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Significant Accounting Policies (Tables) | 12 Months Ended
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Dec. 31, 2019
Accounting Policies [Abstract] |
Schedule of operating segments within reportable segments | For financial reporting purposes, we aggregate our operating segments into the following four reportable segments:
| Location |  | Real Estate Assets Lease or Ownership Structure
Northeast segment |  |  |
Ameristar East Chicago | East Chicago, Indiana |  | Pinnacle Master Lease
Greektown Casino-Hotel (1) | Detroit, Michigan |  | Greektown Lease
Hollywood Casino Bangor | Bangor, Maine |  | Penn Master Lease
Hollywood Casino at Charles Town Races | Charles Town, West Virginia |  | Penn Master Lease
Hollywood Casino Columbus | Columbus, Ohio |  | Penn Master Lease
Hollywood Casino Lawrenceburg | Lawrenceburg, Indiana |  | Penn Master Lease
Hollywood Casino at Penn National Race Course | Grantville, Pennsylvania |  | Penn Master Lease
Hollywood Casino Toledo | Toledo, Ohio |  | Penn Master Lease
Hollywood Gaming at Dayton Raceway | Dayton, Ohio |  | Penn Master Lease
Hollywood Gaming at Mahoning Valley Race Course | Youngstown, Ohio |  | Penn Master Lease
Marquee by Penn (2) | Pennsylvania |  | N/A
Meadows Racetrack and Casino | Washington, Pennsylvania |  | Meadows Lease
Plainridge Park Casino | Plainville, Massachusetts |  | Pinnacle Master Lease
South segment (3) |  |  |
1 st Jackpot Casino | Tunica, Mississippi |  | Penn Master Lease
Ameristar Vicksburg | Vicksburg, Mississippi |  | Pinnacle Master Lease
Boomtown Biloxi | Biloxi, Mississippi |  | Penn Master Lease
Boomtown Bossier City | Bossier City, Louisiana |  | Pinnacle Master Lease
Boomtown New Orleans | New Orleans, Louisiana |  | Pinnacle Master Lease
Hollywood Casino Gulf Coast | Bay St. Louis, Mississippi |  | Penn Master Lease
Hollywood Casino Tunica | Tunica, Mississippi |  | Penn Master Lease
L’Auberge Baton Rouge | Baton Rouge, Louisiana |  | Pinnacle Master Lease
L’Auberge Lake Charles | Lake Charles, Louisiana |  | Pinnacle Master Lease
Margaritaville Resort Casino (4) | Bossier City, Louisiana |  | Margaritaville Lease
West segment |  |  |
Ameristar Black Hawk | Black Hawk, Colorado |  | Pinnacle Master Lease
Cactus Petes and Horseshu | Jackpot, Nevada |  | Pinnacle Master Lease
M Resort | Henderson, Nevada |  | Penn Master Lease
Tropicana Las Vegas | Las Vegas, Nevada |  | Owned
Zia Park Casino | Hobbs, New Mexico |  | Penn Master Lease
Midwest segment |  |  |
Ameristar Council Bluffs | Council Bluffs, Iowa |  | Pinnacle Master Lease
Argosy Casino Alton (5) | Alton, Illinois |  | Penn Master Lease
Argosy Casino Riverside | Riverside, Missouri |  | Penn Master Lease
Hollywood Casino Aurora | Aurora, Illinois |  | Penn Master Lease
Hollywood Casino Joliet | Joliet, Illinois |  | Penn Master Lease
Hollywood Casino at Kansas Speedway (6) | Kansas City, Kansas |  | Owned - JV
Hollywood Casino St. Louis | Maryland Heights, Missouri |  | Penn Master Lease
Prairie State Gaming (2) | Illinois |  | N/A
River City Casino | St. Louis, Missouri |  | Pinnacle Master Lease
(1) | Acquired on May 23, 2019
(2) | VGT route operations
(3) | Resorts Casino Tunica ceased operations on June 30, 2019, but remains subject to the Penn Master Lease.
(4) | Acquired on January 1, 2019
(5) | The riverboat is owned by us and not subject to the Penn Master Lease.
(6) Pursuant to a joint venture (“JV”) with International Speedway Corporation (“International Speedway”) and includes the Company’s 50% investment in Kansas Entertainment, LLC (“Kansas Entertainment”), which owns Hollywood Casino at Kansas Speedway. The following table highlights our revenues and Adjusted EBITDAR for each reportable segment and reconciles Adjusted EBITDAR on a consolidated basis to Net income.
| For the year ended December 31,
(in millions) | 2019 |  | 2018 |  | 2017
Revenues: |  |  |  |  |
Northeast segment | $ | 2,399.9 |  |  | $ | 1,891.5 |  |  | $ | 1,756.6 |
South segment | 1,118.9 |  |  | 394.4 |  |  | 224.3 |
West segment | 642.5 |  |  | 437.9 |  |  | 380.4 |
Midwest segment | 1,094.5 |  |  | 823.7 |  |  | 735.0 |
Other (1) | 47.5 |  |  | 40.4 |  |  | 51.7 |
Intersegment eliminations (2) | (1.9 | ) |  | — |  |  | — |
Total | $ | 5,301.4 |  |  | $ | 3,587.9 |  |  | $ | 3,148.0 |
Adjusted EBITDAR (3): |  |  |  |  |
Northeast segment | $ | 720.8 |  |  | $ | 583.8 |  |  | $ | 549.3 |
South segment | 369.8 |  |  | 118.9 |  |  | 62.6 |
West segment | 198.8 |  |  | 114.3 |  |  | 72.7 |
Midwest segment | 403.6 |  |  | 294.3 |  |  | 249.7 |
Other (1) | (87.8 | ) |  | (68.1 | ) |  | (55.2 | )
Total (3) | 1,605.2 |  |  | 1,043.2 |  |  | 879.1 |
Other operating benefits (costs) and other income (expenses): |  |  |  |  |
Rent expense associated with triple net operating leases (4) | (366.4 | ) |  | (3.8 | ) |  | — |
Stock-based compensation | (14.9 | ) |  | (12.0 | ) |  | (7.8 | )
Cash-settled stock-based awards variance | (0.8 | ) |  | 19.6 |  |  | (23.4 | )
Loss on disposal of assets | (5.5 | ) |  | (3.2 | ) |  | (0.2 | )
Contingent purchase price | (7.0 | ) |  | (0.5 | ) |  | 6.8 |
Pre-opening and acquisition costs | (22.3 | ) |  | (95.0 | ) |  | (9.7 | )
Depreciation and amortization | (414.2 | ) |  | (269.0 | ) |  | (267.1 | )
Impairment losses | (173.1 | ) |  | (34.9 | ) |  | (18.0 | )
Recoveries on (provision for) loan loss and unfunded loan commitments | — |  |  | 17.0 |  |  | (89.8 | )
Insurance recoveries, net of deductible charges | 3.0 |  |  | 0.1 |  |  | 0.3 |
Non-operating items for Kansas JV | (3.7 | ) |  | (5.1 | ) |  | (5.8 | )
Interest expense, net | (534.2 | ) |  | (538.4 | ) |  | (463.2 | )
Loss on early extinguishment of debt | — |  |  | (21.0 | ) |  | (24.0 | )
Other | 20.0 |  |  | (7.1 | ) |  | (2.3 | )
Income before income taxes | 86.1 |  |  | 89.9 |  |  | (25.1 | )
Income tax benefit (expense) | (43.0 | ) |  | 3.6 |  |  | 498.5 |
Net income | $ | 43.1 |  |  | $ | 93.5 |  |  | $ | 473.4 |
(1) | The Other category consists of the Company’s stand-alone racing operations, namely Sanford-Orlando Kennel Club and the Company’s JV interests in Sam Houston Race Park, Valley Race Park, and Freehold Raceway. The Other category also includes Penn Interactive; which operates social gaming, our internally-branded retail sportsbooks, and iGaming; our management contract for Retama Park Racetrack; and HPT. Expenses incurred for corporate and shared services activities that are directly attributable to a property or are otherwise incurred to support a property are allocated to
each property. The Other category also includes corporate overhead costs, which consist of certain expenses, such as: payroll, professional fees, travel expenses and other general and administrative expenses that do not directly relate to or have not otherwise been allocated to a property.
(2) | Represents the elimination of intersegment revenues associated with Penn Interactive and HPT.
(3) | We define Adjusted EBITDAR as earnings before interest expense, net; income taxes; depreciation and amortization; rent expense associated with triple net operating leases (see footnote (4) below); stock-based compensation; debt extinguishment and financing charges; impairment charges; insurance recoveries and deductible charges; changes in the estimated fair value of our contingent purchase price obligations; gain or loss on disposal of assets; the difference between budget and actual expense for cash-settled stock-based awards; pre-opening and acquisition costs; and other income or expenses. Adjusted EBITDAR is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as depreciation and amortization) added back for our JV in Kansas Entertainment.
(4) | The Company’s triple net operating leases include certain components of the Master Leases (primarily land), the Meadows Lease, the Margaritaville Lease, and the Greektown Lease.
| For the year ended December 31,
(in millions) | 2019 |  | 2018 |  | 2017
Capital expenditures: |  |  |  |  |
Northeast segment | $ | 96.2 |  |  | $ | 38.9 |  |  | $ | 26.3 |
South segment | 29.8 |  |  | 10.6 |  |  | 6.3 |
West segment | 21.2 |  |  | 12.8 |  |  | 35.7 |
Midwest segment | 32.7 |  |  | 25.3 |  |  | 26.2 |
Other | 10.7 |  |  | 5.0 |  |  | 4.8 |
Total capital expenditures | $ | 190.6 |  |  | $ | 92.6 |  |  | $ | 99.3 |
(in millions) | Northeast |  | South |  | West |  | Midwest |  | Other |  | Total
As of December 31, 2019 |  |  |  |  |  |  |  |  |  |  |
Investment in and advances to unconsolidated affiliates | $ | 0.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 90.9 |  |  | $ | 37.3 |  |  | $ | 128.3 |
Total assets (1) | $ | 2,273.7 |  |  | $ | 1,397.0 |  |  | $ | 752.1 |  |  | $ | 1,412.2 |  |  | $ | 8,359.5 |  |  | $ | 14,194.5 |
As of December 31, 2018 |  |  |  |  |  |  |  |  |  |  |
Investment in and advances to unconsolidated affiliates | $ | 0.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 89.4 |  |  | $ | 39.0 |  |  | $ | 128.5 |
Total assets (2) | $ | 1,330.2 |  |  | $ | 1,082.3 |  |  | $ | 755.7 |  |  | $ | 1,411.5 |  |  | $ | 6,381.3 |  |  | $ | 10,961.0 |
As of December 31, 2017 |  |  |  |  |  |  |  |  |  |  |
Investment in and advances to unconsolidated affiliates | $ | 0.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 88.3 |  |  | $ | 60.5 |  |  | $ | 148.9 |
Total assets (2) | $ | 921.0 |  |  | $ | 169.3 |  |  | $ | 625.0 |  |  | $ | 970.8 |  |  | $ | 2,548.7 |  |  | $ | 5,234.8 |
(1) | As of December 31, 2019, total assets of the Other category includes the real estate assets subject to the Master Leases, which are either classified as property and equipment, operating lease ROU assets, or finance lease ROU assets, depending on whether the underlying component of the Master Leases was determined to be an operating lease, a finance lease, or continue to be financing obligations, upon adoption of ASC 842.
(2) As of December 31, 2018 and 2017, total assets of the Other category includes the real estate assets subject to the Master Leases, which are classified as property and equipment.
Schedule of receivables | The Company’s receivables as of December 31, 2019 and 2018 primarily consisted of the following:
| December 31,
(in millions) | 2019 |  | 2018
Markers issued to customers | $ | 22.9 |  |  | $ | 17.2 |
Credit card receivables and other advances to customers | 16.5 |  |  | 20.9 |
Receivables from ATM and cash kiosk transactions | 14.4 |  |  | 19.2 |
Hotel and banquet receivables | 6.5 |  |  | 8.1 |
Racing settlements | 6.6 |  |  | 6.1 |
Receivables due from platform providers for social casino games | 3.3 |  |  | 2.3 |
Other | 26.2 |  |  | 36.2 |
Allowance for doubtful accounts | (7.7 | ) |  | (3.2 | )
Accounts receivable, net | $ | 88.7 |  |  | $ | 106.8 |
Schedule of estimated useful lives of property, plant and equipment | Depreciation of property and equipment is recorded using the straight-line method over the shorter of the estimated useful life of the asset or the related lease term, if any, as follows:
| Years
Land improvements | 15
Buildings and improvements | 5 to 31
Vessels | 10 to 35
Furniture, fixtures and equipment | 3 to 31
Property and equipment, net, consisted of the following:
| December 31,
(in millions) | 2019 |  | 2018
Property and equipment - Not Subject to Master Leases |  |  |
Land and improvements | $ | 353.2 |  |  | $ | 344.0 |
Building, vessels and improvements | 420.4 |  |  | 343.0 |
Furniture, fixtures and equipment | 1,598.3 |  |  | 1,565.8 |
Leasehold improvements | 183.6 |  |  | 152.9 |
Construction in progress | 59.3 |  |  | 25.5 |
| 2,614.8 |  |  | 2,431.2 |
Less: Accumulated depreciation | (1,548.3 | ) |  | (1,400.2 | )
| 1,066.5 |  |  | 1,031.0 |
Property and equipment - Subject to Master Leases |  |  |
Land and improvements (1) | 1,525.9 |  |  | 2,971.0 |
Building, vessels and improvements (1) | 3,664.6 |  |  | 3,845.0 |
| 5,190.5 |  |  | 6,816.0 |
Less: Accumulated depreciation | (1,136.8 | ) |  | (978.2 | )
| 4,053.7 |  |  | 5,837.8 |
Property and equipment, net | $ | 5,120.2 |  |  | $ | 6,868.8 |
(1) | Upon adoption of ASC 842, approximately $1.4 billion of land was derecognized and replaced with operating lease ROU assets based on the present value of future lease payments and $180.4 million of building and improvements, gross, was derecognized and replaced with finance lease ROU assets based on the present value of future lease payments. See Note 3, “New Accounting Pronouncements.”
Depreciation expense was as follows:
| For the year ended December 31,
(in millions) | 2019 |  | 2018 |  | 2017
Depreciation expense (1) | $ | 381.6 |  |  | $ | 251.9 |  |  | $ | 248.2 |
(1) Of such amounts, $158.9 million, $112.1 million, and $92.4 million, respectively, pertained to real estate assets subject to either of our Master Leases.
Schedule of complimentaries | Revenues recorded to food and beverage, hotel, and other and offset to gaming revenues were as follows:
| For the year ended December 31,
(in millions) | 2019 |  | 2018
Food and beverage | $ | 261.4 |  |  | $ | 137.2 |
Hotel | 159.6 |  |  | 60.8 |
Other | 17.6 |  |  | 8.1 |
Total complimentaries associated with gaming contracts | $ | 438.6 |  |  | $ | 206.1 |

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