Note 11 – Segment Information

The Company conducts its business through two reportable operating segments: Distributed Gaming and Casinos. The Company’s Distributed Gaming segment involves the installation, maintenance and operation of gaming and amusement devices in certain strategic, high-traffic, non-casino locations (such as grocery stores, convenience stores, restaurants, bars, taverns, saloons and liquor stores) in Nevada and Montana, and the operation of traditional, branded taverns targeting local patrons, primarily in the greater Las Vegas, Nevada metropolitan area. The Company’s Casinos segment includes results of operations and assets related to Rocky Gap in Flintstone, Maryland and its three casino properties in Pahrump, Nevada. The Corporate and Other segment includes the Company’s cash and cash equivalents 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), Net Revenues and Adjusted EBITDA

The Company evaluated its segments’ profitability based upon Adjusted EBITDA, which represents earnings before interest expense and other non-operating income (expense), income taxes, depreciation and amortization, preopening expenses, acquisition and merger expenses, regulatory licensing costs, litigation expense, share-based compensation expense, executive severance and sign-on bonuses, impairments and other gains and losses, as applicable.

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):

	Three Months Ended June 30, 2017
(In thousands)	Distributed Gaming			Casinos			Corporate and Other			Consolidated
Net revenues	$	84,187		$	26,210		$	96		$	110,493

Adjusted EBITDA		13,478			6,934			(5,409	)		15,003
Acquisition expenses		—			—			(2,066	)		(2,066	)
Share-based compensation		—			—			(2,322	)		(2,322	)
Preopening expenses		(400	)		—			(174	)		(574	)
Litigation		—			—			(55	)		(55	)
Depreciation and amortization		(4,942	)		(2,025	)		(441	)		(7,408	)
Income (loss) from operations		8,136			4,909			(10,467	)		2,578
Non-operating income (expense)
Interest expense, net		(278	)		43			(1,765	)		(2,000	)
Total non-operating income (expense), net		(278	)		43			(1,765	)		(2,000	)
Income (loss) before income tax benefit (provision)		7,858			4,952			(12,232	)		578
Income tax benefit		—			—			1,135			1,135
Net income (loss)	$	7,858		$	4,952		$	(11,097	)	$	1,713

	Three Months Ended June 30, 2016
(In thousands)	Distributed Gaming			Casinos			Corporate and Other			Consolidated
Net revenues	$	77,765		$	24,709		$	84		$	102,558

Adjusted EBITDA		11,361			6,843			(4,903	)		13,301
Merger expenses		—			—			(434	)		(434	)
Share-based compensation		—			—			(450	)		(450	)
Preopening expenses		(429	)		—			(90	)		(519	)
Depreciation and amortization		(4,597	)		(1,916	)		(334	)		(6,847	)
Income (loss) from operations		6,335			4,927			(6,211	)		5,051
Non-operating income expense
Interest expense, net		(40	)		(1	)		(1,599	)		(1,640	)
Total non-operating expense, net		(40	)		(1	)		(1,599	)		(1,640	)
Income (loss) before income tax provision		6,295			4,926			(7,810	)		3,411
Income tax provision		—			—			(611	)		(611	)
Net income (loss)	$	6,295		$	4,926		$	(8,421	)	$	2,800

	Six Months Ended June 30, 2017
(In thousands)	Distributed Gaming			Casinos			Corporate and Other			Consolidated
Net revenues	$	166,446		$	50,518		$	175		$	217,139

Adjusted EBITDA		26,584			13,236			(11,248	)		28,572
Acquisition expenses		—			—			(2,066	)		(2,066	)
Share-based compensation		—			—			(3,749	)		(3,749	)
Preopening expenses		(609	)		—			(237	)		(846	)
Litigation		—			—			(55	)		(55	)
Depreciation and amortization		(9,576	)		(3,596	)		(788	)		(13,960	)
Income (loss) from operations		16,399			9,640			(18,143	)		7,896
Non-operating income (expense)
Interest expense, net		(320	)		39			(3,402	)		(3,683	)
Total non-operating income (expense), net		(320	)		39			(3,402	)		(3,683	)
Income (loss) before income tax benefit (provision)		16,079			9,679			(21,545	)		4,213
Income tax benefit		—			—			2,842			2,842
Net income (loss)	$	16,079		$	9,679		$	(18,703	)	$	7,055

	Six Months Ended June 30, 2016
(In thousands)	Distributed Gaming			Casinos			Corporate and Other			Consolidated
Net revenues	$	146,349		$	47,122		$	121		$	193,592

Adjusted EBITDA		21,582			11,607			(9,340	)		23,849
Merger expenses		—			—			(475	)		(475	)
Share-based compensation		—			—			(855	)		(855	)
Preopening expenses		(989	)		—			(103	)		(1,092	)
Depreciation and amortization		(8,295	)		(3,686	)		(658	)		(12,639	)
Income (loss) from operations		12,298			7,921			(11,431	)		8,788
Non-operating income (expense)
Interest expense, net		(75	)		(1	)		(3,021	)		(3,097	)
Other, net		—			—			18			18
Total non-operating expense, net		(75	)		(1	)		(3,003	)		(3,079	)
Income (loss) before income tax provision		12,223			7,920			(14,434	)		5,709
Income tax provision		—			—			(670	)		(670	)
Net income (loss)	$	12,223		$	7,920		$	(15,104	)	$	5,039

Total Segment Assets

The Company's assets by segment consisted of the following amounts:

(In thousands)	Distributed Gaming		Casinos		Corporate and Other		Eliminations			Consolidated
Balance at June 30, 2017	$	294,202	$	104,780	$	76,934	$	(53,398	)	$	422,518

Balance at December 31, 2016	$	294,822	$	108,418	$	69,236	$	(53,398	)	$	419,078