Nature of Business and Basis of Presentation

9 Months Ended

Sep. 30, 2023

Nature of Business and Basis of Presentation

Overview

Golden Entertainment, Inc. and its wholly-owned subsidiaries own and operate a diversified entertainment platform, consisting of a portfolio of gaming assets that focus on casino and distributed gaming operations (including gaming in the Company’s branded taverns). The Company’s portfolio includes eight casino properties located in Nevada. The Company’s Nevada Taverns segment is comprised of the operation of its branded taverns targeting local patrons located primarily in the greater Las Vegas, Nevada metropolitan area. The Company’s distributed gaming operations involve the installation, maintenance and operation of slot machines in third-party non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores and grocery stores in Nevada. Unless otherwise indicated, the terms “Golden” and the “Company” refer to Golden Entertainment, Inc. together with its subsidiaries.

As of September 30, 2023, the Company conducted its business through four reportable segments: Nevada Casino Resorts, Nevada Locals Casinos, Nevada Taverns, and Distributed Gaming. Each reportable segment is comprised of the following properties and operations:


Reportable Segment						Location
Nevada Casino Resorts
The STRAT Hotel, Casino & Tower (“The STRAT”)						Las Vegas, Nevada
Aquarius Casino Resort (“Aquarius”)						Laughlin, Nevada
Edgewater Casino Resort (“Edgewater”)						Laughlin, Nevada
Nevada Locals Casinos
Arizona Charlie’s Boulder						Las Vegas, Nevada
Arizona Charlie’s Decatur						Las Vegas, Nevada
Gold Town Casino						Pahrump, Nevada
Lakeside Casino & RV Park						Pahrump, Nevada
Pahrump Nugget Hotel Casino (“Pahrump Nugget”)						Pahrump, Nevada
Nevada Taverns
65 branded tavern locations						Nevada
Distributed Gaming
Nevada distributed gaming						Nevada

On July 25, 2023, the Company completed the sale of Rocky Gap Casino Resort (“Rocky Gap”) to Century Casinos, Inc. (“Century”) and VICI Properties, L.P. (“VICI”), an affiliate of VICI Properties Inc., for aggregate cash consideration of $260 million. Specifically, Century acquired the operations of Rocky Gap from Golden for $56.1 million in cash (subject to adjustment based on Rocky Gap’s working capital and cage cash at closing), and VICI acquired the real estate assets relating to Rocky Gap from Golden for $203.9 million in cash. Prior to its sale, the operations of Rocky Gap were presented in the Company’s Maryland Casino Resort reportable segment. Refer to discussion in “Note 2 — Divestitures and Assets Held for Sale” for further information.

On March 3, 2023, the Company entered into definitive agreements to sell its distributed gaming operations in Nevada and Montana to J&J Ventures Gaming, LLC (“J&J Gaming”), for aggregate consideration of $322.5 million. Specifically, J&J Gaming agreed to acquire the Company’s distributed gaming operations in Nevada for $213.5 million in cash plus purchased cash, comprised of cash and cash equivalents related to such operations at the time of closing (subject to adjustment based on working capital and purchased cash at closing), and the Company’s distributed gaming operations in Montana for $109 million in cash plus purchased cash, comprised of cash and cash equivalents related to such operations at the time of closing (subject to adjustment based on working capital and purchased cash at closing), subject in each case to the conditions and terms set forth therein. On September 13, 2023, the Company completed the sale of the distributed gaming operations in Montana for aggregate cash consideration of $109 million plus working capital adjustment and purchased cash at closing. Refer to discussion in “Note 2 — Divestitures and Assets Held for Sale” for further information. The Company’s proposed sale of its distributed gaming operations in Nevada to J&J Gaming remains pending and is expected to close during the fourth quarter of 2023, subject to satisfaction or waiver of customary closing conditions, including receipt of gaming regulatory approvals. Prior to the sale, the results of the distributed gaming operations in Montana were combined with the results of the distributed gaming operations in

Nevada and presented in the Company’s Distributed Gaming reportable segment. Refer to discussion in “Note 2 — Divestitures and Assets Held for Sale” for further information.

Basis of Presentation

The unaudited consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial information. Accordingly, certain information normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) has been condensed and/or omitted. For further information, refer to the audited consolidated financial statements of the Company for the year ended December 31, 2022 and the notes thereto included in the Company’s Annual Report on Form 10-K (the “Annual Report”) previously filed with the SEC. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, which included only normal recurring adjustments, necessary to present fairly the Company’s results for the periods presented. Results for interim periods should not be considered indicative of the results to be expected for the full year and should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report.

The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Reclassifications were made to the Company’s prior period consolidated financial statements to conform to the current period presentation, where applicable. These reclassifications had no effect on previously reported net income.

Significant Accounting Policies

There have been no changes to the significant accounting policies disclosed in the Company’s Annual Report.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and in banks and highly liquid investments with original maturities of three months or less. As of September 30, 2023, the Company had $295.9 million in cash and cash equivalents, which included $34.7 million of cash and cash equivalents related to assets held for sale. Although cash and cash equivalents balances may at times exceed the federal insured deposit limit, the Company believes such risk is mitigated by the quality of the institutions holding such deposits.

Net Income Per Share

Basic net income per share is calculated by dividing net income by the weighted-average common shares outstanding. Diluted net income per share in profitable periods reflects the effect of all potentially dilutive common shares outstanding by dividing net income by the weighted-average of all common and potentially dilutive shares outstanding. In the event of a net loss, diluted shares are not considered because of their anti-dilutive effect. For the three months ended September 30, 2023, diluted net income per share excluded the weighted average effect of 68,239 shares of common stock related to time-based and performance-based restricted stock units due to such shares being anti-dilutive. No shares of common stock related to time-based and performance-based restricted stock units were anti-dilutive for the nine months ended September 30, 2023. For the three and nine months ended September 30, 2022, diluted net income per share excluded the weighted average effect of 205,699 and 141,350 shares of common stock, respectively, related to time-based and performance-based restricted stock units due to such shares being anti-dilutive.

Recent Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs.

Accounting Standards Issued and Adopted

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU improves the accounting for revenue contracts with customers acquired in a business combination by addressing diversity in practice and inconsistency related to recognition of contract assets and liabilities acquired in a business combination. The provisions of this ASU require that an acquiring entity account for the related revenue contracts in accordance with ASC 606 as if it had originated the contracts. The Company adopted the standard effective January 1, 2023, and the adoption did not have a material impact on the Company’s financial statements or disclosures.

Management does not believe that any other recently issued accounting standards that are not yet effective are likely to have a material impact on the Company’s financial statements.