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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________
FORM 10-Q
________________________________________
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____
Commission File Number: 000-24993
________________________________________
GOLDEN ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
________________________________________

Minnesota | 41-1913991
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
6595 S Jones Boulevard |
Las Vegas, Nevada | 89118
(Address of principal executive offices) | (Zip Code)

Registrant’s telephone number, including area code: (702) 893-7777
________________________________________
Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, $0.01 par value | GDEN | The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ |  | Accelerated filer | ☐
Non-accelerated filer | ☐ |  | Smaller reporting company | ☐
Emerging growth company | ☐ |  |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 31, 2022, the registrant had 28,505,387 shares of common stock, $0.01 par value per share, outstanding.

GOLDEN ENTERTAINMENT, INC.
FORM 10-Q
INDEX

| Page
PART I. | FINANCIAL INFORMATION | 1
ITEM 1. | FINANCIAL STATEMENTS (Unaudited) | 1
| Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 | 1
| Consolidated Statements of Operations for the three and ni ne months ended September 30, 2022 and 2021 | 2
| Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2022 and 2021 | 3
| Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 | 4
| Condensed Notes to Consolidated Financial Statements | 6
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 20
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 30
ITEM 4. | CONTROLS AND PROCEDURES | 30
PART II. | OTHER INFORMATION | 30
ITEM 1. | LEGAL PROCEEDINGS | 30
ITEM 1A. | RISK FACTORS | 31
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 31
ITEM 5. | OTHER INFORMATION | 32
ITEM 6. | EXHIBITS | 33
SIGNATURES | 34

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GOLDEN ENTERTAINMENT, INC.
Consolidated Balance Sheets
(In thousands, except per share data)

|  | September 30, 2022 |  | December 31, 2021
|  | (unaudited) |  |
ASSETS |  |  |  |
Current assets |  |  |  |
Cash and cash equivalents |  | $ | 170,486 |  |  | $ | 220,540 |
Accounts receivable, net of allowance for credit losses of $978 and $481 at September 30, 2022 and December 31, 2021, respectively |  | 20,951 |  |  | 18,720 |
Prepaid expenses |  | 18,357 |  |  | 15,108 |
Inventories |  | 6,705 |  |  | 6,637 |
Other |  | 8,305 |  |  | 2,933 |
Assets held for sale |  | 41,210 |  |  | — |
Total current assets |  | 266,014 |  |  | 263,938 |
Property and equipment, net |  | 841,870 |  |  | 904,220 |
Operating lease right-of-use assets, net |  | 156,920 |  |  | 179,251 |
Goodwill |  | 158,396 |  |  | 158,396 |
Intangible assets, net |  | 91,372 |  |  | 98,058 |
Deferred income tax assets |  | 17,585 |  |  | — |
Other assets |  | 15,516 |  |  | 11,701 |
Total assets |  | $ | 1,547,673 |  |  | $ | 1,615,564 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |
Current liabilities |  |  |  |
Current portion of long-term debt and finance leases |  | $ | 558 |  |  | $ | 1,057 |
Current portion of operating leases |  | 43,953 |  |  | 40,151 |
Accounts payable |  | 18,834 |  |  | 19,102 |
Accrued payroll and related |  | 24,514 |  |  | 31,309 |
Accrued liabilities |  | 40,882 |  |  | 35,347 |
Liabilities related to assets held for sale |  | 10,343 |  |  | — |
Total current liabilities |  | 139,084 |  |  | 126,966 |
Long-term debt, net and non-current finance leases |  | 926,540 |  |  | 1,010,469 |
Non-current operating leases |  | 129,255 |  |  | 155,098 |
Deferred income tax liabilities |  | — |  |  | 1,861 |
Other long-term obligations |  | 592 |  |  | 1,629 |
Total liabilities |  | 1,195,471 |  |  | 1,296,023 |
Commitments and contingencies (Note 10) |  | — |  |  | — |
Shareholders’ equity |  |  |  |
Common stock, $.01 par value; authorized 100,000 shares; 28,505 and 28,830 common shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively |  | 285 |  |  | 288 |
Additional paid-in capital |  | 476,867 |  |  | 477,829 |
Accumulated deficit |  | (124,950) |  |  | (158,576) |
Total shareholders’ equity |  | 352,202 |  |  | 319,541 |
Total liabilities and shareholders’ equity |  | $ | 1,547,673 |  |  | $ | 1,615,564 |

The accompanying condensed notes are an integral part of these consolidated financial statements.
1

GOLDEN ENTERTAINMENT, INC.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Revenues |  |  |  |  |  |  |
Gaming | $ | 188,420 |  |  | $ | 193,167 |  |  | $ | 575,886 |  |  | $ | 575,124 |
Food and beverage | 43,035 |  |  | 44,271 |  |  | 129,942 |  |  | 123,013 |
Rooms | 30,765 |  |  | 31,566 |  |  | 89,685 |  |  | 80,213 |
Other | 16,773 |  |  | 13,418 |  |  | 46,496 |  |  | 36,235 |
Total revenues | 278,993 |  |  | 282,422 |  |  | 842,009 |  |  | 814,585 |
Expenses |  |  |  |  |  |  |
Gaming | 108,040 |  |  | 106,301 |  |  | 323,431 |  |  | 309,478 |
Food and beverage | 33,090 |  |  | 32,182 |  |  | 97,093 |  |  | 85,256 |
Rooms | 14,337 |  |  | 13,220 |  |  | 40,627 |  |  | 35,213 |
Other operating | 4,531 |  |  | 4,635 |  |  | 13,853 |  |  | 10,430 |
Selling, general and administrative | 59,389 |  |  | 54,457 |  |  | 177,586 |  |  | 161,333 |
Depreciation and amortization | 24,286 |  |  | 26,474 |  |  | 75,894 |  |  | 80,342 |
Loss (gain) on disposal of assets | 266 |  |  | (72) |  |  | 935 |  |  | 747 |
Preopening expenses | 2 |  |  | 3 |  |  | 61 |  |  | 232 |
Total expenses | 243,941 |  |  | 237,200 |  |  | 729,480 |  |  | 683,031 |
Operating income | 35,052 |  |  | 45,222 |  |  | 112,529 |  |  | 131,554 |
Non-operating (expense) income |  |  |  |  |  |  |
Other non-operating income | — |  |  | — |  |  | — |  |  | 60,000 |
Interest expense, net | (15,709) |  |  | (15,535) |  |  | (45,565) |  |  | (47,752) |
Loss on debt extinguishment | (158) |  |  | (759) |  |  | (1,412) |  |  | (759) |
Total non-operating (expense) income, net | (15,867) |  |  | (16,294) |  |  | (46,977) |  |  | 11,489 |
Income before income tax (provision) benefit | 19,185 |  |  | 28,928 |  |  | 65,552 |  |  | 143,043 |
Income tax (provision) benefit | (5,182) |  |  | 123 |  |  | 5,737 |  |  | (366) |
Net income | $ | 14,003 |  |  | $ | 29,051 |  |  | $ | 71,289 |  |  | $ | 142,677 |
Weighted-average common shares outstanding |  |  |  |  |  |  |
Basic | 28,505 |  |  | 28,950 |  |  | 28,757 |  |  | 28,599 |
Diluted | 31,148 |  |  | 31,854 |  |  | 31,640 |  |  | 31,537 |
Net income per share |  |  |  |  |  |  |
Basic | $ | 0.49 |  |  | $ | 1.00 |  |  | $ | 2.48 |  |  | $ | 4.99 |
Diluted | $ | 0.45 |  |  | $ | 0.91 |  |  | $ | 2.25 |  |  | $ | 4.52 |

The accompanying notes are an integral part of these consolidated financial statements.
2

GOLDEN ENTERTAINMENT, INC.
Consolidated Statements of Shareholders’ Equity
(In thousands)
(Unaudited)

| Common stock |  | Additional Paid-In Capital |  | Accumulated Deficit |  | Total Shareholders’ Equity
| Shares |  | Amount |  |  |
Balance, January 1, 2021 | 28,159 |  |  | $ | 282 |  |  | $ | 470,719 |  |  | $ | (309,739) |  |  | $ | 161,262 |
Issuance of stock on options exercised and restricted stock units vested | 303 |  |  | 3 |  |  | 98 |  |  | — |  |  | 101 |
Share-based compensation | — |  |  | — |  |  | 2,669 |  |  | — |  |  | 2,669 |
Tax benefit from share-based compensation | — |  |  | — |  |  | (3,439) |  |  | — |  |  | (3,439) |
Net income | — |  |  | — |  |  | — |  |  | 10,620 |  |  | 10,620 |
Balance, March 31, 2021 | 28,462 |  |  | $ | 285 |  |  | $ | 470,047 |  |  | $ | (299,119) |  |  | $ | 171,213 |
Issuance of stock on options exercised and restricted stock units vested | 408 |  |  | 4 |  |  | — |  |  | — |  |  | 4 |
Share-based compensation | — |  |  | — |  |  | 2,586 |  |  | — |  |  | 2,586 |
Tax benefit from share-based compensation | — |  |  | — |  |  | (122) |  |  | — |  |  | (122) |
Net income | — |  |  | — |  |  | — |  |  | 103,006 |  |  | 103,006 |
Balance, June 30, 2021 | 28,870 |  |  | $ | 289 |  |  | $ | 472,511 |  |  | $ | (196,113) |  |  | $ | 276,687 |
Issuance of stock on options exercised and restricted stock units vested | 187 |  |  | 2 |  |  | — |  |  | — |  |  | 2 |
Share-based compensation | — |  |  | — |  |  | 2,950 |  |  | — |  |  | 2,950 |
Tax benefit from share-based compensation | — |  |  | — |  |  | (3,271) |  |  | — |  |  | (3,271) |
Net income | — |  |  | — |  |  | — |  |  | 29,051 |  |  | 29,051 |
Balance, September 30, 2021 | 29,057 |  |  | $ | 291 |  |  | $ | 472,190 |  |  | $ | (167,062) |  |  | $ | 305,419 |

| Common stock |  | Additional Paid-In Capital |  | Accumulated Deficit |  | Total Shareholders’ Equity
| Shares |  | Amount |  |  |
Balance, January 1, 2022 | 28,830 |  |  | $ | 288 |  |  | $ | 477,829 |  |  | $ | (158,576) |  |  | $ | 319,541 |
Issuance of stock on options exercised and restricted stock units vested | 419 |  |  | 4 |  |  | — |  |  | — |  |  | 4 |
Repurchases of common stock | (269) |  |  | (2) |  |  | — |  |  | (15,194) |  |  | (15,196) |
Share-based compensation | — |  |  | — |  |  | 3,141 |  |  | — |  |  | 3,141 |
Tax benefit from share-based compensation | — |  |  | — |  |  | (10,298) |  |  | — |  |  | (10,298) |
Net income | — |  |  | — |  |  | — |  |  | 36,066 |  |  | 36,066 |
Balance, March 31, 2022 | 28,980 |  |  | $ | 290 |  |  | $ | 470,672 |  |  | $ | (137,704) |  |  | $ | 333,258 |
Issuance of stock on options exercised and restricted stock units vested | 36 |  |  | — |  |  | — |  |  | — |  |  | — |
Repurchases of common stock | (515) |  |  | (5) |  |  | — |  |  | (22,469) |  |  | (22,474) |
Share-based compensation | — |  |  | — |  |  | 3,295 |  |  | — |  |  | 3,295 |
Tax benefit from share-based compensation | — |  |  | — |  |  | (271) |  |  | — |  |  | (271) |
Net income | — |  |  | — |  |  | — |  |  | 21,220 |  |  | 21,220 |
Balance, June 30, 2022 | 28,501 |  |  | $ | 285 |  |  | $ | 473,696 |  |  | $ | (138,953) |  |  | $ | 335,028 |
Issuance of stock on options exercised and restricted stock units vested | 4 |  |  | — |  |  | — |  |  | — |  |  | — |
Share-based compensation | — |  |  | — |  |  | 3,282 |  |  | — |  |  | 3,282 |
Tax benefit from share-based compensation | — |  |  | — |  |  | (111) |  |  | — |  |  | (111) |
Net income | — |  |  | — |  |  | — |  |  | 14,003 |  |  | 14,003 |
Balance, September 30, 2022 | 28,505 |  |  | $ | 285 |  |  | $ | 476,867 |  |  | $ | (124,950) |  |  | $ | 352,202 |

The accompanying notes are an integral part of these consolidated financial statements.
3

GOLDEN ENTERTAINMENT, INC.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

| Nine Months Ended September 30,
| 2022 |  | 2021
Cash flows from operating activities |  |  |
Net income | $ | 71,289 |  |  | $ | 142,677 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 75,894 |  |  | 80,342 |
Change in non-cash lease expense | 113 |  |  | 517 |
Share-based compensation | 9,718 |  |  | 8,205 |
Amortization of debt issuance costs and discounts on debt | 3,150 |  |  | 3,370 |
Loss on disposal of assets | 935 |  |  | 747 |
Provision for credit losses | 627 |  |  | 260 |
Deferred income taxes | (19,446) |  |  | 325 |
Loss on debt extinguishment | 1,412 |  |  | 759 |
Changes in operating assets and liabilities: |  |  |
Accounts receivable | (4,781) |  |  | (7,325) |
Prepaid expenses, inventories and other current assets | (10,032) |  |  | (5,666) |
Other assets | (4,046) |  |  | (1,022) |
Accounts payable and other accrued expenses | 3,659 |  |  | 26,915 |
Other liabilities | (1,197) |  |  | (806) |
Net cash provided by operating activities | 127,295 |  |  | 249,298 |
Cash flows from investing activities |  |  |
Purchase of property and equipment, net of change in construction payables | (33,506) |  |  | (20,828) |
Proceeds from disposal of property and equipment | 118 |  |  | 329 |
Net cash used in investing activities | (33,388) |  |  | (20,499) |
Cash flows from financing activities |  |  |
Repayments of term loan | (50,000) |  |  | (97,000) |
Repurchases of senior notes | (37,539) |  |  | — |
Repayments of notes payable | (488) |  |  | (3,284) |
Principal payments under finance leases | (404) |  |  | (6,064) |
Payment for debt extinguishment and modification costs | (12) |  |  | — |
Tax withholding on share-based payments | (10,680) |  |  | (6,832) |
Proceeds from issuance of common stock, net of costs | 4 |  |  | 9 |
Proceeds from exercise of stock options | — |  |  | 98 |
Repurchases of common stock | (37,670) |  |  | — |
Net cash used in financing activities | (136,789) |  |  | (113,073) |
Change in cash and cash equivalents | (42,882) |  |  | 115,726 |
Balance, beginning of period | 220,540 |  |  | 103,558 |
Balance, end of period | $ | 177,658 |  |  | $ | 219,284 |
Cash and cash equivalents |  |  |
Cash and cash equivalents | $ | 170,486 |  |  | $ | 219,284 |
Cash and cash equivalents included in assets held for sale | 7,172 |  |  | — |
Balance, end of period | $ | 177,658 |  |  | $ | 219,284 |

4

| Nine Months Ended September 30,
| 2022 |  | 2021
Supplemental cash flow disclosures |  |  |
Cash paid for interest | $ | 35,612 |  |  | $ | 36,556 |
Cash paid for income taxes | 13,709 |  |  | — |
Non-cash investing and financing activities |  |  |
Payables incurred for capital expenditures | $ | 1,066 |  |  | $ | 904 |
Loss on debt extinguishment | 1,412 |  |  | — |
Operating lease right-of-use assets obtained in exchange for lease obligations | 19,671 |  |  | 37,429 |

The accompanying notes are an integral part of these consolidated financial statements.
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GOLDEN ENTERTAINMENT, INC.
Condensed Notes to Consolidated Financial Statements (Unaudited)
Note 1 — Nature of Business and Basis of Presentation
Overview
Golden Entertainment, Inc. and its wholly-owned subsidiaries own and operate a diversified entertainment platform, consisting of a portfolio of gaming assets that focus on casino and distributed gaming operations (including gaming in the Company’s branded taverns). The Company’s portfolio includes ten casino properties located in Nevada and Maryland. The Company’s distributed gaming operations involve the installation, maintenance and operation of slot machines and amusement devices in non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores and grocery stores in Nevada and Montana, as well as the operation of branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area. Unless otherwise indicated, the terms “Golden” and the “Company,” refer to Golden Entertainment, Inc. together with its subsidiaries.
The Company conducts its business through four reportable segments: Nevada Casino Resorts, Nevada Locals Casinos, Maryland Casino Resort, and Distributed Gaming. Each reportable segment is comprised of the following properties and operations:

Reportable Segment |  | Location
Nevada Casino Resorts |  |
The STRAT Hotel, Casino & SkyPod (“The STRAT”) |  | Las Vegas, Nevada
Aquarius Casino Resort (“Aquarius”) |  | Laughlin, Nevada
Edgewater Hotel & Casino Resort (“Edgewater”) |  | Laughlin, Nevada
Colorado Belle Hotel & Casino Resort (“Colorado Belle”) (1) |  | Laughlin, Nevada
Nevada Locals Casinos |  |
Arizona Charlie’s Boulder |  | Las Vegas, Nevada
Arizona Charlie’s Decatur |  | Las Vegas, Nevada
Gold Town Casino |  | Pahrump, Nevada
Lakeside Casino & RV Park |  | Pahrump, Nevada
Pahrump Nugget Hotel Casino (“Pahrump Nugget”) |  | Pahrump, Nevada
Maryland Casino Resort |  |
Rocky Gap Casino Resort (“Rocky Gap”) |  | Flintstone, Maryland
Distributed Gaming |  |
Nevada distributed gaming |  | Nevada
Nevada taverns |  | Nevada
Montana distributed gaming |  | Montana

(1)As a result of the impact of the 2019 novel coronavirus (“COVID-19”) pandemic, the operations of the Colorado Belle remain suspended.
On August 24, 2022, the Company entered into definitive agreements to sell Rocky Gap to Century Casinos, Inc. (“Century”) and VICI Properties, L.P. (“VICI”), an affiliate of VICI Properties Inc., for aggregate consideration of $260.0 million (the “Rocky Gap Transactions”). Specifically, Century agreed to acquire the operations of Rocky Gap from Golden for $56.1 million in cash (subject to adjustment based on Rocky Gap’s working capital and cage cash at closing), subject to the conditions and terms set forth therein, and VICI agreed to acquire the real estate assets relating to Rocky Gap from Golden for $203.9 million in cash, subject to the conditions and terms set forth therein. The Rocky Gap Transactions are required by their terms to close concurrently and the Company expects the Rocky Gap Transactions to close during the second quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and closing conditions. Refer to discussion in “Note 2 — Assets Held for Sale” for further information.
Impact of COVID-19
As of September 30, 2022, all of the Company’s properties were open other than the Colorado Belle (whose operations remain suspended as a result of the pandemic), and none of the Company’s casino properties or distributed gaming locations were subject
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to COVID-19 operating restrictions. Despite the resurgence of Omicron variants during 2022, the Company’s casino properties and distributed gaming operations experienced positive trends during the first half of 2022, including an increase in occupancy of hotel rooms and guest visitation following the removal of COVID-19 mitigation measures. The Company’s results of operations in the second half of 2021 also benefited from pent-up demand following the easing of COVID-19 mitigation measures and the effect of government stimulus on discretionary consumer spending. Future COVID-19 variants, mandates, restrictions or mitigation measures imposed by governmental authorities or regulatory bodies are uncertain and could have a significant impact on the Company’s future operations.
Temporary closures of the Company’s operations due to the COVID-19 pandemic resulted in lease concessions for certain of the Company’s taverns and route locations in 2020, some of which continued in 2021. Such concessions provided for deferral and, in some instances, forgiveness of rent payments with no substantive amendments to the consideration due per the terms of the original contract and did not result in substantial changes in the Company’s obligations under such leases. The Company elected to account for the deferred rent as variable lease payments, which resulted in a reduction of the rent expense of $2.3 million for the nine months ended September 30, 2021. Rent expense that was not forgiven was recorded in future periods as those deferred payments were paid to the Company’s lessors.
Basis of Presentation
The unaudited consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial information. Accordingly, certain information normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) has been condensed and/or omitted. For further information, refer to the audited consolidated financial statements of the Company for the year ended December 31, 2021 and the notes thereto included in the Company’s Annual Report on Form 10-K (the “Annual Report”) previously filed with the SEC. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, which included only normal recurring adjustments, necessary to present fairly the Company’s results for the periods presented. Results for interim periods should not be considered indicative of the results to be expected for the full year and should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report.
The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Reclassifications were made to the Company’s prior period consolidated financial statements to conform to the current period presentation, where applicable. These reclassifications had no effect on previously reported net income.
Significant Accounting Policies
There have been no changes to the significant accounting policies disclosed in the Company’s Annual Report.
Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand and in banks and highly liquid investments with original maturities of three months or less. As of September 30, 2022, the Company had $177.7 million in cash and cash equivalents, which included $7.2 million of cash and cash equivalents related to assets held for sale. Although cash and cash equivalents balances may at times exceed the federal insured deposit limit, the Company believes such risk is mitigated by the quality of the institutions holding such deposits.
Net Income Per Share
Basic net income per share is calculated by dividing net income by the weighted-average common shares outstanding. Diluted net income per share in profitable periods reflects the effect of all potentially dilutive common shares outstanding by dividing net income by the weighted-average of all common and potentially dilutive shares outstanding. In the event of a net loss, diluted shares are not considered because of their anti-dilutive effect. For the three and nine months ended September 30, 2022, diluted net income per share excluded the weighted average effect of 205,699 and 141,350 shares of common stock, respectively, related to time-based and performance-based restricted stock units due to such shares being anti-dilutive. No shares of common stock related to time-based and performance-based restricted stock units were anti-dilutive for the three and nine months ended September 30, 2021.
Recent Accounting Pronouncements
Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. While management continues to assess the possible impact of the adoption of new accounting standards and the future
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adoption of the new accounting standards that are not yet effective on the Company’s financial statements, management currently believes that the following new standards have or may have an impact on the Company’s consolidated financial statements and disclosures:
Accounting Standards Issued and Adopted
In July 2021, the FASB issued ASU No. 2021-05, Leases (Topic 842): Lessors — Certain Leases with Variable Lease Payments. The ASU addresses an issue related to a lessor’s accounting for lease contracts that have variable lease payments that do not depend on a reference index or a rate and would have resulted in the recognition of a selling loss at lease commencement if classified as sales-type or direct financing. The amendment allows the lessor to classify and account for such lease contracts as operating. The Company adopted the standard effective January 1, 2022, and the adoption did not have a material impact on the Company’s financial statements or disclosures.
Accounting Standards Issued but Not Yet Adopted
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU improves the accounting for revenue contracts with customers acquired in a business combination by addressing diversity in practice and inconsistency related to recognition of contract assets and liabilities acquired in a business combination. The provisions of this ASU require that an acquiring entity account for the related revenue contracts in accordance with ASC 606 as if it had originated the contracts. The standard is effective for fiscal years beginning after December 15, 2022 and interim periods within those fiscal years with early adoption permitted. The Company does not expect the impact of the adoption of this ASU to be material to its financial statements or disclosures.
Management does not believe that any other recently issued accounting standards that are not yet effective are likely to have a material impact on the Company’s financial statements.
Note 2 — Assets Held for Sale
The Company classifies assets as held for sale when a sale is probable, is expected to be completed within one year, and the asset group meets all of the accounting criteria to be classified as held for sale. As discussed in “Note 1 — Nature of Business and Basis of Presentation,” on August 24, 2022, the Company entered into definitive agreements to sell Rocky Gap. The Rocky Gap Transactions are expected to close in the second quarter of 2023, subject to satisfaction or waiver of customary regulatory approvals and closing conditions. As a result, the assets related to the Rocky Gap property were classified as held for sale as of September 30, 2022 and the Company ceased recording depreciation and amortization of the long-lived assets included in the sale from the date of execution of the definitive agreements. Operations of Rocky Gap have historically been represented in the Company’s Maryland Casino Resort reportable segment.
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The carrying amounts of the assets and liabilities held for sale in the Rocky Gap Transactions consisted of the following:

(In thousands) | September 30, 2022
ASSETS |
Current assets |
Cash and cash equivalents | $ | 7,172 |
Accounts receivables, net | 1,923 |
Prepaid expenses | 768 |
Inventories | 531 |
Other | 44 |
Total current assets held for sale | 10,438 |
Property and equipment, net | 23,717 |
Operating lease right-of-use assets, net | 5,980 |
Intangible assets, net | 1,064 |
Other assets | 11 |
Total assets held for sale | $ | 41,210 |
LIABILITIES |
Current liabilities |
Current portion of finance leases | $ | 103 |
Current portion of operating leases | 436 |
Accounts payable | 1,182 |
Accrued payroll and related | 1,416 |
Other accrued liabilities | 1,772 |
Total current liabilities related to assets held for sale | 4,909 |
Non-current finance leases | 228 |
Non-current operating leases | 5,206 |
Total liabilities related to assets held for sale | $ | 10,343 |

For the three and nine months ended September 30, 2022, Rocky Gap generated revenues of $21.6 million and $60.1 million, respectively, and pretax income of $7.3 million and $17.8 million, respectively. For the three and nine months ended September 30, 2021, Rocky Gap generated revenues of $21.6 million and $59.0 million, respectively, and pretax income of $7.0 million and $18.0 million, respectively.
Note 3 — Property and Equipment
Property and equipment, net, consisted of the following:

(In thousands) | September 30, 2022 |  | December 31, 2021
Land | $ | 125,240 |  |  | $ | 125,240 |
Building and improvements | 915,178 |  |  | 937,759 |
Furniture and equipment | 233,989 |  |  | 246,323 |
Construction in process | 20,699 |  |  | 16,347 |
Property and equipment | 1,295,106 |  |  | 1,325,669 |
Accumulated depreciation | (453,236) |  |  | (421,449) |
Property and equipment, net | $ | 841,870 |  |  | $ | 904,220 |

Depreciation expense for property and equipment, includ ing finance leases, was $22.4 million and $70.3 million for the three and nine months ended September 30, 2022, respectively, and $24.6 million and $74.2 million for the three and nine months ended September 30, 2021, respectively.
The Company reviews the carrying amounts of its long-lived assets, other than goodwill and indefinite-lived intangible assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Due to the significant impact of the COVID-19 pandemic on the Company’s operations, the Company decided to keep operations of its Colorado Belle property suspended. Based on the results of its interim impairment assessments conducted during the three and
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nine months ended September 30, 2022 and 2021, the Company concluded that there was no impairment of the Company’s long-lived assets.
To the extent the Company becomes aware of new facts and circumstances that would result in a triggering event, the Company will revise its cash flow projections accordingly, as its estimates of future cash flows are highly dependent upon certain assumptions, including, but not limited to, the nature, timing, and extent of elimination or change of the restrictions on the Company’s operations and the extent and timing of the economic recovery globally, nationally, and specifically within the gaming industry. If such assumptions are not accurate, the Company may be required to record impairment charges in future periods, whether in connection with its regular review procedures, or earlier, if an indicator of an impairment is present prior to such evaluation.
Note 4 — Goodwill and Intangible Assets
The Company tests goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year, and whenever events or circumstances indicate that it is more likely than not that the carrying value of a reporting unit exceeds its fair value. Finite-lived intangible assets are evaluated for potential impairment whenever there is an indicator that the carrying value of an asset group may not be recoverable. Based on the results of its interim impairment assessments conducted during the three and nine months ended September 30, 2022 and 2021, the Company concluded that there was no impairment of the Company’s goodwill and intangible assets.
The following table summarizes goodwill activity by reportable segment:

(In thousands) | Nevada Casino Resorts |  | Nevada Locals Casinos |  | Maryland Casino Resort |  | Distributed Gaming |  | Total Goodwill
Balance, December 31, 2021 and September 30, 2022 | $ | 22,105 |  |  | $ | 38,187 |  |  | $ | — |  |  | $ | 98,104 |  |  | $ | 158,396 |

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Intangible assets, net, consisted of the following:

| September 30, 2022
(In thousands) | Useful Life (Years) |  | Gross Carrying Value |  | Cumulative Amortization |  | Cumulative Impairment |  | Intangible Assets, Net
Indefinite-lived intangible assets |  |  |  |  |  |  |  |  |
Trade names | Indefinite |  | $ | 53,690 |  |  | $ | — |  |  | $ | (6,890) |  |  | $ | 46,800 |
|  |  | 53,690 |  |  | — |  |  | (6,890) |  |  | 46,800 |
Amortizing intangible assets |  |  |  |  |  |  |  |  |
Customer relationships | 4-16 |  | 81,105 |  |  | (40,277) |  |  | — |  |  | 40,828 |
Player relationships | 2-14 |  | 42,990 |  |  | (40,294) |  |  | — |  |  | 2,696 |
Non-compete agreements | 2-5 |  | 9,840 |  |  | (8,933) |  |  | — |  |  | 907 |
In-place lease value | 4 |  | 1,170 |  |  | (1,170) |  |  | — |  |  | — |
Leasehold interest | 4 |  | 570 |  |  | (570) |  |  | — |  |  | — |
Other | 4-25 |  | 1,366 |  |  | (1,225) |  |  | — |  |  | 141 |
|  |  | 137,041 |  |  | (92,469) |  |  | — |  |  | 44,572 |
Balance, September 30, 2022 |  |  | $ | 190,731 |  |  | $ | (92,469) |  |  | $ | (6,890) |  |  | $ | 91,372 |

| December 31, 2021
(In thousands) | Useful Life (Years) |  | Gross Carrying Value |  | Cumulative Amortization |  | Cumulative Impairment |  | Intangible Assets, Net
Indefinite-lived intangible assets |  |  |  |  |  |  |  |  |
Trade names | Indefinite |  | $ | 53,690 |  |  | $ | — |  |  | $ | (6,890) |  |  | $ | 46,800 |
|  |  | 53,690 |  |  | — |  |  | (6,890) |  |  | 46,800 |
Amortizing intangible assets |  |  |  |  |  |  |  |  |
Customer relationships | 4-16 |  | 81,105 |  |  | (35,879) |  |  | — |  |  | 45,226 |
Player relationships | 2-14 |  | 42,990 |  |  | (39,812) |  |  | — |  |  | 3,178 |
Non-compete agreements | 2-5 |  | 9,840 |  |  | (8,349) |  |  | — |  |  | 1,491 |
Gaming license (1) | 15 |  | 2,100 |  |  | (1,210) |  |  | — |  |  | 890 |
In-place lease value | 4 |  | 1,170 |  |  | (1,155) |  |  | — |  |  | 15 |
Leasehold interest | 4 |  | 570 |  |  | (570) |  |  | — |  |  | — |
Other | 4-25 |  | 1,814 |  |  | (1,356) |  |  | — |  |  | 458 |
|  |  | 139,589 |  |  | (88,331) |  |  | — |  |  | 51,258 |
Balance, December 31, 2021 |  |  | $ | 193,279 |  |  | $ | (88,331) |  |  | $ | (6,890) |  |  | $ | 98,058 |

(1)Relates to Rocky Gap.
Total amortization expense related to intangible assets was $1.9 million and $5.6 million for the three and nine months ended September 30, 2022, respectively, and $1.9 million and $6.1 million for the three and nine months ended September 30, 2021, respectively.
To the extent the Company becomes aware of new facts and circumstances that would result in a triggering event, the Company will revise its cash flow projections accordingly, as its estimates of future cash flows are highly dependent upon certain assumptions, including, but not limited to, the nature, timing, and extent of elimination or change of the restrictions on the Company’s operations and the extent and timing of the economic recovery globally, nationally, and specifically within the gaming industry. If such assumptions are not accurate, the Company may be required to record impairment charges in future periods, whether in connection with its regular review procedures, or earlier, if an indicator of an impairment is present prior to such evaluation.
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Note 5 — Accrued Liabilities
Accrued liabilities consisted of the following:

(In thousands) | September 30, 2022 |  | December 31, 2021
Interest | $ | 12,252 |  |  | $ | 6,168 |
Gaming liabilities | 10,491 |  |  | 12,311 |
Accrued taxes, other than income taxes | 8,818 |  |  | 9,035 |
Other accrued liabilities | 6,353 |  |  | 5,549 |
Deposits | 2,968 |  |  | 2,284 |
Total current accrued liabilities | $ | 40,882 |  |  | $ | 35,347 |

Note 6 — Long-Term Debt
Long-term debt, net, consisted of the following:

(In thousands) | September 30, 2022 |  | December 31, 2021
Term Loan | $ | 600,000 |  |  | $ | 650,000 |
2026 Unsecured Notes | 337,461 |  |  | 375,000 |
Finance lease liabilities | 2,270 |  |  | 3,005 |
Notes payable | 114 |  |  | 602 |
Total long-term debt and finance leases | 939,845 |  |  | 1,028,607 |
Unamortized discount | (8,657) |  |  | (11,689) |
Unamortized debt issuance costs | (4,090) |  |  | (5,392) |
Total long-term debt and finance leases after debt issuance costs and discount | 927,098 |  |  | 1,011,526 |
Current portion of long-term debt and finance leases | (558) |  |  | (1,057) |
Long-term debt, net and finance leases | $ | 926,540 |  |  | $ | 1,010,469 |

Senior Secured Credit Facility
In October 2017, the Company entered into a senior secured credit facility consisting of a $900 million senior secured first lien credit facility (consisting of an $800 million term loan (the “Term Loan”) maturing on October 20, 2024 and a $100 million revolving credit facility (the “Revolving Credit Facility”)) with JPMorgan Chase Bank, N.A. (as administrative agent and collateral agent), the lenders party thereto and the other entities party thereto (the “Credit Facility”). The Revolving Credit Facility was subsequently increased from $100 million to $200 million in 2018, increasing the total Credit Facility capacity to $1 billion. On October 12, 2021, the Company further modified the terms of the Revolving Credit Facility by increasing its size to $240 million and extending the maturity date from October 20, 2022 to April 20, 2024. The Company incurred $0.7 million in debt modification costs and fees related to this modification of the Revolving Credit Facility that have been deferred and are being amortized over the term of the Revolving Credit Facility using the straight-line method.
As of September 30, 2022, the Company had $600 million in principal amount of outstanding Term Loan borrowings under its Credit Facility, no outstanding letters of credit and no borrowings under the Revolving Credit Facility, such that the full borrowing availability of $240 million under the Revolving Credit Facility was available to the Company. The weighted-average effective interest rate on the Company’s outstanding borrowings under the Credit Facility was 5.17% and 4.26% for the three and nine months ended September 30, 2022, respectively.
The Company made multiple prepayments of the principal under the Term Loan during 2021, thereby eliminating the requirement to make any further quarterly installment payments prior to maturity. The Company prepaid $25 million and $50 million of principal under the Term Loan during the three and nine months ended September 30, 2022, respectively, which reduced the final installment payment due at the maturity date of October 20, 2024 to $600 million. The Company recorded non-cash charges in the amount of $0.2 million and $0.3 million during the three and nine months ended September 30, 2022, respectively, for the accelerated amortization of the debt issuance costs and discount related to the prepayment of the Term Loan.
The Company was in compliance with its financial and other covenants under the Credit Facility as of September 30, 2022.
Senior Unsecured Notes
On April 15, 2019, the Company issued $375 million in principal amount of 7.625% Senior Notes due 2026 (“2026 Unsecured
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Notes”) in a private placement to institutional buyers at face value. The 2026 Unsecured Notes bear interest at 7.625%, payable semi-annually on April 15 th and October 15 th of each year.
During June 2022, the Company repurchased $37.5 million in principal amount of 2026 Unsecured Notes in open market transactions, thereby reducing the final principal payment due at maturity to $337.5 million. T he Company recorded a non-cash charge in the amount of $1.1 million for the accelerated amortization of the debt issuance costs and discount related to the repurchase of 2026 Unsecured Notes.
Note 7 — Shareholders’ Equity and Stock Incentive Plans
Share Repurchase Program
On August 3, 2021, the Company’s Board of Directors authorized a share repurchase program of $50 million. In December 2021, the Company repurchased 226,485 shares of its common stock pursuant to its share repurchase program in open market transactions at an average price of $46.87 per share, resulting in a charge to accumulated deficit of $10.6 million. In March 2022, the Company repurchased 268,791 shares of its common stock pursuant to its share repurchase program in open market transactions at an average price of $56.54 per share, resulting in a charge to accumulated deficit of $15.2 million. On May 3, 2022, the Company’s Board of Directors re-authorized its $50 million share repurchase program. During three months ended June 30, 2022, the Company repurchased 515,000 shares of its common stock pursuant to its share repurchase program at an average price of $43.63 per share, resulting in a charge to accumulated deficit of $22.5 million. There were no share repurchases during the three months ended September 30, 2022 and as of September 30, 2022, the Company had $27.5 million of remaining share repurchase availability under its May 3, 2022 share repurchase authorization. On November 1, 2022, the Company’s Board of Directors increased its share repurchase program to $75 million.
Share repurchases may be made from time to time in open market transactions, block trades or in private transactions in accordance with applicable securities laws and regulations and other legal requirements, including compliance with the Company’s finance agreements. There is no minimum number of shares that the Company is required to repurchase and the repurchase program may be suspended or discontinued at any time without prior notice.
Stock Options
The following table summarizes the Company’s stock option activity:

| Stock Options
| Shares |  | Weighted-Average Exercise Price
Outstanding at January 1, 2022 | 2,141,494 |  |  | $ | 11.31 |
Granted | — |  |  | $ | — |
Exercised | (67,000) |  |  | $ | 9.85 |
Cancelled | — |  |  | $ | — |
Expired | — |  |  | $ | — |
Outstanding at September 30, 2022 | 2,074,494 |  |  | $ | 11.36 |
Exercisable at September 30, 2022 | 2,074,494 |  |  | $ | 11.36 |

There was no share-based compensation expense related to stock options for the three and nine months ended September 30, 2022 or for the three months ended September 30, 2021, and the Company recorded share-based compensation expense of $0.2 million for the nine months ended September 30, 2021. The Company did not have any remaining unrecognized share-based compensation expense related to stock options as of September 30, 2022 and 2021.
Restricted Stock Units
The following table summarizes the Company’s activity related to time-based restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”):
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|  | RSUs |  | PSUs
|  | Shares |  | Weighted-Average Grant Date Fair Value |  | Shares (1) |  | Weighted-Average Grant Date Fair Value
Outstanding at January 1, 2022 |  | 815,420 |  |  | $ | 18.17 |  |  | 705,577 |  | (2) | $ | 13.84 |
Granted |  | 122,577 |  |  | $ | 52.05 |  |  | 83,579 |  |  | $ | 53.51 |
Performance certification |  | — |  |  | $ | — |  |  | 534,383 |  | (3) | $ | — |
Vested |  | (363,450) |  |  | $ | 17.78 |  |  | (247,380) |  | (4) | $ | 12.51 |
Cancelled |  | (28,269) |  |  | $ | 17.63 |  |  | — |  |  | $ | — |
Outstanding at September 30, 2022 |  | 546,278 |  |  | $ | 26.06 |  |  | 1,076,159 |  |  | $ | 17.17 |

(1) The number of shares for the PSUs listed as granted represents the “target” number of PSUs granted to each recipient eligible to vest if the Company meets its “target” performance goals for the applicable period. The actual number of PSUs eligible to vest for those PSUs will vary depending on whether or not the Company meets or exceeds the applicable threshold, target, or maximum performance goals for the PSUs, with 200% of the “target” number of PSUs eligible to vest at “maximum” performance levels.
(2) Includes 171,194 shares of PSUs granted in March 2019 that were certified below target during the three months ended March 31, 2021 and vested in March 2022. Also includes PSUs granted in March 2020 and March 2021 at “target.”
(3) The Company’s financial results for the applicable performance goals were certified during the three months ended March 31, 2022 and 200% of the target PSUs granted in March 2020 and March 2021 were deemed “earned.” Includes 38,093 incremental shares issued in March 2022 in connection with vesting of PSUs granted in March 2020 due to such award “earned” at 200% of the “target.” The remaining PSUs granted in March 2020 and March 2021 will be eligible to vest on March 14, 2023 and 2024, respectively.
(4) Comprises 171,194 shares of PSUs granted in March 2019 and 76,186 shares of PSUs granted in March 2020 that vested in March 2022.
Share-based compensation expense related to RSUs was $1.8 million and $5.1 million for the three and nine months ended September 30, 2022, respectively, and $2.2 million and $5.3 million for the three and nine months ended September 30, 2021, respectively. Share-based compensation expense related to PSUs was $1.5 million and $4.6 million for the three and nine months ended September 30, 2022, respectively, and $0.8 million and $2.7 million for the three and nine months ended September 30, 2021, respectively.
As of September 30, 2022, there was $10.0 million and $8.3 million of unamortized share-based compensati on expense related to RSUs and PSUs, respectively, which is expected to be recognized over a weighted-average period of 1.4 years and 0.9 years for RSUs and PSUs, respectively. As of September 30, 2021, there was $10.9 million and $5.0 million of unamortized share-based compensation expense related to RSUs and PSUs, respectively, which is expected to be recognized over a weighted-average period of 2.0 years for both RSUs and PSUs.
As of September 30, 2022, a total of 3,136,862 shares of the Company’s common stock remained available for grants of awards under the Golden Entertainment, Inc. 2015 Incentive Award Plan, which includes the annual increase in the number of shares available for grant on January 1, 2022 of 1,153,210 shares.
Note 8 — Income Tax
The Company’s effective income tax rates were 27.0% and (8.8)% for the three and nine months ended September 30, 2022, respectively, and (0.4)% and 0.3% for the three and nine months ended September 30, 2021, respectively.
The Company recorded income tax expense of $5.2 million for the three months ended September 30, 2022 and income tax benefit of $5.7 million for the nine months ended September 30, 2022. The Company recorded income tax benefit of $0.1 million and income tax expense of $0.4 million for the three and nine months ended September 30, 2021, respectively.
A valuation allowance on the Company’s deferred tax assets resulted in an annual effective tax rate of less than 1% and lower income tax expense amounts in 2021. During the first quarter of 2022, the Company concluded that it was more likely than not that the Company will generate sufficient taxable income within the applicable net operating loss carry-forward periods to realize a portion of its deferred tax assets, which resulted in a partial reversal of the deferred tax asset valuation allowance. The partial reversal of the deferred tax asset valuation allowance during the first quarter of 2022 resulted in the negative effective income tax rate and income tax benefit for the nine months ended September 30, 2022. The effective income tax rate and the income tax expense for the three months ended September 30, 2022 differed from the federal tax rate of 21% due to the limitation of tax deductions on executive compensation under the Internal Revenue Code Section 162(m).
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As of September 30, 2022, the Company’s 2017 and 2018 federal tax returns were under audit by the IRS.
As of September 30, 2022 and December 31, 2021, the Company had no material uncertain tax positions.
Note 9 — Financial Instruments and Fair Value Measurements
Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
•Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. Thus, assets and liabilities categorized as Level 3 may be measured at fair value using inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Management’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy levels.
Financial Instruments
The carrying values of the Company’s cash and cash equivalents, accounts receivable, other current assets and accounts payable approximate fair value because of the short duration of these financial instruments.
The following table summarizes the fair value measurement of the Company’s long-term debt:

| September 30, 2022
(In thousands) | Carrying Amount |  | Fair Value |  | Fair Value Hierarchy
Term Loan | $ | 600,000 |  |  | $ | 593,250 |  |  | Level 2
2026 Unsecured Notes | 337,461 |  |  | 331,893 |  |  | Level 2
Finance lease liabilities | 2,270 |  |  | 2,270 |  |  | Level 3
Notes payable | 114 |  |  | 114 |  |  | Level 3
Total debt | $ | 939,845 |  |  | $ | 927,527 |  |  |

| December 31, 2021
(In thousands) | Carrying Amount |  | Fair Value |  | Fair Value Hierarchy
Term Loan | $ | 650,000 |  |  | $ | 650,813 |  |  | Level 2
2026 Unsecured Notes | 375,000 |  |  | 390,938 |  |  | Level 2
Finance lease liabilities | 3,005 |  |  | 3,005 |  |  | Level 3
Notes payable | 602 |  |  | 602 |  |  | Level 3
Total debt | $ | 1,028,607 |  |  | $ | 1,045,358 |  |  |

The estimated fair value of the Company’s Term Loan and 2026 Unsecured Notes is based on a relative value analysis performed as of September 30, 2022 and December 31, 2021. The finance lease liabilities and notes payable are fixed-rate debt, are not traded and do not have observable market inputs, and therefore, their fair value is estimated to be equal to the carrying value.
Note 10 — Commitments and Contingencies
Participation Agreements
The Company enters into certain slot placement contracts in the form of participation agreements. Under participation agreements, the Company and the business location each hold a state issued gaming license in order to be able to receive a percentage of gaming revenue earned on the Company’s slot machines. The business location retains a percentage of the gaming
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revenue generated from the Company’s slot machines. The Company is considered to be the principal in these arrangements and therefore, records its share of revenue generated under participation agreements on a gross basis with the business location’s share of revenue recorded as gaming expenses.
The aggregate contingent payments recognized by the Company as gaming expenses under participation agreements were $54.2 million and $162.1 million for the three and nine months ended September 30, 2022, respectively, and $57.6 million and $171.2 million for the three and nine months ended September 30, 2021, respectively.
Legal Matters and Other
From time to time, the Company is involved in a variety of lawsuits, claims, investigations and other legal proceedings arising in the ordinary course of business, including proceedings concerning labor and employment matters, personal injury claims, breach of contract claims, commercial disputes, business practices, intellectual property, tax and other matters for which the Company records reserves. Although lawsuits, claims, investigations and other legal proceedings are inherently uncertain and their results cannot be predicted with certainty, the Company believes that the resolution of its currently pending matters should not have a material adverse effect on its business, financial condition, results of operations or liquidity. Regardless of the outcome, legal proceedings can have an adverse impact on the Company because of defense costs, diversion of management resources and other factors. In addition, it is possible that an unfavorable resolution of one or more such proceedings could in the future materially and adversely affect the Company’s business, financial condition, results of operations or liquidity in a particular period.
In January 2021, the Company was affected by a ransomware cyber-attack that temporarily disrupted the Company’s access to certain information located on the Company’s network and incurred expenses relating thereto. The Company’s financial information and business operations were not materially affected. The Company implemented a variety of measures to further enhance its cybersecurity protections and minimize the impact of any future cyber incidents. The Company has insurance related to this event and has recovered a portion of the costs it incurred to remediate this matter, which amounts were received and recorded during 2021 and the three months ended March 31, 2022.
In September 2018, the Company entered into an agreement with American Wagering, Inc. and William Hill U.S. HoldCo, Inc. (collectively, “William Hill”), which contemplated that William Hill would be obligated to make a one-time payment to the Company in the event of a change of control transaction with respect to William Hill. Under this agreement, as amended, the April 22, 2021 acquisition of William Hill PLC by Caesars Entertainment, Inc. (“Caesars”) constituted the change of control event triggering this payment. On May 26, 2021, the Company, William Hill and Caesars executed an amendment to the agreement requiring William Hill and Caesars, as the acquiring party, to make a payment in the amount of $60 million by July 15, 2021. The Company received this payment in July 2021 and recognized $60 million in non-operating income for the year ended December 31, 2021.
Note 11 — Segment Information
The Company conducts its business through four reportable segments: Nevada Casino Resorts, Nevada Locals Casinos, Maryland Casino Resort and Distributed Gaming.
The Nevada Casino Resorts segment is comprised of destination casino resort properties offering a variety of food and beverage outlets, entertainment venues and other amenities. The casino resort properties in this segment cater primarily to a regional drive-in customer base seeking a value-oriented vacation experience, with guests typically traveling from Southern California or Arizona. The Company’s casino resort properties in Nevada have a significantly larger number of hotel rooms compared to the other casino properties in its portfolio. While hotel stays at these casino resorts are typically longer, the overall frequency of visitation from guests is lower when compared to the Nevada Locals Casinos.
The Nevada Locals Casinos segment is comprised of casino properties that cater to local customers who generally live within a five-mile radius. The Company’s locals casino properties typically experience a higher frequency of customer visits compared to its casino resort properties in Nevada and Maryland, with many of the customers visiting the Company’s Nevada Locals Casinos on a weekly basis. The casino properties within this reportable segment have no or a limited number of hotel rooms and offer fewer food and beverage outlets or other amenities, with revenues primarily generated from slot machine play.
The Maryland Casino Resort segment is comprised of the Rocky Gap casino resort, which is geographically disparate from the Company’s Nevada properties, operates in a separate regulatory jurisdiction and has only a limited number of hotel rooms compared to the Nevada Casino Resorts. Rocky Gap caters to a regional drive-in customer base traveling from mid-Atlantic areas (Maryland, Virginia, Washington DC, Pennsylvania, West Virginia) and offers a full range of amenities, including various food and beverage outlets, signature golf course, spa and pool. As discussed in “Note 1 — Nature of Business and Basis of Presentation” and “Note 2 — Assets Held for Sale,” during the three months ended September 30, 2022, the Company entered into definitive agreements to sell Rocky Gap and classified the assets related to Rocky Gap as held for sale as of September 30,
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2022.
The Distributed Gaming segment is comprised of the operation of slot machines and amusement devices in approximately 1,100 non-casino locations, such as restaurants, bars, taverns, convenience stores, liquor stores and grocery stores, across Nevada and Montana with a limited number of slot machines in each location. Distributed Gaming operations cater to local residents with high frequency visitation to these locations. The Company places its slot machines and amusement devices in locations where it believes they will receive maximum customer traffic. As part of the Distributed Gaming segment, the Company owns and operates a limited number of branded tavern locations, where it controls the food and beverage operations as well as the slot machines located within the tavern. The Company’s branded taverns offer a casual, upscale environment catering to local patrons offering superior food, craft beer and other alcoholic beverages, and are typically limited to 15 slot machines.
The Corporate and Other segment includes the Company’s cash and cash equivalents, miscellaneous receivables and corporate overhead. Costs recorded in the Corporate and Other segment have not been allocated to the Company’s reportable segments because these costs are not easily allocable and to do so would not be practical.
The Company presents Adjusted EBITDA in its segment disclosures because it is the primary metric used by the Company’s chief operating decision makers in measuring both the Company’s past and future expectations of performance. Further, the Company’s annual performance plan used to determine compensation of its executive officers and employees is tied to the Adjusted EBITDA metric. Adjusted EBITDA represents each segment’s earnings before interest and other non-operating income (expense), income taxes, depreciation and amortization, impairment of goodwill and intangible assets, preopening and related expenses, gain or loss on disposal of assets, share-based compensation expenses, and other non-cash charges, that are deemed to be not indicative of the Company’s core operating results, calculated before corporate overhead (which is not allocated to each reportable segment).
Due to the Company’s use of Adjusted EBITDA as its measure of profit for its reportable segments, the Company includes a reconciliation of the total of the Company’s consolidated Adjusted EBITDA to the Company’s consolidated net income determined in accordance with GAAP. The Company also discloses Adjusted EBITDA at the reportable segment level, as set forth in the table below:
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|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Revenues |  |  |  |  |  |  |  |
Nevada Casino Resorts |  |  |  |  |  |  |  |
Gaming |  | $ | 42,812 |  |  | $ | 46,216 |  |  | $ | 133,156 |  |  | $ | 135,060 |
Food and beverage |  | 21,537 |  |  | 22,449 |  |  | 66,044 |  |  | 60,129 |
Rooms |  | 26,068 |  |  | 27,643 |  |  | 76,670 |  |  | 69,436 |
Other |  | 8,439 |  |  | 8,072 |  |  | 26,919 |  |  | 20,567 |
Nevada Casino Resorts revenues |  | $ | 98,856 |  |  | $ | 104,380 |  |  | $ | 302,789 |  |  | $ | 285,192 |
Nevada Locals Casinos |  |  |  |  |  |  |  |
Gaming |  | $ | 27,457 |  |  | $ | 28,437 |  |  | $ | 85,886 |  |  | $ | 91,226 |
Food and beverage |  | 6,208 |  |  | 6,081 |  |  | 18,688 |  |  | 17,918 |
Rooms |  | 2,325 |  |  | 1,858 |  |  | 7,098 |  |  | 5,419 |
Other |  | 1,745 |  |  | 1,729 |  |  | 5,737 |  |  | 5,614 |
Nevada Locals Casinos revenues |  | $ | 37,735 |  |  | $ | 38,105 |  |  | $ | 117,409 |  |  | $ | 120,177 |
Maryland Casino Resort |  |  |  |  |  |  |  |
Gaming |  | $ | 16,027 |  |  | $ | 16,502 |  |  | $ | 45,940 |  |  | $ | 45,985 |
Food and beverage |  | 2,463 |  |  | 2,314 |  |  | 6,333 |  |  | 5,867 |
Rooms |  | 2,372 |  |  | 2,065 |  |  | 5,917 |  |  | 5,358 |
Other |  | 762 |  |  | 759 |  |  | 1,872 |  |  | 1,770 |
Maryland Casino Resort revenues |  | $ | 21,624 |  |  | $ | 21,640 |  |  | $ | 60,062 |  |  | $ | 58,980 |
Distributed Gaming |  |  |  |  |  |  |  |
Gaming |  | $ | 102,124 |  |  | $ | 102,012 |  |  | $ | 310,904 |  |  | $ | 302,853 |
Food and beverage |  | 12,827 |  |  | 13,427 |  |  | 38,877 |  |  | 39,099 |
Other |  | 2,695 |  |  | 2,496 |  |  | 8,456 |  |  | 7,295 |
Distributed gaming revenues |  | $ | 117,646 |  |  | $ | 117,935 |  |  | $ | 358,237 |  |  | $ | 349,247 |
Corporate and other |  | 3,132 |  |  | 362 |  |  | 3,512 |  |  | 989 |
Total revenues |  | $ | 278,993 |  |  | $ | 282,422 |  |  | $ | 842,009 |  |  | $ | 814,585 |

|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Adjusted EBITDA |  |  |  |  |  |  |  |
Nevada Casino Resorts |  | $ | 30,122 |  |  | $ | 39,196 |  |  | $ | 102,589 |  |  | $ | 112,486 |
Nevada Locals Casinos |  | 16,818 |  |  | 18,103 |  |  | 56,651 |  |  | 61,230 |
Maryland Casino Resort |  | 7,446 |  |  | 7,669 |  |  | 20,260 |  |  | 20,831 |
Distributed Gaming |  | 18,845 |  |  | 21,158 |  |  | 63,092 |  |  | 66,952 |
Corporate and other |  | (12,176) |  |  | (12,698) |  |  | (39,196) |  |  | (37,561) |
Total Adjusted EBITDA |  | 61,055 |  |  | 73,428 |  |  | 203,396 |  |  | 223,938 |
Adjustments |  |  |  |  |  |  |  |
Other non-operating income |  | — |  |  | — |  |  | — |  |  | 60,000 |
Depreciation and amortization |  | (24,286) |  |  | (26,474) |  |  | (75,894) |  |  | (80,342) |
Change in non-cash lease expense |  | 298 |  |  | 143 |  |  | (113) |  |  | (517) |
Share-based compensation |  | (3,286) |  |  | (3,089) |  |  | (10,269) |  |  | (8,762) |
(Loss) gain on disposal of assets |  | (266) |  |  | 72 |  |  | (935) |  |  | (747) |
Loss on debt extinguishment |  | (158) |  |  | (759) |  |  | (1,412) |  |  | (759) |
Preopening and related expenses (1) |  | (2) |  |  | (3) |  |  | (61) |  |  | (232) |
Other, net |  | 1,539 |  |  | 1,145 |  |  | (3,595) |  |  | (1,784) |
Interest expense, net |  | (15,709) |  |  | (15,535) |  |  | (45,565) |  |  | (47,752) |
Income tax (provision) benefit |  | (5,182) |  |  | 123 |  |  | 5,737 |  |  | (366) |
Net Income |  | $ | 14,003 |  |  | $ | 29,051 |  |  | $ | 71,289 |  |  | $ | 142,677 |

(1) Preopening and related expenses consist of labor, food, utilities, training, initial licensing, rent and organizational costs
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incurred in connection with the opening of tavern and casino locations.
Assets
The Company’s assets by reportable segment consisted of the following amounts:

(In thousands) | Nevada Casino Resorts |  | Nevada Locals Casinos |  | Maryland Casino Resort |  | Distributed Gaming |  | Corporate and Other |  | Consolidated
Balance at September 30, 2022 | $ | 783,693 |  |  | $ | 163,863 |  |  | $ | 41,210 |  |  | $ | 408,156 |  |  | $ | 150,751 |  |  | $ | 1,547,673 |
Balance at December 31, 2021 | $ | 811,016 |  |  | $ | 165,362 |  |  | $ | 41,403 |  |  | $ | 411,342 |  |  | $ | 186,441 |  |  | $ | 1,615,564 |

Note 12 — Related Party Transactions
The Company historically 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. On May 24, 2021 the building was sold to an independent third party, and therefore this lease is no longer with a related party. The rent expense for the office headquarters building prior to the sale of the building to an independent third party was $0.5 million for the nine months ended September 30, 2021. Additionally, a portion of the office headquarters building was sublet to Sartini Enterprises, Inc., a company controlled by Mr. Sartini. Rental income for each of the three and nine months ended September 30, 2022 and 2021 for the sublet portion of the office headquarters building was insignificant. No amount was owed to the Company under such sublease as of September 30, 2022 and December 31, 2021. In addition, Golden and Sartini Enterprises, Inc. participate in certain cost-sharing arrangements. The amount due and payable by the Company under such arrangements was insignificant as of September 30, 2022 and December 31, 2021. Mr. Sartini serves as the Chairman of the Board and Chief Executive Officer of the Company and is co-trustee of The Blake L. Sartini and Delise F. Sartini Family 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 additional office space in a building 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 commenced in August 2020 and expires on December 31, 2030. The rent expense for the space was $0.1 million for each of the three months ended September 30, 2022 and 2021, and $0.2 million for each of the nine months ended September 30, 2022 and 2021. Additionally, the lease agreement includes a right of first refusal for additional space on the second floor of the building.
From time to time, the Company’s executive officers and employees use a private aircraft leased to Sartini Enterprises, Inc. for Company business purposes pursuant to aircraft time-sharing, co-user and cost-sharing agreements between the Company and Sartini Enterprises, Inc., all of which have been approved by the Audit Committee of the Board of Directors. The aircraft time-sharing, 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 the 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. The Company incurred $0.1 million under the aircraft time-sharing, co-user and cost-sharing agreements with Sartini Enterprises, Inc. for each of the three months ended September 30, 2022 and 2021, and $0.5 million under such agreements for each of the nine months ended September 30, 2022 and 2021. The Company owed $0.1 million and $0.2 million under such agreements as of September 30, 2022 and December 31, 2021, respectively.
On May 18, 2022, the Company repurchased 210,000 shares of its common stock from Anthony A. Marnell III, an independent non-employee member of the Company’s Board of Directors, pursuant to its share repurchase program at a price of $42.61 per share, resulting in a charge to accumulated deficit of $8.9 million. This transaction was approved by the Audit Committee of the Board of Directors prior to being executed.
Note 13 — Subsequent Events
The Company’s management evaluates subsequent events through the date of issuance of the consolidated financial statements. Other than the re-authorization of the Company’s share repurchase program discussed in “Note 7 — Shareholders’ Equity and Stock Incentive Plans,” there have been no subsequent events that occurred during such period that would require adjustment to or disclosure in the consolidated financial statements as of and for the three and nine months ended September 30, 2022.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As used in this Quarterly Report on Form 10-Q, unless the context suggests otherwise, the terms “Golden,” “we,” “us” and “our” refer to Golden Entertainment, Inc. together with its subsidiaries.
The following information should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in Item 1 of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”) previously filed with the Securities and Exchange Commission (“SEC”).
Forward-Looking Statements
This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can generally be identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “potential,” “seek,” “should,” “think,” “will,” “would” and similar expressions, or they may use future dates. In addition, forward-looking statements include statements regarding the Rocky Gap Transactions, including the anticipated timing of the closing of the transactions and satisfaction of regulatory and other conditions; the impact of the 2019 novel coronavirus (“COVID-19”) pandemic on our business; our strategies, objectives, business opportunities and plans for future expansion, developments or acquisitions; anticipated future growth and trends in our business or key markets; projections of future financial condition, operating results, income, capital expenditures, costs or other financial items; anticipated regulatory and legislative changes; and other characterizations of future events or circumstances as well as other statements that are not statements of historical fact. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other f uture conditions. These forward-looking statements are subject to assumptions, risks and uncertainties that may change at any time, and readers are therefore cautioned that actual results could differ materially from those expressed in any forward-looking statements. Factors that could cause our actual results to differ materially include: risks and uncertainties related to the Rocky Gap Transactions, including the failure to obtain, or delays in obtaining, required regulatory approvals or clearances; the failure to satisfy any of the closing conditions to the Rocky Gap Transactions on a timely basis or at all; the uncertainty of the extent, duration and effects of the COVID-19 pandemic and the response of governments; changes in national, regional and local economic and market conditions; legislative and regulatory matters (including the cost of compliance or failure to comply with applicable laws and regulations); increases in gaming taxes and fees in the jurisdictions in which we operate; litigation; increased competition; our ability to renew our distributed gaming contracts; reliance on key personnel (including our Chief Executive Officer, President and Chief Financial Officer, and Chief Operating Officer); the level of our indebtedness and our ability to comply with covenants in our debt instruments; terrorist incidents; natural disasters; severe weather conditions (including weather or road conditions that limit access to our properties); the effects of environmental and structural building conditions; the effects of disruptions to our information technology and other systems and infrastructure; factors affecting the gaming, entertainment and hospitality industries generally; and other factors identified under the heading “Risk Factors” in our Annual Report and in Part II, Item 1A of this report, or appearing elsewhere in this report and in our other filings with the SEC. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the filing date of this report. We undertake no obligation to update any forward-looking statements for any reason.
Overview
We own and operate a diversified entertainment platform, consisting of a portfolio of gaming assets that focus on casino and distributed gaming operations (including gaming in our branded taverns). Our portfolio includes ten casino properties located in Nevada and Maryland. Our distributed gaming operations involve the installation, maintenance and operation of slot machines and amusement devices in non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores and grocery stores in Nevada and Montana, as well as the operation of branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area.
Impact of COVID-19
As of September 30, 2022, all of our properties were open other than the Colorado Belle (whose operations remain suspended as a result of the pandemic), and none of our casino properties or distributed gaming locations were subject to COVID-19 operating restrictions. Despite the resurgence of Omicron variants during 2022, our casino properties and distributed gaming operations experienced positive trends during the first half of 2022, including an increase in occupancy of hotel rooms and guest visitation following the removal of COVID-19 mitigation measures. Our results of operations in the second half of 2021 also benefited from
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pent-up demand following the easing of COVID-19 mitigation measures and the effect of government stimulus on discretionary consumer spending. Future COVID-19 variants, mandates, restrictions or mitigation measures imposed by governmental authorities or regulatory bodies are uncertain and could have a significant impact on our future operations.
Operations
We conduct our business through four reportable segments: Nevada Casino Resorts, Nevada Locals Casinos, Maryland Casino Resort and Distributed Gaming.
The following table sets forth certain information regarding our operations by reportable segment as of September 30, 2022 (certain amenities at our casino properties may remain closed or operate in a limited capacity):

|  | Location |  | Casino Space (Sq. ft.) |  | Slot Machines |  | Table Games |  | Hotel Rooms
Nevada Casino Resorts |  |  |  |  |  |  |  |  |  |
The STRAT Hotel, Casino & SkyPod (“The STRAT”) |  | Las Vegas, NV |  | 80,000 |  | 716 |  | 42 |  |  | 2,429 |
Aquarius Casino Resort (“Aquarius”) |  | Laughlin, NV |  | 69,750 |  | 1,102 |  | 29 |  |  | 1,906 |
Edgewater Hotel & Casino Resort (“Edgewater”) |  | Laughlin, NV |  | 57,457 |  | 641 |  | 13 |  |  | 1,052 |
Colorado Belle Hotel & Casino Resort (“Colorado Belle”) (1) |  | Laughlin, NV |  | — |  |  | — |  |  | — |  |  | — |
Nevada Locals Casinos |  |  |  |  |  |  |  |  |  |
Arizona Charlie’s Boulder |  | Las Vegas, NV |  | 41,969 |  | 616 |  | — |  |  | 303 |
Arizona Charlie’s Decatur |  | Las Vegas, NV |  | 67,360 |  | 712 |  | 10 |  |  | 259 |
Gold Town Casino |  | Pahrump, NV |  | 10,000 |  | 188 |  | — |  |  | — |
Lakeside Casino & RV Park |  | Pahrump, NV |  | 11,009 |  | 173 |  | — |  |  | — |
Pahrump Nugget Hotel Casino (“Pahrump Nugget”) |  | Pahrump, NV |  | 22,528 |  | 337 |  | 9 |  |  | 69 |
Maryland Casino Resort |  |  |  |  |  |  |  |  |  |
Rocky Gap Casino Resort (“Rocky Gap”) |  | Flintstone, MD |  | 25,447 |  | 630 |  | 16 |  |  | 198 |
Distributed Gaming |  |  |  |  |  |  |  |  |  |
Nevada distributed gaming |  | Nevada |  | — |  |  | 7,188 |  |  | — |  |  | — |
Nevada taverns |  | Nevada |  | — |  |  | 1,018 |  |  | — |  |  | — |
Montana distributed gaming |  | Montana |  | — |  |  | 3,639 |  |  | — |  |  | — |
Totals |  |  |  | 385,520 |  | 16,960 |  | 119 |  | 6,216

(1)The operations of the Colorado Belle remain suspended.
On August 24, 2022, we entered into definitive agreements to sell Rocky Gap to Century Casinos, Inc. (“Century”) and VICI Properties, L.P. (“VICI”), an affiliate of VICI Properties Inc., for aggregate consideration of $260.0 million (the “Rocky Gap Transactions”). Specifically, Century agreed to acquire the operations of Rocky Gap from us for $56.1 million in cash (subject to adjustment based on Rocky Gap’s working capital and cage cash at closing), subject to the conditions and terms set forth therein, and VICI agreed to acquire the real estate assets relating to Rocky Gap from us for $203.9 million in cash, subject to the conditions and terms set forth therein. The Rocky Gap Transactions are required by their terms to close concurrently and we expect the Rocky Gap Transactions to close during the second quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and closing conditions.
Nevada Casino Resorts
Our Nevada Casino Resorts segment is comprised of destination casino resort properties offering a variety of food and beverage outlets, entertainment venues and other amenities. The casino resort properties in this segment cater primarily to a regional drive-
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in customer base seeking a value-oriented vacation experience, with guests typically traveling from Southern California or Arizona. Our casino resort properties in Nevada have a significantly larger number of hotel rooms compared to the other casino properties in our portfolio. While hotel stays at these casino resorts are typically longer, the overall frequency of visitation from guests is lower when compared to our Nevada Locals Casinos.
The STRAT: The STRAT is our premier casino resort property, located on Las Vegas Boulevard on the north end of the Las Vegas Strip. The STRAT comprises a casino, a hotel, a retail center and the iconic SkyPod, which includes indoor and outdoor observation decks, thrill rides and the SkyJump attraction. In addition to hotel rooms, gaming and sportsbook facilities in an 80,000 square foot casino, The STRAT offers nine restaurants, two rooftop pools, a fitness center, retail shops and entertainment facilities.
Laughlin casinos: We own and operate three casino resorts in Laughlin, Nevada, which is located approximately 90 miles from Las Vegas on the western bank of the Colorado River. In addition to hotel rooms, gaming and sportsbook facilities, the Aquarius has nine restaurants and the Edgewater offers six restaurants. The Edgewater also offers dedicated entertainment venues, including the Laughlin Event Center.
Nevada Locals Casinos
Our Nevada Locals Casinos segment is comprised of casino properties that cater to local customers who generally live within a five-mile radius. Our locals casino properties typically experience a higher frequency of customer visits compared to our casino resort properties in Nevada and Maryland, with many of our customers visiting our Nevada Locals Casinos on a weekly basis. The casino properties within this reportable segment have no or a limited number of hotel rooms and offer fewer food and beverage outlets or other amenities, with revenues primarily generated from slot machine play.
Arizona Charlie’s casinos: Our Arizona Charlie’s Boulder and Arizona Charlie’s Decatur casino properties primarily serve local Las Vegas gaming patrons, and provide an alternative experience to the Las Vegas Strip. In addition to hotel rooms, gaming, sportsbook and bingo facilities, Arizona Charlie’s Boulder offers five r estaurants and an RV park with 221 RV hook-up sites and Arizona Charlie’s Decatur offers five restaurants.
Pahrump casinos: We own and operate three casino properties in Pahrump, Nevada, which is located approximately 60 miles from Las Vegas and is a gateway to Death Valley National Park. In addition to gaming, sportsbook and bingo facilities at our Pahrump casino properties, Pahrump Nugget offers 69 hotel rooms, a bowling center and a 5,200 square foot banquet and event center and Lakeside Casino & RV Park offers 159 RV hook-up sites.
Maryland Casino Resort
Our Maryland Casino Resort segment is comprised of our Rocky Gap casino resort, which is geographically disparate from our Nevada properties, operates in a separate regulatory jurisdiction and has only a limited number of hotel rooms compared to our Nevada Casino Resorts. In addition to hotel rooms and gaming, Rocky Gap offers a full range of amenities, including three restaurants, a signature golf course, spa and pool.
Distributed Gaming
Our Distributed Gaming segment is comprised of the operation of slot machines and amusement devices in approximately 1,100 non-casino locations, such as restaurants, bars, taverns, convenience stores, liquor stores and grocery stores, across Nevada and Montana, with a limited number of slot machines in each location. We own and operate over 11,800 slot machines and amusement devices as part of our Distributed Gaming segment, with the majority of gaming devices offered at these locations being video poker machines. Distributed Gaming operations cater to local residents with high frequency visitation to these locations. We place our slot machines and amusement devices in locations where we believe they will receive maximum customer traffic.
As part of our Distributed Gaming segment, we own and operate a limited number of branded tavern locations, where we control the food and beverage operations as well as the slot machines located within the tavern. Our branded taverns offer a casual, upscale environment catering to local patrons offering superior food, craft beer and other alcoholic beverages, and are typically limited to 15 slot machines. Most of our taverns are located in the greater Las Vegas, Nevada metropolitan area and cater to local patrons seeking more convenient entertainment establishments than traditional casino properties. Our tavern brands include PT’s Pub, PT’s Gold, PT’s Place, PT’s Ranch, Sean Patrick’s, Sierra Gold and SG Bar. As of September 30, 2022, we owned and operated over 60 branded taverns, which offered a total of over 1,000 onsite slot machines. We continue to look for opportunistic and accretive opportunities to pursue additional tavern openings and acquisitions.
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In Nevada, we generally enter into two types of slot placement contracts as part of our Distributed Gaming business: space lease agreements and participation agreements. Under space lease agreements, we pay a fixed monthly rental fee for the right to install, maintain and operate our slot machines at a business location and we are the sole holder of the applicable gaming license that allows us to operate such slot machines. Under participation agreements, the business location retains a percentage of the gaming revenue generated from our slot machines, and as a result both the business location and Golden are required to hold a gaming license. In Montana, our slot and amusement device placement contracts are all participation agreements.
Results of Operations
The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2022 and 2021.

| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2022 |  | 2021 |  | 2022 |  | 2021
Revenues |  |  |  |  |  |  |
Gaming | $ | 188,420 |  |  | $ | 193,167 |  |  | $ | 575,886 |  |  | $ | 575,124 |
Food and beverage | 43,035 |  |  | 44,271 |  |  | 129,942 |  |  | 123,013 |
Rooms | 30,765 |  |  | 31,566 |  |  | 89,685 |  |  | 80,213 |
Other | 16,773 |  |  | 13,418 |  |  | 46,496 |  |  | 36,235 |
Total revenues | 278,993 |  |  | 282,422 |  |  | 842,009 |  |  | 814,585 |
Expenses |  |  |  |  |  |  |
Gaming | 108,040 |  |  | 106,301 |  |  | 323,431 |  |  | 309,478 |
Food and beverage | 33,090 |  |  | 32,182 |  |  | 97,093 |  |  | 85,256 |
Rooms | 14,337 |  |  | 13,220 |  |  | 40,627 |  |  | 35,213 |
Other operating | 4,531 |  |  | 4,635 |  |  | 13,853 |  |  | 10,430 |
Selling, general and administrative | 59,389 |  |  | 54,457 |  |  | 177,586 |  |  | 161,333 |
Depreciation and amortization | 24,286 |  |  | 26,474 |  |  | 75,894 |  |  | 80,342 |
Loss (gain) on disposal of assets | 266 |  |  | (72) |  |  | 935 |  |  | 747 |
Preopening expenses | 2 |  |  | 3 |  |  | 61 |  |  | 232 |
Total expenses | 243,941 |  |  | 237,200 |  |  | 729,480 |  |  | 683,031 |
Operating income | 35,052 |  |  | 45,222 |  |  | 112,529 |  |  | 131,554 |
Non-operating (expense) income |  |  |  |  |  |  |
Other non-operating income | — |  |  | — |  |  | — |  |  | 60,000 |
Interest expense, net | (15,709) |  |  | (15,535) |  |  | (45,565) |  |  | (47,752) |
Loss on debt extinguishment | (158) |  |  | (759) |  |  | (1,412) |  |  | (759) |
Total non-operating (expense) income, net | (15,867) |  |  | (16,294) |  |  | (46,977) |  |  | 11,489 |
Income before income tax (provision) benefit | 19,185 |  |  | 28,928 |  |  | 65,552 |  |  | 143,043 |
Income tax (provision) benefit | (5,182) |  |  | 123 |  |  | 5,737 |  |  | (366) |
Net income | $ | 14,003 |  |  | $ | 29,051 |  |  | $ | 71,289 |  |  | $ | 142,677 |

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Three and Nine Months Ended September 30, 2022 Compared to Three and Nine Months Ended September 30, 2021
Revenues
The $3.4 million, or 1%, decrease in revenues for the three months ended September 30, 2022 compared to the prior year period resulted from decreases of $4.7 million, $1.2 million and $0.8 million in gaming, food and beverage, and rooms revenues, respectively, offset by an increase of $3.3 million in other revenues. The decrease in gaming, food and beverage, and rooms revenues for the three months ended September 30, 2022 was primarily related to a decrease in demand for gaming and a decline in visitation across our casino properties during the current year period. The increase in other revenues was primarily driven by proceeds from the buyout of royalty payments under certain of our agreements and recoveries under certain of our insurance policies. The three months ended September 30, 2021 also benefited from pent-up demand following the lifting of COVID-19 mitigation measures during the summer of 2021 and the effect of government stimulus payments in 2021 on discretionary consumer spending.
The $27.4 million, or 3%, increase in revenues for the nine months ended September 30, 2022 compared to the prior year period resulted from increases of $0.8 million, $6.9 million, $9.5 million and $10.2 million in gaming, food and beverage, rooms, and other revenues, respectively. The increase in revenues for the nine months ended September 30, 2022 was primarily a ttributable to an increase in occupancy of our hotel rooms and guest visitation following the lifting of COVID-19 mitigation measures and related operating restrictions during the summer of 2021.
Operating Expenses
The $3.7 million, or 2%, increase in operating expenses for the three months ended September 30, 2022 compared to the prior year period resulted from increases of $1.8 million, $0.9 million and $1.1 million in gaming, food and beverage, and rooms operating expenses, respectively, offset by a decrease of $0.1 million in other operating expenses. The increase in operating expenses was primarily attributable to higher labor costs and cost of goods incurred during the three months ended September 30, 2022.
The $34.6 million, or 8%, increase in operating expenses for the nine months ended September 30, 2022 compared to the prior year period resulted from increases of $14.0 million, $11.8 million, $5.4 million, and $3.4 million in gaming, food and beverage, rooms, and other operating expenses, respectively. The increase in operating expenses was primarily driven by higher labor costs and cost of goods incurred during the nine months ended September 30, 2022, as well as an increase in other operating expenses related to the increase in the number of concert events hosted at our Laughlin Event Center during the first half of 2022 following the lifting of COVID-19 mitigation measures and related operating restrictions during the summer of 2021.
Selling, General and Administrative Expenses
The $4.9 million, or 9%, increase in selling, general and administrative (“SG&A”) expenses for the three months ended September 30, 2022 compared to the prior year period was primarily attributable to the increase in payroll and related expenses as well as an increase in costs related to utilities and maintenance contracts.
The $16.3 million, or 10%, increase in SG&A expenses for the nine months ended September 30, 2022 compared to the prior year period was primarily attributable to the increase in payroll and related expenses as well as an increase in costs related to utilities and maintenance contracts. SG&A expenses are comprised of marketing and advertising, utilities, building rent, maintenance contracts, corporate office overhead, information technology, legal, accounting, third-party service providers, executive compensation, share-based compensation, payroll expenses and payroll taxes.
Depreciation and Amortization
The decrease in depreciation and amortization expenses for the three and nine months ended September 30, 2022 of $2.2 million, or 8%, and $4.4 million, or 6%, respectively, compared to the prior year period was primarily related to long-lived assets acquired in connection with the American Casino and Entertainment Properties LLC acquisition being fully depreciated and amortized. In addition, as discussed in “Note 2 — Assets Held for Sale” in Part I, Item 1: Financial Statements, in connection with our entry into definitive agreements for the sale of Rocky Gap, the assets related to Rocky Gap were classified as held for sale as of September 30, 2022 and we ceased recording depreciation and amortization of the long-lived assets included in the sale from the date of execution of the definitive agreements on August 24, 2022.
Loss (Gain) on Disposal of Assets
Loss on disposal of assets for the three and nine months ended September 30, 2022 and for the nine months ended September 30, 2021 was primarily driven by sales of used gaming equipment in our Distributed Gaming segment. Gain on disposal of assets of $0.1 million for the three months ended September 30, 2021 was driven by sales of used equipment in our Maryland Casino
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Resort segment.
Preopening Expenses
Preopening expenses consist of labor, food, utilities, training, initial licensing, rent and organizational costs incurred in connection with the opening of tavern and casino locations. Preopening expenses for the three and nine months ended September 30, 2022 and 2021 primarily related to our planned expansion in our Distributed Gaming segment.
Non-Operating (Expense) Income, Net
The decrease in non-operating expense, net, of $0.4 million, or 3%, for the three months ended September 30, 2022 compared to the prior year period primarily related to a $0.6 million decrease in loss on debt extinguishment, offset by a $0.2 million, or 1%, increase in interest expense, net. During the three months ended September 30, 2021, we prepaid $50.0 million of our term loan borrowings and recorded a non-cash charge of $0.8 million for the accelerated amortization of the debt issuance costs and discount as compared to $25.0 million prepaid and a related non-cash charge of the accelerated amortization of the debt issuance costs and discount of $0.2 million for the three months ended September 30, 2022. The increase in interest expense, net, related to the increase in interest rates during the period.
Non-operating expense, net, was $47.0 million for the nine months ended September 30, 2022, compared to non-operating income, net, of $11.5 million in the prior year period. This $58.5 million, or 509%, change was primarily driven by the decrease in other non-operating income of $60.0 million related to our agreement with William Hill providing for certain payments arising from the acquisition of William Hill by Caesars Entertainment, Inc. discussed in “Note 10 — Commitments and Contingencies” in Part I, Item 1: Financial Statements.
Interest expense, net decreased by $2.2 million, or 5%, for the nine months ended September 30, 2022 compared to the prior year period, primarily due to the prepayment of our term loan borrowings during the course of 2021 and 2022 and the repurchase of $37.5 million in principal amount of 2026 Unsecured Notes in June 2022, partially offset by a $0.7 million, or 100%, increase in year-over-year in non-cash charges for the accelerated amortization of the debt issuance costs and discount, as discussed in “Note 6 — Long-Term Debt” in Part I, Item 1: Financial Statements.
Income Taxes
The effective income tax rate was 27.0% for the three months ended September 30, 2022, which differed from the federal income tax rate of 21% due to the limitation of tax deductions on executive compensation under the Internal Revenue Code Section 162(m). The effective income tax rate f or the nine months ended September 30, 2022 was (8.8)%. The negative effective income tax rate for the nine months ended September 30, 2022 was a result of the partial release of the valuation allowance on our deferred tax assets during the first quarter of 2022. The effective income tax rates were (0.4)% and 0.3% for the three and nine months ended September 30, 2021, respectively, which differed from the federal tax rate of 21% primarily due to the change in valuation allowance.
Revenues and Adjusted EBITDA by Reportable Segment
To supplement our consolidated financial statements presented in accordance with United States generally accepted accounting principles (“GAAP”), we use Adjusted EBITDA because it is the primary metric used by our chief operating decision makers and investors in measuring both our past and future expectations of performance. Adjusted EBITDA provides useful information to the users of our financial statements by excluding specific expenses and gains that we believe are not indicative of our core operating results. Furthermore, our annual performance plan used to determine compensation for our executive officers and employees is tied to the Adjusted EBITDA metric. It is also a measure of operating performance widely used in the gaming industry. The presentation of this additional information is not meant to be considered in isolation or as a substitute for measures of financial performance prepared in accordance with GAAP. In addition, other companies in our industry may calculate Adjusted EBITDA differently than we do.
We define “Adjusted EBITDA” as earnings before interest and other non-operating income (expense), income taxes, depreciation and amortization, impairment of goodwill and intangible assets, preopening and related expenses, gain or loss on disposal of assets, share-based compensation expenses, change in non-cash lease expense, and other non-cash charges that are deemed to be not indicative of our core operating results, calculated before corporate overhead (which is not allocated to each reportable segment).
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The following table presents our total revenues and Adjusted EBITDA by reportable segment and a reconciliation of net income to Adjusted EBITDA:

|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Revenues |  |  |  |  |  |  |  |
Nevada Casino Resorts |  | $ | 98,856 |  |  | $ | 104,380 |  |  | $ | 302,789 |  |  | $ | 285,192 |
Nevada Locals Casinos |  | 37,735 |  |  | 38,105 |  |  | 117,409 |  |  | 120,177 |
Maryland Casino Resort |  | 21,624 |  |  | 21,640 |  |  | 60,062 |  |  | 58,980 |
Distributed Gaming |  | 117,646 |  |  | 117,935 |  |  | 358,237 |  |  | 349,247 |
Corporate and other |  | 3,132 |  |  | 362 |  |  | 3,512 |  |  | 989 |
Total Revenues |  | $ | 278,993 |  |  | $ | 282,422 |  |  | $ | 842,009 |  |  | $ | 814,585 |
Adjusted EBITDA |  |  |  |  |  |  |  |
Nevada Casino Resorts |  | $ | 30,122 |  |  | $ | 39,196 |  |  | $ | 102,589 |  |  | $ | 112,486 |
Nevada Locals Casinos |  | 16,818 |  |  | 18,103 |  |  | 56,651 |  |  | 61,230 |
Maryland Casino Resort |  | 7,446 |  |  | 7,669 |  |  | 20,260 |  |  | 20,831 |
Distributed Gaming |  | 18,845 |  |  | 21,158 |  |  | 63,092 |  |  | 66,952 |
Corporate and other |  | (12,176) |  |  | (12,698) |  |  | (39,196) |  |  | (37,561) |
Total Adjusted EBITDA |  | $ | 61,055 |  |  | $ | 73,428 |  |  | $ | 203,396 |  |  | $ | 223,938 |
Net income |  | $ | 14,003 |  |  | $ | 29,051 |  |  | $ | 71,289 |  |  | $ | 142,677 |
Adjustments |  |  |  |  |  |  |  |
Other non-operating income |  | — |  |  | — |  |  | — |  |  | (60,000) |
Depreciation and amortization |  | 24,286 |  |  | 26,474 |  |  | 75,894 |  |  | 80,342 |
Change in non-cash lease expense |  | (298) |  |  | (143) |  |  | 113 |  |  | 517 |
Share-based compensation |  | 3,286 |  |  | 3,089 |  |  | 10,269 |  |  | 8,762 |
Loss (gain) on disposal of assets |  | 266 |  |  | (72) |  |  | 935 |  |  | 747 |
Loss on debt extinguishment |  | 158 |  |  | 759 |  |  | 1,412 |  |  | 759 |
Preopening and related expenses (1) |  | 2 |  |  | 3 |  |  | 61 |  |  | 232 |
Other, net |  | (1,539) |  |  | (1,145) |  |  | 3,595 |  |  | 1,784 |
Interest expense, net |  | 15,709 |  |  | 15,535 |  |  | 45,565 |  |  | 47,752 |
Income tax provision (benefit) |  | 5,182 |  |  | (123) |  |  | (5,737) |  |  | 366 |
Adjusted EBITDA |  | $ | 61,055 |  |  | $ | 73,428 |  |  | $ | 203,396 |  |  | $ | 223,938 |

(1)Preopening and related expenses consist of labor, food, utilities, training, initial licensing, rent and organizational costs incurred in connection with the opening of tavern and casino locations.
Nevada Casino Resorts
For the three months ended September 30, 2022, revenues decreased by $5.5 million, or 5%, compared to the prior year period. This decrease resulted from decreases of $3.4 million, $0.9 million and $1.6 million in gaming, food and beverage, and rooms revenues, respectively, offset by an increase of $0.4 million in other revenues. The decrease in gaming, food and beverage, and rooms revenues for the three months ended September 30, 2022 was primarily related to the supply chain disruptions during the current year period. The increase in other revenues was primarily driven by an increase in visitation to amenities offered at The STRAT during the current year period. The three months ended September 30, 2021 also benefited from pent-up demand following the lifting of COVID-19 mitigation measures during the summer of 2021 and the effect of government stimulus payments in 2021 on discretionary consumer spending.
For the nine months ended September 30, 2022, revenues increased by $17.6 million, or 6%, compared to the prior year period. This increase was driven by increases of $5.9 million, $7.2 million and $6.4 million in food and beverage, rooms, and other revenues, respectively, offset by a decrease of $1.9 million in gaming revenues. The increase in revenues during the nine months ended September 30, 2022 compared to the prior year period was driven by increases in occupancy of our hotel rooms during the first half of 2022 relative to the prior year period (reflecting the lifting of COVID-19 mitigation measures and related operating
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restrictions in June 2021) combined with a higher average daily rate. The decrease in gaming revenues during the nine months ended September 30, 2022 was primarily attributable to a decrease in demand for gaming as compared to the prior year period.
Adjusted EBITDA decreased by $9.1 million, or 23%, and $9.9 million, or 9%, for the three and nine months ended September 30, 2022, respectively, compared to the applicable prior year period. These decreases were primarily attributable to higher labor costs and cost of goods in the current year period.
Nevada Locals Casinos
Revenues decreased by $0.4 million, or 1%, and $2.8 million, or 2%, and Adjusted EBITDA decreased by $1.3 million, or 7%, and $4.6 million, or 7%, for the three and nine months ended September 30, 2022, respectively, as compared to the applicable prior year period. The decrease in revenues for both the three and nine months ended September 30, 2022 was primarily attributable to a decrease in patron visitation compared to the applicable prior year period. The three months ended September 30, 2021 benefited from pent-up demand following the lifting of COVID-19 mitigation measures during the summer of 2021 and the effect of government stimulus payments in 2021 on discretionary consumer spending.
The decrease in Adjusted EBITDA for both the three and nine months ended September 30, 2022 was primarily attributable to higher labor costs and cost of goods compared to the applicable prior year period.
Maryland Casino Resort
Revenues for the three months ended September 30, 2022 were relatively unchanged compared to the prior year period. Revenues for the nine months ended September 30, 2022 increased by $1.1 million, or 2%, primarily due to a higher average daily rate and an increase in guest visitation following the easing of COVID-19 mitigation measures during the summer of 2021. Adjusted EBITDA decreased $0.2 million, or 3%, and $0.6 million, or 3%, respectively, for the three and nine months ended September 30, 2022, respectively, compared to the applicable prior year period primarily due to an increase in labor costs and cost of goods.
Distributed Gaming
Revenues for the three months ended September 30, 2022 were relatively unchanged compared to the prior year period. Revenues for the nine months ended September 30, 2022 increased by $9.0 million, or 3%, compared to the prior year period, primarily due to the expansion of our distributed gaming locations as well as the easing of COVID-19 mitigation measures during 2021. Adjusted EBITDA decreased by $2.3 million, or 11%, and $3.9 million, or 6%, for the three and nine months ended September 30, 2022, respectively, compared to the applicable prior year period, primarily due to an increase in labor costs, higher cost of goods, and an increase in costs of providing gaming related services to third parties under our space lease and participation agreements.
Adjusted EBITDA Margin
For the three months ended September 30, 2022 Adjusted EBITDA as a percentage of segment revenues (or Adjusted EBITDA margin) was 30%, 45%, 34% and 16% for Nevada Casino Resorts, Nevada Locals Casinos, Maryland Casino and Distributed Gaming, respectively, as compared to Adjusted EBITDA margins of 38%, 48%, 35% and 18%, respectively, for the prior year period. For the nine months ended September 30, 2022, Adjusted EBITDA margin was 34%, 48%, 34% and 18% for Nevada Casino Resorts, Nevada Locals Casinos, Maryland Casino and Distributed Gaming, respectively, as compared to 39%, 51%, 35% and 19%, respectively, for the prior year period. The lower Adjusted EBITDA margins for the three and nine months ended September 30, 2022 were primarily attributable to increases in labor costs and cost of goods. In addition, lower Adjusted EBITDA margins in our Distributed Gaming segment reflect the fixed and variable amounts paid to third parties under our space lease and participation agreements as expenses. In the event our Adjusted EBITDA margins demonstrate new trends and developments in future periods, we may be required to identify additional reportable segments in future filings.
Liquidity and Capital Resources
As of September 30, 2022, we had $177.7 million in cash and cash equivalents. We currently believe that our cash and cash equivalents, cash flows from operations and borrowing availability under our $240 million revolving credit facility (the “Revolving Credit Facility”) will be sufficient to meet our capital requirements during the next 12 months. As of September 30, 2022, we had borrowing availability of $240 million under our Revolving Credit Facility (refer to “Note 6 — Long-Term Debt” in Part I, Item 1: Financial Statements for additional information regarding our Revolving Credit Facility). In addition, as discussed above, we have entered into definitive agreements to sell Rocky Gap for aggregate consideration of $260.0 million in cash, which transactions are expected to close during the second quarter of 2023, subject to the satisfaction or waiver of customary regulatory approvals and closing conditions.
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Our operating results and performance depend significantly on national, regional and local economic conditions and their effect on consumer spending. Declines in consumer spending would cause revenues generated by our operations to be adversely affected.
To further enhance our liquidity position or to finance any future acquisition or other business investment initiatives, we may obtain additional financing, which could consist of debt, convertible debt or equity financing from public and/or private credit and capital markets.
Cash Flows
Net cash provided by operating activities w as $127.3 million and $249.3 million for the nine months ended September 30, 2022 and 2021, respectively. The $122.0 million, or 49%, decrease in operating cash flows for the nine months ended September 30, 2022 compared to the prior year period primarily related to a decrease in the operating income of $19.0 million. The prior year period also included the impact of $60.0 million in non-operating income related to our agreement with William Hill providing for certain payments arising from the acquisition of William Hill by Caesars Entertainment, Inc. as discussed in “Note 10 — Commitments and Contingencies” in Part I, Item 1: Financial Statements. Such payment was recognized as of June 30, 2021 but not received until the third quarter of 2021.
Net cash used in investing activities was $33.4 million and $20.5 million for the nine months ended September 30, 2022 and 2021, respectively. The $12.9 million, or 63%, increase in net cash used in investing activities for the nine months ended September 30, 2022 compared to the prior year period related to the increase in our capital expenditures.
Net cash used in financing activities was $136.8 million and $113.1 million f or the nine months ended September 30, 2022 and 2021, respectively. The $23.7 million, or 21%, increase in net cash used in financing activities during the nine months ended September 30, 2022 compared to the prior year period related to the prepayment of outstanding term loan borrowings with a principal amount of $50.0 million and repurchase of $37.5 million in principal amount of 2026 Unsecured Notes in open market transactions (refer to “Note 6 — Long-Term Debt” in Part I, Item 1: Financial Statements), as well as $37.7 million in repurchases of our common stock pursuant to our share repurchase program and a $3.8 million increase in cash paid for tax withholding on option exercises and the vesting of RSUs.
Long-Term Debt
Refer to “Note 6 — Long-Term Debt” in Part I, Item 1: Financial Statements and Supplemental Data of this Quarterly Report for discussion of our debt instruments.
Share Repurchase Program
On August 3, 2021, our Board of Directors authorized a share repurchase program of $50 million. In December 2021, we repurchased 226,485 shares of our common stock pursuant to our share repurchase program in open market transactions at an average price of $46.87 per share, resulting in a charge to accumulated deficit of $10.6 million. In March 2022, we repurchased 268,791 shares of our common stock pursuant to our share repurchase program in open market transactions at an average price of $56.54 per share, resulting in a charge to accumulated deficit of $15.2 million. On May 3, 2022, our Board of Directors re-authorized our $50 million share repurchase program. During the three months ended June 30, 2022, we repurchased 515,000 shares of our common stock pursuant to our share repurchase program at an average price of $43.63 per share, resulting in a charge to accumulated deficit of $22.5 million. As of September 30, 2022, we had $27.5 million of remaining share repurchase availability under the May 3, 2022 share repurchase authorization. On November 1, 2022, our Board of Directors increased our share repurchase program to $75 million.
Share repurchases may be made from time to time in open market transactions, block trades or in private transactions in accordance with applicable securities laws and regulations and other legal requirements, including compliance with our finance agreements. There is no minimum number of shares that we are required to repurchase and the repurchase program may be suspended or discontinued at any time without prior notice.
Other Items Affecting Liquidity
The outcome of the following specific matters, including our commitments and contingencies, may also affect our liquidity.
Commitments, Capital Spending and Development
We perform on-going refurbishment and maintenance at our facilities, of which certain maintenance costs are capitalized if such improvement or refurbishment extends the life of the related asset, while other maintenance costs that do not so qualify are expensed as incurred. The commitment of capital and the related timing thereof are contingent upon, among other things,
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negotiation of final agreements and receipt of approvals from the appropriate regulatory bodies. We intend to fund such capital expenditures through our operating cash flows and borrowings under our Revolving Credit Facility.
Refer to “Note 10 — Commitments and Contingencies” in Part I, Item 1: Financial Statements for additional information regarding commitments and contingencies that may also affect our liquidity.
Other Opportunities
We may investigate and pursue expansion opportunities in our existing or new markets from time to time. Such expansions will be influenced and determined by a number of factors, which may include licensing availability and approval, suitable investment opportunities and availability of acceptable financing. Investigation and pursuit of such opportunities may require us to make substantial investments or incur substantial costs, which we may fund through cash flows from operations or borrowing availability under our Revolving Credit Facility. To the extent such sources of funds are not sufficient, we may also seek to raise such additional funds through public or private equity or debt financings or from other sources. No assurance can be given that additional financing will be available or that, if available, such financing will be obtainable on terms favorable to us. Moreover, we can provide no assurances that the investigation or pursuit of an opportunity will result in a completed transaction.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet date and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and judgments, including those related to the application of the acquisition method of accounting, long-lived assets, goodwill and indefinite-lived intangible assets, revenue recognition, income taxes and share-based compensation expenses. We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We believe that our estimates and assumptions are reasonable, based upon information presently available; however, actual results may differ from these estimates under different assumptions or conditions.
A description of our critical accounting estimates can be found under Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report. For a more extensive discussion of our accounting policies, refer to “Note 2 — Summary of Significant Accounting Policies” in Part II, Item 8: Financial Statements and Supplemental Data in our Annual Report. There were no material changes to our critical accounting policies and estimates during the three and nine months ended September 30, 2022.
Seasonality
We believe that our businesses are affected by seasonal factors, including holidays, weather and travel conditions. Our casino properties and distributed gaming businesses in Nevada have historically experienced lower revenues during the summer as a result of fewer tourists due to higher temperatures, as well as increased vacation activity by local residents. Rocky Gap typically experiences higher revenues during summer months and may be significantly adversely impacted by inclement weather during winter months. Our Nevada distributed gaming operations typically experience higher revenues during the fall which corresponds with several professional sports seasons. Our Montana distributed gaming operations typically experience higher revenues during the winter due to the inclement weather in the state and less opportunity for outdoor activities, in addition to the impact from professional sports seasons during the fall. While other factors like unemployment levels, market competition and the diversification of our business may either offset or magnify seasonal effects, some seasonality is likely to continue, which could result in significant fluctuation in our quarterly operating results.
Recently Issued Accounting Pronouncements
See “Note 1 — Nature of Business and Basis of Presentation” in Part I, Item 1: Financial Statements for information regarding recently issued accounting pronouncements.
Regulation and Taxes
The casino and distributed gaming industries are subject to extensive regulation by state gaming authorities. Changes in applicable laws or regulations could have a material adverse effect on us.
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The gaming industry represents a significant source of tax revenues to regulators. From time to time, various federal and state legislators and officials have proposed changes in tax law, or in the administration of such law, affecting the gaming industry. It is not possible to determine the likelihood of possible changes in tax law or in the administration of such law. Such changes, if adopted, could have a material adverse effect on our future financial position, results of operations, cash flows and prospects.
Off Balance Sheet Arrangements
We have no off balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary exposure to market risk is interest rate risk associated with our variable rate long-term debt. As of September 30, 2022, our variable rate long-term debt primarily comprised our indebtedness under the Credit Facility (refer to “Note 6 — Long-Term Debt” in Part I, Item 1: Financial Statements).
As of September 30, 2022, we had $600 million in principal amount of outstanding term loan borrowings under the Credit Facility with no outstanding borrowings under our $240 million Revolving Credit Facility. Our primary interest rate under the Credit Facility is the Eurodollar rate plus an applicable margin. The weighted-average effective interest rate on our outstanding borrowings under the Credit Facility was 5.17% and 4.26% for the three and nine months ended September 30, 2022, respectively. Assuming the outstanding balance under our Credit Facility remained constant over a year, a 50 basis point increase in the applicable interest rate would increase interest incurred, prior to effects of capitalized interest, by $3.0 million over a twelve-month period.
As of September 30, 2022, our investment portfolio included $177.7 million in cash and cash equivalents and $5.0 million in short-term cash investments.
We continue to evaluate the potential impact of the eventual replacement of the LIBOR benchmark interest rate. While some LIBOR rates are now extended through June 2023, lenders are no longer allowed to issue new loans and other financial instruments that are linked to LIBOR. Although we are not able to predict what will become a widely accepted benchmark in place of LIBOR, or the exact impact such a transition may have, our current expectation is that this transition will not have a material impact on our business, financial condition or results of operations.
ITEM 4. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures designed to provide reasonable assurance of achieving the objective that information in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified and pursuant to the requirements of the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by SEC Rule 13a-15(b), we carried out an evaluation , with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of September 30, 2022, the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2022.
During the quarter ended September 30, 2022, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A discussion of our legal proceedings is contained in “Note 10 — Commitments and Contingencies — Legal Matters and Other” in Part I, Item 1: Financial Statements.
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ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K, which factors could materially affect our business, financial condition, liquidity or future results. Except as set forth below, there have been no material changes to the risk factors described in the “Risk Factors” section in our Annual Report. The risk set forth below or described in our Annual Report are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, liquidity, results of operations, prospects or stock price.
Inability to complete the sale of Rocky Gap could negatively impact our business, financial condition, results of operations or prospects.
The closing of the Rocky Gap Transactions is subject to a number of closing conditions and there can be no assurance that these conditions will be satisfied on the timeline we expect or at all. The Rocky Gap Transactions may also be terminated in certain specified circumstances, including if the sale is not completed by August 24, 2023 (subject to certain extensions under certain circumstances). While the sale of Rocky Gap is pending or if the sale is not completed, we may be subject to several risks including:
•the current trading price of our common stock may reflect a market assumption that the Rocky Gap Transactions will be completed;
•we have incurred and expect to continue to incur significant transaction costs in connection with the sale of Rocky Gap whether or not the sale is completed;
•under the definitive agreements for the Rocky Gap Transactions, we are subject to certain restrictions on the conduct of the Rocky Gap business prior to the completion of the sale, which restrictions could adversely affect our ability to realize certain business strategies or take advantage of certain business opportunities;
•the negative perception of investors, vendors, customers, or employees if the sale is not consummated; and
•the attention of our management may be directed toward the completion of the pending sale and related matters, and their focus may be diverted from our day-to-day business operations.
Any of these risks could have a material adverse effect on our business, financial condition, results of operations and prospects.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchase of Equity
From time to time, we repurchase shares of our common stock pursuant to our $50 million share repurchase program authorized by our Board of Directors on August 3, 2021 and re-authorized on May 3, 2022. There is no minimum number of shares that we are required to repurchase and the repurchase program may be suspended or discontinued at any time without prior notice (refer to “Note 7 — Shareholders’ Equity and Stock Incentive Plans” in Part I, Item 1: Financial Statements for additional information regarding our share repurchase program). Share repurchases executed during May 2022 included 210,000 shares repurchased from a related party as discussed in “Note 12 — Related Party Transactions” in Part I, Item 1: Financial Statements. The rest of the repurchases were made through open market transactions. The following table presents our common stock purchases made pursuant to our share repurchase program during the nine months ended September 30, 2022:
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|  | Total Number of Shares Purchased |  | Average Price per Share |  | Total Number of Shares Purchased as Part of a Publicly Announced Program |  | Approximate Dollar Value That May Yet Be Purchased Under the Program (in millions) |
Period |  |  |  |  |  |  |  |  |
January 1-31, 2022 |  | — |  |  | $ | — |  |  | — |  |  | $ | 39.4 |  |
February 1-28, 2022 |  | — |  |  | $ | — |  |  | — |  |  | $ | 39.4 |  |
March 1-31, 2022 |  | 268,791 |  |  | $ | 56.54 |  |  | 268,791 |  |  | $ | 24.2 |  |
April 1-30, 2022 |  | — |  |  | $ | — |  |  | — |  |  | $ | 24.2 |  |
May 1-31, 2022 |  | 211,100 |  |  | $ | 42.59 |  |  | 211,100 |  |  | $ | 41.0 |  | (1) (2)
June 1-30, 2022 |  | 303,900 |  |  | $ | 44.34 |  |  | 303,900 |  |  | $ | 27.5 |  |
July 1-31, 2022 |  | — |  |  | $ | — |  |  | — |  |  | $ | 27.5 |  |
August 1-31, 2022 |  | — |  |  | $ | — |  |  | — |  |  | $ | 27.5 |  |
September 1-30, 2022 |  | — |  |  | $ | — |  |  | — |  |  | $ | 27.5 |  | (3)

(1) Our Board of Directors increased the amount authorized for share repurchases to $50 million on May 3, 2022.
(2) Includes 210,000 shares repurchased from Anthony A. Marnell III, an independent non-employee member of our Board of Directors, at a price of $42.61 per share.
(3) Our Board of Directors increased the amount authorized for share repurchases to $75 million on November 1, 2022.
ITEM 5. OTHER INFORMATION
On November 4, 2022, the Company’s Board of Directors (the “Board”) amended and restated the Company’s bylaws, effective immediately, to clarify and establish certain corporate procedures and make certain other enhancements and technical changes. The changes effected by the amendment and restatement of the Company’s bylaws (as so amended and restated, the “Amended and Restated Bylaws”) include, without limitation, the following:
•establishing procedures and disclosure requirements for shareholders to call shareholder meetings and to make director nomination and proposals of other business for consideration at meetings of shareholders (including that, among other things, the proposing shareholder provide additional information about its financial interests and intentions (and those of any beneficial owner on whose behalf such proposal is being made), as well as such updates and supplements as are necessary to ensure the required information is true and correct as of the record date for the meeting, and (in the case of a director nomination) a signed questionnaire, representation and agreement from each person proposed to be nominated for election as a director);
•clarifying that director nominations and proposals of other business may only be made by a shareholder who is a shareholder of record;
•implementing a vote standard of a majority of votes cast for matters other than election of directors (except where a higher standard is required by applicable law or Nasdaq rules);
•clarifying that the plurality vote standard continues to apply to director elections;
•addressing the adoption by the SEC of the “universal proxy” rules and related requirements;
•establishing and modernizing rules for the delivery of notices (including notices by electronic transmission);
•providing for the President of the Company to preside over shareholder meetings in the absence of the Chief Executive Officer; and
•making certain administrative, modernizing, clarifying and confirming changes.
The preceding summary does not purport to be complete and is qualified in its entirety by reference to the Amended and Restated Bylaws, a copy of which is filed as Exhibit 3.1 to this report and incorporated herein by reference.
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ITEM 6. EXHIBITS

Exhibits |  | Description
2.1 |  | Equity Purchase Agreement, dated August 24, 2022, by and among Lakes Maryland Development, LLC, a Minnesota limited liability company, Century Casinos, Inc., a Delaware Corporation, VICI Properties, L.P., a Delaware limited partnership, and Golden Entertainment, Inc. (incorporated by reference to Exhibit 2.1 to Golden Entertainment, Inc.'s Form 8-K dated August 24, 2022 and filed on August 25, 2022)
2.2 |  | Real Estate Purchase Agreement, dated August 24, 2022, by and between Evitts Resort, LLC, a Maryland limited liability company, and VICI Properties, L.P., a Delaware limited partnership (incorporated by reference to Exhibit 2.2 to Golden Entertainment, Inc.'s Form 8-K dated August 24, 2022 and filed on August 25, 2022)
3.1 |  | Ninth Amended and Restated Bylaws of Golden Entertainment, Inc.
31.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 |  | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS |  | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document
101.SCH |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF |  | Inline XBRL Taxonomy Extension Calculation Definition Document
101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 |  | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

# Management contract or compensatory plan or arrangement in which one or more executive officers or directors participates
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

| GOLDEN ENTERTAINMENT, INC.
| (Registrant)
Dated: November 7, 2022 | /s/ BLAKE L. SARTINI
| Blake L. Sartini
| Chairman of the Board and Chief Executive Officer
| (Principal Executive Officer)
| /s/ CHARLES H. PROTELL
| Charles H. Protell
| President and Chief Financial Officer
| (Principal Financial Officer)
| /s/ THOMAS E. HAAS
| Thomas E. Haas
| Senior Vice President of Accounting
| (Principal Accounting Officer)

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