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Related Party Transactions
12 Months Ended
Dec. 31, 2019
Related Party Transactions [Abstract]  
Related Party Transactions

Note 15 – Related Party Transactions

 

As of December 31, 2019, the Company leased its office headquarters building from a company 33% beneficially owned by Blake L. Sartini, 5% owned by a trust for the benefit of Mr. Sartini’s immediate family members (including Blake L. Sartini, II) for which Mr. Sartini serves as trustee, and 3% beneficially owned by Stephen A. Arcana. The lease for the Company’s office headquarters building expires on December 31, 2030. The rent expense for the office headquarters building during the years ended December 31, 2019, 2018 and 2017 was $1.3 million, $1.3 million, and $1.2 million, respectively. No amount was owed to the Company, and no amount was due and payable by the Company, under this lease as of December 31, 2019 and 2018. Additionally, a portion of the office headquarters building was sublet to a company owned or controlled by Mr. Sartini. Rental income during each of the years ended December 31, 2019, 2018 and 2017 for the sublet portion of the office headquarters building was less than $0.1 million. No amount was owed to the Company under such sublease as of December 31, 2019 and 2018. Mr. Sartini serves as the Chairman of the Board and Chief Executive Officer of the Company and is co-trustee of the Sartini Trust, which is a significant shareholder of the Company. Mr. Arcana serves as the Executive Vice President and Chief Operating Officer of the Company.

 

In November 2018, the Company entered into a lease agreement for office space in a building to be constructed and owned by a company 33% beneficially owned by Mr. Sartini, 5% owned by a trust for the benefit of Mr. Sartini’s immediate family members (including Blake L. Sartini, II) for which Mr. Sartini serves as trustee, and 3% beneficially owned by Mr. Arcana. The lease is intended to commence in 2020 and expires on December 31, 2030. The rent expense for the space is expected to be approximately $0.3 million per year. Additionally, the lease agreement includes a right of first refusal for additional space on the second floor of the building

 

One tavern location that the Company had previously leased from a related party was sold in the second quarter of 2019 to an unrelated third party. A second tavern location that the Company had previously leased from a related party was sold in 2018 to an unrelated third party. The rent expense for tavern locations leased from related parties (for the periods in which the leases were with related parties) was $0.2 million, $0.4 million and $0.9 million for the years ended December 31, 2019, 2018, and 2017, respectively. No amounts were owed to the Company, and no amount was due and payable by the Company, under such leases as of December 31, 2018. No tavern locations were leased from related parties as of December 31, 2019.

 

From time to time, the Company’s executive officers and employees use for Company business private aircraft that are owned by or leased to Sartini Enterprises, Inc., a company controlled by Mr. Sartini, pursuant to aircraft timesharing, co-user and cost-sharing agreements between the Company and Sartini Enterprises, Inc. that have been approved by the Audit Committee of the Board of Directors. The aircraft timesharing, co-user and cost-sharing agreements specify the maximum expense reimbursement that Sartini Enterprises, Inc. can charge the Company under the applicable regulations of the Federal Aviation Administration for the use of the aircraft and flight crew. Such costs include fuel, landing fees, hangar and tie-down costs away from the aircraft’s operating base, flight planning and weather contract services, crew costs and other related expenses. The Company’s compliance department regularly reviews these reimbursements. During the years ended December 31, 2019, 2018, and 2017, the Company paid approximately $0.6 million, $0.6 million and $0.2 million, respectively. No amount was due and payable by the Company as of December 31, 2019 and less than $0.1 million was owed by the Company as of December 31, 2018, under the aircraft timesharing, co-user and cost-sharing agreements.

One of the distributed gaming locations at which the Company’s slots are located is owned in part by Sean T. Higgins, who serves as Executive Vice President of Government Affairs of the Company. This agreement was in place prior to Mr. Higgins’s joining the Company on March 28, 2016. Net revenues and gaming expenses recorded by the Company from the use of the Company’s slots at this location were $1.0 million and $0.9 million, respectively, during the year ended December 31, 2019, $1.0 million and $0.9 million, respectively, during the year ended December 31, 2018, and $1.1 million and $1.0 million, respectively, during the year ended December 31, 2017. De minimis amounts were owed to or due and payable by the Company as of December 31, 2019 and no amount was owed to or due and payable by the Company as of December 31, 2018, related to this agreement.

 

In connection with the Sartini Gaming merger, Lyle A. Berman, who serves on the Board of the Directors of the Company, entered into a three-year consulting agreement with the Company pursuant to which the Company paid his wholly-owned consulting firm $200,000 annually, plus reimbursements for certain health insurance, administrative assistant and office costs. Expenses recorded by the Company for the agreement with Mr. Berman were less than $0.1 million for the year ended December 31, 2018 and $0.2 million for the year ended December 31, 2017. The consulting agreement expired on July 31, 2018.