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ACQUISITIONS | 12 Months Ended
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Dec. 31, 2020
Business Combinations [Abstract] |
ACQUISITIONS | ACQUISITIONS Recent Acquisitions Dover Downs Gaming & Entertainment, Inc. On July 22, 2018, the Company entered into a merger agreement with Dover Downs pursuant to which, among other things, on March 28, 2019, a subsidiary of the Company merged with and into Dover Downs with Dover Downs becoming an indirect wholly-owned subsidiary of the Company. The merger resulted in Dover Downs’ shareholders exchanging their Dover Downs stock for Company common shares representing 7.225% of the outstanding shares of common stock in the combined company at closing. A total of 2,976,825 shares of common stock were issued at the transaction closing on March 28, 2019 and the valuation of those shares was based on the closing price of Dover Downs’ common stock on March 27, 2019.
(in thousands, except share and per share data) | March 28, 2019
Dover Downs shares outstanding | 33,125,997 |
Closing Dover Downs share price on March 27, 2019 | $ | 2.62 |
Total fair value of Dover Downs stock purchased * | $ | 86,790 |
Cash paid by the Company at closing, including amounts to retire Dover Downs debt, inclusive of accrued interest | $ | 29,096 |
Consideration transferred | $ | 115,886 |
*Shares issued at approximately $29.15 per share when considering the fair value of stock purchased and number of Company shares issued in conjunction with the acquisition.
The total consideration paid by the Company in connection with the Dover Downs merger was approximately $115.9 million, or $96.4 million, net of cash acquired of $19.5 million. This purchase price excludes transaction costs. During the year ended December 31, 2020, the Company incurred $0.1 million of transaction costs related to the merger and becoming a publicly traded company, compared to $7.9 million during the year ended December 31, 2019. These costs are included in “Acquisition, integration and restructuring expense” in the consolidated statements of operations. The identifiable intangible assets recorded in connection with the closing of the merger based on final valuations include trademarks of $3.9 million, rated player relationships of $0.8 million and hotel and conference pre-bookings of $0.4 million, which are being amortized on a straight-line basis over estimated useful lives of approximately ten years, eight years, and three years, respectively. The fair value of the identifiable intangible assets acquired was determined by using an income approach. Significant assumptions utilized in the income approach were based on company-specific information and projections, which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance. The Company accounted for the acquisition as a business combination using the acquisition method with Bally’s as the accounting acquirer in accordance with FASB Codification Topic 805, Business Combinations (“ASC 805”). Under this method of accounting the purchase price has been allocated to Dover Downs’ assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date. The following table summarizes the consideration paid and the fair values of the assets acquired and liabilities assumed based on final valuations as of December 31, 2019.
(in thousands) |  |  |  |  | As of March 28, 2019
Cash |  |  |  |  | $ | 19,500 |
Accounts receivable |  |  |  |  | 5,674 |
Due from State of Delaware |  |  |  |  | 2,535 |
Inventory |  |  |  |  | 1,393 |
Prepaid expenses and other assets |  |  |  |  | 2,479 |
Property and equipment |  |  |  |  | 98,279 |
Right of use asset |  |  |  |  | 1,333 |
Intangible assets |  |  |  |  | 5,110 |
Deferred income tax assets |  |  |  |  | 11,879 |
Other assets |  |  |  |  | 320 |
Goodwill |  |  |  |  | 1,047 |
Accounts payable |  |  |  |  | (7,373) |
Purses due to horseman |  |  |  |  | (2,613) |
Accrued and other current liabilities |  |  |  |  | (13,513) |
Lease obligations |  |  |  |  | (1,333) |
Pension benefit obligations |  |  |  |  | (6,613) |
Other long-term liabilities |  |  |  |  | (2,218) |
Total purchase price |  |  |  |  | $ | 115,886 |
Dover Downs’ revenue and net income for the year ended December 31, 2020 was $65.0 million and $3.3 million, respectively, and $80.8 million and $6.0 million for the year ended December 31, 2019, respectively. The following table represents unaudited supplemental pro forma consolidated revenue and net income based on Dover Downs’ historical reporting periods as if the acquisition had occurred as of January 1, 2018:
| Year Ended
(in thousands, except per share data) | December 31, 2019 |  | December 31, 2018
Revenue | $ | 546,634 |  |  | $ | 534,140 |
Net income | $ | 61,945 |  |  | $ | 62,792 |
Net income applicable to common stockholders | $ | 61,945 |  |  | $ | 63,432 |
Net income per share, basic | $ | 1.64 |  |  | $ | 1.59 |
Net income per share, diluted | $ | 1.64 |  |  | $ | 1.53 |
Black Hawk Casinos On January 23, 2020, the Company acquired a subsidiary of Affinity Gaming (“Affinity”) that owns three casino properties located in Black Hawk, Colorado: Golden Gates, Golden Gulch and Mardi Gras (the “Black Hawk Casinos”). The total consideration paid by the Company in connection with the Black Hawk Casinos acquisition was approximately $53.8 million, or $50.5 million net of cash acquired, excluding transaction costs. The Company incurred $1.0 million and $1.7 million of transaction costs during the years ended December 31, 2020 and 2019, respectively. These cost s are included in “Acquisition, integration and restructuring expense” in the consolidated statements of operations. The Company accounted for the acquisition of the Black Hawk Casinos as a business combination using the acquisition method with Bally’s as the accounting acquirer in accordance with ASC 805. Under this method of accounting, the purchase price has been allocated to Black Hawk Casinos’ assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date. The identifiable assets recorded in connection with the closing of the Black Hawk Casinos acquisition include trademarks of $2.1 million and rated player relationships of $0.6 million, which are being amortized on a straight-line basis over estimated useful lives of approximately 10 years and 6 years, respectively. The Company also recorded an intangible asset related to gaming licenses of approximately $3.3 million, with an indefinite life. However, in connection with the impairment testing discussed in Note 7 “Goodwill and Intangible Assets”, the asset was deemed fully impaired and its value was written down to zero as of March 31, 2020. The fair value of the identifiable intangible assets acquired was determined by using an income approach. Significant assumptions utilized in the income approach were based on company-specific information and projections, which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance. Revenue included in operations from the Black Hawk Casinos, from the date of their acquisition, January 23, 2020, through December 31, 2020 was $17.8 million. Casino KC and Casino Vicksburg On July 1, 2020, the Company completed its acquisition of the operations and real estate of Casino KC and Casino Vicksburg from affiliates of Eldorado. The total consideration paid by the Company in connection with the acquisition was approximately $229.9 million, or $225.5 million net of cash acquired, excluding transaction costs. The Company recorded acquisition costs related to the acquisition of Casino KC and Casino Vicksburg of $1.8 million duri ng the year ended December 31, 2020. These costs are included in “Acquisition, integration and restructuring expense” in the consolidated statements of operations. The Company accounted for the acquisition of Casino KC and Casino Vicksburg as a business combination using the acquisition method with Bally’s as the accounting acquirer in accordance with ASC 805. Under this method of accounting, the purchase price has been allocated to Casino KC’s and Casino Vicksburg’s assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date. The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition. Due to the fact that the transaction only recently closed, the purchase price allocation is preliminary and will be finalized when valuations are complete and final assessments of the fair value of other acquired assets and assumed liabilities are completed. There can be no assurance that such finalizations will not result in material changes from the preliminary purchase price allocations. The Company’s estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date), as the Company finalizes the valuations of certain tangible and intangible asset acquired and liabilities assumed.
| As of July 1, 2020
| Preliminary as of July 1, 2020 |  | Year to Date Adjustments |  | Preliminary as of December 31, 2020
Cash | $ | 4,362 |  |  | $ | — |  |  | $ | 4,362 |
Accounts receivable | 594 |  |  | (12) |  |  | 582 |
Inventory | 164 |  |  | — |  |  | 164 |
Prepaid expenses and other assets | 709 |  |  | (23) |  |  | 686 |
Property and equipment | 60,574 |  |  | 291 |  |  | 60,865 |
Right of use asset | 41,971 |  |  | (31,656) |  |  | 10,315 |
Intangible assets | 139,760 |  |  | (1,600) |  |  | 138,160 |
Other assets | 118 |  |  | (1) |  |  | 117 |
Goodwill | 52,285 |  |  | 1,611 |  |  | 53,896 |
Accounts payable | (614) |  |  | — |  |  | (614) |
Accrued and other current liabilities | (4,003) |  |  | 91 |  |  | (3,912) |
Lease obligations | (65,381) |  |  | 30,929 |  |  | (34,452) |
Deferred income tax liabilities | (233) |  |  | 233 |  |  | — |
Other long-term liabilities | (306) |  |  | — |  |  | (306) |
Total purchase price | $ | 230,000 |  |  | $ | (137) |  |  | $ | 229,863 |
Revenue and net income included in operations from Casino KC and Casino Vicksburg from the date of acquisition, July 1, 2020, through December 31, 2020 was $40.1 million and $8.5 million, respectively. Bally’s Atlantic City On November 18, 2020, the Company completed its acquisition of Bally’s Atlantic City from Caesars Entertainment, Inc. (“Caesars”) and Vici Properties, Inc. In connection with the Bally’s Atlantic City acquisition, the Company paid cash of approximately $24.7 million at closing, or $16.1 million, net of cash acquired, excluding transaction costs. The Company recorded a liability of $2.0 million for a net working capital adjustment which is reflected in “Accrued liabilities’ in the consolidated balance sheets as of December 31, 2020. In connection with the approval of the Company’s interim gaming license in the state of New Jersey, the Company committed to the New Jersey Casino Control Commission to spend $90 million in capital expenditures over a span of five years to refurbish and upgrade the property’s facilities and expand its amenities. In connection with this commitment, the Company reached an agreement with Caesars, whereby Caesars would reimburse the Company for $30.0 million of the capital expenditure commitment by December 31, 2021. This commitment from Caesars to the Company was accounted for as a contingent consideration asset under ASC 805 and was recognized at its present value as of the acquisition date, which was determined to be $27.7 million, as it represents consideration due back from the seller in connection with a business combination, and is included in “Prepaid expenses and other assets” in the consolidated balance sheets. This contingent consideration asset resulted in an adjusted purchase price of $(0.9) million. The Company incurred $4.4 million of transaction costs related to Bally’s Atlantic City during the year ended December 31, 2020. These costs are included in “Acquisition, integration and restructuring expenses” in the consolidated statements of operations. The Company accounted for the acquisition of Bally’s Atlantic City as a business combination using the acquisition method with Bally’s as the accounting acquirer in accordance with ASC 805. Under this method of accounting, the purchase price has been allocated to Bally’s Atlantic City’s assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date. The identifiable intangible assets recorded in connection with the closing of the Bally’s Atlantic City acquisition based on preliminary valuations include rated player relationships of $0.9 million and hotel and conference pre-bookings of $0.2 million, which are being amortized on a straight-line basis over estimated useful lives of approximately 8 years and 3 years, respectively. The Company determined that the value of and intangible asset related to gaming licenses was de minimus, primarily due to the previously mentioned capital expenditure commitment required to obtain the license. The preliminary fair value of the identifiable intangible assets acquired was determined by using a cost approach and an income approach for the rater player relationships and pre-bookings, respectively. The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition of Bally’s Atlantic City on November 18, 2020. Due to the fact that the transaction only recently closed, the purchase price allocation is preliminary and will be finalized when valuations are complete and final assessments of the fair value of other acquired assets and assumed liabilities are completed. There can be no assurance that such finalizations will not result in material changes from the preliminary purchase price allocations. The Company’s estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date), as the Company finalizes the valuations of certain tangible and intangible asset acquired and liabilities assumed.
| Preliminary as of November 18, 2020
Cash | $ | 8,651 |
Accounts receivable | 1,122 |
Inventory | 721 |
Prepaid expenses and other assets | 1,402 |
Property and equipment | 40,898 |
Intangible assets | 1,120 |
Accounts payable | (3,131) |
Accrued and other current liabilities | (7,983) |
Deferred income tax liabilities | (11,132) |
Net assets acquired | 31,668 |
Bargain purchase gain | (32,595) |
Total purchase price | $ | (927) |
Based on the preliminary purchase price allocation, the fair value of the assets acquired and liabilities assumed exceed the purchase price consideration and therefore, a bargain purchase gain of $32.6 million was recorded during the three months ended December 31, 2020. The Company believes that it was able to acquire the net assets of Bally’s Atlantic City for less than fair value as a result of a capital expenditure requirement imposed on the Company by the New Jersey Casino Control Commission, which would have been imposed on the seller had they not divested the property. This gain is included in “Gain on bargain purchases” in the consolidated statements of operations. Revenue included in operations from Bally’s Atlantic City from the date of their acquisition, November 18, 2020, through December 31, 2020 was $8.7 million. Eldorado Resort Casino Shreveport On December 23, 2020, the Company completed its acquisition of Eldorado Resort Casino Shreveport in Shreveport, Louisiana (“Shreveport”). The total purchase price was approximately $137.2 million. Cash paid by the Company at closing, net of $5.0 million cash acquired and offset by a receivable of $0.8 million resulting from a networking capital adjustment, was $133.1 million, excluding transaction costs. The Company recorded acquisition costs related to the acquisition of Shr eveport of $3.1 million during the year ended December 31, 2020. These costs are included in “Acquisition, integration and restructuring expense” in the consolidated statements of operations for the year ended December 31, 2020. The Company accounted for the acquisition of Shreveport as a business combination using the acquisition method with Bally’s as the accounting acquirer in accordance with ASC 805. Under this method of accounting, the purchase price has been allocated to Shreveport’s assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date. The identifiable intangible assets recorded in connection with the closing of the Shreveport acquisition based on preliminary valuations include gaming licenses of $57.7 million with an indefinite life and rated player relationships of $0.4 million, which is being amortized on a straight-line basis over estimated useful lives of approximately 8 years. The preliminary fair value of the identifiable intangible assets acquired was determined by using an income approach. Significant assumptions utilized in the income approach were based on company-specific information and projections, which are not observable in the market and are thus considered Level 3 measurements as defined by authoritative guidance. The following table summarizes the consideration paid and the preliminary fair values of the assets acquired and liabilities assumed in connection with the acquisition of Shreveport on December 23, 2020. Due to the fact that the transaction only recently closed, the purchase price allocation is preliminary and will be finalized when valuations are complete and final assessments of the fair value of other acquired assets and assumed liabilities are completed. There can be no assurance that such finalizations will not result in material changes from the preliminary purchase price allocations. The Company’s estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date), as the Company finalizes the valuations of certain tangible and intangible asset acquired and liabilities assumed.
| Preliminary as of December 23, 2020
Cash | $ | 4,980 |
Accounts receivable | 1,936 |
Inventory | 495 |
Prepaid expenses and other assets | 245 |
Property and equipment | 125,822 |
Right of use asset | 9,260 |
Intangible assets | 58,140 |
Other assets | 403 |
Accounts payable | (931) |
Accrued and other current liabilities | (5,207) |
Lease obligations | (14,540) |
Deferred income tax liabilities | (11,457) |
Other long-term liabilities | (680) |
Net assets acquired | 168,466 |
Bargain purchase gain | (31,276) |
Total purchase price | $ | 137,190 |
Based on the preliminary purchase price allocation, the fair value of the assets acquired and liabilities assumed exceed the purchase price consideration and therefore, a bargain purchase gain of $31.3 million was recorded during the three months ended December 31, 2020. The Company believes that it was able to acquire the net assets of Shreveport for less than fair value as a result of a distressed sale whereby Eldorado was required by the Federal Trade Commission to divest the Shreveport property prior to its merger with Caesars coupled with the timing of the agreement to purchase which was in the middle of industry wide COVID related shutdowns of all casinos in the United States. This gain is presented in “Gain on bargain purchases” in the consolidated statements of operations for the year ended December 31, 2020. Revenue and net income included in operations from Shreveport from the date of acquisition, December 23, 2020, through December 31, 2020 was $2.5 million and $1.9 million, respectively. Supplemental Proforma Consolidated Information The following table represents unaudited supplemental proforma consolidated revenue and net (loss) income based on Casino KC, Casino Vicksburg and Shreveport’s historical reporting periods as if the acquisitions had occurred as of January 1, 2019:
| Year Ended
(in thousands, except per share data) | December 31, 2020 |  | December 31, 2019
Revenue | $ | 465,685 |  |  | $ | 722,136 |
Net (loss) income | $ | (7,450) |  |  | $ | 92,713 |
Net (loss) income per share, basic | $ | (0.24) |  |  | $ | 2.46 |
Net (loss) income per share, diluted | $ | (0.24) |  |  | $ | 2.45 |
Pending Acquisitions MontBleu The Company entered into an agreement with Eldorado and certain of its affiliates to purchase MontBleu Resort Casino & Spa in Lake Tahoe, Nevada (“MontBleu”) for an aggregate purchase price of $15.0 million, payable one year form the closing date and subject to customary post-closing adjustments. The acquisition is subject to receipt of required state regulatory approvals and satisfaction of other customary closing conditions. The Company recorded acquisition costs related to the pending acquisition of MontBleu of $1.1 million during the year ended December 31, 2020. These costs are included in “Acquisition, integration and restructuring expense” in the consolidated statements of operations. Jumer’s Casino & Hotel On September 30, 2020, the Company entered into an agreement with Delaware North Companies Gaming & Entertainment, Inc. to acquire Jumer’s Casino & Hotel (“Jumer’s”) in Rock Island, Illinois for a purchase price of $120.0 million in cash, subject to customary post-closing adjustments. The transaction is subject to receipt of required state regulatory approvals and satisfaction of other customary closing conditions. The Company paid a deposit of $4.0 million related to this transaction during the third quarter of 2020, $2.0 million of which is nonrefundable. The Company recorded acquisition costs related to the pending acquisition of Jumer’s of $1.0 million during the year ended December 31, 2020. These costs are included in “Acquisition, integration and restructuring expense” in the consolidated statements of operations. Tropicana Evansville On October 27, 2020, the Company and certain affiliates entered into an agreement with Caesars and certain of its affiliates to acquire the operations of Tropicana Evansville casino for $140.0 million, subject to customary post-closing adjustments. The transaction is subject to receipt of required state regulatory approvals and satisfaction of other customary closing conditions. The Company recorded acquisition costs related to the pending acquisition of Tropicana Evansville of $0.7 million during the year ended December 31, 2020. These costs are included in “Acquisition, integration and restructuring expense” in the consolidated statements of operations. In connection with the acquisition of the Tropicana Evansville casino operations, an affiliate of Gaming & Leisure Properties, Inc. (“GLPI”) agreed to acquire the real estate associated with the Tropicana Evansville Casino for $340.0 million and lease it back to the Company for $28.0 million per year, subject to escalation. GLPI also agreed to acquire the real estate associated with the Company’s Dover Downs casino for $144.0 million and lease it back to the Company for $12.0 million per year, subject to escalation. Both leases are governed by a master lease agreement with GLPI which has an initial term of 15 years with four, five-year renewal options. Consummation of the Company’s proposed acquisition of the Tropicana Evansville is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals for the purchase of the casino by the Company. The Company’s obligation to sell the Dover Downs real estate to GLPI is conditioned on, among other things, satisfaction of the conditions to the Company’s obligation to close on its acquisition of the Tropicana Evansville. The Company’s obligation to consummate the acquisition of the Tropicana Evansville is not conditioned on the closing of the sale of the Dover Downs real estate to GLPI. Bet.Works On November 18, 2020, the Company and Bet.works Corp. (“Bet.Works”) entered into a definitive agreement pursuant to which the Company will acquire Bet.Works (the “Bet.Works Acquisition”) for $62.5 million in cash and 2,528,194 of the Company’s common shares, subject in each case to customary adjustments. The shareholders of Bet.Works will not transfer any shares of Company common stock received in the Bet.Works Acquisition prior to the one-year anniversary of the closing and, for the next year thereafter, may transfer only up to 1% of the Company’s common stock per quarter. Consummation of the Bet.Works Acquisition is subject to customary conditions, including receipt of required regulatory approvals. Subsequent Events Monkey Knife Fight On January 22, 2021, the Company entered into an agreement to acquire Monkey Knife Fight (“MKF”) for (1) immediately exercisable penny warrants to purchase up to 984,450 of the Company’s common shares (subject to adjustment) at closing and (2) contingent penny warrants to purchase up to 787,550 additional common shares half of which is issuable on each of the first and second anniversary of closing. The contingency relates to MKF’s continued operations in jurisdictions in which it operates at closing. SportCaller On February 5, 2021, the Company acquired Horses Mouth Limited (“SportCaller”) for $24.0 million in cash and 221,391 of the Company’s common shares at closing, pending adjustment, and up to $12.0 million in value of additional shares if SportCaller meets certain post-closing performance targets (calculated based on an exchange ratio of 0.8334). The Company will account for the this acquisition as a business combination under the acquisition method of accounting. As such, the purchase price will be allocated to the net assets acquired, inclusive of intangible assets, with any excess fair value recorded to goodwill. Since the closing date of the acquisition occurred subsequent to the end of the reporting period, the allocation of purchase price to the underlying net assets has not yet been completed. The Company will reflect the preliminary purchase price allocation in its consolidated financial statements for the year ending December 31, 2021.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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