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LEASES | 12 Months Ended
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Dec. 31, 2022
LEASES |
LEASES | 7. LEASES The Company has no material leases in which it is the lessor. As lessee, the Company has some finance leases and various operating leases for land, casino and office space, equipment, buildings, and signage. The Company’s remaining lease terms, including extensions, range from one month to approximately 35 years as of December 31, 2022. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants, but the land lease at Silver Slipper does include contingent rent as further discussed below. Subsequent to year-end, the Company executed a 99-year operating land lease in January 2023 with the City of Waukegan, on which site the Company built The Temporary and will build the permanent American Place facility (see Note 12). Operating Leases Silver Slipper Casino Land Lease through April 2058 and Options to Purchase. In 2004, the Company’s subsidiary, Silver Slipper Casino Venture, LLC, entered into a land lease with Cure Land Company, LLC for approximately 31 acres of marshlands and a seven-acre parcel on which the Silver Slipper Casino and Hotel is situated. The land lease includes fixed, base monthly payments of $77,500 plus contingent rents of 3% of monthly gross gaming revenue (as defined in the lease) in excess of $3.65 million, with no scheduled base rent increases through the remaining lease term ending in 2058. We recognized $1.8 million of rent expense, including $0.9 million of contingent rents, during 2022, and $2.1 million of rent expense, including $1.2 million of contingent rents, during 2021. Through October 1, 2027, the Company may buy out the lease for $15.5 million plus a seller-retained interest in Silver Slipper Casino and Hotel’s operations of 3% of net income (as defined) for 10 years following the purchase date. In the event that the Company sells or transfers either: (i) substantially all of the assets of Silver Slipper Casino Venture, LLC or (ii) its membership interests in Silver Slipper Casino Venture, LLC in its entirety, then the purchase price will increase to $17.1 million, plus the retained interest mentioned above. In either case, the Company also has an option to purchase a four-acre portion from the total 38 acres of leased land for $2.0 million in connection with the development of an owned hotel, which may be exercised at any time and would accordingly reduce the purchase price of the remaining land by $2.0 million. Bronco Billy’s / Chamonix Lease through January 2035 and Option to Purchase. Bronco Billy’s leases certain parking lots and buildings, including a portion of the hotel and casino, under a long-term lease. The lease term includes six renewal options in three-year increments to 2035. The Company exercised its third renewal option to extend the lease term through January 2026, with current annual lease payments of $0.4 million. Annual minimum rent will increase to $0.5 million starting in February 2026 with adjustments on each anniversary thereafter, based on the consumer price index. The lease also contains a $7.6 million purchase option exercisable at any time during the lease term, or as extended, and a right of first refusal on any sale of the property. In September 2022, the Company remeasured this lease’s related ROU asset and liability balances on its balance sheet, by factoring in all renewal terms through January 2035 to reflect the partial overlap of Chamonix’s construction on leased land. As a result of that overlap, the Company is deemed likely to exercise each renewal unless it exercises its purchase buyout right. Third Street Corner Building through August 2023 and Option to Purchase. The Company began leasing this building in August 2018, which is currently used as office space for Chamonix’s construction personnel, obviating the need for construction trailers. The lease had an initial three-year term with annual lease payments of $0.2 million. This was extended to August 13, 2023, with current annual lease payments of $0.3 million. The Company currently has the right to purchase the casino at any time during the extended lease term for $2.8 million. Grand Lodge Casino Lease through December 2024. The Company’s subsidiary, Gaming Entertainment (Nevada), LLC, has a lease with Incline Hotel, LLC, the owner of the Hyatt Regency Lake Tahoe Resort (“Hyatt Lake Tahoe”), to operate the Grand Lodge Casino. It is collateralized by the Company’s interests under the lease and property (as defined in the lease) and is subordinate to the liens of the Notes (see Note 6). The lessor has an option to purchase the Company’s leasehold interest and related operating assets of the Grand Lodge Casino, subject to assumption of applicable liabilities. The option price is an amount equal to the Grand Lodge Casino’s positive working capital, plus Grand Lodge Casino’s earnings before interest, income taxes, depreciation and amortization (“EBITDA”) for the twelve-month period preceding the acquisition (or pro-rated if less than twelve months remain on the lease), plus the fair market value of the Grand Lodge Casino’s personal property. The current monthly rent of $166,667 is applicable through the remaining lease term, which was subsequently extended through December 31, 2024 (see Note 12). We recognized $1.8 million of rent expense for each of 2022 and 2021. Corporate Office Lease through January 2025. The Company leases 4,479 square feet of office space in Las Vegas, Nevada. Annual rent is approximately $0.2 million and the term of the office lease expires in January 2025. Finance Lease Rising Star Casino Hotel Lease through October 2027 and Option to Purchase. The Company’s Indiana subsidiary, Gaming Entertainment (Indiana) LLC, leases a 104-room hotel at Rising Star Casino Resort. At any time during the lease term, the Company has the option to purchase the hotel, and approximately 3.01 acres of land on which it resides, at a price based upon the project’s original cost of $7.7 million (see Note 3), reduced by the cumulative principal finance lease payments made by the Company during the lease term. At December 31, 2022, such net amount was $2.8 million. Upon expiration of the lease term in October 2027, (i) the Landlord has the right to sell the hotel to the Company, and (ii) the Company has the option to purchase the hotel. In either case, the purchase price is $1 plus closing costs. Leases recorded on the balance sheet consist of the following:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(In thousands) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | December 31,
Leases |  | Balance Sheet Classification |  | 2022 | ​ | 2021
Assets |  |  |  | ​ | ​ | ​ | ​ |
Operating lease assets |  | Operating Lease Right-of-Use Assets, Net |  | $ | 15,771 | ​ | $ | 15,814
Finance lease assets |  | Property and Equipment, Net(1) | ​ |  | 4,566 | ​ |  | 4,722
Finance lease assets | ​ | Finance Lease Right-of-Use Assets, Net(2) | ​ | ​ | 3,808 | ​ | ​ | —
Total lease assets |  |  | ​ | $ | 24,145 | ​ | $ | 20,536
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Liabilities |  |  | ​ |  |  | ​ |  |
Current |  |  | ​ |  |  | ​ |  |
Operating |  | Current Portion of Operating Lease Obligations | ​ | $ | 2,485 | ​ | $ | 3,542
Finance |  | Current Portion of Finance Lease Obligation | ​ |  | 1,581 | ​ |  | 514
Noncurrent |  |  | ​ |  | ​ | ​ |  | ​
Operating |  | Operating Lease Obligations, Net of Current Portion | ​ |  | 13,418 | ​ |  | 12,903
Finance |  | Finance Lease Obligation, Net of Current Portion | ​ |  | 4,727 | ​ |  | 2,783
Total lease liabilities |  |  | ​ | $ | 22,211 | ​ | $ | 19,742
__________
(1) | Finance lease assets are recorded net of accumulated depreciation of $3.2 million and $3.0 million as of December 31, 2022 and 2021, respectively.
(2) | These finance lease assets are recorded separately from Property and Equipment due to meeting qualifying classification criteria under ASC 842, but ownership of such assets is not expected to transfer to the Company upon term expiration. Additionally, amortization of these assets are expensed over the duration of the lease term or the assets’ estimated useful lives, whichever is earlier.
​ The components of lease expense are as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(In thousands) |  | ​ |  | Year Ended
​ | ​ | Classification within | ​ | December 31,
Lease Costs | ​ | Statement of Operations | ​ | 2022 |  | 2021
Operating leases: |  |  |  | ​ |  | ​ | ​ |
Fixed/base rent |  | Selling, General and Administrative Expenses | ​ | $ | 4,833 | ​ | $ | 4,680
Short-term payments | ​ | Selling, General and Administrative Expenses | ​ | ​ | 136 | ​ | ​ | 72
Variable payments |  | Selling, General and Administrative Expenses | ​ |  | 1,366 | ​ |  | 1,739
Finance leases: |  | ​ | ​ |  |  | ​ |  |
Amortization of leased assets |  | Depreciation and Amortization | ​ |  | 266 | ​ |  | 157
Interest on lease liabilities |  | Interest Expense, Net | ​ |  | 138 | ​ |  | 160
Total lease costs | ​ | ​ | ​ | $ | 6,739 | ​ | $ | 6,808
​ Maturities of lease liabilities are summarized as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
(In thousands) | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Operating |  | Financing
Years Ending December 31, | ​ | Leases | ​ | Leases
2023 | ​ | $ | 3,887 | ​ | $ | 1,972
2024 | ​ |  | 2,014 | ​ |  | 1,972
2025 | ​ |  | 2,010 | ​ |  | 2,061
2026 | ​ |  | 1,405 | ​ |  | 652
2027 | ​ |  | 1,410 | ​ |  | 488
Thereafter | ​ |  | 31,611 | ​ |  | —
Total future minimum lease payments | ​ |  | 42,337 | ​ |  | 7,145
Less: Amount representing interest | ​ |  | (26,434) | ​ |  | (837)
Present value of lease liabilities | ​ |  | 15,903 | ​ |  | 6,308
Less: Current lease obligations | ​ |  | (2,485) | ​ |  | (1,581)
Long-term lease obligations | ​ | $ | 13,418 | ​ | $ | 4,727
​ ​ Other information related to lease term and discount rate is as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31,
Lease Term and Discount Rate | ​ | 2022 | ​ | 2021
Weighted-average remaining lease term |  |  | ​ | ​ |  | ​
Operating leases |  | 23.2 | years | ​ | 21.5 | years
Finance lease |  | 3.7 | years | ​ | 5.8 | years
Weighted-average discount rate |  |  | ​ | ​ |  | ​
Operating leases |  | 9.73 | % | ​ | 9.32 | %
Finance leases |  | 7.08 | % | ​ | 4.50 | %
​ ​ Supplemental cash flow information related to leases is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
(In thousands) |  | Year Ended
​ | ​ | December 31,
Supplemental Cash Flow Information: | ​ | 2022 | ​ | 2021
Cash paid for amounts included in the measurement of lease liabilities: | ​ | ​ | ​ | ​ | ​ | ​
Operating cash flows for operating leases | ​ | $ | 4,944 | ​ | $ | 4,886
Operating cash flows for finance lease | ​ | $ | 138 | ​ | $ | 160
Financing cash flows for finance lease | ​ | $ | 514 | ​ | $ | 492
​

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