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 for the periods cover by this report. 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, class action litigation expense, share-based compensation expense, executive severance and sign-on bonuses, gain on revaluation of contingent consideration, 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 September 30, 2017
(In thousands)	Distributed Gaming			Casinos			Corporate and Other			Consolidated
Net revenues	$	80,746		$	27,484		$	92		$	108,322

Adjusted EBITDA		11,169			8,928			(5,024	)		15,073
Acquisition expenses		—			—			(2,975	)		(2,975	)
Share-based compensation		—			—			(1,603	)		(1,603	)
Loss on disposal of property and equipment		(272	)		(35	)		(1	)		(308	)
Gain on revaluation of contingent consideration		1,719			—			—			1,719
Preopening expenses		(121	)		—			(161	)		(282	)
Class action litigation expenses		—			—			(1,530	)		(1,530	)
Sign-on bonuses		—			—			(166	)		(166	)
Depreciation and amortization		(4,937	)		(2,202	)		(400	)		(7,539	)
Income (loss) from operations		7,558			6,691			(11,860	)		2,389
Non-operating income (expense)
Interest expense, net		(41	)		(5	)		(1,839	)		(1,885	)
Total non-operating expense, net		(41	)		(5	)		(1,839	)		(1,885	)
Income (loss) before income tax benefit		7,517			6,686			(13,699	)		504
Income tax benefit		—			—			8,051			8,051
Net income (loss)	$	7,517		$	6,686		$	(5,648	)	$	8,555

	Three Months Ended September 30, 2016
(In thousands)	Distributed Gaming			Casinos			Corporate and Other			Consolidated
Net revenues	$	78,253		$	25,909		$	64		$	104,226

Adjusted EBITDA		10,483			6,511			(4,439	)		12,555
Merger expenses		—			—			(139	)		(139	)
Share-based compensation		—			—			(1,654	)		(1,654	)
Gain on disposal of property and equipment		14			—			330			344
Preopening expenses		(666	)		—			(135	)		(801	)
Depreciation and amortization		(4,871	)		(2,034	)		(318	)		(7,223	)
Income (loss) from operations		4,960			4,477			(6,355	)		3,082
Non-operating income (expense)
Interest expense, net		(43	)		(3	)		(1,643	)		(1,689	)
Total non-operating expense, net		(43	)		(3	)		(1,643	)		(1,689	)
Income (loss) before income tax provision		4,917			4,474			(7,998	)		1,393
Income tax provision		(60	)		—			(31	)		(91	)
Net income (loss)	$	4,857		$	4,474		$	(8,029	)	$	1,302

	Nine Months Ended September 30, 2017
(In thousands)	Distributed Gaming			Casinos			Corporate and Other			Consolidated
Net revenues	$	247,192		$	78,002		$	267		$	325,461

Adjusted EBITDA		37,753			22,164			(16,272	)		43,645
Acquisition expenses		—			—			(5,041	)		(5,041	)
Share-based compensation		—			—			(5,352	)		(5,352	)
Loss on disposal of property and equipment		(272	)		(35	)		(1	)		(308	)
Gain on revaluation of contingent consideration		1,719			—			—			1,719
Preopening expenses		(730	)		—			(398	)		(1,128	)
Class action litigation expenses		—			—			(1,585	)		(1,585	)
Sign-on bonuses		—			—			(166	)		(166	)
Depreciation and amortization		(14,513	)		(5,798	)		(1,188	)		(21,499	)
Income (loss) from operations		23,957			16,331			(30,003	)		10,285
Non-operating income (expense)
Interest expense, net		(361	)		34			(5,241	)		(5,568	)
Total non-operating income (expense), net		(361	)		34			(5,241	)		(5,568	)
Income (loss) before income tax benefit		23,596			16,365			(35,244	)		4,717
Income tax benefit		—			—			10,893			10,893
Net income (loss)	$	23,596		$	16,365		$	(24,351	)	$	15,610

	Nine Months Ended September 30, 2016
(In thousands)	Distributed Gaming			Casinos			Corporate and Other			Consolidated
Net revenues	$	224,602		$	73,031		$	185		$	297,818

Adjusted EBITDA		32,065			18,118			(13,779	)		36,404
Merger expenses		—			—			(614	)		(614	)
Share-based compensation		—			—			(2,509	)		(2,509	)
Gain on disposal of property and equipment		14			—			330			344
Preopening expenses		(1,655	)		—			(238	)		(1,893	)
Depreciation and amortization		(13,166	)		(5,720	)		(976	)		(19,862	)
Income (loss) from operations		17,258			12,398			(17,786	)		11,870
Non-operating income (expense)
Interest expense, net		(118	)		(4	)		(4,664	)		(4,786	)
Other, net		—			—			18			18
Total non-operating expense, net		(118	)		(4	)		(4,646	)		(4,768	)
Income (loss) before income tax provision		17,140			12,394			(22,432	)		7,102
Income tax provision		(60	)		—			(701	)		(761	)
Net income (loss)	$	17,080		$	12,394		$	(23,133	)	$	6,341

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 September 30, 2017	$	298,734	$	109,352	$	80,953	$	(53,398	)	$	435,641

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