30 2017,~~March 31, 2018, adjusted to give effect to the ~~American~~ Acquisition, related transactions, ~~(including the refinancing),~~ and the adoption of ASC ~~606.~~606 for the Acquired Entities.

~~On July 14, 2018,~~ the Company ~~entered into a purchase agreement with Marnell Gaming, LLC (the “Seller”) to acquire Edgewater Gaming, LLC and Colorado Belle Gaming, LLC (collectively,~~incurred approximately $0.4 million of acquisition costs during the ~~“Acquired Entities”). At~~three month ended March 31, 2019. For the closing of the acquisition, the Company expects to pay the Seller $155 million in cash and issue to the Seller between 455,501 and 1,226,348 shares of the Company’s newly issued common stock (which was valued at signing at between $13 million and $35 million, based on the volume-weighted average trading price of the Company’s common stock for the twenty trading days ending on July 13, 2018), with the final amount based on the earnings before interest, taxes, depreciation, amortization, rent and management fees ofthree months ended March 31, 2019, the Acquired Entities ~~from December 1, 2017~~contributed revenue of approximately $21.5 million. For the three months ended March 31, 2019, operating expenses related to November 30, 2018. Consummation of the acquisition is subject to the satisfaction or waiver of customary closing conditions, applicable gaming authority approvals, the absence of a material adverse effect regarding the Acquired Entities and other customary closing conditions. The Company and the Seller have agreed that the closing of the transactions will not occur prior to January 1, 2019, unless otherwise agreed by the parties. The Company intends to finance the cash portion of the purchase price from a combination of borrowings under the Company’s revolving credit facility and cash on hand.were approximately $11.9 million.

Depreciation expense for property and equipment, including ~~capital~~finance leases, was ~~$18.8~~$21.5 million and ~~$5.6~~$20.8 million for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively, and $58.2 million and $15.7 million for the nine months ended September 30, 2018 and 2017,~~ respectively.

As of ~~September 30, 2018,~~March 31, 2019, the Company’s senior secured credit facilities consisted of a ~~$940 million~~$1 billion senior secured first lien credit facility (consisting of $800 million in term loans and a ~~$140~~$200 million revolving credit facility) with JPMorgan Chase Bank, N.A. (as administrative agent and collateral agent), the lenders party thereto and the other entities party thereto (the “First Lien Facility”), and a $200 million senior secured second lien term loan facility with Credit Suisse AG, Cayman Islands Branch (as administrative agent and collateral agent), the lenders party thereto and the other entities party thereto (the “Second Lien Term Loan” and, together with the First Lien Facility, the “Credit Facilities”).

~~On June 11, 2018,~~As of March 31, 2019, the Company entered into Incremental Joinder Agreement No. 1 with JPMorgan Chase Bank, N.A. and the lenders party thereto, pursuant to which the size of the revolving credit facility under the First Lien Facility was increased from $100 million to $140 million.

~~As of September 30, 2018, $794~~had $790 million and $200 million in principal amount of outstanding term loan borrowings ~~were outstanding~~ under ~~the Company’s~~its First Lien Facility and Second Lien Term Loan, respectively, ~~there were~~ no letters of credit outstanding under the First Lien Facility, and ~~the Company’s~~$145 million in principal amount of borrowings outstanding under its revolving credit ~~facility was undrawn, leaving borrowing availability under the revolving credit facility as of September 30, 2018 of $140 million.~~facility.

As of ~~September 30, 2018,~~March 31, 2019, the weighted-average effective interest rate on the Company’s outstanding borrowings under the Credit Facilities was approximately ~~5.7%~~6.1%.

The revolving credit facility under the First Lien Facility matures on October 20, 2022, and the term loans under the First Lien Facility mature on October 20, 2024. The term loans under the First Lien Facility are repayable in 27 quarterly installments of $2 million each, which commenced in March 2018, followed by a final installment of $746 million at maturity. The term loans under the Second Lien Term Loan ~~are~~were repayable in full at maturity on October 20, 2025.

The Company was in compliance with its financial covenants under the Credit Facilities as of ~~September 30, 2018.~~March 31, 2019.

On April 15, 2019, the Company issued $375 million in principal amount of 7.625% Senior Notes due 2026 (“2026 Notes”) in a private placement to institutional buyers. The 2026 Notes were issued at face value and will be recorded as long-term debt, net of debt issuance costs, in the Company’s consolidated financial statements. The 2026 Notes bear interest at the rate of 7.625%, payable semi-annually in cash in arrears, which interest payments will commence in October 2019. Debt issuance costs associated with the issuance of the 2026 Notes will be amortized to interest expense on a straight-line basis over the term of the 2026 Notes.

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

Prior to April 15, 2022, the Company may redeem up to 40% of the 2026 Notes at a redemption price of 107.625% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the redemption date, from the net cash proceeds of specified equity offerings. The Company may also redeem the 2026 Notes prior to April 15, 2022, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus the applicable premium and any accrued and unpaid interest, if any, thereon to the redemption date. The applicable premium is calculated as the greater of: (i) 1.0% of the principal amount of such 2026 Notes and (ii) the excess, if any, of (a) the present value at such date of redemption of (1) the redemption price of such 2026 Notes on April 15, 2022 plus (2) all required interest payments due on such 2026 Notes through April 15, 2022 (excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the treasury rate (as defined under the indenture governing the 2026 Notes) plus 50 basis points, over (b) the then-outstanding principal amount of such 2026 Notes. The 2026 Notes may be redeemed, in whole or in part, at any time during the 12 months beginning on April 15, 2022 at a redemption price of 103.813%, during the 12 months beginning on April 15, 2023 at a redemption price of 101.906%, and at any time on or after April 15, 2024 at a redemption price of 100%, in each case plus accrued and unpaid interest, if any, thereon to the redemption date.

As of ~~September 30, 2018, 1,007,154~~March 31, 2019, a total of 1,399,820 shares of the Company’s common stock ~~were~~remained available for grants of awards under the ~~Company’s~~Golden Entertainment, Inc. 2015 Incentive Award Plan (the “2015 Plan”), which includes the annual increase in the number of shares available for grant on January 1, ~~2018~~2019 of ~~1,056,505~~1,119,924 shares.

Share-based compensation expense related to stock options was ~~$1.1~~$2.5 million and ~~$1.4~~$1.5 million for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively, and $4.0 million and $3.6 million for the nine months ended September 30, 2018 and 2017,~~ respectively. The Company’s unrecognized share-based compensation expense related to stock options was approximately ~~$8.3~~$4.5 million as of ~~September 30, 2018,~~March 31, 2019, which is expected to be recognized over a weighted-average period of ~~2.2~~1.6 years.

On March 14, 2018, the Compensation Committee of the Board of Directors of the Company approved a new long-term incentive structure for equity awards to be granted to the executive officers of the Company under the 2015 Plan. Under this new structure,

commencing in the first quarter of 2018, the executive officers of the Company receive long-term equity awards in a combination of time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”). The number of PSUs that will be eligible to vest will be determined based on the Company’s attainment of performance goals set by the Compensation Committee. Following the two-year performance period, the number of “vesting eligible” PSUs will then be subject to one additional year of time-based vesting. Share-based compensation costs related to RSU and PSU awards are calculated based on the market price on the date of the grant. The Company periodically reviews the estimates of performance against the defined criteria to assess the expected payout of each outstanding PSU grant and adjusts the stock compensation expense accordingly.

~~Outstanding PSUs as of December 31, 2017 were combined with the RSUs in the Company’s Annual Report on Form 10-K previously filed with the SEC.~~

Share-based compensation expense related to RSUs was $1.1 million and $0.2 million for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively, and $2.3 million and $1.5 million for the nine months ended September 30, 2018 and 2017,~~ respectively. Share-based compensation expense related to PSUs was ~~$0.3~~$0.4 million and ~~$0.8~~$0.2 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, respectively. ~~There~~

As of March 31, 2019, there was no$8.0 million and $5.4 million of unamortized share-based compensation expense related to ~~PSUs in 2017.~~

~~As of September 30, 2018, there was $4.5 million and $3.2 million of unamortized compensation expense related to unvested~~ RSUs and PSUs, respectively, which is expected to be recognized over a weighted-average period of ~~1.5~~2.7 years for both RSUs and ~~2.8 years for~~ PSUs.

The Company’s effective tax rate was ~~(2.5)%~~7.9% and ~~(231.33)%~~23.7% for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively.

Income tax benefit ~~was $0.1~~of $0.7 million for the ~~nine~~three months ended ~~September 30, 2018, which~~March 31, 2019 was ~~attributed~~ primarily due to ~~excess~~the change in valuation allowance against the Company’s deferred tax ~~benefits from stock options exercised~~assets during the ~~third~~first quarter of ~~2018.~~2019. Income tax ~~benefit was $10.9~~expense of $1.2 million for the ~~nine~~three months ended ~~September 30, 2017, which~~March 31, 2018 was ~~attributed~~ primarily due to ~~a partial release of valuation allowance on deferred~~expenses that are not deductible for tax ~~assets.~~purposes.

Deferred tax assets are evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies. The Company continues to evaluate its deferred tax asset valuation allowance on a quarterly basis. The Company concluded that, as of December 31, 2017, it is more likely than not that the Company will generate sufficient taxable income within the applicable net operating loss carry-forward periods to realize a portion of its deferred tax assets.

~~The Company’s income taxes receivable was $0.2 million as of September 30, 2018 and December 31, 2017.~~

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate income tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017. As of September 30, 2018, the Company had not completed its accounting for the tax effects of enactment of the Tax Act; however, in certain cases, as described below, the Company has made a reasonable estimate of the effects on its existing deferred tax balances. For any amounts the Company has not been able to make a reasonable estimate, it will continue to account for those items based on its existing accounting under ASC 740, Income Taxes, and the provisions of the tax laws that were in effect immediately prior to enactment. In all cases, the Company will continue to make and refine its calculations as additional analysis is completed. In addition, the Company’s estimates may also be affected as it gains a more thorough understanding of the Tax Act.

Given the significance of the legislation, the SEC staff issued Staff Accounting Bulletin (“SAB”) No. 118 (SAB 118), which allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended earlier when the registrant has obtained, prepared, and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared, or analyzed. SAB 118 summarizes a three-step process to be applied at each reporting period to account for and qualitatively disclose: (1) the effects of the change in tax law for which accounting is complete; (2) provisional amounts (or adjustments to provisional amounts) for the effects of the tax law where accounting is not complete, but that a reasonable estimate has been determined; and (3) a reasonable estimate cannot yet be made and therefore taxes are reflected in accordance with law prior to the enactment of the Tax Act.

Several provisions of the Tax Act have significant impact on the Company’s U.S. tax attributes, generally consisting of credits and loss carry-forwards. Although the Company has made a reasonable estimate of the gross amounts of the attributes disclosed, the Company is continuing to analyze certain aspects of the Tax Act and is refining its calculations which could potentially affect the measurements of these balances or potentially give rise to new deferred tax amounts.

Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2) and

unobservable (Level 3). Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels.

The carrying values of cash and cash equivalents, accounts receivable and accounts payable ~~short-term borrowings and accrued and other current liabilities~~ approximate fair value because of the short duration of these financial instruments. ~~As of September 30, 2018 and December 31, 2017,~~

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

The estimated fair value of the Company’s ~~long-term~~term loan debt ~~approximated~~is based on a relative value analysis performed as of March 31, 2019 and December 31, 2018. The finance lease liabilities and note payable debt are fixed-rate debt, are not traded and do not have observable market inputs, therefore, the fair value is estimated to be equal to the carrying ~~value because the terms were recently negotiated and based upon the Company’s expected borrowing rate for debt with similar remaining maturities and comparable risk.~~value.

As of ~~September 30, 2018,~~March 31, 2019, the Company had ~~one derivative instrument outstanding from which the Company will receive cash payments at the end of each period in which the~~an interest rate ~~exceeds the agreed upon strike price (the “Interest Rate Cap”),~~cap agreement that was outstanding with a notional amount of $650 million, which expires on December 31, 2020. Using Level 2 inputs, the Company adjusts the carrying value of ~~its Interest Rate Cap derivative~~the interest rate cap agreement to ~~estimate~~estimated fair value ~~quarterly. The fair value of the Company’s asset under its Interest Rate Cap is~~quarterly based upon observable market-based inputs that reflect the present values of the difference between estimated future fixed rate payments and future variable receipts. ~~Fair~~The fair value of the Company’s ~~Interest Rate Cap at September 30,~~interest rate cap agreement was $2.4 million and $5.0 million as of March 31, 2019 and December 31, 2018, ~~was $9.2 million.~~respectively. As the Company elected to not apply hedge accounting, the change in fair value of ~~this Interest Rate Cap~~its interest rate cap agreement was recorded in the consolidated statement of operations.

The Company ~~recorded rental revenue of $1.9 million~~has operating and finance leases for ~~the three months ended September 30, 2018~~offices, taverns, land, vehicles, slot machines, and no rental revenue during the three months ended September 30, 2017. The Company recorded rental revenue of $5.5 million for the nine months ended September 30, 2018 and de minmus amount for the nine months ended September 30, 2017.

The Company leases its branded tavern locations, office headquarters building, land, equipment and vehicles under noncancelable operating leases that are not subject to contingent rents. The Company leases one of its tavern locations and its office headquarters building from a related party. See Note 13,equipment. ~~Related Party Transactions,~~ ~~for more detail.~~

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

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

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

The current and long-term obligations under finance leases are included in “current portion of long-term debt, net and finance leases” and “long-term debt, net and finance leases”, respectively. The majority of the finance leases related to vehicles with minimum lease payment terms of four years or less, and external and internal lighting and renovations at The Strat.

As of March 31, 2019, the Company does not have any leases that have not yet commenced but that create significant rights and obligations.

For the three months ended March 31, 2018, operating lease rental expense, ~~associated with all operating leases, which is~~ calculated on a straight-line basis, ~~is as follows:~~was $9.4 million, $0.4 million and $3.6 million for space lease agreements, related party leases and other operating leases, respectively. The Company recorded rental revenue of $1.7 million for the three months ended March 31, 2018.

In addition to the space lease agreements described above in Note ~~10,~~9, Leases, the Company also enters into slot placement contracts in the form of participation and revenue share agreements. Under participation agreements, the business location holds the applicable gaming license and ~~participation agreements.~~retains a percentage of the gaming revenue that it generates from the Company’s slots. Under revenue share agreements, the Company pays the business location a percentage of the gaming revenue generated from the Company’s slots placed at the location, rather than a fixed monthly rental fee. ~~Under participation agreements, the business location holds the applicable gaming license and retains a percentage of the gaming revenue that it generates from the Company’s slots.~~ During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, the aggregate contingent payments recognized by the Company as(recorded in gaming ~~expenses~~expenses) under revenue share and participation agreements were ~~$35.5~~$38.6 million and ~~$110.1~~$37.1 million, respectively, including $0.2 million and ~~$0.7~~$0.2 million, respectively, under revenue share and participation agreements with related parties, as described in Note ~~13,~~12, Related Party Transactions. During the three and nine months ended September 30, 2017, the aggregate contingent payments recognized by the Company as gaming expenses under revenue share and participation agreements were $35.4 million and $107.0 million, respectively, including $0.3 million and $0.8 million, respectively, under revenue share and participation agreements with related parties.

The Company also enters into amusement device and ATM placement contracts in the form of ~~revenue share~~participation agreements. Under these ~~revenue share~~ agreements, the Company pays the business location a percentage of the non-gaming revenue generated from the Company’s amusement devices and ATMs placed at the location. During the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ the total contingent

payments recognized by the Company as(recorded in other operating ~~expenses~~expenses) for amusement devices and ATMs under such agreements were $0.3 million and $0.2 million, respectively. During the nine months ended September 30, 2018 and 2017, the total contingent payments recognized by the Company as other operating expenses for amusement devices and ATMs under such agreements were $1.1 million and $1.0 million, respectively.

In June 2018 the Company entered into a capital lease financing arrangement for external and internal lighting and renovations at the Stratosphere. Construction commenced in the third quarter of 2018 and is expected to be completed in the first quarter of 2019. The total amount to be paid is $9.6 million, of which $8.5 million will be financed over a 36-month period.

From time to time, the Company is involved in a variety of lawsuits, claims, investigations and other legal proceedings arising in the ordinary course of business, including proceedings concerning labor and employment matters, personal injury claims, breach of contract claims, commercial disputes, business practices, intellectual property, tax and other matters for which the Company ~~has~~ recorded reserves of ~~$1.7~~$1.0 million for claims as of ~~September 30, 2018.~~March 31, 2019. Although lawsuits, claims, investigations and other legal proceedings are inherently uncertain and their results cannot be predicted with certainty, the Company believes that the resolution of its currently pending matters should not have a material adverse effect on its business, financial condition, results of operations or liquidity. Regardless of the outcome, legal proceedings can have an adverse impact on the Company because of defense costs, diversion of management resources and other factors. In addition, it is possible that an unfavorable resolution of one or more such proceedings could in the future materially and adversely affect the Company’s business, financial condition, results of operations or liquidity in a particular period.

In February and April 2017, several former employees filed two separate purported class action lawsuits against the Company in the District Court of Clark County, Nevada, ~~and~~ on behalf of similarly situated individuals employed by the Company in the State of Nevada. The lawsuits allege that the Company violated certain Nevada labor laws including payment of an hourly wage below the statutory minimum wage without providing a qualified health insurance plan and an associated failure to pay proper overtime compensation. The complaints seek, on behalf of the plaintiffs and members of the putative class, an unspecified amount of damages (including punitive damages), injunctive and equitable relief, and an award of attorneys’ fees, interest and costs. The Company agreed to settle the first of these cases in the fourth quarter of 2017 and the second of these cases in the third quarter of 2018. ~~Both settlements are~~In February 2019, the court approved the settlement for the first case for $0.5 million. The remaining case remains subject to final court approval, with the final fairness hearing scheduled for June 2019, and ~~are~~is included in the Company’s recorded reserves of ~~$1.7~~$1.0 million at ~~September 30, 2018.~~March 31, 2019.

On August 31, 2018, prior guests of ~~the Stratosphere~~The Strat filed a purported class action complaint against the Company in the District Court, Clark County, Nevada, on behalf of similarly situated individuals and entities that paid the Clark County Combined Transient Lodging Tax (“Tax”) on the portion of a resort fee that constitutes charges for Internet access, during the period of February 6, 2014 through the date the alleged conduct ceases. The lawsuit ~~alleges~~alleged that the Tax was charged in violation of the federal Internet Tax Freedom Act, which ~~imposes~~imposed a national moratorium on the taxation of Internet access by states and their political subdivisions, and ~~seeks,~~sought, on behalf of the plaintiff and the putative class, damages equal to the amount of the Tax collected on the Internet access component of the resort fee, injunctive relief, disgorgement, interest, fees and costs. All defendants to this matter, including Golden Entertainment, Inc., filed a joint motion to dismiss this matter for lack of merit. The ~~Company has not yet been served~~District Court granted this joint motion to dismiss on ~~this complaint.~~February 21, 2019. The plaintiffs appealed the District Court decision, on April 10, 2019, to the Supreme Court of Nevada.

While legal proceedings are inherently unpredictable and no assurance can be given as to the ultimate outcome of any of the above matters, based on management’s current understanding of the relevant facts and circumstances, the Company believes that these proceedings should not have a material adverse effect on its financial position, results of operations or cash flows.

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

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

The Company evaluates each segment’s profitability based upon such segment’s Adjusted EBITDA, which represents each segment’s earnings before interest and other non-operating income (expense), income taxes, depreciation and amortization, preopening expense, acquisition expenses, ~~class action litigation expenses,~~ share-based compensation expenses, executive severance, rebranding, class action litigation expenses, gain/loss on disposal of property and equipment, gain on change in fair value of derivative and other ~~gains and~~ losses, calculated before corporate overhead (which is not allocated to each segment).

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

	Three Months Ended September 30, 2018										Three Months Ended March 31, 2019
(In thousands)	Casinos		Distributed Gaming		Corporate and Other			Consolidated			Casinos		Distributed Gaming			Corporate and Other			Consolidated
Revenues
Gaming	$	60,440	$	67,324	$	—		$	127,764		$	70,885	$	72,907		$	—		$	143,792
Food and beverage		29,666		12,333		—			41,999			36,442		13,316			—			49,758
Rooms		28,104		—		—			28,104			31,287		—			—			31,287
Other		10,627		1,531		312			12,470			12,760		2,134			161			15,055
Total revenues	$	128,837	$	81,188	$	312		$	210,337		$	151,374	$	88,357		$	161		$	239,892

Net income (loss)	$	19,113	$	5,014	$	(27,251	)	$	(3,124	)	$	22,689	$	7,606		$	(38,313	)	$	(8,018	)
Depreciation and amortization		17,667		5,292		371			23,330			21,643		5,329			293			27,265
Acquisition expenses		—		—		1,123			1,123
Loss on disposal of property and equipment		770		4		—			774
Preopening and related expenses⁽¹⁾												1,654		566			12			2,232
Acquisition and severance expenses												286		26			1,232			1,544
Asset disposal and other writedowns												256		(9	)		390			637
Share-based compensation		37		3		2,743			2,783			11		5			4,168			4,184
Preopening expenses		—		73		(52	)		21
Class action litigation expenses		—		—		219			219
Executive severance		54		1		65			120
Other, net		—		—		50			50			11		—			853			864
Interest expense, net		25		21		16,245			16,291			52		16			18,067			18,135
Change in fair value of derivative		—		—		(1,222	)		(1,222	)		—		—			2,248			2,248
Income tax benefit		—		—		(2,222	)		(2,222	)		—		—			(651	)		(651	)
Adjusted EBITDA	$	37,666	$	10,408	$	(9,931	)	$	38,143		$	46,602	$	13,539		$	(11,701	)	$	48,440

Three Months Ended September 30, 2017

(In thousands)

Casinos

Distributed
Gaming

Corporate and
Other

Consolidated

Revenues

Gaming

$
19,958

$
66,686

$
—

$
86,644

Food and beverage

3,674

11,495

—

15,169

Rooms

2,237

—

—

2,237

Other

1,552

1,966

92

3,610

Total revenues

$
27,421

$
80,147

$
92

$
107,660

Net income (loss)

$
6,686

$
7,517

$
(5,648
)

$
8,555

Depreciation and amortization

2,202

4,937

400

7,539

Acquisition expenses

—

—

2,975

2,975

Loss on disposal of property and equipment

35

272

1

308

Gain on contingent consideration

—

(1,719
)

—

(1,719
)
Share-based compensation

—

—

1,603

1,603

Preopening expenses

—

121

161

282

Class action litigation expenses

—

—

1,530

1,530

Sign-on bonuses

—

—

166

166

Interest expense, net

5

41

1,839

1,885

Income tax benefit

—

—

(8,051
)

(8,051
)
Adjusted EBITDA

$
8,928

$
11,169

$
(5,024
)

$
15,073

	Nine Months Ended September 30, 2018										Three Months Ended March 31, 2018
(In thousands)	Casinos		Distributed Gaming		Corporate and Other			Consolidated			Casinos		Distributed Gaming		Corporate and Other			Consolidated
Revenues
Gaming	$	186,828	$	207,345	$	—		$	394,173		$	64,459	$	69,404	$	—		$	133,863
Food and beverage		90,405		37,619		—			128,024			29,996		12,607		—			42,603
Rooms		81,737		—		—			81,737			26,127		—		—			26,127
Other		31,280		5,782		673			37,735			9,905		2,150		141			12,196
Total revenues	$	390,250	$	250,746	$	673		$	641,669		$	130,487	$	84,161	$	141		$	214,789

Net income (loss)	$	67,190	$	20,014	$	(82,804	)	$	4,400		$	23,841	$	7,448	$	(27,359	)	$	3,930
Depreciation and amortization		54,714		15,419		1,288			71,421			19,635		5,148		454			25,237
Acquisition expenses		—		—		2,429			2,429
Loss on disposal of property and equipment		1,050		19		—			1,069
Preopening expenses⁽¹⁾												—		148		300			448
Acquisition and severance expenses												51		35		1,213			1,299
Asset disposal and other writedowns												62		15		—			77
Share-based compensation		37		3		7,345			7,385			—		—		1,844			1,844
Preopening expenses		—		309		549			858
Class action litigation expenses		16		195		343			554
Executive severance		273		38		367			678
Other, net		144		167		129			440			37		167		104			308
Interest expense, net		74		93		46,933			47,100			24		46		14,673			14,743
Change in fair value of derivative		—		—		(5,895	)		(5,895	)		—		—		(3,211	)		(3,211	)
Income tax benefit		—		—		(106	)		(106	)
Income tax provision												—		—		1,219			1,219
Adjusted EBITDA	$	123,498	$	36,257	$	(29,422	)	$	130,333		$	43,650	$	13,007	$	(10,763	)	$	45,894

Nine Months Ended September 30, 2017

(In thousands)

Casinos

Distributed
Gaming

Corporate and
Other

Consolidated

Revenues

Gaming

$
57,385

$
204,694

$
—

$
262,079

Food and beverage

10,747

34,314

—

45,061

Rooms

5,646

—

—

5,646

Other

4,112

6,263

267

10,642

Total revenues

$
77,890

$
245,271

$
267

$
323,428

Net income (loss)

$
16,365

$
23,596

$
(24,351
)

$
15,610

Depreciation and amortization

5,798

14,513

1,188

21,499

Acquisition expenses

—

—

5,041

5,041

Loss on disposal of property and equipment

35

272

1

308

Gain on contingent consideration

—

(1,719
)

—

(1,719
)
Share-based compensation

—

—

5,352

5,352

Preopening expenses

—

730

398

1,128

Class action litigation expenses

—

—

1,585

1,585

Sign-on bonuses

—

—

166

166

Interest expense, net

(34
)

361

5,241

5,568

Income tax benefit

—

—

(10,893
)

(10,893
)
Adjusted EBITDA

$
22,164

$
37,753

$
(16,272
)

$
43,645

(1)

Preopening expenses include rent, organizational costs, non-capital costs associated with the opening of tavern and casino locations, and expenses related to The Strat rebranding and the launch of the TrueRewards players club.

As of ~~September 30, 2018,~~March 31, 2019, the Company leased its office headquarters building from a company 33% beneficially owned by Blake L. Sartini, 5% owned by a trust for the benefit of Mr. Sartini’s immediate family members (including Blake L. Sartini, II) for which Mr. Sartini serves as trustee, and 3% beneficially owned by Stephen A. Arcana. The rent expense for the office headquarters building was $0.3 million for each of the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, and $1.0 million and $0.9 million for the nine months ended September 30, 2018 and 2017,~~ respectively. There were no amounts ~~and $0.1 million~~ owed by the Company, ~~with respect to such~~and no amount was due and payable by the Company, under this lease as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017, respectively.~~2018. Additionally, a portion of the office headquarters building was sublet to a company owned or controlled by Mr. Sartini. There was less than $0.1 million of rental income under such sublease for each of the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018. ~~There~~No amount was ~~no rental income and less than $0.1 million of rental income under such sublease for the three and nine months ended September 30, 2017, respectively. No amounts were~~ owed to the Company under such sublease ~~at September 30, 2018 or~~as of March 31, 2019 and December 31, ~~2017.~~2018. Mr. Sartini serves as the Chairman of the Board, President and Chief Executive Officer of the Company and is co-trustee of ~~the~~The Blake L. Sartini and Delise F. Sartini Family Trust, which is a significant shareholder of the Company. Mr. Arcana serves as the Executive Vice President and Chief Operating Officer of the Company.

In November 2018, the Company entered into a lease agreement for office space in a building to be constructed and owned by a company 33% beneficially owned by Mr. Sartini, 5% owned by a trust for the benefit of Mr. Sartini’s immediate family members (including Blake L. Sartini, II) for which Mr. Sartini serves as trustee, and 3% beneficially owned by Stephen A. Arcana. The lease is intended to commence in 2019 and expires on December 31, 2030. The rent expense for the space is expected to be approximately $0.3 million per year. Additionally, the lease agreement includes a right of first refusal for additional space on the second floor of the building.

As of ~~September 30, 2018,~~March 31, 2019, the Company leased one tavern location from a trust controlled by Mr. Sartini through a trust for the benefit of Mr. Sartini’s immediate family members (including Blake L. Sartini, II) for which Mr. Sartini serves as trustee. ~~In addition, a second~~One tavern location that the Company had previously leased from a related ~~parties~~party was sold in ~~January~~ 2018 to an unrelated third party. The rent expense for tavern locations leased from related parties (including the sold tavern ~~locations~~location for the ~~periods~~period in which the ~~leases were~~lease was with a related ~~parties)~~party) was $0.1 ~~million and $0.2~~ million for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively, and $0.4 million and $0.7 million for the nine months ended September 30, 2018 and 2017,~~ respectively. There were no amounts owed by the Company, ~~with respect to~~and no amount was due and payable by the Company, under such leases as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

During each of the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ the Company paid ~~less than $0.1~~$0.2 million under aircraft time-sharing, co-user and cost-sharing agreements between the Company and Sartini Enterprises, Inc. a company controlled by Mr. Sartini. ~~During each of the nine months ended September 30, 2018 and 2017, the Company paid $0.2 million and $0.1 million, respectively, under aircraft time-sharing, co-user and cost-sharing agreements.~~ The Company owed less than $0.1 million under the aircraft time-sharing, co-user and cost-sharing agreements as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018.

During the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ the Company recorded revenues of $0.2 million and $0.3 million, respectively, and the Company recorded gaming expenses of $0.2 million ~~and $0.3 million, respectively,~~in each period, related to the use of the Company’s slots at a distributed gaming location owned in part by Sean T. Higgins, who serves as the Company’s Executive Vice President of Compliance and Governmental Affairs and Chief Legal Officer. During each of the nine months ended September 30, 2018 and 2017, the Company recorded revenues of $0.7 million and $0.9 million, respectively, and the Company recorded gaming expenses of $0.7 million and $0.8 million, respectively, related to the use of the Company’s slots at a distributed gaming location owned in part by Mr. Higgins. De minimis amounts were owed to the Company and were due and payable by the Company related to this arrangement as of ~~September 30, 2018~~March 31, 2019 and ~~no amount was due and payable by the Company as of~~ December 31, ~~2017~~2018.

During ~~each of~~ the three months ended ~~September 30,~~March 31, 2018, ~~and 2017,~~ the Company recorded ~~selling, general and administrative (“SG&A”)~~ expenses of less than $0.1 million related to a three-year consulting agreement between the Company and Lyle A. Berman, who serves on the Board of Directors of the Company. ~~During each of the nine months ended September 30, 2018 and 2017, the Company recorded $0.2 million of SG&A expenses related to the Lyle A. Berman consulting agreement.~~ No amount was due and payable by the Company as of ~~September 30, 2018~~ ~~and~~ December 31, ~~2017~~2018 related to this agreement. The consulting agreement expired on July 31, 2018.

On November 7, 2018, the Board of Directors authorized the Company to repurchase up to $25 million shares of common stock, subject to available liquidity, general market and economic conditions, alternate uses for the capital and other factors. Share repurchases may be made from time to time in open market transactions, block trades or in private transactions in accordance with applicable securities laws and regulations and other legal requirements, including compliance with the Company’s finance

~~agreements. There is no minimum number of shares that the Company is required to repurchase and the repurchase program may be suspended or discontinued at any time without prior notice.~~

On November 8, 2018, the Company entered into Incremental Joinder Agreement No. 2, pursuant to which the size of the revolving credit facility under the First Lien Facility was increased from $140 million to $200 million.

The Company’s management evaluates subsequent events through the date of issuance of the consolidated financial statements. ~~There~~Other than the issuance of the 2026 Notes and associated repayments of borrowings under the Credit Facilities (see Note 5, Long-Term Debt, above), there have been no ~~other~~ subsequent events that occurred during such period that would require adjustment to or disclosure in the consolidated financial statements as of and for the ~~nine~~three months ~~September 30, 2018.~~March 31, 2019.

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

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

The following information should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 filed with the Securities and Exchange Commission (“SEC”).

This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can generally be identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “plan,” “project,” “seek,” “should,” “think,” “will,” “would” and similar expressions. In addition, forward-looking statements include statements regarding cost savings, synergies, growth opportunities and other financial and operating benefits of our ~~acquisition of American Casino & Entertainment Properties, LLC (“American”), our pending acquisition of certain entities that own two resort~~ casino ~~properties in Laughlin, Nevada (as further described below)~~ and ~~our~~ other acquisitions; our strategies, objectives, business opportunities and plans for future expansion, developments or acquisitions; anticipated future growth and trends in our business or key markets; projections of future financial condition, operating results, income, capital expenditures, costs or other financial items; anticipated regulatory and legislative changes; and other characterizations of future events or circumstances as well as other statements that are not statements of historical fact. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. These forward-looking statements are subject to assumptions, risks and uncertainties that may change at any time, and readers are therefore cautioned that actual results could differ materially from those expressed in any forward-looking statements. Factors that could cause our actual results to differ materially include: ~~the failure of our pending Laughlin, Nevada acquisition to close as anticipated;~~ our ability to realize the anticipated cost savings, synergies and other benefits of our ~~acquisition of American, our pending~~casino and other acquisitions, including the casinos we recently acquired in Las Vegas and Laughlin, Nevada, ~~acquisition and our other acquisitions,~~ and integration risks relating to such transactions; changes in national, regional and local economic and market conditions; legislative and regulatory matters (including the cost of compliance or failure to comply with applicable laws and regulations); increases in gaming taxes and fees in the jurisdictions in which we operate; litigation; increased competition; our ability to renew our distributed gaming contracts; reliance on key personnel (including our Chief Executive Officer, Chief Operating Officer, and Chief Strategy and Financial Officer); the level of our indebtedness and our ability to comply with covenants in our debt instruments; terrorist incidents; natural disasters; severe weather conditions (including weather or road conditions that limit access to our properties); the effects of environmental and structural building conditions; the effects of disruptions to our information technology and other systems and infrastructure; factors affecting the gaming, entertainment and hospitality industries generally, and other factors identified under the heading “Risk Factors” in our Annual Report on Form 10-K and in Part II, Item 1A of this report, or appearing elsewhere in this report and in our other filings with the SEC. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the filing date of this report. We undertake no obligation to revise or update any forward-looking statements for any reason.

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

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

On ~~October 20, 2017,~~January 14, 2019, we completed the acquisition of ~~all of the outstanding equity interests of American~~Edgewater Gaming, LLC and Colorado Belle Gaming, LLC (the ~~“American Acquisition”~~“Acquired Entities”) from Marnell Gaming, LLC (“Marnell”) for ~~aggregate consideration of $787.6~~$156.2 million in cash (after giving effect to the post-closing ~~adjustments)~~adjustment provisions in the purchase agreement) and the issuance by us of ~~approximately 4.0 million~~911,002 shares of our common stock to ~~W2007/ACEP Holdings, LLC, a former American equity holder.~~certain assignees of Marnell (the “Laughlin Acquisition”). The ~~American~~Laughlin Acquisition added ~~four Nevada~~two resort casino properties in Laughlin, Nevada to our casino ~~portfolio, including~~portfolio: the ~~Stratosphere Casino,~~Edgewater Hotel & ~~Tower~~Casino Resort (the ~~“Stratosphere”~~“Edgewater”) and the Colorado Belle Hotel & Casino Resort (the “Colorado Belle”), which increase our scale and presence in ~~Las Vegas.~~the Southern Nevada market. The results of operations of ~~American and its subsidiaries have been~~the Acquired Entities are included in our results subsequent to ~~that~~the acquisition date. See Note 3,2, Acquisitions,, in the accompanying unaudited consolidated financial statements for additional information.

We own and operate ~~eight~~ten resort casino properties in Nevada and Maryland, ~~comprising the Stratosphere, Arizona Charlie’s Decatur and Arizona Charlie’s Boulder in Las Vegas, Nevada, the Aquarius Casino Resort (the “Aquarius”) in Laughlin, Nevada, Pahrump Nugget~~comprising:

The STRAT Hotel, Casino ~~(“Pahrump Nugget”), Gold Town Casino and Lakeside Casino~~ & ~~RV Park in Pahrump, Nevada, and the Rocky Gap Casino Resort~~SkyPod (“~~Rocky Gap”) in Flintstone, Maryland.~~

The ~~Stratosphere~~Strat”): The ~~Stratosphere~~Strat is our premier casino property, located on Las Vegas Blvd on the north end of the Las Vegas Strip. ~~A gaming and entertainment complex, the Stratosphere~~The Strat comprises the iconic ~~Stratosphere Tower,~~SkyPod, a casino, a hotel and a retail center. As of ~~September 30, 2018, the Stratosphere~~March 31, 2019, The Strat featured an 80,000 sq. ft. casino, ~~and offered~~ 2,429 hotel rooms, ~~728~~715 slots, 4748 table games, a race and sports book, 1013 restaurants, two rooftop pools, a fitness center, retail shops and entertainment facilities.

Arizona Charlie’s casinos: Our Arizona Charlie’s Decatur and Arizona Charlie’s Boulder casino properties primarily serve local Las Vegas patrons, and provide an alternative experience to the Las Vegas Strip. As of ~~September 30, 2018,~~March 31, 2019, our Arizona Charlie’s Decatur casino offered 259 hotel rooms, ~~and a total of 1,033~~1,032 slots, seven table games, race and sports books, five restaurants and an approximately 400-seat bingo parlor, and our Arizona Charlie’s Boulder casino offered 303 hotel rooms, ~~and a total of 833~~827 slots, ~~seven~~eight table games, race and sports books, four restaurants, and an approximately 450-seat bingo parlor, as well as an RV park with approximately 220 RV hook-up sites.

~~Aquarius~~Laughlin casinos: ~~The Aquarius is located~~We own and operate three casinos in Laughlin, Nevada, which is located approximately 90 miles from Las Vegas on the western riverbank of the Colorado ~~River. The~~River: the Aquarius ~~caters~~Casino Resort (the “Aquarius”), the Edgewater and the Colorado Belle. Our Laughlin casinos are situated along the heart of the Laughlin Riverwalk and cater primarily to patrons traveling from Arizona and Southern California, as well as customers from Nevada seeking an alternative to the Las Vegas experience. As of ~~September 30, 2018,~~March 31, 2019, the Aquarius had 1,906 hotel rooms, ~~and offered 1,221~~1,202 slots, 33 table games and eight restaurants. As of March 31, 2019 the Colorado Belle had 1,102 hotel rooms, 696 slots, 20 table games and three restaurants. As of March 31, 2019 the Edgewater had 1,052 hotel rooms, 710 slots, 20 table games and six restaurants and dedicated entertainment venues, including the Laughlin Event Center.

Pahrump casinos: We own and operate three casinos in Pahrump, Nevada, ~~the~~which is located approximately 60 miles from Las Vegas and is a gateway to Death Valley National ~~Park, approximately 60 miles from Las Vegas.~~Park: the Pahrump Nugget ~~is our largest property in~~ Hotel Casino (“Pahrump ~~Nevada.~~Nugget”), Gold Town Casino and Lakeside Casino & RV Park. As of ~~September 30, 2018,~~March 31, 2019, Pahrump Nugget offered 69 hotel rooms, ~~415~~403 slots, 10 table games, a race and sports book, an approximately 200-seat bingo facility and a bowling center. As of ~~September 30, 2018,~~March 31, 2019, our Gold Town Casino offered ~~229~~222 slots, ~~and an approximately 100-seat bingo facility,~~ and our Lakeside Casino & RV Park offered ~~184~~172 slots, an approximately 100-seat bingo facility, and approximately 160 RV hook-up sites.

Rocky Gap Casino Resort (“Rocky Gap”): Rocky Gap is situated on approximately 270 acres in the Rocky Gap State Park in Maryland, which we lease from the Maryland Department of Natural Resources under a 40-year ~~operating~~ ground lease expiring in 2052 (plus a 20-year option renewal). As of ~~September 30, 2018,~~March 31, 2019, Rocky Gap offered 665 slots, 17 table games, two casino bars, three restaurants, a spa and the only Jack Nicklaus signature golf course in Maryland. Rocky Gap is a AAA Four Diamond Award® winning resort with 198 hotel rooms, as well as an event and conference center.

On July 14, 2018, we entered into a purchase agreement with Marnell Gaming, LLC (the “Seller”) to acquire Edgewater Gaming, LLC and Colorado Belle Gaming, LLC (collectively, the “Acquired Entities”). At the closing of the acquisition, we expect to pay the Seller $155 million in cash and issue to the Seller between 455,501 and 1,226,348 shares of our newly issued common stock (which was valued at signing at between $13 million and $35 million, based on the volume-weighted average trading price of our common stock for the twenty trading days ending on July 13, 2018), with the final amount based on the earnings before interest, taxes, depreciation, amortization, rent and management fees of the Acquired Entities from December 1, 2017 to November 30, 2018. Consummation of the acquisition is subject to the satisfaction or waiver of customary closing conditions, applicable gaming authority approvals, the absence of a material adverse effect regarding the Acquired Entities, and other customary closing conditions. We and the Seller have agreed that the closing of the transactions will not occur prior to January 1, 2019, unless otherwise agreed by the parties. We intend to finance the cash portion of the purchase price from a combination of borrowings under our revolving credit facility and cash on hand.

Distributed Gaming

Our Distributed Gaming segment involves the installation, maintenance and operation of slots and amusement devices in non-casino locations such as ~~grocery stores,~~restaurants, bars, taverns, convenience stores, liquor stores ~~restaurants, bars~~ and ~~taverns~~grocery stores in Nevada and Montana. We place our slots and amusement devices in locations where we believe they will receive maximum customer traffic, generally near a store’s entrance. In addition, we own and operate ~~wholly-owned~~ branded taverns with slots, which target local patrons, primarily in the greater Las Vegas, Nevada metropolitan area. As of ~~September 30, 2018,~~March 31, 2019, our distributed gaming operations comprised approximately ~~10,660~~10,700 slots in over 1,000 locations.

Our ~~wholly-owned~~ branded taverns offer a casual, upscale environment catering to local patrons offering superior food, craft beer and other alcoholic beverages, and typically include 15 onsite slots. As of ~~September 30, 2018,~~March 31, 2019, we owned and operated ~~60 wholly-owned~~63 branded taverns, which offered a total of over ~~950~~1,000 onsite slots. Most of our taverns are located in the greater Las Vegas, Nevada metropolitan area and cater to local patrons seeking more convenient entertainment establishments than traditional casino properties. Our tavern brands include PT’s Gold, PT’s Pub, Sierra Gold, Sean Patrick’s, PT’s Place, PT’s Ranch, PT’s Brewing Company, Sierra Junction and SG Bar. We also own a brewery in Las Vegas, PT’s Brewing Company, which produces craft beer for our taverns and casinos.

Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017.~~2018.

													Increase (Decrease)
	Three Months Ended September 30,						Nine Months Ended September 30,						From Prior Year						Three Months Ended March 31,
(In thousands)	2018			2017			2018			2017			Three Months Ended September 30,			Nine Months Ended September 30,			2019			2018
Revenues by segment
Casinos	$	128,837		$	27,421		$	390,250		$	77,890		$	101,416		$	312,360		$	151,374		$	130,487
Distributed Gaming		81,188			80,147			250,746			245,271			1,041			5,475			88,357			84,161
Corporate and other		312			92			673			267			220			406			161			141
Total revenues		210,337			107,660			641,669			323,428			102,677			318,241			239,892			214,789
Operating expenses by segment
Casinos		62,818			13,062			185,939			39,697			49,756			146,242			73,543			60,719
Distributed Gaming		64,243			63,386			196,205			190,860			857			5,345			67,657			65,350
Corporate and other		826			(1	)		2,391			(5	)		827			2,396			197			772
Total operating expenses		127,887			76,447			384,535			230,552			51,440			153,983			141,397			126,841
Selling, general and administrative		47,479			19,439			135,858			56,334			28,040			79,524			56,947			44,206
Depreciation and amortization		23,330			7,539			71,421			21,499			15,791			49,922			27,265			25,237
Acquisition expenses		1,123			2,975			2,429			5,041			(1,852	)		(2,612	)
Acquisition and severance expenses																				1,544			1,299
Preopening expenses		21			282			858			1,128			(261	)		(270	)		778			448
Gain on contingent consideration		—			(1,719	)		—			(1,719	)		1,719			1,719
Loss on disposal of property and equipment		774			308			1,069			308			466			761
Loss on disposal of assets																				247			77
Total expenses		200,614			105,271			596,170			313,143			95,343			283,027			228,178			198,108

Operating income		9,723			2,389			45,499			10,285			7,334			35,214			11,714			16,681
Non-operating expense, net		(15,069	)		(1,885	)		(41,205	)		(5,568	)		(13,184	)		(35,637	)		(20,383	)		(11,532	)
Income tax benefit		2,222			8,051			106			10,893			(5,829	)		(10,787	)
Income tax benefit (provision)																				651			(1,219	)
Net income (loss)	$	(3,124	)	$	8,555		$	4,400		$	15,610		$	(11,679	)	$	(11,210	)	$	(8,018	)	$	3,930

Three ~~and Nine~~ Months Ended ~~September 30, 2018~~March 31, 2019 Compared to Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2018

Revenues

The ~~$102.7~~$25.1 million, or ~~95%~~12%, increase in revenues for the three months ended ~~September 30, 2018~~March 31, 2019 compared to the prior year period resulted ~~primarily~~ from increases of ~~$41.1~~$9.9 million, ~~$26.8~~$7.2 million, ~~$25.9~~$5.2 million and ~~$8.9~~$2.8 million in gaming, food and beverage, room and other revenues, respectively, due primarily to the impact of the Acquired Entities, which we acquired in January 2019.

Casinos segment revenue increased $20.9 million, or 16%, for the three months ended March 31, 2019 compared to the prior year period. Gaming revenues in the Casinos segment increased $6.4 million, which reflected the inclusion in the current year period of $7.7 million of gaming revenue from the ~~American Acquisition which was consummated in October 2017.~~

Acquired Entities. The ~~$101.4 million, or 370%,~~ increase in revenues related to our Casinos segment for the three months ended September 30, 2018 compared to the prior year period resulted primarily from increases of $40.5 million, $26.0 million, $25.9 million and $9.1 million in gaming, food and beverage, room and other revenues, respectively, due primarily to the impact of revenue in the current year period from the American Acquisition. Additionally, revenue from Rocky Gap increased slightly compared to the prior year period, primarily due to revised marketing efforts, partially offset by weather conditions in Maryland.

The $1.0 million, or 1%, increase in revenues related to our Distributed Gaming segment for the three months ended September 30, 2018 was primarily due to increases of $0.6 million in gaming revenues and $0.8 million in food and beverage revenues, reflecting a full period of revenues from the five taverns opened in 2017, and was offset by a decrease in Nevada casinos’ race and sports book revenue. In the first quarter of ~~$0.4 million in~~2019, we began outsourcing race and sports book management to William Hill and the resulting revenue stream is classified as other operating ~~revenues.~~

The $318.2 million, or 98%, increase in revenues for the nine months ended September 30, 2018 compared to the prior year period resulted primarily from increases of $132.1 million, $83.0 million, $76.1 million and $27.1 million in gaming,revenue. Casinos segment food and beverage ~~room and other revenues, respectively,~~revenue increased by $6.4 million due primarily to the inclusion in the current year period of ~~revenue~~food and beverage revenues from the ~~American Acquisition which~~Acquired Entities, partially offset by decreases in food and beverage revenues at our other casino properties. Casinos segment room revenues increased by $5.2 million primarily due to increased room revenues from the Aquarius as well as the inclusion in the current year period of room revenues from the Acquired Entities. Casinos segment other revenues increased by $2.8 million primarily due to the contribution of $3.3 million of other revenues from the Acquired Entities, and was ~~consummated~~partially offset by a decrease in ~~October 2017.~~other revenues at The Strat of $0.6 million.

~~The $312.4~~Distributed Gaming segment revenue increased $4.2 million or ~~401%, increase in revenues related to our Casinos segment~~5% for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 compared to the prior year period ~~resulted primarily from increases~~due to an increase of ~~$129.4 million, $79.7 million, $76.1 million and $27.2~~$3.5 million in gaming revenues (reflecting a $1.5 million increase from additional locations and new technology in Montana) and of $0.7 million in branded tavern food and beverage ~~room and other~~ revenues ~~respectively,~~(primarily due ~~primarily~~ to the inclusion in the current year period of revenue from the American Acquisition. Additionally, revenue from Rocky Gap increased $0.3 million compared to the prior year period, primarily due to revised marketing efforts, partially offset by weather conditions in Maryland.

The $5.5 million, or 2%, increase in revenues related to our Distributed Gaming segment for the nine months ended September 30, 2018 was primarily due to increases of $2.7 million in gaming revenues and $3.3 million in food and beverage revenues, reflecting the opening of three new taverns in the Las Vegas Valley in 2018 as well as a full period of revenues from the ~~five~~three taverns opened in ~~2017, and was offset by a $0.5 million decrease in other operating revenues.~~2018).

During the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, Adjusted EBITDA in our Casinos segment as a percentage of segment revenues (or Adjusted EBITDA margin) was ~~29% and 32%~~31%, ~~respectively,~~ compared to Adjusted EBITDA margin in our Distributed Gaming segment of ~~13% and 14%~~15%. During the three months ended March 31, 2018, Adjusted EBITDA margin in our Casinos segment was 33%, ~~respectively.~~compared to Adjusted EBITDA margin in our Distributed Gaming segment of 15%. The lower Adjusted EBITDA margin in our Distributed Gaming segment relative to our Casinos segment reflects the fixed and variable amounts paid to third parties under our space and revenue share agreements as expenses in the Distributed Gaming segment (which includes the percentage of gaming revenues paid to third parties under revenue share agreements). See Note ~~12,~~11, Segment Information, in the accompanying unaudited consolidated financial statements for additional information regarding segment Adjusted EBITDA and a reconciliation of segment Adjusted EBITDA to segment net income (loss).

Operating Expenses

The ~~$51.4~~$14.6 million, or ~~67%~~11%, increase in operating expenses for the three months ended ~~September 30, 2018~~March 31, 2019 compared to the prior year period resulted primarily from ~~$15.0~~the inclusion of operating expenses of the Acquired Entities. Gaming expenses increased $4.7 million ~~$21.3~~for the three months ended March 31, 2019 compared to the prior year period. Of this increase, $3.2 million ~~$12.5~~related to the inclusion of gaming expenses relating to the Acquired Entities in the current year period, and $1.6 million ~~and $2.6~~related to gaming expenses in our Distributed Gaming segment, which included an increase of $1.3 million ~~increases in~~relating to our Montana distributed gaming operations. The increase of $4.6 million of food and beverage ~~room and other expenses, respectively,~~expense compared to the prior year period was due primarily to the inclusion in the current year period of ~~operating expenses~~$3.7 million relating to the ~~resort casino properties acquired in the American Acquisition.~~

Acquired Entities, combined with increases of $0.6 million relating to our Nevada distributed gaming operations and $0.5 million relating to The ~~$154.0~~Strat (reflecting increased and improved offerings at The Strat). The $2.8 million ~~or 67%,~~year-over-year increase in operating expenses for the nine months ended September 30, 2018 compared to the prior year period resulted primarily from $47.1 million, $64.1 million, $35.4 million and $7.4 million increases in gaming, food and beverage, room ~~and other expenses, respectively,~~expense was due primarily to the inclusion in the current year period of $2.4 million relating to the Acquired Entities, combined with an increase of $0.4 million related to The Strat. The $2.4 million year-over-year increase in other operating expenses was almost entirely due to the inclusion in the current year period of other operating expenses relating to the ~~resort casino properties acquired in the American Acquisition.~~Acquired Entities.

Selling, General and Administrative Expenses

The ~~$28.0~~$12.7 million, or ~~144%~~29%, increase in selling, general and administrative (“SG&A”) expenses for the three months ended ~~September 30, 2018~~March 31, 2019 compared to the prior year period resulted primarily from the inclusion in the current year period of $4.9 million in SG&A expenses relating to the ~~resort casino properties acquired in the American Acquisition.~~

~~The $79.5 million, or 141%,~~Acquired Entities, an increase in corporate SG&A ~~expenses for the nine months ended September 30, 2018 compared to the prior year period resulted primarily from the inclusion~~of $4.9 million and an increase in ~~the current year period~~Nevada distributed gaming SG&A of ~~SG&A expenses relating to the resort casino properties acquired in the American Acquisition.~~$1.2 million.

Within our Casinos segment, the majority of the SG&A expenses are comprised of marketing and advertising, utilities, maintenance contracts, payroll expenses and payroll taxes. Casino segment SG&A expenses increased ~~$23.0~~$6.5 million, or ~~424%~~25%, for the three months ended ~~September 30, 2018, and increased $65.3 million, or 407%, for the nine months ended September 30, 2018, in each case~~March 31, 2019, compared to the prior year period, resulting primarily from the inclusion $4.9 million in the current year period of SG&A related to the ~~American Acquisition.~~Acquired Entities. The remaining increase was primarily due to increases in advertising and production at The Strat and Aquarius.

Within our Distributed Gaming segment, the majority of the SG&A expenses ~~in this segment~~are comprised of marketing and advertising, utilities, building ~~and~~ rent, ~~expense, bonus~~payroll expenses and payroll taxes. ~~SG&A expenses at Rocky Gap did not change significantly in the current year period compared to the prior year period.~~

~~Within our~~ Distributed ~~Gaming~~gaming segment SG&A expenses increased ~~$0.9~~$1.2 million, or ~~17%~~20%, for the three months ended ~~September 30, 2018, and increased $2.0 million, or 12%, for the nine months ended September 30, 2018, in each case~~March 31, 2019 compared to the prior year period, ~~reflecting~~primarily due to a $0.9 million increase in rent and marketing costs.

Corporate SG&A expenses represent corporate office overhead, information technology, legal, accounting, third party service providers, executive compensation, share based compensation, payroll expenses and payroll taxes. The $4.9 million, or 40%, increase in corporate SG&A for the ~~opening~~three months ended March 31, 2019 compared to the prior year period resulted primarily from increases of ~~three new taverns~~$2.3 million in ~~the Las Vegas Valley~~share-based compensation, $1.0 million in ~~2018.~~marketing expense, $0.3 million in audit fees and $0.2 million in aircraft time-sharing, co-user and cost-sharing agreements.

Acquisition Expenses

Acquisition expenses during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 related primarily to the ~~pending acquisition of the Acquired Entities~~Laughlin Acquisition, which closed on January 14, 2019, and the American ~~Acquisition.~~Acquisition, respectively.

Preopening Expenses

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

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ preopening expenses related primarily to costs incurred in the opening of new taverns in the Las Vegas Valley.

Depreciation and Amortization

The increase in depreciation and amortization expenses for each of the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 compared to the prior year period, was primarily due to the depreciation of the assets and the amortization of the intangibles acquired in the ~~American Acquisition.~~Laughlin Acquisition, offset by the decrease in depreciation and amortization expense at The Strat related to the disposal of several assets and the change in useful life of depreciation.

Non-Operating Expense, Net

Non-operating expense, net increased ~~$13.2~~$8.9 million for the three months ended ~~September 30, 2018~~March 31, 2019 compared to the prior year period, primarily due to a ~~$14.4~~$3.4 million increase in interest expense from the substantially higher level of indebtedness under our senior secured credit facilities following the ~~American~~Laughlin Acquisition, ~~partially offset by~~and a ~~gain~~loss on change in fair value of derivative of ~~$1.2~~$5.5 million.

Non-operating expense, net increased $35.6 million for the nine months ended September 30, 2018 compared to the prior year period, primarily due to a $41.5 million increase in interest expense from the substantially higher level of indebtedness under our senior secured credit facilities following the American Acquisition, partially offset by a gain on change in fair value of derivative of $5.9 million.

Income Taxes

Our effective tax rate was ~~(2.5)%~~7.9% and ~~(231.33)%~~23.7% for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively. For the ~~nine~~three months ended ~~September 30,~~March 31, 2019, the effective tax rate differed from the federal tax rate of 21% due primarily to the change in valuation allowance against our deferred tax assets during the first quarter of 2019. For the three months ended March 31, 2018, the effective tax rate differed from the federal tax rate of 21% primarily due to excess tax benefit from stock options exercised during the third quarter of 2018. For the nine months ended September 30, 2017, the effective tax rate differed from the federal tax rate of 35% due primarily to ~~changes in the valuation allowance~~expenditures that are not deductible for ~~deferred taxes.~~tax purposes.

Non-GAAP Measures

To supplement our consolidated financial statements presented in accordance with United States generally accepted accounting principles (“GAAP”), we use Adjusted EBITDA, a measure we believe is appropriate to provide meaningful comparison with, and to enhance an overall understanding of, our past financial performance and prospects for the future. We believe Adjusted EBITDA provides useful information to both management and investors by excluding specific expenses and gains that we believe are not indicative of our core operating results. Further, Adjusted EBITDA is a measure of operating performance used by management, as well as industry analysts, to evaluate operations and operating performance and is widely used in the gaming industry. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. In addition, other companies in our industry may calculate Adjusted EBITDA differently than we do. A reconciliation of net income (loss) to Adjusted EBITDA is provided in the table below.

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

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(In thousands)	2018			2017			2018			2017			2019			2018
Net income (loss)	$	(3,124	)	$	8,555		$	4,400		$	15,610		$	(8,018	)	$	3,930
Depreciation and amortization		23,330			7,539			71,421			21,499			27,265			25,237
Acquisition expenses		1,123			2,975			2,429			5,041
Loss on disposal of property and equipment		774			308			1,069			308
Gain on revaluation of contingent consideration		—			(1,719	)		—			(1,719	)
Preopening expenses and related expenses⁽¹⁾														2,232			448
Acquisition and severance expenses														1,544			1,299
Asset disposal and other writedowns														637			77
Share-based compensation		2,783			1,603			7,385			5,352			4,184			1,844
Preopening expenses		21			282			858			1,128
Class action litigation expenses		219			1,530			554			1,585
Executive severance and sign-on bonuses		120			166			678			166
Other, net		50			—			440			—			864			308
Interest expense, net		16,291			1,885			47,100			5,568			18,135			14,743
Change in fair value of derivative		(1,222	)		—			(5,895	)		—			2,248			(3,211	)
Income tax benefit		(2,222	)		(8,051	)		(106	)		(10,893	)
Income tax (benefit) provision														(651	)		1,219
Adjusted EBITDA	$	38,143		$	15,073		$	130,333		$	43,645		$	48,440		$	45,894

As of ~~September 30, 2018,~~March 31, 2019, we had ~~$132.4~~$108.3 million in cash and cash equivalents. We currently believe that our cash and cash equivalents, cash flows from operations and borrowing availability under our revolving credit facility will be sufficient to meet our capital requirements during the next 12 months.

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

To further enhance our liquidity position or to finance any future acquisition or other business investment initiatives, we may obtain additional financing, which could consist of debt, convertible debt or equity financing from public and/or private credit and capital markets. In January 2018, the SEC declared our universal shelf registration statement effective for the future sale of up to $150.0 million in aggregate amount of common stock, preferred stock, debt securities, warrants and units and the resale of up to approximately 8.0 million shares of our common stock held by the selling security holders named therein. The securities may be offered from time to time, separately or together, directly by us or through underwriters, dealers or agents at amounts, prices, interest rates and other terms to be determined at the time of the offering.

In January 2018, we completed an underwritten public offering pursuant to our universal shelf registration statement, in which certain of our shareholders resold an aggregate of 6.5 million shares of our common stock, and we sold 975,000 newly issued shares of our common ~~stock pursuant to the exercise in full of the underwriters’ over-allotment option to purchase additional shares.~~stock. Our net proceeds from the offering were approximately $25.6 million after deducting underwriting discounts and offering expenses.

Net cash provided by operating activities for the ~~nine~~three months ended ~~September 30, 2018 increased $41.2~~March 31, 2019 decreased $3.3 million compared to the prior year period due primarily to the ~~flow-through effect~~timing of ~~higher revenues.~~operating assets and liabilities.

Net cash used in investing activities was ~~$50.0~~$176.1 million for the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, compared to ~~$21.0~~$10.2 million for the prior year period. The increase in net cash used in investing activities as compared to the prior year period was primarily due to ~~capital expenditures undertaken at~~ the ~~Stratosphere~~closing of the Laughlin Acquisition in ~~2018.~~January 2019.

Net cash provided by financing activities was ~~$18.8~~$141.5 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2019, due primarily to borrowings under the revolving credit facility related to the closing of the Laughlin Acquisition.

Net cash provided by financing activities was $23.3 million for the three months ended March 31, 2018, and primarily related to net proceeds to us in the underwritten public offering completed in January 2018, partially offset by repayments under our first lien senior secured credit facility. Net cash used in financing activities was $14.7 million for the nine months ended September 30, 2017, primarily related to proceeds from borrowings, net of repayments, under our former senior secured credit facility.

As of ~~September 30, 2018,~~March 31, 2019, our senior secured credit facilities consisted of a ~~$940 million~~$1 billion senior secured first lien credit facility (consisting of $800 million in term loans and a ~~$140~~$200 million revolving credit facility) with JPMorgan Chase Bank, N.A. (as administrative agent and collateral agent), the lenders party thereto and the other entities party thereto (the “First Lien Facility”), and a $200 million senior secured second lien term loan facility with Credit Suisse AG, Cayman Islands Branch (as administrative agent and collateral agent), the lenders party thereto and the other entities party thereto (the “Second Lien Term Loan” and, together with the First Lien Facility, the “Credit Facilities”).

On June 11, 2018, we entered into Incremental Joinder Agreement No. 1 with JPMorgan Chase Bank, N.A. and the lenders party thereto, pursuant to which the size of the revolving credit facility under the First Lien Facility was increased from $100 million to $140 million. On November 8, 2018, we entered into Incremental Joinder Agreement No. 2, pursuant to which the size of the revolving credit facility under the First Lien Facility was increased from $140 million to $200 million.

As of ~~September 30, 2018, $794~~March 31, 2019, we had $790 million and $200 million in principal amount of outstanding term loan borrowings ~~were outstanding~~ under our First Lien Facility and Second Lien Term Loan, respectively, ~~there were~~ no letters of credit outstanding under the First Lien Facility and $145 million in principal amount of borrowings outstanding under our revolving credit ~~facility was undrawn, leaving borrowing availability under the revolving credit facility as of September 30, 2018 of $140 million.~~facility.

Borrowings under each of the Credit Facilities bear interest, at our option, at either (1) a base rate equal to the greatest of the federal funds rate plus 0.50%, the applicable administrative agent’s prime rate as announced from time to time, or the LIBOR rate for a one-month interest period plus 1.00%, subject to a floor of 1.75% (with respect to the term loans) or 1.00% (with respect to borrowings under the revolving credit facility) or (2) the LIBOR rate for the applicable interest period, subject to a floor of 0.75% (with respect to the term loans only), plus in each case, an applicable margin. The applicable margin for the term loans under the First Lien Facility is 2.00% for base rate loans and 3.00% for LIBOR rate loans. The applicable margin for borrowings under the revolving credit facility under the First Lien Facility ranges from 1.50% to 2.00% for base rate loans and 2.50% to 3.00% for LIBOR rate loans, based on our net leverage ratio. The applicable margin for the Second Lien Term Loan iswas 6.00% for base rate loans and 7.00% for LIBOR rate loans. The commitment fee for the revolving credit facility is payable quarterly at a rate of ~~between~~ 0.375% ~~and~~or 0.50%, depending on our net leverage ratio, and is accrued based on the average daily unused amount of the available revolving commitment. As of ~~September 30, 2018,~~March 31, 2019, the weighted-average effective interest rate on our outstanding borrowings under the Credit Facilities was approximately ~~5.7%~~6.1%.

Borrowings under each of the Credit Facilities are guaranteed by each of our existing and future wholly-owned domestic subsidiaries (other than certain insignificant or unrestricted subsidiaries), and are secured by substantially all of the present and future assets of Golden and our subsidiary guarantors (subject to certain exceptions).

Under the Credit Facilities, we and our restricted subsidiaries are subject to certain limitations, including limitations on our respective ability to: incur additional debt, grant liens, sell assets, make certain investments, pay dividends and make certain other restricted payments. In addition, we will be required to pay down the term loans under the Credit Facilities under certain circumstances if we or our restricted subsidiaries issue debt, sell assets, receive certain extraordinary receipts or generate excess cash flow (subject to exceptions). The revolving credit facility under the First Lien Facility contains a financial covenant regarding a maximum net leverage ratio that applies when borrowings under the revolving credit facility exceed 30% of the total revolving commitment. The Credit Facilities also prohibit the occurrence of a change of control, which includes the acquisition of beneficial ownership of 50% or more of our capital stock (other than by certain permitted holders, which include, among others, Blake L. Sartini, Lyle A. Berman, Neil I. Sell and certain affiliated entities). If we default under the Credit Facilities due to a covenant breach or otherwise, the lenders may be entitled to, among other things, require the immediate repayment of all outstanding amounts and sell our assets to satisfy the obligations thereunder. We were in compliance with our financial covenants under the Credit Facilities as of ~~September 30,~~March 31, 2019.

On April 15, 2019, we issued $375 million in principal amount of 7.625% Senior Notes due 2026 (“2026 Notes”) in a private placement to institutional buyers. The 2026 Notes were issued at face value and will be recorded as long-term debt, net of debt issuance costs, in our consolidated financial statements. The 2026 Notes bear interest at the rate of 7.625%, payable semi-annually in cash in arrears, which interest payments will commence in October 2019. Debt issuance costs associated with the issuance of the 2026 Notes will be amortized to interest expense on a straight-line basis over the term of the 2026 Notes.

Prior to April 15, 2022, we may redeem up to 40% of the 2026 Notes at a redemption price of 107.625% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the redemption date, from the net cash proceeds of specified equity offerings. We may also redeem the 2026 Notes prior to April 15, 2022, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus the applicable premium and any accrued and unpaid interest, if any, thereon to the redemption date. The applicable premium is calculated as the greater of: (i) 1.0% of the principal amount of such 2026 Notes and (ii) the excess, if any, of (a) the present value at such date of redemption of (1) the redemption price of such 2026 Notes on April 15, 2022 plus (2) all required interest payments due on such 2026 Notes through April 15, 2022 (excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the treasury rate (as defined under the indenture governing the 2026 Notes) plus 50 basis points, over (b) the then-outstanding principal amount of such 2026 Notes. The 2026 Notes may be redeemed, in whole or in part, at any time during the 12 months beginning on April 15, 2022 at a redemption price of 103.813%, during the 12 months beginning on April 15, 2023 at a redemption price of 101.906%, and at any time on or after April 15, 2024 at a redemption price of 100%, in each case plus accrued and unpaid interest, if any, thereon to the redemption date.

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

Under the indenture governing the 2026 Notes, we and our restricted subsidiaries are subject to certain limitations, including limitations on our respective ability to: incur additional debt, grant liens, sell assets, make certain investments, pay dividends and make certain other restricted payments. In the event a change of control (which includes the acquisition of more than 50% of our capital stock, other than by certain permitted holders, which include, among others, Blake L. Sartini, Lyle A. Berman, Neil I. Sell and certain affiliated entities), each holder will have the right to require us to repurchase all or any part of such holder’s 2026 Notes at a purchase price in cash equal to 101% of the aggregate principal amount of the 2026 Notes repurchased, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

On March 12, 2019, our Board of Directors authorized the repurchase of up to $25.0 million additional shares of common stock, subject to available liquidity, general market and economic conditions, alternate uses for the capital and other factors, which replaced the prior share repurchase program authorized in November 2018. Share repurchases may be made from time to time in open market transactions, block trades or in private transactions in accordance with applicable securities laws and regulations and other legal requirements, including compliance with our finance agreements. There is no minimum number of shares that we are required to repurchase and the repurchase program may be suspended or discontinued at any time without prior notice. During the three months ended March 31, 2019, no shares of our common stock were repurchased under our share repurchase programs.

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

See Note ~~11,~~10, Commitments and Contingencies, in the accompanying unaudited consolidated financial statements for additional information regarding commitments and contingencies that may also affect our liquidity.

The following table summarizes our contractual obligations as of March 31, 2019:

We may investigate and pursue expansion opportunities in our existing or new markets from time to time. Such expansions will be influenced and determined by a number of factors, which may include licensing availability and approval, suitable investment opportunities and availability of acceptable financing. Investigation and pursuit of such opportunities may require us to make substantial investments or incur substantial costs, which we may fund through cash flows from operations or borrowing availability under our revolving credit facility. To the extent such sources of funds are not sufficient, we may also seek to raise such additional funds through public or private equity or debt financings or from other sources. No assurance can be given that additional financing will be available or that, if available, such financing will be obtainable on terms favorable to us. Moreover, we can provide no assurances that the investigation or pursuit of an opportunity will result in a completed transaction.

Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet date and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and judgments, including those related to the application of the acquisition method of accounting, long-lived assets, goodwill and indefinite-lived intangible assets, revenue recognition, ~~and promotional allowances,~~ income taxes and share-based compensation expenses. We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.

A description of our critical accounting estimates can be found under Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, previously filed with the SEC. For a more extensive discussion of our accounting policies, see Note 2, Summary of Significant Accounting Policies, in ~~the notes to~~ the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2017. With the exception of the adoption of ASC 606 on January 1, 2018, during the first quarter 2018, there were~~2018. There have been no ~~newly identified or material~~significant changes toin our critical accounting policies and estimates ~~as discussed in our Annual Report on Form 10-K for the~~since year ~~ended December 31, 2017. See Note 1,~~ ~~Nature of Business and Basis of Presentation~~ ~~and Note 2,~~ ~~Revenue Recognition~~, in the notes to the unaudited consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for further information regarding our updated revenue recognition and loyalty program accounting policies, including estimates inherent in the accounting of such items, and the impact of adoption of ASC 606 on our unaudited consolidated financial statements.end.

No significant changes occurred in the ~~third~~first quarter of ~~2018~~2019 to the contractual commitments discussed under Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Commitments and Contractual Obligations, in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. Subsequent to quarter end, we issued $375 million in principal amount of 2026 Notes in a private placement to institutional buyers, and in connection therewith we repaid and

discharged the Second Lien Term Loan in full, repaid $18 million in principal amount of term loan borrowings under the First Lien Facility, and repaid all of the outstanding indebtedness under the revolving credit facility under the First Lien Facility.

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

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

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

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

We have no off balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Our primary exposure to market risk is interest rate risk associated with our variable rate long-term debt. As of ~~September 30, 2018,~~March 31, 2019, our variable rate long-term debt primarily comprised our indebtedness under the Credit Facilities.

As of ~~September 30, 2018,~~March 31, 2019, we had ~~$794~~$790 million in principal amount of outstanding borrowings under the First Lien Facility, ~~and~~ $200 million in principal amount of outstanding borrowings under the Second Lien Term ~~Loan.~~Loan and $145 million in principal amount of outstanding borrowings under our revolving credit facility. Our primary interest rate under the Credit Facilities is the Eurodollar rate plus an applicable margin. As of ~~September 30, 2018,~~March 31, 2019, the weighted-average effective interest rate on our outstanding borrowings under the Credit Facilities was approximately ~~5.7%~~6.1%. Assuming the outstanding balance under our Credit Facilities remained constant over a year, a 50 basis point increase in the applicable interest rate would increase interest incurred, prior to effects of capitalized interest, by ~~$5.0~~$5.7 million over a twelve-month period.

As of ~~September 30, 2018,~~March 31, 2019, our investment portfolio included ~~$132.4~~$108.3 million in cash and cash equivalents. As of ~~September 30, 2018,~~March 31, 2019, we did not hold any short-term investments.

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

As required by SEC Rule 13a-15(b), we carried out an evaluation, with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of ~~September 30, 2018,~~March 31, 2019, the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at athe reasonable assurance level as of ~~September 30, 2018.~~March 31, 2019.

On ~~October 20, 2017,~~January 14, 2019, the ~~American~~Laughlin Acquisition was completed. Management has begun the evaluation of the internal control structures of ~~American.~~the Acquired Entities. However, SEC guidance permits management to omit an assessment of an acquired business’ internal control over financial reporting from management’s assessments of internal control over financial reporting and disclosure controls and procedures for a period not to exceed one year from the date of the acquisition. Accordingly, we excluded ~~American~~the Acquired Entities from our evaluation of our disclosure controls and procedures as of ~~September 30, 2018.~~March 31, 2019. We have reported the operating results of ~~American~~the Acquired Entities in our consolidated statements of operations and cash flows from the acquisition date through ~~September 30, 2018.~~March 31, 2019. As of ~~September 30, 2018,~~March 31, 2019, total assets related to ~~American~~the Acquired Entities represented approximately ~~65.5%~~11% of our total assets, recorded on a preliminary basis as the measurement period for the business combination remained open as of ~~September 30, 2018.~~March 31, 2019. Revenues from ~~American~~the Acquired Entities comprised approximately ~~48.5% and 48.7%, respectively,~~9% of our consolidated revenues for the three ~~and nine~~ months ended ~~September 30, 2018.~~March 31, 2019. We will include ~~American~~the Acquired Entities in our evaluation of internal control over financial reporting as of December 31, ~~2018.~~2019.

During the quarter ended ~~September 30, 2018,~~March 31, 2019, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As described above, on ~~October 20, 2017,~~January 14, 2019, the ~~American~~Laughlin Acquisition was completed. ~~Management excluded American from its assessment of the effectiveness of our internal control over financial reporting as of December 31, 2017.~~ Our integration of ~~American~~the Acquired Entities may lead us to modify certain internal controls in future periods.

From time to time, we are involved in a variety of lawsuits, claims, investigations and other legal proceedings arising in the ordinary course of business, including proceedings concerning labor and employment matters, personal injury claims, breach of contract claims, commercial disputes, business practices, intellectual property, tax and other matters for which we ~~have~~ recorded reserves of ~~$1.7~~$1.0 million for claims as of ~~the date of this filing.~~March 31, 2019. Although lawsuits, claims, investigations and other legal proceedings are inherently uncertain and their results cannot be predicted with certainty, we believe that the resolution of our currently pending matters should not have a material adverse effect on our business, financial condition, results of operations or liquidity. Regardless of the outcome, legal proceedings can have an adverse impact on us because of defense costs, diversion of management resources and other factors. In addition, it is possible that an unfavorable resolution of one or more such proceedings could in the future materially and adversely affect our business, financial condition, results of operations or liquidity in a particular period.

In February and April 2017, several former employees filed two separate purported class action lawsuits against us in the District Court of Clark County, Nevada, ~~and~~ on behalf of similarly situated individuals employed by us in the State of Nevada. The lawsuits allege that we violated certain Nevada labor laws including payment of an hourly wage below the statutory minimum wage without providing a qualified health insurance plan and an associated failure to pay proper overtime compensation. The complaints seek, on behalf of the plaintiffs and members of the putative class, an unspecified amount of damages (including punitive damages), injunctive and equitable relief, and an award of attorneys’ fees, interest and costs. We agreed to settle the first of these cases in the fourth quarter of 2017 and the second of these cases in the third quarter of 2018. ~~Both settlements are~~In February 2019, the court approved the settlement for the first case for $0.5 million. The remaining case remains subject to final court approval, with the final fairness hearing scheduled for June 2019, and ~~are~~is included in our recorded reserves of ~~$1.7~~$1.0 million at ~~September 30, 2018.~~March 31, 2019.

On August 31, 2018, prior guests of ~~the Stratosphere~~The Strat filed a purported class action complaint against us in the District Court, Clark County, Nevada, on behalf of similarly situated individuals and entities that paid the Clark County Combined Transient Lodging Tax (“Tax”) on the portion of a resort fee that constitutes charges for Internet access, during the period of February 6, 2014 through the date the alleged conduct ceases. The lawsuit ~~alleges~~alleged that the Tax was charged in violation of the federal Internet Tax Freedom Act, which ~~imposes~~imposed a national moratorium on the taxation of Internet access by states and their political subdivisions, and ~~seeks,~~sought, on behalf of the plaintiff and the putative class, damages equal to the amount of the Tax collected on the Internet access component of the resort fee, injunctive relief, disgorgement, interest, fees and costs. ~~We have not yet been served on~~All defendants to this ~~complaint.~~matter, including Golden Entertainment, Inc., filed a

joint motion to dismiss this matter for lack of merit. The District Court granted this joint motion to dismiss on February 21, 2019. The plaintiffs appealed the District Court decision on April 10, 2019 to the Supreme Court of Nevada.

While legal proceedings are inherently unpredictable and no assurance can be given as to the ultimate outcome of any of the above matters, based on management’s current understanding of the relevant facts and circumstances, we believe that these proceedings should not have a material adverse effect on our financial position, results of operations or cash flows.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, which factors could materially affect our business, financial condition, liquidity or future results. There have been no material changes to the risk factors described in the “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, liquidity, results of operations, prospects or stock price.

On November 8, 2018, we entered into the Incremental Joinder Agreement No. 2 (the “Incremental Joinder No. 2”), by and among us, the subsidiary guarantors party thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (the “Agent”). The Incremental Joinder No. 2 relates to that certain First Lien Credit Agreement, dated as of October 20, 2017, by and among us, the subsidiary guarantors party thereto, the lenders party thereto, the Agent, JPMorgan Chase Bank, N.A., as collateral agent, and the other parties thereto, with respect to a $900 million senior secured first lien credit facility (consisting of $800 million in term loans and a $100 million revolving credit facility) (the “First Lien Facility”), and the Incremental Joinder Agreement dated June 11, 2018. The Incremental Joinder No. 2 provides for an increase in the size of the revolving credit facility under the First Lien Facility from $140 million to $200 million.

The revolving credit facility under the First Lien Facility matures on October 20, 2022, and the term loans under the First Lien Facility mature on October 20, 2024. As of September 30, 2018, our weighted-average interest rate under the First Lien Credit Facility was ~~5.09%. The~~ commitment fee for the revolving credit facility is payable quarterly at a rate of between 0.375% and 0.50%, depending on our net leverage ratio, and is accrued based on the average daily unused amount of the available revolving commitment. Borrowings under the First Lien Facility are guaranteed by each of our existing and future wholly owned domestic subsidiaries (other than certain insignificant or unrestricted subsidiaries), and are secured by substantially all of our present and future assets and the guarantors (subject to certain exceptions). Under the First Lien Facility, we and our restricted subsidiaries are subject to certain customary limitations, as described in this Quarterly Report on Form 10-Q.

Certain of the lenders under the First Lien Facility, and their respective affiliates, may in the future perform for us and our affiliates various commercial banking, investment banking, financial advisory or other services, for which they have received and/or may in the future receive customary compensation and expense reimbursement. In addition, Credit Suisse AG, Cayman Islands Branch, a lender under the First Lien Facility, also serves as administrative agent and collateral agent under our $200 million senior secured second lien term loan facility (the “Second Lien Facility”), and the Agent is a lender under the Second Lien Facility.

The foregoing description of the Incremental Joinder No. 2 does not purport to be complete and is qualified in its entirety by the full text of such agreement, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.

*Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K, but a copy will be furnished to the Securities and Exchange Commission upon request

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

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

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

		Page
PART I.	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS (Unaudited)	1

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

	Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~	2

	Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~	34

	Condensed Notes to Consolidated Financial Statements	45

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2526

ITEM 4.	CONTROLS AND PROCEDURES	2627

PART II.	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	2627

ITEM 1A.	RISK FACTORS	27

~~ITEM 5.~~	~~OTHER INFORMATION~~	2728

ITEM 6.	EXHIBITS	2829

SIGNATURES		2930

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

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

					Additional						Total
	Common stock				Paid-In			Accumulated			Shareholders'
	Shares		Amount		Capital			Deficit			Equity
Balances, December 31, 2018		26,779	$	268	$	435,245		$	(120,361	)	$	315,152
Cumulative effect, change in accounting for leases, net of tax		—		—		—			(12,272	)		(12,272	)
Issuance of common stock related to business combination		911		9		16,599			—			16,608
Proceeds from issuance of stock on options exercised		53		—		—			—			—
Share-based compensation		—		—		4,140			—			4,140
Tax benefit from share-based compensation		—		—		(288	)		—			(288	)
Net loss		—		—		—			(8,018	)		(8,018	)
Balances, March 31, 2019		27,743	$	277	$	455,696		$	(140,651	)	$	315,322


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

	Three Months Ended September 30, 2017
(In thousands)	As Reported			Adjustments			As Adjusted
Gross revenues	$	113,748		$	(6,088	)	$	107,660
Promotional allowances		(5,426	)		5,426			—
Net revenues		108,322			(662	)		107,660
Operating income		2,389			—			2,389
Net income		8,555			—			8,555

	Nine Months Ended September 30, 2017
(In thousands)	As Reported			Adjustments			As Adjusted
Gross revenues	$	342,045		$	(18,617	)	$	323,428
Promotional allowances		(16,584	)		16,584			—
Net revenues		325,461			(2,033	)		323,428
Operating income		10,285			—			10,285
Net income		15,610			—			15,610

(In thousands)
Current assets	$	12,615
Property and equipment		126,198
Right-of-use assets		2,620
Intangible assets		19,234
Goodwill		24,736
Liabilities		(10,023	)
Lease liabilities		(2,620	)
Total assets acquired, net of liabilities assumed	$	172,760

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


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

	Three Months Ended		Nine Months Ended		Three Months Ended
(In thousands, except per share data)	September 30, 2017		September 30, 2017		March 31, 2018
Pro forma combined revenues	$	214,625	$	638,658	$	238,232
Pro forma combined net income		13,883		31,751		5,155
Weighted-average common shares outstanding:
Basic		26,312		26,326		28,060
Diluted		28,137		27,493		2,379
Pro forma combined net income per share:
Basic	$	0.53	$	1.21	$	0.18
Diluted		0.49		1.15		0.17

	Stock Options					Stock Options
				Weighted-					Weighted-
				Average					Average
	Shares			Exercise Price		Shares			Exercise Price
Outstanding at January 1, 2018		4,375,929		$	10.73
Outstanding at January 1, 2019							3,424,755		$	11.49
Granted		—					—		$	—
Exercised		(733,033	)	$	7.05		(2,500	)	$	7.34
Cancelled		(117,635	)	$	12.15		(21,875	)	$	11.41
Outstanding at September 30, 2018		3,525,261		$	11.44
Exercisable and Vested at September 30, 2018		2,056,168		$	10.25
Outstanding at March 31, 2019							3,400,380		$	11.50
Exercisable at March 31, 2019							2,533,382		$	11.32

	RSUs					PSUs				RSUs					PSUs
				Weighted-				Weighted-					Weighted-				Weighted-
				Average Grant				Average Grant					Average Grant				Average Grant
	Shares			Date Fair Value		Shares⁽¹⁾		Date Fair Value		Shares			Date Fair Value		Shares⁽¹⁾		Date Fair Value
Outstanding at January 1, 2018		—					62,791	$	27.87
Outstanding at January 1, 2019											232,299		$	29.10		171,748	$	28.41
Granted		241,542		$	29.09		108,957	$	28.72		414,951		$	14.13		204,580	$	14.13
Vested		—					—				(68,874	)	$	28.72		—	$	—
Cancelled		(8,081	)	$	28.72		—				(6,863	)	$	28.56		—	$	—
Outstanding at September 30, 2018		233,461		$	29.10		171,748	$	28.41
Outstanding at March 31, 2019											571,513		$	18.28		376,328	$	20.65

	Operating			Finance
(In thousands)	Leases			Leases			Total
Remaining 2019	$	34,456		$	1,721		$	36,177
2020		30,099			1,791			31,890
2021		28,779			1,203			29,982
2022		22,304			581			22,885
2023		16,924			491			17,415
Thereafter		114,285			7,248			121,533
Total lease payments		246,847			13,035			259,882
Less: interest		(68,353	)		(5,487	)		(73,840	)
Present value of lease liabilities	$	178,494		$	7,548		$	186,042

(In thousands)	Operating Leases
Remaining 2019	$	3,963
2020		3,995
2021		3,272
2022		2,433
2023		1,763
Thereafter		2,546
Total future minimum rentals	$	17,972

	March 31, 2019
	Carrying		Fair		Fair Value
(In thousands)	Amount		Value		Hierarchy
Term loans	$	990,000	$	981,600	Level 2
Revolving credit facility		145,000		143,900	Level 2
Finance lease liabilities		7,548		7,548	Level 3
Notes payable		257		257	Level 3
Total debt	$	1,142,805	$	1,133,305

		Three Months Ended
(In thousands)	Classification	March 31, 2019
Operating lease cost
Operating lease cost	Operating and SG&A expenses	$	11,640
Variable lease cost	Operating and SG&A expenses		4,186
Short-term lease cost	Operating and SG&A expenses		1,049
Total operating lease cost		$	16,875

Finance lease cost
Amortization of lease assets	Depreciation and amortization	$	494
Interest on lease liabilities	Interest expense, net		98
Total finance lease cost		$	592

(In thousands, except lease term and discount rate)	March 31, 2019
Operating leases
Operating lease right-of-use assets, gross	$	172,394
Accumulated amortization		(9,350	)
Operating lease right-of-use assets, net	$	163,044

Current portion of operating leases	$	36,050
Noncurrent operating leases		142,444
Total operating lease liabilities	$	178,494

Finance leases
Property and equipment, gross	$	7,966
Accumulated depreciation		(2,117	)
Property and equipment, net	$	5,849

Current portion of finance leases, net	$	1,798
Noncurrent finance leases, net		5,750
Total finance lease liabilities	$	7,548

Weighted Average Remaining Lease Term
Operating leases	10.0 years
Finance leases	19.9 years

Weighted Average Discount Rate
Operating leases		6.3	%
Finance leases		6.1	%

	Remaining 2019		2020		2021		2022		2023		Thereafter		Total
(In thousands)
First Lien Facility (term loans)⁽¹⁾	$	6,000	$	8,000	$	8,000	$	8,000	$	8,000	$	752,000	$	790,000
Second Lien Term Loan⁽¹⁾		—		—		—		—		—		200,000		200,000
Revolving credit facility⁽¹⁾		—		—		—		145,000		—		—		145,000
Interest on long-term debt ⁽¹⁾⁽²⁾		52,748		69,936		69,490		67,056		60,635		65,771		385,636
Operating leases		34,456		30,099		28,779		22,304		16,924		114,285		246,847
Notes payable and finance lease obligations⁽³⁾		1,801		1,911		1,224		604		503		7,248		13,291
	$	95,005	$	109,946	$	107,493	$	242,964	$	86,062	$	1,139,304	$	1,780,774

Exhibits		Description

2.1* 4.1		~~Purchase Agreement,~~Indenture, dated as of ~~July 14, 2018, by and~~April 15, 2019, between Golden Entertainment, Inc., the Guarantors party thereto and ~~Marnell Gaming, LLC (incorporated by reference to Exhibit 2.1 to~~Wilmington Trust, National Association, as trustee.

4.2		Form of 7.625% Senior Note due 2026 of Golden Entertainment, Inc.~~’s Current Report on Form 8-K dated July 14, 2018,~~ (attached as Exhibit A to the Indenture filed ~~on July 16, 2018)~~as Exhibit 4.1 hereto).

10.1		~~Incremental Joinder~~Stockholders Agreement, ~~No. 2,~~ dated as of ~~November 8, 2018,~~January 14, 2019, by and ~~among~~between Golden Entertainment, Inc. ~~(as borrower),~~and the ~~subsidiaries of~~stockholders party thereto (incorporated by reference to Exhibit 10.1 to Golden Entertainment, Inc. ~~party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A. (as administrative agent)~~’s Current Report on Form 8-K dated January 14, 2019, filed on January 15, 2019).

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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

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

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Calculation Definition Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

	GOLDEN ENTERTAINMENT, INC.
	(Registrant)

Dated: ~~November 8, 2018~~May 10, 2019	/s/ BLAKE L. SARTINI
	Blake L. Sartini
	Chairman of the Board, President and Chief Executive Officer
	(Principal Executive Officer)

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company