Goodwill And Intangible Assets

12 Months Ended

Dec. 31, 2023

Goodwill And Intangible Assets [Abstract]

5. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill represents the future economic benefits of a business combination to the extent that the purchase price exceeds the fair value of the net identified tangible and intangible assets acquired and liabilities assumed. The Company determines the estimated fair value of the net identified tangible and intangible assets acquired and liabilities assumed after review and consideration of relevant information including discounted cash flows, quoted market prices, and estimates made by management.

The Company tests goodwill for impairment as of October 1 each year, or more frequently as circumstances indicate it is necessary. Testing compares the estimated fair values of the reporting units to the reporting units’ carrying values. The reportable segments with goodwill balances as of December 31, 2023 included the United States, Canada and Poland. For the quantitative goodwill impairment test, the current fair value of each reporting unit with goodwill balances is estimated using a combination of (i) the income approach using the discounted cash flow method for projected revenue, EBITDAR and working capital, (ii) the market approach observing the price at which comparable companies or shares of comparable companies are bought or sold, and (iii) fair value measurements using either quoted market price or an estimate of fair value using a present value technique. The cost approach, estimating the cost of reproduction or replacement of an asset, was considered but not used because it does not adequately capture an operating company’s intangible value. If the carrying value of a reporting unit exceeds its estimated fair value, the Company will recognize an impairment for the amount by which the carrying value exceeds the reporting unit’s fair value. The impairment analysis requires management to make estimates about future operating results, valuation multiples and discount rates and assumptions based on historical data and consideration of future market conditions. Changes in the assumptions can materially affect these estimates. Given the uncertainty inherent in any projection, actual results may differ from the estimates and assumptions used, or conditions may change, which could result in additional impairment charges in the future. Such impairments could be material.

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Changes in the carrying value of goodwill related to the United States, Canada and Poland segments are as follows:


Amounts in thousands	United States		Canada		Poland		Total
Gross carrying value January 1, 2022	$	19,786	$	7,402	$	6,320	$	33,508
Currency translation		—		(260)		(504)		(764)
Gross carrying value December 31, 2022		19,786		7,142		5,816		32,744
Acquisitions		70,189		—		—		70,189
Currency translation		—		91		720		811
Gross carrying value December 31, 2023		89,975		7,233		6,536		103,744

Accumulated impairment losses January 1, 2022		(19,786)		(3,375)		—		(23,161)
Accumulated impairment losses December 31, 2022		(19,786)		(3,375)		—		(23,161)
Accumulated impairment losses December 31, 2023		(19,786)		(3,375)		—		(23,161)

Net carrying value at December 31, 2022	$	—	$	3,767	$	5,816	$	9,583
Net carrying value at December 31, 2023	$	70,189	$	3,858	$	6,536	$	80,583

Intangible Assets

The Company tests its indefinite-lived intangible assets as of October 1 each year, or more frequently as circumstances indicate it is necessary. The fair value is determined primarily using the multi-period excess earnings methodology (“MPEEM”) and the relief from royalty method under the income approach.

Intangible assets at December 31, 2023 and 2022 consisted of the following:


		December 31,		December 31,
Amounts in thousands	2023		2022
Finite-lived
Casino licenses	$	2,499	$	2,672
Less: accumulated amortization		(1,417)		(1,763)
		1,082		909
Trademarks		16,718		2,368
Less: accumulated amortization		(1,843)		(730)
		14,875		1,638
Players club lists		59,253		20,373
Less: accumulated amortization		(14,272)		(8,974)
		44,981		11,399
Total finite-lived intangible assets, net		60,938		13,946
Indefinite-lived
Casino licenses		30,604		29,331
Trademarks		1,665		1,494
Total indefinite-lived intangible assets		32,269		30,825
Total intangible assets, net	$	93,207	$	44,771

Trademarks

The Company currently owns five trademarks: Century Casinos, Mountaineer, Nugget, Rocky Gap and Casinos Poland. The trademarks are reported as intangible assets on the Company’s consolidated balance sheets.

Trademarks: Finite-Lived

The Company has determined that the Mountaineer, Nugget and Rocky Gap trademarks, all reported in the United States segment, have a useful lives of ten years after considering, among other things, the expected use of the asset, the expected useful life of other related assets or asset groups, any legal, regulatory, or contractual provisions that may limit the useful life, the effects of obsolescence, demand and other economic factors, and the maintenance expenditures required to promote and support the trademark. As such, the trademarks will be amortized over its useful life. Costs incurred to renew trademarks that are finite-lived are expensed over the renewal period to general and administrative expenses on the Company’s consolidated statements of (loss) earnings.

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Changes in the carrying amount of the United States trademarks are as follows:


Amounts in thousands		Balance at ‎January 1, 2023		Acquisitions		Amortization		Balance at ‎December 31, 2023
United States	$	1,638	$	14,350	$	(1,113)	$	14,875

Amounts in thousands		Balance at January 1, 2022		Acquisitions		Amortization		Balance at December 31, 2022
United States	$	1,874	$	—	$	(236)	$	1,638

As of December 31, 2023, estimated amortization expense for the United States trademarks over the next five years was as follows:


Amounts in thousands
2024	$	1,665
2025		1,665
2026		1,665
2027		1,665
2028		1,487
Thereafter		6,728
	$	14,875

The weighted-average amortization period of the United States trademarks is 8.3 years.

Trademarks: Indefinite-Lived

The Company has determined the Casinos Poland trademark, reported in the Poland segment, and the Century Casinos trademark, reported in the Corporate and Other segment, have indefinite useful lives and therefore the Company does not amortize these trademarks. Costs incurred to renew trademarks that are indefinite-lived are expensed over the renewal period as general and administrative expenses on the Company’s consolidated statement of (loss) earnings.

Changes in the carrying amount of the indefinite-lived trademarks are as follows:


Amounts in thousands		Balance at January 1, 2023		Currency translation		Balance at December 31, 2023
Poland	$	1,386	$	171	$	1,557
Corporate and Other		108		—		108
	$	1,494	$	171	$	1,665

Amounts in thousands		Balance at January 1, 2022		Currency translation		Balance at December 31, 2022
Poland	$	1,507	$	(121)	$	1,386
Corporate and Other		108		—		108
	$	1,615	$	(121)	$	1,494

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Casino Licenses: Finite-Lived

As of December 31, 2023, Casinos Poland had six casino licenses, each with an original term of six years, which are reported as finite-lived intangible assets and are amortized over their respective useful lives.

Changes in the carrying amount of the Casinos Poland licenses are as follows:


Amounts in thousands		Balance at January 1, 2023		New Casino License		Amortization		Currency translation		Balance at December 31, 2023
Poland	$	909	$	537	$	(444)	$	80	$	1,082

Amounts in thousands		Balance at January 1, 2022		New Casino License		Amortization		Currency translation		Balance at December 31, 2022
Poland	$	1,019	$	390	$	(443)	$	(57)	$	909

As of December 31, 2023, estimated amortization expense for the CPL casino licenses over the next five years was as follows:


Amounts in thousands
2024	$	331
2025		196
2026		168
2027		168
2028		129
Thereafter		90
	$	1,082

These estimates do not reflect the impact of future foreign exchange rate changes or the continuation of the licenses following their expiration. The weighted average period before the next license expiration is 2.3 years. In Poland, casino gaming licenses are granted for a term of six years and are not renewable. Once a gaming license has expired, any gaming company can apply for the license.

The Company closed its casinos in Katowice and Bielsko-Biala in October 2023 and its casino in Wroclaw in November 2023 due to the expiration of the gaming licenses. The Wroclaw license was awarded to the Company in December 2023 and the Katowice and Bielsko-Biala licenses were awarded to the Company in February 2024. Through September 30, 2023, these casinos combined generated approximately 32% of CPL’s net operating revenue and approximately 6% of the Company’s consolidated net operating revenue. The Bielsko-Biala casino reopened in February 2024, the Katowice casino is expected to reopen in mid-March 2024 and the Wroclaw casino is expected to reopen in a new location in the third quarter of 2024.

Casino Licenses: Indefinite-Lived

The Company has determined that the casino licenses held in the United States segment from the Missouri Gaming Commission, the West Virginia Lottery Commission and the Nevada Gaming Commission (held by Smooth Bourbon) and those held in the Canada segment from the AGLC and the HRA are indefinite-lived. Costs incurred to renew licenses that are indefinite-lived are expensed over the renewal period to general and administrative expenses on the Company’s consolidated statements of (loss) earnings. Changes in the carrying amount of the licenses are as follows:


Amounts in thousands		Balance at ‎January 1, 2023		Consolidation of Smooth Bourbon		Currency translation		Balance at ‎December 31, 2023
United States	$	17,962	$	1,000	$	—	$	18,962
Canada		11,369		—		273		11,642
	$	29,331	$	1,000	$	273	$	30,604

Amounts in thousands		Balance at January 1, 2022		Consolidation of Smooth Bourbon		Currency translation		Balance at ‎December 31, 2022
United States	$	17,962	$	—	$	—	$	17,962
Canada		12,150		—		(781)		11,369
	$	30,112	$	—	$	(781)	$	29,331

Player’s Club Lists

The Company has determined that the player’s club lists, reported in the United States segment, have a useful life of seven to 10 years based on estimated revenue attrition among the player’s club members as estimated by management over each property’s historical operations as estimated by management. As such, the player’s club lists will be amortized over their useful lives. Changes in the carrying amount of the player’s club lists are as follows:


Amounts in thousands		Balance at ‎January 1, 2023		Acquisitions		Amortization		Balance at ‎December 31, 2023
United States	$	11,399	$	38,880	$	(5,298)	$	44,981

Amounts in thousands		Balance at January 1, 2022		Acquisitions		Amortization		Balance at December 31, 2022
United States	$	14,310	$	—	$	(2,911)	$	11,399

As of December 31, 2023, estimated amortization expense for the player’s club lists over the next five years was as follows:


Amounts in thousands
2024	$	6,774
2025		6,799
2026		6,556
2027		3,888
2028		3,888
Thereafter		17,076
	$	44,981

The weighted-average amortization period for the player’s club lists is 5.5 years.