XML 72 R17.htm IDEA: XBRL DOCUMENT
v2.4.1.9

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Components of the provision for income taxes are as follows (in thousands):
| 2014 |  | 2013 |  | 2012
Current provision: |  |  |  |  |
Federal | $ | 13,236 |  |  | $ | 22,727 |  |  | $ | 21,103 |
State and local | 2,008 |  |  | 2,462 |  |  | 2,351 |
Foreign | 78 |  |  | — |  |  | (38 | )
| 15,322 |  |  | 25,189 |  |  | 23,416 |
Deferred: |  |  |  |  |
Federal | 19,672 |  |  | 5,788 |  |  | 8,292 |
State and local | 81 |  |  | (504 | ) |  | 1,367 |
Foreign | (4,914 | ) |  | — |  |  | — |
| 14,839 |  |  | 5,284 |  |  | 9,659 |
| $ | 30,161 |  |  | $ | 30,473 |  |  | $ | 33,075 |
The Company’s income tax expense is different from the amount computed by applying the federal statutory income tax rate to income before taxes as follows (in thousands):
| 2014 |  | 2013 |  | 2012
Federal statutory tax on earnings before income taxes | $ | 26,782 |  |  | $ | 29,928 |  |  | $ | 31,929 |
State income taxes, net of federal income tax benefit | 1,388 |  |  | 1,514 |  |  | 2,185 |
Non-deductible lobbying and contributions | 999 |  |  | 723 |  |  | 946 |
Tax credits and incentives | (1,209 | ) |  | (663 | ) |  | (494 | )
Tax adjustments | (485 | ) |  | (174 | ) |  | (1,093 | )
Accruals and settlements related to tax audits | 529 |  |  | (395 | ) |  | (686 | )
Valuation allowance | — |  |  | (220 | ) |  | — |
Change in effective state tax rates | (401 | ) |  | (383 | ) |  | 197 |
Non-deductible transaction costs | 947 |  |  | — |  |  | — |
Non-deductible acquisition related charges | 1,339 |  |  | — |  |  | — |
Other permanent differences | 272 |  |  | 143 |  |  | 91 |
| $ | 30,161 |  |  | $ | 30,473 |  |  | $ | 33,075 |
During 2003, the Company entered into a Tax Increment Financing (“TIF”) Agreement with the Commonwealth of Kentucky. Pursuant to this agreement, the Company is entitled to receive reimbursement for 80% of the increase in Kentucky income and sales tax resulting from its 2005 renovation of the Churchill facility. During the years ended 2014, 2013, and 2012, the Company recognized reductions in operating expenses of $0.6 million, $0.8 million and $0.7 million, respectively. In addition, the Company recognized reductions to its income tax expense, net of federal taxes, of $0.1 million, $0.4 million, and $0.5 million, respectively. As of December 31, 2014, the Company has received $6.4 million of combined benefits and established a sales tax receivable of $0.6 million and an income tax receivable of $0.1 million related to the reimbursement. Components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
| 2014 |  | 2013
Deferred tax assets: |  |  |
Deferred compensation plans | $ | 31,520 |  |  | $ | 14,271 |
Deferred income | 752 |  |  | 6,328 |
Allowance for uncollectible receivables | 1,323 |  |  | 1,295 |
Deferred liabilities | 3,822 |  |  | 3,574 |
Net operating losses and credit carryforward | 32,573 |  |  | 19,186 |
Deferred tax assets | 69,990 |  |  | 44,654 |
Valuation allowance | (1,274 | ) |  | (1,213 | )
Net deferred tax asset | 68,716 |  |  | 43,441 |
Deferred tax liabilities: |  |  |
Intangible assets in excess of tax basis | 151,210 |  |  | 22,749 |
Property and equipment in excess of tax basis | 37,827 |  |  | 40,135 |
Other | 11,485 |  |  | 2,246 |
Deferred tax liabilities | 200,522 |  |  | 65,130 |
Net deferred tax liability | $ | (131,806 | ) |  | $ | (21,689 | )
Income taxes are classified in the balance sheet as follows: |  |  |
Net current deferred tax asset | $ | 17,716 |  |  | $ | 8,927 |
Net non-current deferred tax liability | (149,522 | ) |  | (30,616 | )
| $ | (131,806 | ) |  | $ | (21,689 | )
As of December 31, 2014, the Company had federal net operating losses of $24.4 million, which were acquired in conjunction with the acquisitions of Youbet.com and Big Fish Games. The utilization of these losses, which expire between 2019 and 2034, is limited on an annual basis pursuant to IRC § 382. The Company believes that it will be able to fully utilize all of these losses. In addition, the Company has $4.3 million of state net operating losses; $2.4 million of this loss carryforward was acquired in conjunction with the acquisitions of Youbet.com and Big Fish Games. These losses, which expire between 2015 and 2034, may be subject to annual limitations similar to IRC § 382. The Company has recorded a valuation allowance of $0.9 million against the state net operating losses due to the fact that it is unlikely that it will generate income in certain states, which is necessary to utilize the assets. The changes in the valuation allowance for deferred tax assets for the years ended December 31, 2014 and 2013 are as follows (in thousands):
| 2014 |  | 2013
Balance at beginning of the year | $ | 1,213 |  |  | $ | 1,334 |
Charged to costs and expenses | 158 |  |  | 168 |
Charged to other accounts | (83 | ) |  | — |
Deductions | (14 | ) |  | (289 | )
Balance at end of the year | $ | 1,274 |  |  | $ | 1,213 |
The IRS has audited the Company through 2012. Subsequent years are open to examination. State and local tax years open for examination vary by jurisdiction. As of December 31, 2014, the Company had approximately $2.9 million of total gross unrecognized tax benefits, excluding interest of $0.1 million. Of this amount, $1.7 million was related to tax positions acquired in the Big Fish Games acquisition. If the total gross unrecognized tax benefits were recognized, there would be a $1.8 million effect to the annual effective tax rate and an additional $1.1 million would be reimbursed by the pre-acquisition shareholders of Big Fish Games, in conjunction with a tax indemnity agreement. The Company anticipates a decrease in its unrecognized tax positions of approximately $1.1 million during the next twelve months. This anticipated decrease is primarily due to the expiration of statutes of limitations. During October 2012, the Company funded a $2.9 million income tax payment to the State of Illinois related to a dispute over state income tax apportionment methodology which was recorded in other assets at December 31, 2014. The Company filed its state income tax returns related to the years 2002 through 2005 following the methodology prescribed by Illinois statute, however the State of Illinois has taken a contrary tax position. The Company filed a formal protest with the State of Illinois during the fourth quarter of 2012. The Company does not expect this issue to have a material adverse effect on its business, financial condition or results of operations. See Note 17 for further discussion of this matter. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| 2014 |  | 2013 |  | 2012
Balance as of January 1 | $ | 582 |  |  | $ | 8,565 |  |  | $ | 2,109 |
Additions for tax positions related to the current year | 573 |  |  | 190 |  |  | — |
Additions for tax positions of prior years | 2,097 |  |  | 207 |  |  | 7,390 |
Reductions for tax positions of prior years | (326 | ) |  | (8,380 | ) |  | (934 | )
Balance as of December 31 | $ | 2,926 |  |  | $ | 582 |  |  | $ | 8,565 |
The increase in the uncertain tax position in 2014 was primarily related to the acquisition of Big Fish Games. The decrease in the uncertain tax position in 2013 was due to an IRS settlement related to the timing of the taxation of receipts from the HRE Trust Fund and the expiration of statute of limitations related to various tax positions. The Company recognizes interest accrued related to unrecognized tax benefits in income tax expense and penalties in selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income. The Company accrued less than $0.2 million of interest for each of the years ended December 31, 2014 and 2013.

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration