INTANGIBLE ASSETS

Intangible assets consist of the following:



	December 31, 2017
	Weighted	Gross					Cumulative
	Average Life	Carrying		Cumulative			Impairment			Intangible
(In thousands)	Remaining	Value		Amortization			Losses			Assets, Net
Amortizing intangibles:
Customer relationships	5.2 years	$	9,400	$	(3,470	)	$	—		$	5,930
Favorable lease rates	38.0 years	11,730		(3,075		)	—			8,655
Development agreement	—	21,373		—			—			21,373
		42,503		(6,545		)	—			35,958

Indefinite lived intangible assets:
Trademarks	Indefinite	151,887		—			(4,300		)	147,587
Gaming license rights	Indefinite	873,335		(33,960		)	(179,974		)	659,401
		1,025,222		(33,960		)	(184,274		)	806,988
Balance, December 31, 2017		$	1,067,725	$	(40,505	)	$	(184,274	)	$	842,946



	December 31, 2016
	Weighted	Gross					Cumulative
	Average Life	Carrying		Cumulative			Impairment			Intangible
(In thousands)	Remaining	Value		Amortization			Losses			Assets, Net
Amortizing intangibles:
Customer relationships	1.1 years	$	144,780	$	(125,318	)	$	—		$	19,462
Favorable lease rates	31.4 years	45,370		(13,039		)	—			32,331
Development agreement	—	21,373		—			—			21,373
		211,523		(138,357		)	—			73,166

Indefinite lived intangible assets:
Trademarks	Indefinite	153,687		—			(4,300		)	149,387
Gaming license rights	Indefinite	873,335		(33,960		)	(179,974		)	659,401
		1,027,022		(33,960		)	(184,274		)	808,788
Balance, December 31, 2016		$	1,238,545	$	(172,317	)	$	(184,274	)	$	881,954

Amortizing Intangible Assets

Customer Relationships

Customer relationships represent the value of repeat business associated with our customer loyalty programs. The value of customer relationships is determined using a multi-period excess earnings method, which is a specific discounted cash flow model. The value is determined at an amount equal to the present value of the incremental after-tax cash flows attributable only to these customers, discounted to present value at a risk-adjusted rate of return. With respect to the application of this methodology, we used the following significant projections and assumptions: revenue of our rated customers, based on expected level of play; promotional allowances provided to these existing customers; attrition rate related to these customers; operating expenses; general and administrative expenses; trademark expense; discount rate; and the present value of tax benefit.

Favorable Lease Rates

Favorable lease rates represent the rental rates for assumed land leases that are favorable to comparable market rates. The fair value is determined on a technique whereby the difference between the lease rate and the then current market rate for the remaining contractual term is discounted to present value. The assumptions underlying this computation include the actual lease rates, the expected remaining lease term, including renewal options, based on the existing lease; current rates of rent for leases on comparable properties with similar terms obtained from market data and analysis; and an assumed discount rate. The estimates underlying the result covered a term of 41 to 52 years.

Development Agreement

Development agreement is an acquired contract with a Native American tribe (the "Tribe") under which the Company has the right to assist the Tribe in the development and management of a gaming facility on the Tribe's land. This asset although amortizable, is not amortized until development is completed. We are in the process of finalizing project design and construction planning. In the interim, this asset is subject to periodic impairment reviews.

Indefinite Lived Intangible Assets

Trademarks

Trademarks are based on the value of our brands, which reflect the level of service and quality we provide and from which we generate repeat business. Trademarks are valued using the relief from royalty method, which presumes that without ownership of such trademark, we would have to make a stream of payments to a brand or franchise owner in return for the right to use their name. By virtue of this asset, we avoid any such payments and record the related intangible value of our ownership of the trade name. We used the following significant projections and assumptions to determine value under the relief from royalty method: revenue from gaming and hotel activities; royalty rate; tax expense; terminal growth rate; discount rate; and the present value of tax benefit.

Gaming License Rights

Gaming license rights represent the value of the license to conduct gaming in certain jurisdictions, which is subject to highly extensive regulatory oversight, and a limitation on the number of licenses available for issuance therein. In the majority of cases, the value of our gaming licenses is determined using a multi-period excess earnings method, which is a specific discounted cash flow model. The value is determined at an amount equal to the present value of the incremental after-tax cash flows attributable only to future gaming revenue, discounted to present value at a risk-adjusted rate of return. With respect to the application of this methodology, we used the following significant projections and assumptions: gaming revenues; gaming operating expenses; general and administrative expenses; tax expense; terminal value; and discount rate. In two instances, we determine the value of our gaming licenses by applying a cost approach. Our primary consideration in the application of this methodology is the initial statutory fee associated with acquiring a gaming license in the jurisdiction.

Activity for the Years Ended December 31, 2017, 2016 and 2015

The following table sets forth the changes in these intangible assets:



(In thousands)	Customer Relationships			Favorable Lease Rates			Development Agreements		Trademarks			Gaming License Rights			Intangible Assets, Net
Balance, January 1, 2015	$	51,958		$	34,414		$	21,373	$	126,001		$	700,503		$	934,249
Additions	—			—			—		—			—			—
Impairments	—			—			—		—			(17,502		)	(17,502		)
Amortization	(25,652		)	(1,041		)	—		—			—			(26,693		)
Balance, December 31, 2015	26,306			33,373			21,373		126,001			683,001			890,054
Additions	8,480			—			—		24,200			—			32,680
Impairments	—			—			—		(800		)	(23,600		)	(24,400		)
Amortization	(15,324		)	(1,042		)	—		—			—			(16,366		)
Other	—			—			—		(14		)	—			(14		)
Balance, December 31, 2016	19,462			32,331			21,373		149,387			659,401			881,954
Additions	—			—			—		—			—			—
Purchase price adjustment	920			—			—		(1,800		)	—			(880		)
Impairments	—			—			—		—			—			—
Amortization	(14,452		)	(228		)	—		—			—			(14,680		)
Other	—			(23,448		)	—		—			—			(23,448		)
Balance, December 31, 2017	$	5,930		$	8,655		$	21,373	$	147,587		$	659,401		$	842,946

In March 2017, The Orleans Hotel and Casino exercised an option in its lease agreement to terminate the existing lease and purchase the land subject to the lease therefore combining the remaining unamortized favorable lease rate asset into the cost of the land asset.

Future Amortization

Customer relationships are being amortized on an accelerated basis over an estimated life of five years. Favorable lease rates are being amortized on a straight-line basis over a weighted-average original useful life of 38.0 years. Future amortization is as follows:



(In thousands)	Customer Relationships		Favorable Lease Rates		Total
For the year ending December 31,
2018	$	2,291	$	228	$	2,519
2019	1,634		228		1,862
2020	1,043		228		1,271
2021	511		228		739
2022	271		228		499
Thereafter	180		7,515		7,695
Total future amortization	$	5,930	$	8,655	$	14,585

Trademarks and gaming license rights are not subject to amortization, as we have determined that they have an indefinite useful life; however, these assets are subject to an annual impairment test each year and between annual test dates in certain circumstances.

Impairment Considerations

As a result of our annual impairment testing in the fourth quarter of 2017, there were no impairment charges recognized.

During the year ended 2016, we recognized non-cash impairment charges of $23.6 million of gaming licenses and $0.8 million of trademarks in our Midwest and South segment. These amounts are included in impairments of assets in the consolidated statements of operations for the year ended December 31, 2016.

During the year ended 2015, we recognized non-cash impairment charges of $17.5 million of a gaming license in our Midwest and South segment. These amounts are included in impairments of assets in the consolidated statements of operations for the year ended December 31, 2015.