Leases

12 Months Ended

Dec. 31, 2020

10. LEASES

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). The Company adopted ASU 2016-02 with a date of initial application of January 1, 2019. The Company used the alternative modified retrospective method, also known as the transition relief method, which did not require the restatement of prior periods and instead recognized a $0.3 million cumulative-effect adjustment to retained earnings upon transition.

When adopting the leasing standard, the Company made the following policy elections:

The Company elected the practical expedient to account for the lease and non-lease components as a single lease component for all asset classes;

The Company elected the short-term lease measurement and recognition exemption and did not establish right-of-use (“ROU”) assets or lease liabilities for operating leases with terms of 12 months or less;

The Company used its original assumptions for operating leases entered into prior to adoption, electing not to use the hindsight practical expedient;

The Company elected to use the package of practical expedients for transition and did not reassess (i) whether expired or existing contracts were leases or contained leases, (ii) the classification of its existing leases, or (iii) initial direct costs for existing leases; and

The Company elected not to evaluate existing or expired land easements under the leasing standard prior to the date of adoption.

The Company determines if an arrangement is a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate in each of the jurisdictions in which its subsidiaries operate to calculate the present value of lease payments. Lease terms may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that the Company will exercise those options. Operating lease expense is recorded on a straight-line basis over the lease term.

The Company accounts for lease agreements with lease and non-lease components as a single lease component for all asset classes. The Company does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.

The Company’s operating and finance leases include land, casino space, corporate offices, and gaming and other equipment. The leases have remaining lease terms of one month to 16 years.

The Company determined that the ROU asset at CCB was impaired based on the losses incurred by the casino since operations began and future forecasts of continued losses due to the current regulatory environment for casinos in England. As a result, the Company impaired $7.3 million related to the CCB ROU asset to impairment – intangible and tangible assets on its consolidated statement of (loss) earnings for the year ended December 31, 2019.

The components of lease expense were as follows:


	For the year ended
	December 31,
Amounts in thousands	2020		2019
Operating lease expense	$	5,250	$	6,443

Finance lease expense:
Amortization of right-of-use assets	$	165	$	303
Interest on lease liabilities		15		44
Total finance lease expense	$	180	$	347

Short-term lease expense	$	244	$	697

Variable lease expense	$	1,476	$	3,502

Variable lease expense relates primarily to rates based on a percentage of gaming revenue, changes in indexes that are excluded from the lease liability and fluctuations in foreign currency related to leases in Poland.

Supplemental cash flow information related to leases was as follows:


	For the year ended
	December 31,
Amounts in thousands	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	5	$	48
Operating cash flows from operating leases		6,355		7,062
Financing cash flows from finance leases		166		364

‎

Supplemental balance sheet information related to leases was as follows:


	As of		As of
Amounts in thousands	December 31, 2020		December 31, 2019
Operating leases
Leased right-of-use assets, net	$	34,074	$	37,040

Current portion of operating lease liabilities		4,327		4,235
Operating lease liabilities, net of current portion		32,277		42,942
Total operating lease liabilities		36,604		47,177

Finance leases
Finance lease right-of-use assets, gross		552		731
Accumulated depreciation		(338)		(338)
Property and equipment, net		214		393

Current portion of finance lease liabilities		131		161
Finance lease liabilities, net of current portion		83		217
Total finance lease liabilities		214		378

Weighted-average remaining lease term
Operating leases		11.3 years		14.4 years
Finance leases		2.1 years		2.7 years

Weighted-average discount rate
Operating leases		4.5%		4.8%
Finance leases		4.7%		5.1%

Maturities of lease liabilities as of December 31, 2020 were as follows:


Amounts in thousands		Operating Leases	Finance Leases
2021	$	5,679	$	137
2022		5,455		41
2023		4,777		26
2024		3,987		20
2025		2,829		—
Thereafter		26,370		—
Total lease payments		49,097		224
Less imputed interest		(12,493)		(10)
Total	$	36,604	$	214