9. REVENUE RECOGNITION

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The objective of ASU 2014-09 was to clarify the principles for recognizing revenue and to develop a common revenue standard under US GAAP and International Financial Reporting Standards. The Company adopted ASU 2014-09 in its consolidated financial statements for 2018 using the modified retrospective approach. The Company applied ASU 2014-09 to contracts that were not completed as of January 1, 2018. The Company determined that all contractual performance obligations were completed as of December 31, 2017 and that no adjustment to retained earnings was required. The Company determined there was no impact to its consolidated balance sheet, consolidated statement of comprehensive (loss) income or consolidated statement of cash flows. The standard impacted the presentation of the Company’s consolidated statement of (loss) earnings in its consolidated financial statements beginning with the year ended December 31, 2019. The changes related to the adoption of ASU 2014-09 are detailed below.

Changes Related to Adoption of ASU 2014-09

The most significant impacts on the Company of its adoption of ASU 2014-09 were as follows:

Promotional Allowances: The Company recognizes revenue for goods and services provided to customers for free as an inducement to gamble as gaming revenue with an offset to gaming revenue based on the stand-alone selling price rather than an offset to promotional allowances. This change primarily resulted in a reclassification between revenue line items.

Loyalty Accounting: Complimentary points earned through game play at the Company’s casinos are identified as separate performance obligations and recorded as a reduction in gaming revenue when earned at the retail value of the benefits owed to the customer (less estimated breakage) and an increase to the loyalty program liability representing outstanding performance obligations. Such amounts are recognized as revenue in the line item of the corresponding good or service provided when the performance obligation is fulfilled. This change primarily resulted in a reclassification between revenue line items.

Estimated Cost of Promotional Allowances: The Company no longer reclassifies the estimated direct cost of providing promotional allowances from other expense line items to the gaming expense line item.

Revenue

The Company derives revenue and other income from:

contracts with customers,

financial instruments,

cost recovery payments, and

dividends from its cost investment.

A breakout of the Company’s derived revenue and other income is presented in the table below.


	For the year
	ended December 31,
Amounts in thousands	2019		2018		2017
Revenue from contracts with customers	$	218,227	$	168,938	$	154,069
Interest income		21		103		92
Cost recovery income		417		—		604
Dividend income		18		—		43
Total revenue	$	218,683	$	169,041	$	154,808

The Company operates gaming establishments as well as related lodging, restaurant, horse racing (including off-track betting) and entertainment facilities around the world. The Company generates revenue at its properties by providing the following types of products and services: gaming, hotel, food and beverage, and pari-mutuel and other. Disaggregation of the Company’s revenue from contracts with customers by type of revenue and geographical location is presented in the tables below.


	For the year ended December 31, 2019
Amounts in thousands		United States		Canada		Poland		Corporate and Other		Total
Gaming	$	42,285	$	49,450	$	80,829	$	4,302	$	176,866
Hotel		2,030		491		—		—		2,521
Food and beverage		4,804		13,507		912		799		20,022
Pari-mutuel and other		879		17,202		153		584		18,818
Net operating revenue	$	49,998	$	80,650	$	81,894	$	5,685	$	218,227



	For the year ended December 31, 2018
Amounts in thousands		United States		Canada		Poland		Corporate and Other		Total
Gaming	$	27,736	$	40,470	$	67,289	$	4,806	$	140,301
Hotel		1,444		542		—		—		1,986
Food and beverage		3,931		10,528		782		501		15,742
Pari-mutuel and other		372		9,821		138		578		10,909
Net operating revenue	$	33,483	$	61,361	$	68,209	$	5,885	$	168,938



	For the year ended December 31, 2017
Amounts in thousands		United States		Canada		Poland		Corporate and Other		Total
Gaming	$	34,610	$	39,866	$	60,180	$	3,215	$	137,871
Hotel		1,389		554		—		—		1,943
Food and beverage		3,782		10,017		714		—		14,513
Pari-mutuel and other		334		8,427		158		1,209		10,128
Promotional allowances (1)		(7,961)		(1,132)		(1,256)		(37)		(10,386)
Net operating revenue	$	32,154	$	57,732	$	59,796	$	4,387	$	154,069

(1)

With the adoption of ASU 2014-09, promotional allowances are presented as a reduction in gaming revenue beginning with the year ended December 31, 2018.

For the majority of the Company’s contracts with customers, payment is made in advance of the services and contracts are settled on the same day the sale occurs with revenue recognized on the date of the sale. For contracts that are not settled, a contract liability is created. The expected duration of the performance obligation is less than one year.

The amount of revenue recognized that was included in the opening contract liability balance was $0.2 million for each of the years ended December 31, 2019 and 2018. This revenue consisted primarily of the Company’s deferred gaming revenue from player points earned through play at the Company’s casinos located in the United States. Activity in the Company’s receivables and contract liabilities is presented in the table below.


	For the year				For the year
	ended December 31, 2019				ended December 31, 2018
Amounts in thousands	Receivables		Contract Liabilities		Receivables		Contract Liabilities
Opening	$	305	$	219	$	266	$	235
Closing		326		663		305		219
Increase/(decrease)	$	21	$	444	$	39	$	(16)

The Company did not have any contract assets for the years ended December 31, 2019 and 2018. The increase in contract liabilities for the year ended December 31, 2019 is due to the Acquisition of the Acquired Casinos.

Receivables are included in accounts receivable and contract liabilities are included in accrued liabilities on the Company’s consolidated balance sheets. There were no impairment losses for the Company’s receivables or contract liabilities recognized for the years ended December 31, 2019 and 2018.

Substantially all of the Company’s contracts and contract liabilities have an original duration of one year or less. The Company applies the practical expedient for such contracts and does not consider the effects of the time value of money. Further, because of the short duration of these contracts, the Company has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue.