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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2015
Commitments and Contingencies |
Commitments and Contingencies | 12. Commitments and Contingencies Litigation Bankruptcy Litigation With the acquisition of the Tropicana Las Vegas and its associated entities ("Tropicana Las Vegas") in August 2015, the Company has assumed litigation arising from the Bankruptcy Chapter 11 reorganization ("Bankruptcy") of Tropicana's former affiliate, Tropicana Entertainment Holdings, LLC ("TEH"). In this Bankruptcy proceeding, there is an unresolved dispute related to the payment of certain professional fees and expenses totaling approximately $13.5 million. TEH takes the position that, pursuant to an Intercompany Agreement signed by TEH and Tropicana, Tropicana must reimburse TEH for a portion of certain professional fees that were incurred and paid by TEH during the Chapter 11 cases. Tropicana Las Vegas contends that it owes no reimbursement to TEH for the professional fees paid by TEH prior to effective date of the bankruptcy plan, and as a result, its potential liability in respect of such claimed professional fees and expenses should be limited to the current balance of a professional fee escrow account of approximately $3.8 million. On January 5, 2016, the Bankruptcy Court entered an order consistent with Tropicana Las Vegas's position. On January 19, 2016, TEH and other parties appealed the order. This appeal remains pending. At this point, management cannot predict the outcome of this disputed claim and no assurance can be provided regarding Tropicana Las Vegas's liability in this regard. The Company is subject to various legal and administrative proceedings relating to personal injuries, employment matters, commercial transactions and other matters arising in the ordinary course of business. The Company does not believe that the final outcome of these matters will have a material adverse effect on the Company's consolidated financial position or results of operations. In addition, the Company maintains what it believes is adequate insurance coverage to further mitigate the risks of such proceedings. However, such proceedings can be costly, time consuming and unpredictable and, therefore, no assurance can be given that the final outcome of such proceedings may not materially impact the Company's consolidated financial condition or results of operations. Further, no assurance can be given that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters. The following proceedings could result in costs, settlements, damages, or rulings that materially impact the Company's consolidated financial condition or operating results. The Company believes that it has meritorious defenses, claims and/or counter-claims with respect to these proceedings, and intends to vigorously defend itself or pursue its claims. Operating Lease Commitments The Company is liable under numerous operating leases for various assets, including but not limited to automobiles, and other equipment. Total rental expense under these other lease agreements was $37.9 million, $33.3 million, and $36.4 million for the years ended December 31, 2015, 2014 and 2013, respectively. The future minimum lease commitments relating to the base lease rent portion of noncancelable operating leases at December 31, 2015 are as follows (in thousands):
Year ending December 31, |  | Total |
2016 |  | $ | 4,223 |
2017 |  |  | 3,205 |
2018 |  |  | 2,668 |
2019 |  |  | 1,632 |
2020 |  |  | 1,066 |
Thereafter |  |  | 14,831 |
​ | ​ | ​ | ​ | ​
Total |  | $ | 27,625 |
​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​
Capital Expenditure Commitments The Company's current construction program for 2016 includes capital expenditures of approximately $31.4 million, of which the Company was contractually committed to spend approximately $2.0 million at December 31, 2015. Purchase obligations The Company has obligations to purchase various goods and services totaling $87.1 million at December 31, 2015, of which $62.7 million will be incurred in 2016. Employee Benefit Plans The Company maintains a qualified retirement plan under the provisions of Section 401(k) of the Internal Revenue Code of 1986, as amended, which covers all eligible employees. The plan enables participating employees to defer a portion of their salary in a retirement fund to be administered by the Company. The Company makes a discretionary match contribution, where applicable, of 50% of employees' elective salary deferrals, up to a maximum of 6% of eligible employee compensation. The matching contributions for the qualified retirement plan for the years ended December 31, 2015, 2014 and 2013 were $5.0 million, $4.7 million, and $4.6 million, respectively. The Company also has a defined contribution plan, the Charles Town Races Future Service Retirement Plan, covering substantially all of its union employees at Hollywood Casino at Charles Town Races. Hollywood Casino at Charles Town Races makes annual contributions to this plan for the eligible union employees and to the Penn National Gaming, Inc. 401(k) Plan for the eligible non-union employees for an amount equal to the amount accrued for retirement expense, which is calculated as 0.25% of the daily mutual handle, 1.0% of net video lottery revenue up to a base and, after the base is met, it reverts to 0.5% and 0.84% of table and poker revenue, respectively. The contributions for the two plans at Hollywood Casino at Charles Town Races for the years ended December 31, 2015, 2014 and 2013 were $2.9 million, $3.0 million, and $3.6 million, respectively. The Company maintains a non-qualified deferred compensation plan that covers most management and other highly-compensated employees. This plan was effective March 1, 2001. The plan allows the participants to defer, on a pre-tax basis, a portion of their base annual salary and/or their annual bonus, and earn tax-deferred earnings on these deferrals. The plan also provides for matching Company contributions that vest over a five-year period. The Company has established a Trust, and transfers to the Trust, on a periodic basis, an amount necessary to provide for its respective future liabilities with respect to participant deferral and Company contribution amounts. The Company's matching contributions for the non-qualified deferred compensation plan for the years ended December 31, 2015, 2014 and 2013 were $2.0 million, $1.9 million, and $2.3 million, respectively. The Company's deferred compensation liability, which was included in other current liabilities within the consolidated balance sheets, was $52.7 million and $61.4 million at December 31, 2015 and 2014, respectively. Labor Agreements The Company is required to have agreements with the horsemen at the majority of its racetracks to conduct its live racing and/or simulcasting activities. In addition, in order to operate gaming machines and table games in West Virginia, the Company must maintain agreements with each of the Charles Town horsemen, pari-mutuel clerks and breeders. At Hollywood Casino at Charles Town Races, the Company renewed an agreement with the Charles Town Horsemen's Benevolent and Protective Association that expires on June 18, 2018. Hollywood Casino at Charles Town Races also renewed an agreement with the breeders that expires on June 30, 2016. Additionally, the pari-mutuel clerks at Charles Town are represented under a collective bargaining agreement with the West Virginia Union of Mutuel Clerks, which expired on December 31, 2010 and has been extended on a month-to-month basis. The Company's agreement with the Pennsylvania Horsemen's Benevolent and Protective Association at Hollywood Casino at Penn National Race Course was renewed through January 31, 2017. The Company had a collective bargaining agreement with Local 137 of the Sports Arena Employees at Penn National Race Course with respect to on-track pari-mutuel clerks and admissions personnel which expired on December 31, 2011. In August 2012, Local 137 of the Sports Arena Employees announced that they entered into a "voluntary supervision" agreement with their international union, Laborers' International Union of North America ("LIUNA") Local 108. In February 2014, a new agreement with LIUNA Local 108 for on-track and OTWs bargaining units was ratified for three years. In August 2015, the company entered into a three year collective bargaining agreement with the International Chapter of Horseshoers and Allied Equine Trades Local 947. The Company's agreement with the Maine Harness Horsemen Association at Bangor Raceway continued through the conclusion of the 2015 racing season. In March of 2014, Hollywood Gaming at Mahoning Valley Race Course entered into an agreement with the Ohio Horsemen's Benevolent and Protective Association. The term is for a period of ten years from the September 2014 commencement of video lottery terminal operations at that facility. In September 2015, Hollywood Gaming at Dayton Raceway entered into an agreement with the Ohio Harness Horsemen's Association for racing at the property. The term is for a period of ten years from the September 2015 effective date. Rosecroft Raceway entered into agreements with the Cloverleaf Standardbred Owners Association ("CSOA") and Maryland Standardbred Breeder's Association ("MSBA") as of July 5, 2011. CSOA's agreement has been extended through December 31, 2017 with certain termination provisions. The MSBA agreement has been extended through December 31, 2017 with certain termination provisions. Additionally, Rosecroft Raceway has entered into agreements with the United Food and Commercial Workers Union ("UFCW") Local 27 and the Seafarers Entertainment and Allied Trade Union ("SEATU") for certain bargaining positions at the racetrack. The UFCW Local 27 agreement was ratified on December 13, 2014 and expires on November 30, 2019. The SEATU agreement expires on November 30, 2020. Across certain of the Company's properties, SEATU represents approximately 1,827 of the Company's employees under a National Agreement that expires on January 24, 2032 and Local Addenda that expire at various times between May 2016 and January 2024. SEATU agreements are in place at Hollywood Casino Joliet, Hollywood Casino Lawrenceburg, Hollywood Casino Riverside, Argosy Alton, Hollywood Casino Kansas Speedway, Hollywood Gaming Dayton, Hollywood Gaming at Mahoning Valley and Plainridge Park Casino. Argosy Alton has a wage reopener in May 2016; the remainder of the SEATU agreements have expiration dates in 2017 and beyond. At Hollywood Casino Joliet, the Hotel Employees and Restaurant Employees Union Local 1 represents approximately 186 employees under a collective bargaining agreement which expires on March 31, 2019. At Hollywood Casino Columbus and Hollywood Casino Toledo, a council comprised of the United Auto Workers and the United Steel Workers represents approximately 1,361 employees under a collective bargaining agreement which ends on November 15, 2019. On August 25, 2015, the Company acquired Tropicana Las Vegas Hotel & Casino who had an existing agreement with the Culinary & Bartenders Union which expires on May 31, 2018. In addition, at some of the Company's properties, the Security Police and Fire Professionals of America, the International Brotherhood of Electronic Workers Locals 176 and 649, the LIUNA Public Serviced Employees Local 1290PE, The International Association of Machinists and Aerospace Workers, Locals 447 and 264, the United Industrial, Service, Transportation, Professional and Government Workers of North America, the International Alliance of Theatrical Stage Employees and Teamsters Union represent certain of the Company's employees under collective bargaining agreements that expire at various times between July 2016 and September 2025. None of these additional unions represent more than 91 of the Company's employees. If the Company fails to maintain operative agreements with the horsemen at a track, it will not be permitted to conduct live racing and export and import simulcasting at that track and OTWs and, in West Virginia, the Company will not be permitted to operate its gaming machines and table games unless the state intervenes or changes the statute. In addition, the Company's simulcasting agreements are subject to the horsemen's approval. If the Company fails to renew or modify existing agreements on satisfactory terms, this failure could have a material adverse effect on its business, financial condition and results of operations. Except for the closure of the facilities at Penn National Race Course and its OTWs from February 16, 1999 to March 24, 1999 due to a horsemen's strike, and a few days at other times and locations, the Company has been able to maintain the necessary agreements. There can be no assurance that the Company will be able to maintain the required agreements.

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