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Related Party Transactions
12 Months Ended
Dec. 31, 2017
Related Party Transactions [Abstract]  
Related Party Transactions

Note 15 – Related Party Transactions

 

As of December 31, 2017, the Company leased its office headquarters building and one tavern location from a company 33% beneficially owned by Blake L. Sartini, 5% owned by a trust for the benefit of Mr. Sartini’s immediate family members (including Blake L. Sartini, II) for which Mr. Sartini serves as trustee, and 3% beneficially owned by Stephen A. Arcana, and leased one tavern location from a company controlled by Mr. Sartini through a trust for the benefit of Mr. Sartini’s immediate family members (including Blake L. Sartini, II) for which Mr. Sartini serves as trustee. In addition, two tavern locations that the Company had previously leased from related parties were sold in 2017 to unrelated third parties. The lease for the Company’s office headquarters building expires on July 31, 2025. The rent expense for the office headquarters building during the years ended December 31, 2017, 2016 and 2015 was $1.2 million, $1.1 million, and $0.5 million respectively. Under the office headquarters lease, there was no amount and less than $0.1 million owed to the Company as of December 31, 2017 and 2016, respectively, and no amount was due and payable by the Company as of December 31, 2017 and 2016. The leases for the tavern locations have remaining terms of up to 10 years. The rent for the tavern locations (including sold tavern locations for the periods in which the leases were with related parties) was $0.9 million, $1.3 million, and $0.6 million during the years ended December 31 2017, 2016, and 2015, respectively. Under the tavern leases, there was no amount and less than $0.1 million owed to the Company as of December 31, 2017 and 2016, respectively, and no amount was due and payable by the Company as of December 31, 2017 and 2016. Additionally, a portion of the office headquarters building is sublet to a company owned or controlled by Mr. Sartini. Rental income during each of the years ended December 31, 2017, 2016, and 2015 for the sublet portion of the office headquarters building was less than $0.1 million. Under this sublease, there was no amount and less than $0.1 million owed to the Company as of December 31, 2017 and 2016, respectively. Mr. Sartini serves as the Chairman of the Board, President and Chief Executive Officer of the Company and is co-trustee of the Sartini Trust, which is a significant shareholder of the Company. Mr. Arcana serves as the Executive Vice President and Chief Operating Officer of the Company. All of these related party lease agreements were in place prior to the consummation of the Merger.

From time to time, the Company’s executive officers and employees use for Company business a private aircraft owned by Sartini Enterprises, Inc., a company controlled by Mr. Sartini. In April 2016, the Audit Committee of the Board of Directors approved the Company’s entering into an aircraft timesharing agreement between the Company and Sartini Enterprises, Inc. pursuant to which the Company will reimburse Sartini Enterprises, Inc. for direct costs and expenses incurred for travel on the private aircraft by Company employees while on Company business. Sartini Enterprises, Inc. sold the aircraft subject to this agreement in December 2017. In June 2017, the Audit Committee approved the Company’s entering into a second aircraft timesharing agreement between the Company and Sartini Enterprises, Inc. on similar terms for a private aircraft leased by Sartini Enterprises Inc. The aircraft timesharing agreements specify the maximum expense reimbursement that Sartini Enterprises, Inc. can charge the Company under the applicable regulations of the Federal Aviation Administration for the use of the aircraft and flight crew. Such costs include fuel, landing fees, hangar and tie-down costs away from the aircraft’s operating base, flight planning and weather contract services, crew costs and other related expenses. The Company’s compliance department regularly reviews these reimbursements. During the years ended December 31, 2017 and 2016, the Company paid approximately $0.2 million, and $0.1 million, respectively, and as of December 31, 2017 the Company owed less than $0.1 million, under the aircraft timesharing agreements.

Three of the distributed gaming locations at which the Company’s slots are located are owned in part by the spouse of Matthew W. Flandermeyer, the Company’s former Executive Vice President and Chief Financial Officer. On November 11, 2016, Matthew Flandermeyer resigned, effective as of November 28, 2016, from his position with the Company. Net revenues and gaming expenses recorded by the Company from the use of the Company’s slots at these three locations were $1.4 million and $1.2 million, respectively, during the year ended December 31, 2016, in each case excluding net revenues and gaming expenses incurred during the period after the termination of Mr. Flandermeyer’s employment with the Company (as during such period the agreement was not with a related party). The gaming expenses recorded by the Company represent amounts retained by the counterparty (with respect to the two locations that are subject to participation agreements) or paid to the counterparty (with respect to the location that is subject to a revenue share agreement) from the operation of the slots. All of the agreements were in place prior to the consummation of the Merger.

One of the distributed gaming locations at which the Company’s slots are located is owned in part by Sean T. Higgins, who serves as Executive Vice President and Chief Legal Officer of the Company. This agreement was in place prior to Mr. Higgins joining the Company on March 28, 2016. Net revenues and gaming expenses recorded by the Company from the use of the Company’s slots at this location were $1.1 million and $1.0 million, respectively, during the year ended December 31, 2017, and were $0.9 million and $0.8 million, respectively, during the year ended December 31, 2016, in each case excluding net revenues and gaming expenses incurred during the period prior to the commencement of Mr. Higgins employment with the Company (as during such period the agreement was not with a related party). No amounts were owed to or due and payable by the Company related to this agreement as of December 31, 2017.

Additionally, one distributed gaming location at which the Company’s slots are located was owned in part by Terrence L. Wright, who serves on the Board of Directors of the Company, who divested his interest in such distributed gaming location in March 2016. Net revenues and gaming expenses recorded by the Company from the use of the Company’s slots at this location during the period in which the agreement was with a related party were $0.1 million during the year ended December 31, 2016. This agreement was in place prior to the consummation of the Merger. 

 

In connection with the Merger, Lyle A. Berman, who serves on the Board of the Directors of the Company, entered into a three-year consulting agreement with the Company that pays his wholly-owned consulting firm $200,000 annually, plus reimbursements for certain health insurance, administrative assistant and office costs. Expenses recorded by the Company for the agreement with Mr. Berman were $0.2 million for each of the years ended December 31, 2017 and 2016. No amounts were due and payable by the Company related to this agreement at December 31, 2017.

 

Additionally, in connection with the Merger, Timothy J. Cope, who serves on the Board of Directors of the Company, entered into a short-term consulting agreement for the period from July 31, 2015 to April 1, 2016 under which Mr. Cope was paid a total of $140,000, plus reimbursement of certain health insurance costs. Expenses recorded by the Company for the agreement with Mr. Cope were $0.1 million for the year ended December 31, 2016.