Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

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. Refer to “Note 2 — Summary of Significant Accounting Policies” for further information on the Company’s accounting policies related to its goodwill and intangible assets.

Mandatory shut-down of the Company’s properties commencing in March 2020 that lasted for a majority of the second quarter of 2020 resulted in a deterioration in the performance of the Company’s casino properties in particular, which required the Company to revise its cash flow projections to reflect the then-current economic environment, including the uncertainty surrounding the nature, timing, and extent of elimination of or change to the restrictions on the Company’s operations. As a result, the Company conducted an interim qualitative and quantitative assessment of its goodwill and intangible assets for potential impairment in each quarter of 2020 and performed its annual quantitative test of goodwill and indefinite-lived intangible assets for potential impairment during the fourth quarter of 2020. The analyses performed by the Company throughout 2020 resulted in non-cash impairment charges recorded to the Company’s Nevada Casino Resorts goodwill and indefinite-lived trade names in the amount of $27.1 million and $6.9 million, respectively.

Management determined that there were no new indicators of impairment for the years ended December 31, 2022 and 2021, and the Company concluded that there was no impairment of the Company’s goodwill and intangible assets as of December 31, 2022 and 2021.

The estimated fair value of goodwill during the interim periods in 2021 and for the annual quantitative test in both 2021 and 2022 was determined using an income valuation approach utilizing discounted cash flow models. The annual quantitative test in 2020 was conducted using a combination of an income valuation approach utilizing discounted cash flow models and a market valuation approach. The market valuation approach considers comparable market data based on multiples of revenue or earnings before interest, taxes, depreciation and amortization. The income valuation approach conducted in 2020 utilized the following Level 3 inputs: discount rate of 12.0% - 13.5%; long-term revenue growth rate of 2.0% - 3.0%. The income valuation approach conducted in 2021 and 2022 utilized a discount rate of 13% and 13.5%, respectively, and long-term revenue growth rate of 2.5% in both periods.

The estimated fair value of indefinite-lived intangible assets in 2020, 2021 and 2022 was determined using the income approach by applying the relief from royalty methodology using Level 3 inputs. For 2020, the Company applied a royalty rate of 0.75% to 2.0%, a discount rate of 12.0% to 13.5% and long-term revenue growth rate of 2.0% to 3.0%. For 2021, the Company utilized a royalty rate of 1.0% to 2.0%, a discount rate of 13.0% and a long-term revenue growth rate of 2.5%. For 2022, the Company utilized a royalty rate of 1.0% to 2.0%, a discount rate of 13.5% and a long-term revenue growth rate of 2.5%.

The following table summarizes goodwill balances by reportable segment:


(In thousands)	Nevada Casino Resorts		Nevada Locals Casinos		Maryland Casino Resort		Nevada Taverns		Distributed Gaming		Total Goodwill
Balance, December 31, 2021 and 2022	$	22,105	$	38,187	$	—	$	20,459	$	77,645	$	158,396

Intangible assets, net, consisted of the following:


	At December 31, 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		(41,743)		—		39,362
Player relationships	2-14	42,990		(40,455)		—		2,535
Non-compete agreements	2-5	9,840		(9,114)		—		726
In-place lease value	4	1,170		(1,170)		—		—
Leasehold interest	4	570		(570)		—		—
Other	4-25	1,366		(1,237)		—		129
		137,041		(94,289)		—		42,752
Balance, December 31, 2022		$	190,731	$	(94,289)	$	(6,890)	$	89,552


	At 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 $7.4 million, $8.1 million, and $21.0 million for the years ended December 31, 2022, 2021, and 2020, respectively. Estimated future amortization expense related to intangible assets is as follows:


(In thousands)	2023		2024		2025		2026		2027		Thereafter		Total (1)
Estimated amortization expense	$	7,209	$	6,313	$	5,974	$	5,869	$	5,737	$	11,650	$	42,752

(1) The Company did not have intangible assets that were not placed in service as of December 31, 2022.