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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income tax provision is summarized as follows:
| Year Ended December 31,
(In thousands) | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
Federal | $ | (24,499) |  |  | $ | 87,840 |  |  | $ | 13,877 |
State | (3,861) |  |  | 6,106 |  |  | 274 |
Total current tax (benefit) provision | $ | (28,360) |  |  | $ | 93,946 |  |  | $ | 14,151 |
Deferred: |  |  |  |  |
Federal | $ | 50,423 |  |  | $ | (17,846) |  |  | $ | (13,462) |
State | — |  |  | 107 |  |  | (168) |
Total deferred tax provision (benefit) | 50,423 |  |  | (17,739) |  |  | (13,630) |
Income tax provision | $ | 22,063 |  |  | $ | 76,207 |  |  | $ | 521 |
Reconciliation of the statutory federal income tax rate to the Company’s actual rate based on income before income tax provision is summarized below:
| Year Ended December 31,
| 2024 |  | 2023 |  | 2022
Statutory federal tax rate | 21.00 | % |  | 21.00 | % |  | 21.00 | %
State income taxes, net of federal income taxes | (5.03) |  |  | 2.53 |  |  | 0.62 |
Permanent tax differences – stock compensation | 1.62 |  |  | (2.12) |  |  | (6.31) |
Permanent tax differences – business meals | 0.70 |  |  | 0.17 |  |  | 0.44 |
Permanent tax differences – executive compensation and other | 0.64 |  |  | 2.60 |  |  | 9.27 |
Permanent tax differences – goodwill | 16.69 |  |  | — |  |  | — |
Change in valuation allowance | — |  |  | (1.71) |  |  | (23.99) |
FICA credit generated | (1.27) |  |  | (0.28) |  |  | (1.09) |
WOTC credit generated | (0.14) |  |  | — |  |  | — |
Tax benefit due to settlement of uncertain tax positions | (9.38) |  |  | — |  |  | — |
Additional tax due to amending tax returns from prior years | 5.01 |  |  | — |  |  | — |
Change in tax rate and apportionment | — |  |  | 0.43 |  |  | (0.26) |
Deferred only adjustment to beginning deferred balances | 0.47 |  |  | 0.34 |  |  | 0.95 |
Effective tax rate | 30.31 | % |  | 22.96 | % |  | 0.63 | %
The effective income tax rate for the year ended December 31, 2024 was 30.31%, which differed from the federal income tax rate of 21% primarily due to the tax effect of the sale of the distributed gaming operations in Nevada discussed in “Note 1 — Nature of Business and Basis of Presentation” and the benefit recorded from the reduction of the uncertain tax positions (“UTP”) payable. The effective income tax rate for the year ended December 31, 2023 was 22.96%, which differed from the federal tax rate of 21% primarily due to state income taxes. The Company’s current and non-current deferred tax assets (liabilities) are comprised of the following:
| December 31,
(In thousands) | 2024 |  | 2023
Deferred tax assets: |  |  |
Accruals and reserves | $ | 3,895 |  |  | $ | 5,128 |
Share-based compensation expense | 1,997 |  |  | 2,137 |
Operating lease obligation | 19,626 |  |  | 27,092 |
Depreciation of fixed assets | — |  |  | 18,631 |
Uncertain tax position | — |  |  | 6,245 |
Other | — |  |  | 1,553 |
Gross deferred tax assets | 25,518 |  |  | 60,786 |
Valuation allowance | — |  |  | — |
Deferred tax assets, net of valuation allowance | $ | 25,518 |  |  | $ | 60,786 |
Deferred tax liabilities: |  |  |
Prepaid services | $ | (1,744) |  |  | $ | (1,771) |
Amortization of intangible assets | (787) |  |  | (5,778) |
Depreciation of fixed assets | (26,050) |  |  | — |
Right-of-use assets | (16,478) |  |  | (23,729) |
Debt basis | (1,359) |  |  | — |
Other | (15) |  |  | — |
Gross deferred tax liabilities | (46,433) |  |  | (31,278) |
Deferred tax (liabilities) assets, net | $ | (20,915) |  |  | $ | 29,508 |
Non-current deferred tax assets, net | $ | — |  |  | $ | 29,508 |
Non-current deferred tax liabilities, net | (20,915) |  |  | — |
Deferred tax (liabilities) assets, net | $ | (20,915) |  |  | $ | 29,508 |
The realizability of deferred tax assets is evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies. As of December 31, 2024, the Company had net deferred tax liabilities of $20.9 million and determined that it was more likely than not that the Company would generate sufficient taxable income to conclude that deferred tax assets of $25.5 million were realizable. The Company’s income tax returns from 2021 onward are subject to examination. In addition, the statute of limitation for assessment for years with net operating losses (“NOLs”) is determined by reference to the year the NOLs were used to reduce the Company’s taxable income. NOLs from the 2012-2014 and 2017-2020 income tax returns were used to reduce taxable income in 2021 and 2022. Consequently, the 2012-2014 and 2017-2020 income tax returns remain subject to examination by taxing authorities. The Company is not currently under any income tax examinations. On April 30, 2024, the Internal Revenue Service (the “IRS”) notified the Company that the review of the Company’s 2017 and 2018 federal income tax returns was completed. As a result of the review, the Company’s fixed asset classification and related net operating losses for the respective tax years were adjusted and the Company recorded UTP payable until the historical filings were amended and submitted to the IRS. The Company filed the amended tax returns with the IRS such that no UTP remained as of December 31, 2024. As a result, the Company’s income tax provision for the year December 31, 2024 included a net tax benefit from the decrease in UTP payable, interest and penalties. The following table summarizes the Company’s reconciliation of the beginning and ending unrecognized tax benefits:
| December 31,
(In thousands) | 2024 |  | 2023
Balance – beginning of period | $ | 7,165 |  |  | $ | — |
Tax positions related to current year additions | — |  |  | 884 |
Additions for tax positions of prior years | — |  |  | 6,281 |
Settlements | (7,165) |  |  | — |
Balance – end of period | $ | — |  |  | $ | 7,165 |

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