GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

2019 Annual Impairment Assessments

As of October 1, 2019, the Company performed a qualitative analysis for the annual assessment of goodwill (commonly referred to as “Step Zero”) for all of its reporting units, which did not result in any impairment charges to goodwill or other intangible assets.

2020 Interim Impairment Assessments

Late in the first quarter of 2020, as a result of the economic and market conditions surrounding the COVID-19 pandemic and the decline in its stock price and market capitalization the Company experienced at the time, the Company determined that it was more likely than not that the carrying value of all of its reporting units exceeded these units’ fair value and performed an interim quantitative impairment test of goodwill.

The Company estimated the fair values of all reporting units using both the market approach, applying a multiple of earnings based on guidelines for publicly traded companies, and the income approach, discounting projected future cash flows based on management’s expectations of the current and future operating environment for each reporting unit. The calculation of the impairment charge includes substantial fact-based determinations and estimates including weighted average cost of capital, future revenue, profitability, cash flows and fair values of assets and liabilities. The rates used to discount projected future cash flows under the income approach reflect a weighted average cost of capital in the range of 10% to 15%, which considered guidelines for publicly traded companies, capital structure and risk premiums, including those reflected in the current market capitalization. The Company corroborated the reasonableness of the estimated reporting unit fair values by reconciling to its enterprise value and market capitalization. Based on this analysis, the Company determined that only the carrying value of its Black Hawk Casinos reporting unit exceeded its fair value by an amount that exceeded the assigned goodwill and indefinite lived intangibles as of the acquisition date. As a result, the Company recorded a total impairment charge of $8.7 million for the year ended December 31, 2020, which is included in the Company’s “West” reportable segment, and was allocated between goodwill and intangible assets with charges of $5.4 million and $3.3 million, respectively.

The goodwill impairment charge adjustment recorded in the second quarter of 2020 was attributable to changes in the preliminary fair value of net assets, which affected the initial goodwill resulting from the Black Hawk Casinos acquisition. The goodwill impairment charge is reflected in goodwill and asset impairment (adjustment) in the consolidated statements of operations and comprehensive income. The goodwill impairment charge reflects all of the Black Hawk Casinos reporting unit goodwill, based on the preliminary acquisition date assigned fair values.

2020 Annual Impairment Assessments

As of October 1, 2020, the Company performed a qualitative analysis for the annual assessment of goodwill (commonly referred to as “Step Zero”) for all reporting units with the exception of its Twin River Casino Hotel and Tiverton Casino Hotel reporting units which together comprise the “Rhode Island” reportable segment. From a qualitative perspective, in evaluating whether it is more likely than not that the fair value of a reporting unit exceeds its carrying amount, relevant events and circumstances are taken into account, with greater weight assigned to events and circumstances that most affect the fair value or the carrying amounts of its assets. Items that were considered included, but were not limited to, the following: macroeconomic conditions, industry and market conditions and overall financial performance. After assessing these and other factors, the Company determined that it was more likely than not that the fair value of each reporting unit exceed their carrying amounts as of October 1, 2020. If future results vary significantly from current estimates and related projections, the Company may be required to record impairment charges.

As of October 1, 2020, the Company bypassed its option to perform a qualitative analysis for the annual assessment of goodwill for its Rhode Island reportable segment, and instead performed a quantitative analysis. The Company estimated the fair values of each reporting unit using both the income approach, discounting projected future cash flows based on management’s expectations of the current and future operating environment for each reporting unit. The calculation of the impairment charge includes substantial fact-based determinations and estimates including weighted average cost of capital, future revenue, profitability, cash flows and fair values of assets and liabilities. The rates used to discount projected future cash flows under the income approach reflect a weighted average cost of capital of 10%, which considered guidelines for publicly traded companies, capital structure and risk premiums, including those reflected in the current market capitalization. Based on this analysis, the Company determined that the fair values of the Twin River Casino Hotel and Tiverton Casino Hotel exceeded their carrying values by significant margins and that impairment did not exist. If future results vary significantly from current estimates and related projections, the Company may be required to record impairment charges.

The change in carrying value of goodwill by reportable segment for the years ended December 31, 2020 and 2019 is as follows:


	Rhode Island		Mid-Atlantic		Southeast		West		Total
Goodwill as of December 31, 2018	$	83,101	$	—	$	48,934	$	—	$	132,035
Goodwill from current year business combinations	—		1,047		—		—		1,047
Goodwill as of December 31, 2019	$	83,101	$	1,047	$	48,934	$	—	$	133,082
Goodwill from current year business combinations	—		—		6,053		53,204		59,257
Impairment charges	—		—		—		(5,360)		(5,360)
Goodwill as of December 31, 2020	$	83,101	$	1,047	$	54,987	$	47,844	$	186,979

The change in intangible assets, net for the years ended December 31, 2020 and 2019 is as follows:


Intangible assets, net as of December 31, 2018	$	110,104
Intangible assets from current year business combinations	5,110
Other intangibles acquired	1,092
Less: Accumulated amortization	(5,933)
Intangible assets, net as of December 31, 2019	$	110,373
Intangible assets from current year business combinations	203,380
Other intangibles acquired(1)	357,793
Impairment charges	(3,299)
Less: Accumulated amortization	(4,852)
Intangible assets, net as of December 31, 2020	$	663,395

(1) Includes Naming rights and Bally’s trade name.

The Company’s identifiable intangible assets consist of the following:


	Weighted average remaining life (in years)	December 31, 2020
(in thousands, except years)		Gross Carrying Amount		Accumulated Amortization		Net
Amortizable intangible assets:
Naming rights - Sinclair(1)	10.0	$	338,241	$	—	$	338,241
Rhode Island contract for VLT’s	0.0	29,300		(29,300)		—
Trade names	8.6	21,600		(16,475)		5,125
Hard Rock license	26.5	8,000		(1,576)		6,424
Rated player relationships	5.8	10,515		(5,483)		5,032
Other	3.7	1,950		(750)		1,200
Total amortizable intangible assets		409,606		(53,584)		356,022

Intangible assets not subject to amortization:
Gaming licenses	Indefinite	287,108		—		287,108
Bally’s trade name	Indefinite	19,052		—		19,052
Novelty game licenses	Indefinite	1,213		—		1,213
Total unamortizable intangible assets		307,373		—		307,373
Total intangible assets, net		$	716,979	$	(53,584)	$	663,395

(1) Amortization will begin upon the commencement date of the re-branded Sinclair regional sports networks which had not occurred as of December 31, 2020. As such, there was no amortization expense for the year ended December 31, 2020.


	Weighted average remaining life (in years)	December 31, 2019
(in thousands, except years)		Gross amount		Accumulated amortization		Net Amount
Amortizable intangible assets:
Rhode Island contract for VLT’s	0.6	$	29,300	$	(27,629)	$	1,671
Trade names	7.0	19,500		(14,576)		4,924
Hard Rock license	27.5	8,000		(1,333)		6,667
Rated player relationships	5.1	7,765		(4,660)		3,105
Other	3.2	1,220		(534)		686
Total amortizable intangible assets		65,785		(48,732)		17,053

Intangible assets not subject to amortization:
Rhode Island VLT license	Indefinite	92,108		—		92,108
Novelty game licenses	Indefinite	1,212		—		1,212
Total unamortizable intangible assets		93,320		—		93,320
Total intangible assets, net		$	159,105	$	(48,732)	$	110,373

Amortization of intangible assets was approximately $4.9 million, $5.9 million and $5.5 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Refer to Note 5 “Acquisitions” for further information about the preliminary purchase price allocation and provisional goodwill and intangible balances added from current year business combinations. Refer to Note 9 “Sinclair Agreement” for intangible assets added through the Sinclair Agreement.

The following table shows the remaining amortization expense associated with finite lived intangible assets as of December 31, 2020:


(in thousands)
2021	$	27,610
2022	36,005
2023	35,924
2024	35,274
2025	35,274
Thereafter	185,935
	$	356,022