10-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the fiscal year ended December 31, 2016

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the transition period from                          to                          .

Commission file number 000-55119

PLAYAGS, INC.

(Exact name of registrant as specified in its charter)

Nevada	46-3698600
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

5475 S. Decatur Blvd., Ste #100

Las Vegas, NV 89118

(Address of principal executive offices) (Zip Code)

(702) 722-6700 

(Registrant’s telephone number, including area code)

AP GAMING HOLDCO, INC.

(Former name, former address and former fiscal year, if changed since last report)

Securities to be registered pursuant to Section 12(b) of the Act: None

Securities to be registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o  No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o  No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x  No  o (Note: The registrant is a voluntary filer of reports required to be filed under section 13 or 15(d) of the Securities Exchange Act of 1934).

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  o  No  x*

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o Accelerated filer o Non-accelerated filer  x (Do not check if a smaller reporting company) Smaller reporting company  o Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o  No  x

Neither the registrant’s voting common stock nor its non-voting common stock are publicly traded, and accordingly have no market value as of June 30, 2016, the last business day of the registrant’s most recently completed second fiscal quarter. As of March 7, 2017, there were 100 shares of the Registrant’s Class A common stock, $.01 par value per share, and 15,041,361 shares of the Registrant’s Class B common stock, $.01 par value per share, outstanding.

*The Company does not have any public stockholders. Accordingly, it does not maintain an investor relations website where Interactive Data Files would be posted.

EXPLANATORY NOTE

PlayAGS, Inc. (formerly, AP Gaming Holdco, Inc.) (the “Company”) is filing this Amendment No. 1 on Form 10-K/A (the “Amendment”) to its annual report on Form 10-K for the fiscal year ended December 31, 2016, which was originally filed with the Securities and Exchange Commission on March 10, 2017 (the “Original Filing”).

During the second and third quarters of 2017, the Company identified the Report of Independent Registered Public Accounting Firm, included in Item 8, “Financial Statements and Supplemental Data,” did not include reference to the financial statement schedules as being management’s responsibility. The exclusion of such reference from the Report of Independent Registered Public Accounting Firm was due to an administrative oversight. The Company concluded, based on its evaluation of both quantitative and qualitative factors, that this correction was not material to any of its previously issued consolidated financial statements. In addition, the Company elected to make certain minor edits to the notes to the financial statements.

This Amendment amends the Original Filing with respect to Item 8, “Financial Statements and Supplemental Data.”

As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), new certifications of our principal executive officer and principal financial officer are also being filed as exhibits 31.1, 31.2 and 32.1 to this Amendment. Similarly, revised XBRL exhibits are being filed as exhibits to this Amendment. As a result, Item 15, “Exhibits, Financial Statement Schedules”, has also been modified.

This Amendment should be read in conjunction with the Original Filing, which continues to speak as of the date of the Original Filing. Accordingly, this Amendment does not reflect events occurring after the filing of the Original Filing or modify or update any related or other disclosures. This Amendment should be read in conjunction with our other filings made with the Securities and Exchange Commission subsequent to March 10, 2017.

TABLE OF CONTENTS

ITEM 8	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	v
ITEM 15	EXHIBITS AND FINANCIAL STATEMENT SCHEDULE	v

iv

PART II

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required by this item is contained in the financial statements listed in Item 15. “Exhibits and Financial Statement Schedules” of this Amendment.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)(1). Financial Statements.

Included in Part II of this Amendment:

Report of Independent Registered Public Accounting Firms	F-1
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations and Comprehensive Loss	F-4
Consolidated Statements of Changes in Stockholders’ Equity/Member’s Deficit	F-5
Consolidated Statements of Cash Flows	F-6
Notes to Consolidated Financial Statements	F-7

(a)(2). Financial Statement Schedules.

We have omitted certain other financial statement schedules because they are not required or are not applicable, or the required information is shown in the financial statements or notes to the financial statements. We have included Schedule I - Condensed Financial Information of the Registrant and Schedule II - Valuation and Qualifying Accounts.

(a)(3). Exhibits.

			Incorporated by Reference
Exhibit Number	Exhibit Description	Filed Herewith	Form	Exhibit	Filing Date/Period End Date
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X	—	—	—
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X	—	—	—
32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	X	—	—	—
101.IN	XBRL Instance Document	X	—	—	—
101.SCH	XBRL Taxonomy Extension Schema Document	X	—	—	—
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	X	—	—	—
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	X	—	—	—
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	X	—	—	—
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	X	—	—	—

v

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		PLAYAGS, INC.
Date:	December 18, 2017	By:	/s/ KIMO AKIONA
		Name:	Kimo Akiona
		Title:	Treasurer (Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ DAVID LOPEZ	President and Chief Executive Officer (Principal Executive Officer)	December 18, 2017
David Lopez
/s/ KIMO AKIONA	Chief Financial Officer, Chief Accounting Officer and Treasurer (Principal Financial and Accounting Officer)	December 18, 2017
Kimo Akiona
/s/ DAVID SAMBUR	Director	December 18, 2017
David Sambur
/s/ DANIEL COHEN	Director	December 18, 2017
Daniel Cohen

vi

ITEM 1. FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of PlayAGS, Inc.

In our opinion, the accompanying consolidated balance sheet and the related consolidated statement of operations and comprehensive loss, of changes in stockholders’ equity, and of cash flows present fairly, in all material respects, the financial position of PlayAGS, Inc.(formerly, AP Gaming Holdco, Inc.) and its subsidiariesas of December 31, 2016, and the results of their operations andtheir cash flows for the year ended December 31, 2016 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the indexappearing under Item 15(a)(2)present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As discussed in Note 6 to the consolidated financial statements, the Company changed the manner in which it presents debt issuance costs in 2016.

/s/ PricewaterhouseCoopers LLP

Las Vegas, Nevada

March 10, 2017

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

PlayAGS, Inc.

We have audited the accompanying consolidated balance sheet of PlayAGS, Inc. (formerly, AP Gaming Holdco, Inc.) (the Company) as of December 31, 2015, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the years ended December 31, 2015 and 2014. Our audits also included the financial statement schedules listed in the Index at item 15(a)2. These financial statements and schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of PlayAGS, Inc. as of December 31, 2015, and the consolidated results of its operations and its cash flows for the years ended December 31, 2015 and 2014, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Las Vegas, Nevada

March 9, 2016

F-2

PLAYAGS, INC.

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and per share data)

	December 31,
	2016			2015
Assets
Current assets
Cash and cash equivalents	$	17,977		$	35,722
Restricted cash	100			100
Accounts receivable, net of allowance of $1,972 and $113, respectively	24,035			23,653
Inventories	10,729			7,087
Prepaid expenses	2,609			4,642
Deposits and other	3,052			2,440
Total current assets	58,502			73,644
Property and equipment, net	67,926			66,699
Goodwill	251,024			253,851
Deferred tax asset	9			37
Intangible assets	232,877			290,356
Other assets	23,754			26,560
Total assets	$	634,092		$	711,147
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	8,790		$	4,776
Accrued liabilities	17,702			18,254
Current maturities of long-term debt	6,537			6,919
Total current liabilities	33,029			29,949
Long-term debt	547,238			533,290
Deferred tax liability - noncurrent	6,957			15,347
Other long-term liabilities	30,440			32,024
Total liabilities	617,664			610,610
Commitments and contingencies (Note 14)
Stockholders' equity
Preferred stock at $0.01 par value; 100,000 shares authorized, no shares issued and outstanding	—			—
Common stock at $0.01 par value; 30,000,100 shares authorized; 100 Class A Shares issued and outstanding at December 31, 2016 and 2015, and 14,931,529 Class B Shares issued and outstanding at December 31, 2016 and 2015.	149			149
Additional paid-in capital	177,276			177,276
Accumulated deficit	(156,451		)	(75,077		)
Accumulated other comprehensive (loss) income	(4,546		)	(1,811		)
Total stockholders’ equity	16,428			100,537
Total liabilities and stockholders’ equity	$	634,092		$	711,147

The accompanying notes are an integral part of these consolidated financial statements.

F-3

PLAYAGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(amounts in thousands, except per share data)

	Year ended December 31,
	2016			2015			2014
Revenues
Gaming operations	$	154,857		$	117,013		$	68,981
Equipment sales	11,949			6,279			3,159
Total revenues	166,806			123,292			72,140
Operating expenses
Cost of gaming operations(1)	26,736			23,291			14,169
Cost of equipment sales(1)	6,237			1,548			1,607
Selling, general and administrative	46,108			40,088			19,456
Research and development	21,346			14,376			4,856
Write downs and other charges	3,262			11,766			7,068
Depreciation and amortization	80,181			61,662			33,405
Total operating expenses	183,870			152,731			80,561
Loss from operations	(17,064		)	(29,439		)	(8,421		)
Other expense (income)
Interest expense	59,963			41,642			17,235
Interest income	(57		)	(82		)	(42		)
Other expense (income)	7,404			3,635			573
Loss before income taxes	(84,374		)	(74,634		)	(26,187		)
Income tax benefit (expense)	3,000			36,089			(2,189		)
Net loss	(81,374		)	(38,545		)	(28,376		)
Foreign currency translation adjustment	(2,735		)	(2,099		)	289
Total comprehensive loss	$	(84,109	)	$	(40,644	)	$	(28,087	)
Basic and diluted loss per common share:
Basic	$	(5.45	)	$	(2.98	)	$	(2.84	)
Diluted	$	(5.45	)	$	(2.98	)	$	(2.84	)
Weighted average common shares outstanding:
Basic	14,932			12,918			10,000
Diluted	14,932			12,918			10,000

(1) exclusive of depreciation and amortization

The accompanying notes are an integral part of these consolidated financial statements.

F-4

PLAYAGS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY

(in thousands)

	PlayAGS, Inc.
	Common Stock	Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income (loss)			Total Stockholders’ Equity
Balance at January 1, 2014	100	$	99,900	$	(8,156	)	$	(1	)	$	91,843
Net loss	—	—		(28,376		)	—			(28,376		)
Foreign currency translation adjustment	—	—		—			289			289
Balance at December 31, 2014	100	99,900		(36,532		)	288			63,756
Net loss	—	—		(38,545		)	—			(38,545		)
Foreign currency translation adjustment	—	—		—			(2,099		)	(2,099		)
Issuance of common stock	49	77,376		—			—			77,425
Balance at December 31, 2015	149	177,276		(75,077		)	(1,811		)	100,537
Net loss	—	—		(81,374		)	—			(81,374		)
Foreign currency translation adjustment	—	—		—			(2,735		)	(2,735		)
Balance at December 31, 2016	149	$	177,276	$	(156,451	)	$	(4,546	)	$	16,428

The accompanying notes are an integral part of these consolidated financial statements.

F-5

PLAYAGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

	Year ended December 31,
	2016			2015			2014
Cash flows from operating activities
Net loss	$	(81,374	)	$	(38,545	)	$	(28,376	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	80,181			61,662			33,405
Accretion of contract rights under development agreements and placement fees	4,702			496			58
Amortization of deferred loan costs and discount	3,542			2,446			1,242
Payment-in-kind interest capitalized	15,396			8,507			481
Provision (benefit) for bad debts	2,290			106			(450		)
Imputed interest income	—			(18		)	(36		)
Loss on disposition of assets	1,149			1,439			1,936
Impairment of assets	4,749			4,989			2,475
(Benefit) provision of deferred income tax	(7,998		)	(38,645		)	2,189
Changes in assets and liabilities that relate to operations:
Accounts receivable	(3,191		)	(342		)	(973		)
Inventories	307			1,144			806
Prepaid expenses	2,021			(1,466		)	(1,349		)
Deposits and other	(315		)	11,531			(241		)
Other assets, non-current	467			869			(1,476		)
Accounts payable and accrued liabilities	12,567			(4,770		)	2,791
Net cash provided by (used in) operating activities	34,493			9,403			12,482
Cash flows from investing activities
Business acquisitions, net of cash acquired	—			(374,347		)	(10,345		)
Collection of notes receivable	—			323			205
Change in Canadian tax receivable	—			—			(154		)
Purchase of intangible assets	(1,311		)	(6,102		)	(9,259		)
Software development and other expenditures	(6,526		)	(6,476		)	(5,127		)
Proceeds from disposition of assets	87			29			569
Purchases of property and equipment	(32,879		)	(15,277		)	(9,811		)
Net cash used in investing activities	(40,629		)	(401,850		)	(33,922		)
Cash flows from financing activities
Borrowings under the revolving facility	—			11,500			10,000
Repayments under the revolving facility	—			(21,500		)	—
Proceeds from issuance of debt	—			369,400			—
Payments on debt	(6,987		)	(4,743		)	(2,036		)
Payment of previous acquisition obligation	(1,125		)	(10,000		)	—
Payment of financed placement fee obligations	(3,516		)	—			—
Repurchase of shares issued to management	(50		)	(1,277		)	—
Proceeds from issuance of common stock	—			77,425			—
Proceeds from employees in advance of common stock issuance	75			579			1,969
Payment of deferred loan costs	—			(3,837		)	(73		)
Net cash provided by financing activities	(11,603		)	417,547			9,860
Effect of exchange rates on cash and cash equivalents	(6		)	(58		)	518
Increase (decrease) in cash and cash equivalents	(17,745		)	25,042			(11,062		)
Cash and cash equivalents, beginning of period	35,722			10,680			21,742
Cash and cash equivalents, end of period	$	17,977		$	35,722		$	10,680
Supplemental cash flow information:
Cash paid during the period for interest	$	40,060		$	30,203		$	15,315
Cash paid during the period for taxes	$	1,247		$	840		$	—
Non-cash investing and financing activities:
Non-cash consideration given in business acquisitions	$	—		$	17,233		$	11,500
Financed placement fees	$	—		$	12,391		$	—
Financed purchase property and equipment	$	2,662		$	5,800		$	2,717

The accompanying notes are an integral part of these consolidated financial statements.

F-6

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

PlayAGS, Inc. (formerly, AP Gaming Holdco, Inc.) (the “Company,” “AP Gaming,” “we,” “us,” or “our”) is a leading designer and supplier of gaming products and services for the gaming industry. We operate in legalized gaming markets across the globe and provide state-of-the-art, value-add products in three distinct segments: Electronic Gaming Machines (“EGM”), which includes server-based systems and back-office systems that are used by Class II Native American and Mexican gaming jurisdictions and Class III Native American, commercial and charity jurisdictions; Table Products (“Table Products”), which includes live felt table games, side-bets and progressives as well as our newly introduced card shuffler, “DEX”; and Interactive Social Casino Games(“Interactive”), which provides social casino games on desktop and mobile devices. Each segment's activities include the design, development, acquisition, manufacturing, marketing, distribution, installation and servicing of a distinct product line.

The Company filed a Registration Statement on Form 10 on December 12/19/2013, which went effective under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on December 19, 2013.

Electronic Gaming Machines

Our EGM segment offers a selection of video slot titles developed for the global marketplace, which currently includes ICON, Halo, Colossal Diamonds cabinet (“Big Red”), and Orion. In addition to providing complete EGM units, we offer conversion kits that allow existing game titles to be converted to other game titles offered within that operating platform.

Table Products

Our table products include live proprietary table products and side-bets, as well as ancillary table products. Products include both internally developed and acquired proprietary table products, side-bets, and table technology related to blackjack, poker, baccarat, craps and roulette. We have acquired a number of popular brands, including In-Bet, Buster Blackjack, Double Draw Poker and Criss Cross Poker that are based on traditional well-known public domain games such as blackjack and poker; however, these proprietary games provide intriguing betting options that offer more excitement and greater volatility to the player, ultimately enhancing our casino customers’ profitability. Our Tornado product is unique in that it allows players to control the spin of the roulette ball by pressing a remote ball activation device. We believe this mechanism enhances player interaction without altering traditional roulette rules and procedures; similarly, our Double Ball Roulette game creates a unique game experience by allowing players to use two balls instead of one.

Interactive

Our social gaming products are primarily delivered through our mobile apps, Lucky Play Casino and Vegas Fever. The apps contain several game titles available for consumers to play for fun and with coins that they purchase through the app. Some of our most popular social games include content that is also popular in land-based settings such as Colossal Diamonds, So Hot, and Monkey in the Bank.

Principles of Consolidation

The accompanying consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain amounts in the consolidated financial statements for the previous years have been reclassified to be consistent with the current year presentation. These reclassifications had no effect on the previously reported net loss.

F-7

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make decisions based upon estimates, assumptions, and factors considered relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of the estimates and assumptions. Accordingly, actual results could differ materially from those anticipated.

Revenue Recognition

Gaming Operations

Gaming operations revenue is earned by providing customers with gaming machines, gaming machine content licenses, back-office equipment and linked progressive systems, which are collectively referred to as gaming equipment, under participation arrangements. The participation arrangements convey the right to use the equipment (i.e. gaming machines and related integral software) for a stated period of time, which typically ranges from one to three years and then the contract continues on a month-to-month basis thereafter. In some instances, the Company will enter arrangements for longer periods of time; however, many of these arrangements include the ability of the customer to cancel the contract and return the games to the Company, a provision which renders their contracts effectively month-to-month contracts. Primarily due to these factors, our participation arrangements are accounted for as operating leases. In some instances, we will offer a free trial period during which no revenue is recognized. If during or at the conclusion of the trial period the customer chooses to enter into a lease for the gaming equipment, we commence revenue recognition according to the terms of the agreement.

Under participation arrangements, the Company retains ownership of the gaming equipment installed at the customer facilities and receives either revenue based on a percentage of the win per day generated by the gaming equipment or a daily fee. Thus, in our consolidated financial statements the Company records revenue monthly related to these arrangements and the gaming equipment is recorded in property and equipment, net on our balance sheet and depreciated over the expected life of the gaming equipment.

The majority of the Company’s leases require the Company to provide maintenance throughout the entire term of the lease. In some cases, a performance guarantee exists that, if not met, provides the customer with the right to return the gaming machines to the Company. This performance guarantee is considered a cancellation clause, a provision which renders their contracts effectively month-to-month contracts. Accordingly, the Company accounts for these contract in a similar manner with its other operating leases as described above. Whether contractually required or not, the Company develops and provides new gaming titles throughout the life of the lease. Certain arrangements require a portion of the win per day to be retained by the customer to fund facility-specific marketing, advertising and promotions. These amounts retained by the customer reduce the monthly revenue recognized on each arrangement.

Gaming operations revenue is also earned from the licensing of table product content and is earned and recognized on a fixed monthly rate. Our social gaming products earn revenue from the sale of virtual coins or chips, which is recorded when the purchased coins or chips are used by the customer.

Equipment Sales

Revenues from the stand-alone product sales or separate accounting units are recorded when:

• Pervasive evidence of an arrangement exists;

• The sales price is fixed and determinable;

• Delivery has occurred and services have been rendered; and

• Collectability is reasonably assured.

Equipment sales are generated from the sale of gaming machines and licensing rights to game content software that is installed in the gaming machine, parts, and other ancillary equipment. Also included within the deliverables are delivery, installation and training, all of which occur within a few days of arriving at the customer location. Gaming equipment sales do not include maintenance beyond a standard warranty period. The recognition of revenue from the sale of gaming devices occurs as title and risk of loss have passed to the customer and all other revenue recognition criteria have been satisfied. As the

F-8

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

combination of game content software and the tangible gaming device function together to deliver the product’s essential functionality, revenue from the sale of gaming devices is recognized under U.S. GAAP revenue recognition guidance.

The Company enters into revenue arrangements that may consist of multiple deliverables of its products.

For example, gaming equipment arrangements may include the sale of gaming machines and game content conversion kits.

Revenue associated with arrangements with multiple deliverables is allocated to separate units of accounting if (1) the deliverables have value to the customer on a stand-alone basis or (2) the arrangement includes a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and substantially in the control of the Company.

At the inception of a multiple element arrangement, fees under the arrangement are allocated to deliverables based on their relative selling price. When applying the relative selling price method, a hierarchy is used for estimating the selling price based first on vendor-specific objective evidence (“VSOE”), then third-party evidence (“TPE”) and finally management’s estimate of the selling price (“ESP”). Revenue for each unit of accounting is recognized when the relevant recognition criteria for each respective element has been met.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of deposits held at major banks and other marketable securities with original maturities of 90 days or less.

Restricted Cash

Restricted cash amounts represent funds held in escrow as collateral for the Company’s surety bonds for various gaming authorities and funds held to ensure the availability of funds to pay wide-area progressive jackpot awards.

Receivables, Allowance for Doubtful Accounts

Accounts receivable are stated at face value less an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts related to accounts receivable and notes receivable, which are non-interest bearing, deemed to have a high risk of collectability. The Company reviews the accounts receivable and notes receivable on a monthly basis to determine if any receivables will potentially be uncollectible. The Company analyzes historical collection trends and changes in the customers’ payment patterns, customer concentration, and credit worthiness when evaluating the adequacy of the allowance for doubtful accounts. A large percentage of receivables are with Native American tribes and the Company has concentrations of credit risk with several tribes. The Company includes any receivable balances that are determined to be uncollectible in the overall allowance for doubtful accounts. Changes in the assumptions or estimates reflecting the collectability of certain accounts could materially affect the allowance for both accounts and notes receivable.

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PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following provides financial information concerning the change in our allowance for doubtful accounts (in thousands):

	Allowance for Accounts Receivables Year ended December 31, 2016
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	113	$	(431	)	$	—	$	2,290	$	1,972

	Allowance for Accounts Receivables Year ended December 31, 2015
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	29	$	(22	)	$	—	$	106	$	113

	Allowance for Accounts Receivables Year ended December 31, 2014
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	9	$	(36	)	$	—	$	56	$	29

Inventories

Inventories consist primarily of parts and supplies that are used to repair and maintain machinery and equipment as well as EGMs in production and finished goods held for sale. Inventories are stated at net realizable value. Cost of inventories is determined using the first-in, first-out (“FIFO”) method for all components of inventory. The Company regularly reviews inventory quantities and updates estimates for the net realizable value of inventories. This process includes examining the carrying values of parts and ancillary equipment in comparison to the current fair market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of the inventories, the current and projected sales levels for such products, the projected markets for such products and the costs required to sell the products, including refurbishment costs. Changes in the assumptions or estimates could materially affect the inventory carrying value.

Property and Equipment

The cost of gaming equipment, consisting of gaming equipment as well as other property and equipment, is depreciated over their estimated useful lives, using the straight-line method for financial reporting. The Company capitalizes costs incurred for the refurbishment of used gaming equipment that is typically incurred to refurbish a machine in order to return it to its customer location. The refurbishments extend the life of the gaming equipment beyond the original useful life. Repairs and maintenance costs are expensed as incurred. The Company routinely evaluates the estimated lives used to depreciate assets. The estimated useful lives are as follows:

Gaming equipment	3 to 6 years
Other property and equipment	3 to 6 years

The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. The Company groups long-lived assets for impairment analysis at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, which is typically at the individual gaming machine level or at the cabinet product line level. Impairment testing is performed and losses are estimated when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount.

When the estimated undiscounted cash flows are not sufficient to recover the asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future cash flows expected to be generated by the asset. The Company’s policy is to impair, when necessary, excess or obsolete gaming machines on hand that it does not expect to be used. Impairment is based upon several factors, including estimated

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PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

forecast of gaming machine demand for placement into casinos. While the Company believes that the estimates and assumptions used in evaluating the carrying amount of these assets are reasonable, different assumptions could affect either the carrying amount or the estimated useful lives of the assets, which could have a significant impact on the results of operations and financial condition.

Intangible Assets

The Company reviews its identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment losses are recognized for identifiable intangibles, other than goodwill, when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount.

When the estimated undiscounted cash flows are not sufficient to recover the intangible asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

Certain trade names have an indefinite useful life and the Company tests these trade names for possible impairment at least annually, on October 1, or whenever events or changes in circumstances indicate that the carrying value may be impaired. We perform a qualitative assessment to determine if it is more likely than not that the fair value of the asset is less than its carrying amount. If we believe, as a result of our qualitative assessment, that it is more likely than not that the fair value of the asset is less than its carrying amount, the quantitative impairment test is required.

Costs of Computer Software

Internally developed gaming software represents the Company’s internal costs to develop gaming titles to utilize on the Company’s gaming machines. Internally developed gaming software is stated at cost and amortized over the estimated useful lives of the software, using the straight-line method. Software development costs are capitalized once technological feasibility has been established and are amortized when the software is placed into service. The computer software we develop reaches technological feasibility when a working model of the computer software is available. Any subsequent software maintenance costs, such as bug fixes and subsequent testing, are expensed as incurred. Discontinued software development costs are expensed when the determination to discontinue is made. Software development costs are amortized over the expected life of the title or group of titles, if applicable, to amortization expense.

On a quarterly basis, or more frequently if circumstances warrant, the Company compares the net book value of its internally developed computer software to the net realizable value on a title or group of title basis. The net realizable value is determined based upon certain assumptions, including the expected future revenues and net cash flows of the gaming titles or group of gaming titles utilizing that software, if applicable.

Goodwill

The excess of the purchase price of an acquired business over the estimated fair value of the assets acquired and the liabilities assumed is recorded as goodwill. The Company tests for possible impairment of goodwill at least annually, on October 1, or when circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company has the option to begin with a qualitative assessment, commonly referred to as “Step 0”, to determine whether it is more likely than not that the reporting unit’s fair value of goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as the general economic environment, industry and market conditions, changes in key assumptions used since the most recently performed valuation and overall financial performance of the reporting units. If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company performs a quantitative goodwill impairment analysis, and depending upon the results of that measurement, the recorded goodwill may be written down and charged to income from operations when its carrying amount exceeds its estimated fair value.

Acquisition Accounting

The Company applies the provisions of ASC 805, “Business Combinations” (ASC 805), in accounting for business acquisitions. It requires us to recognize separately from goodwill the fair value of assets acquired and liabilities assumed on the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required

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PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are inherently uncertain and subject to refinement and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

Fair Value of Financial Instruments

The Company applies the provisions of ASC 820, “Fair Value Measurements” (ASC 820) to its financial assets and liabilities. Fair value is defined as a market-based measurement intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. ASC 820 also established a fair value hierarchy, which requires an entity to maximize the use of observable inputs when measuring fair value. These inputs are categorized as follows:

• Level 1 - quoted prices in an active market for identical assets or liabilities;

• Level 2 - quoted prices in an active market for similar assets or liabilities, inputs other than quoted prices that are observable for similar assets or liabilities, inputs derived principally from or corroborated by observable market data by correlation or other means; and

• Level 3 - valuation methodology with unobservable inputs that are significant to the fair value measurement.

The carrying values of the Company’s cash and cash equivalents, restricted cash, receivables and accounts payable approximate fair value because of the short term maturities of these instruments. The fair value of our long-term debt is based on the quoted market prices for similar issues (Level 2 inputs). The estimated fair value of our long-term debt was $557.8 million and $529.2 million as of December 31, 2016 and 2015, respectively.

Accounting for Income Taxes

We conduct business globally and are subject to income taxes in U.S. federal, state, local, and foreign jurisdictions. Determination of the appropriate amount and classification of income taxes depends on several factors, including estimates of the timing and probability of realization of deferred income taxes, reserves for uncertain income tax positions and income tax payment timing.

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Taxes on income of our foreign subsidiaries are provided at the tax rates applicable to the tax jurisdictions in which they are located. Future tax benefits are recognized to the extent that realization of those benefits is considered more likely than not and a valuation allowance is established for deferred tax assets which do not meet this threshold.

The recoverability of certain deferred tax assets is based in part on estimates of future income and the timing of temporary differences, and the failure to fully realize such deferred tax assets could result in a higher tax provision in future periods.

We apply the accounting guidance to our uncertain tax positions and under the guidance, we may recognize a tax benefit from an uncertain position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the issue. The amount recognized in the financial statements is the largest benefit that we believe has greater than a 50% likelihood of being realized upon settlement.

We are required to make significant judgments when evaluating our uncertain tax positions and the related tax benefits. We believe our assumptions are reasonable; however, there is no guarantee that the final outcome of the related matters will not differ from the amounts reflected in our income tax provisions and accruals. We adjust our liability for uncertain tax positions based on changes in facts and circumstances such as the closing of a tax audit or changes in estimates. Our income tax provision may be impacted to the extent that the final outcome of these tax positions is different than the amounts recorded.

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PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Contingencies

The Company assesses its exposures to loss contingencies including claims and legal proceedings and accrues a liability if a potential loss is considered probable and the amount can be estimated. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, if the actual loss from a contingency differs from management’s estimate, there could be a material impact on the results of operations or financial position. Operating expenses, including legal fees, associated with contingencies are expensed when incurred.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable, net. Cash equivalents are investment-grade, short-term debt instruments consisting of treasury bills which are maintained with high credit quality financial institutions under repurchase agreements. Cash and cash equivalents are in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of December 31, 2016 and 2015, the Company did not have cash equivalents.

Revenue from gaming operations is concentrated in the Class II gaming and casino industry, primarily located in Oklahoma. For the years ended December 31, 2016, 2015 and 2014, approximately 15%, 20% and 30% of our gaming revenue was derived from one customer, respectively. Another customer accounted for approximately 10% of our gaming operations revenue for the year ended December 31, 2016, with no concentrations noted for the years ended December 31, 2015 and 2014.

For the year ended December 31, 2016, approximately 10% of our gaming revenue was derived in Mexico. For the years ended December 31, 2015 and 2014, the company did not have a concentration of revenue from Mexico exceeding 10%. The Company had one customer with accounts receivable, net equaling approximately 10% of total outstanding accounts receivable, net at December 31, 2016 and none at December 31, 2015 and 2014.

Foreign Currency Translation

The financial statements of the Company’s foreign subsidiaries are translated into U.S. dollars at the period end rate of exchange for asset and liability accounts and the weighted average rate of exchange for income statement accounts. The effects of these translations are recorded as a component of accumulated other comprehensive (loss) income in stockholders’ equity.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs for the year ended December 31, 2016, 2015 and 2014 were $0.7 million, $0.2 million and $0.3 million, respectively.

Research and Development

Research and development costs related primarily to software product development costs and is expensed as incurred until technological feasibility has been established. Employee related costs associated with product development are included in research and development.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued an accounting standards update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies the principles for recognizing revenue from contracts with customers. The amendment outlines a single comprehensive model for entities to depict the transfer of goods or services to customers in amounts that reflect the payment to which a company expects to be entitled in exchange for those goods or services. The amendment also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. The ASU may be adopted using either a full retrospective transition method or a modified retrospective transition method and will be adopted by the Company on January

F-13

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

1, 2018. The Company does not expect adoption of the new revenue standards to have a material impact on its consolidated financial statements as the majority of our revenue is recognized under lease accounting guidance.

In June 2014, the FASB issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period. The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The Company adopted the guidance in the current year and it did not have a material effect on our financial condition, results of of operations or cash flows.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern. The ASU requires management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, consolidated in the aggregate, indicate that it is probable that an entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Currently, there is no guidance in U.S. GAAP for management's responsibility to perform an evaluation. Under the update, management's evaluation is to be performed when preparing financial statements for each annual and interim reporting period and based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The Company adopted the guidance on January 1, 2016 and it did not have a material effect on our financial condition, results of operations or cash flows.

In January 2015, the FASB issued ASU No. 2015-01, Income Statement-Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates from GAAP the concept of extraordinary items. The presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that were previously classified as extraordinary. ASU 2015-01 is effective for the Company on January 1, 2016, with earlier adoption permitted using either a prospective or retrospective method. This ASU did not have a material effect on our financial condition, results of operations or cash flows.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 intends to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.  In August 2015, the FASB issued ASU 2015-15 which clarifies that the guidance issued in April 2015 does not apply to line-of-credit arrangements. According to ASU 2015-15, line-of-credit arrangements will continue to present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the arrangement. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company adopted the guidance on January 1, 2016, with retrospective application in the accompanying Condensed Consolidated Balance Sheet at December 31, 2015. This change in accounting principle resulted in net deferred financing costs of $7.8 million incurred in connection with the issuance of the Company's long-term debt (excluding revolving credit facilities) at December 31, 2015 being reclassified as a direct reduction of the long-term debt balance. The presentation of the net deferred financing costs incurred in connection with the issuance of the Company's revolving credit facilities as of December 31, 2015, are not affected by the adoption of this new accounting guidance and are included in other assets in the accompanying Consolidated Balance Sheet.

In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory. ASU 2015-11 changes the criteria for measuring inventory within the scope of the ASU. Inventory will now be measured at the lower of cost and net realizable value, while the concept of market value will be eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The ASU will be effective for the Company beginning on January 1, 2017. The Company does not expect the provisions of the ASU to have a material effect on our financial condition, results of operations or cash flows.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement to retrospectively apply adjustments made to

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PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

provisional amounts recognized in a business combination. It requires that an acquirer recognize and disclose adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, which should be calculated as if the accounting had been completed at the acquisition date. The Company adopted the guidance on January 1, 2016. The amendments in this ASU was applied prospectively to adjustments to provisional amounts that occur after the effective date of this ASU with earlier application permitted for financial statements that have not been issued. This guidance did not have a material effect on our financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 intends to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The adoption of this guidance is expected to result in a significant portion of our operating leases, where we are the lessee, to be recognized on our Consolidated Balance Sheets. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with earlier adoption permitted. The Company is currently evaluating the provisions of the amendment and the impact on its future consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 intends to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the provisions of ASU 2016-15 to have a material effect on our financial condition, results of operations or cash flows.    

NOTE 2. ACQUISITIONS

Cadillac Jack

On May 29, 2015, the Company acquired 100% of the equity of Amaya Americas Corporation (“Cadillac Jack”), a leading provider of Class II gaming machines for the North American tribal gaming market, with key regions of operation within Alabama, Mexico, and Wisconsin. This acquisition is expected to create growth opportunities in Class II and Class III jurisdictions and expands the Company’s geographic footprint with an EGM installed base of approximately 10,500 units. The combined management teams are complementary and possess years of combined experience that is expected to allow us to effectively grow and improve our business.

The acquisition was funded primarily from cash proceeds of incremental borrowings on our existing term loans, the issuance of senior secured PIK notes, as described in Note 6, and the issuance of additional common stock, as described in Note 7. The consideration also included a promissory note to the seller, Amaya Inc., for $12.0 million, as described in Note 6, as well as a contingent receivable that was recorded at its estimated fair value on the date of the acquisition. The contingent receivable is related to a clause in the stock purchase agreement allowing for a refund of up to $25.0 million if certain deactivated gaming machines in Mexico are not in operation by November 29, 2016. As of December 31, 2016 the estimated fair value of the contingent receivable is recorded in other long-term assets. In the first quarter 2017, the Company reached an agreement with Amaya, Inc. to receive $5.1 million for this contingent receivable.

The following summarizes the consideration paid for Cadillac Jack (in thousands):

Contractual cash purchase price adjusted for working capital	$	369,760
Seller note	12,000
Contingent receivable	(1,300		)
Total consideration	$	380,460

We have recorded Cadillac Jack’s assets acquired and liabilities assumed based on our estimates of their fair values at the acquisition date. The determination of the fair values of the assets acquired and liabilities assumed (and the related determination of estimated lives of depreciable and amortizable tangible and identifiable intangible assets) requires significant judgment and estimates. The estimates and assumptions used include the projected timing and amount of future cash flows and discount rates that reflect risk inherent in the future cash flows.

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PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

	At May 29, 2015
Currents assets(1)	$	34,871
Property and equipment	29,634
Goodwill	171,497
Intangible assets	199,752
Other long-term assets	23,828
Total assets	459,582
Current liabilities	8,636
Deferred tax liability non-current	51,486
Other long-term liabilities	19,000
Total equity purchase price	$	380,460

⁽¹⁾Current assets includes $4.2 million of cash acquired.

Based on our estimates, the total consideration exceeded the aggregate estimated fair value of the acquired assets and assumed liabilities at the acquisition date and has been recorded as goodwill. We attribute this goodwill to our enhanced financial scale and geographic diversification, opportunities for synergies, assembled workforce and other strategic benefits. None of the goodwill associated with the acquisition is deductible for income tax purposes and, as such, no deferred taxes have been recorded related to goodwill.

We included an estimated value of $8.3 million in current assets above and in deposits and other in the consolidated balance sheet related to the value of stock options held by employees of Cadillac Jack. The stock options entitled the holder to purchase shares of Amaya Inc., the former global parent of Cadillac Jack, based on the holder’s continued employment at Cadillac Jack through the vesting date, which was November 29, 2015.

Our estimates of the fair values of depreciable tangible assets are as follows (in thousands):

	Fair values at May 29, 2015		Average remaining useful life (in years)
Gaming equipment	$	23,065	1 - 5
Other property and equipment	6,569		2 - 3
Total property and equipment	$	29,634

Our estimates of the fair values of identifiable intangible assets are as follows (in thousands):

	Fair values at May 29, 2015		Average remaining useful life (in years)
Trade names	$	3,000	5
Brand names	10,600		3 - 5
Customer relationships	107,000		5 - 12
Gaming software and technology platforms	79,152		2 - 7
Total intangible assets	$	199,752

The fair value of gaming equipment and other personal property assets as well as the fair value of gaming content software was primarily determined using cost approaches in which we determined an estimated reproduction or replacement cost, as applicable.

The estimated fair values of acquired trade names, brand names and gaming technology platforms was primarily determined using the royalty savings method, which is a risk-adjusted discounted cash flow approach. The gaming technology platforms include $30.0 million of in-process research and development. The royalty savings method values an intangible asset

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PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

by estimating the royalties saved through ownership of the asset. The royalty savings method requires identifying the future revenue that would be impacted by the trade name or intellectual property (or royalty-free rights to the assets), multiplying it by a royalty rate deemed to be avoided through ownership of the asset and discounting the projected royalty savings amounts back to the acquisition date.  The royalty rate used in such valuation was based on a consideration of market rates for similar categories of assets.

The estimated fair values of customer relationships was determined using the excess earnings method, which is a risk-adjusted discounted cash flow approach that determines the value of an intangible asset as the present value of the cash flows attributable to such asset after excluding the proportion of the cash flows that are attributable to other assets. The contribution to the cash flows that are made by other assets - such as fixed assets, working capital, workforce and other intangible assets - was estimated through contributory asset capital charges. The value of the acquired customer relationship asset is the present value of the attributed post-tax cash flows, net of the post-tax return on fair value attributed to the other assets.

The estimated fair value of deferred income taxes was determined by applying the appropriate enacted statutory tax rate to the temporary differences that arose on the differences between the financial reporting value and tax basis of the assets acquired and liabilities assumed. We recorded liabilities for estimated uncertain tax positions in other long-term liabilities and a related indemnification receivable in other long-term assets.

The revenue and net loss of Cadillac Jack from the acquisition date through December 31, 2015, are presented below and are included in our consolidated statements of operations and comprehensive loss. These amounts are not necessarily indicative of the results of operations that Cadillac Jack would have realized if it had continued to operate as a stand-alone company during the period presented, primarily due to the elimination of certain headcount and administrative costs since the acquisition date resulting from integration activities or due to costs that are now reflected in our unallocated corporate costs and not allocated to Cadillac Jack.

	From May 29, 2015 through December 31, 2015
Revenue	$	46,075
Net loss	$	17,133

The following unaudited pro forma statements of operations give effect to the Cadillac Jack acquisition as if it had been completed on January 1, 2014. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the acquisition been completed on January 1, 2014. In addition, the unaudited pro forma financial information does not purport to project future operating results. This information is preliminary in nature and subject to change based on final purchase price adjustments. The pro forma statements of operations do not reflect: (1) any anticipated synergies (or costs to achieve synergies) or (2) the impact of non-recurring items directly related to the Cadillac Jack acquisition.

	Year ended December 31,
	2015		2014
Revenue	$	156,110	$	160,341
Net loss	$	54,682	$	83,709

Gamingo Limited

On June 15, 2015, the Company purchased 100% of the equity of Gamingo Limited (formerly known as “RocketPlay”, currently known as “AGSi”), a leading gaming company developing social casino titles for mobile devices. With primary offices in San Francisco and Tel Aviv, AGSi’s flagship product, Lucky Play Casino, gives players a casino-quality experience with EGMs, table products, tournaments, and live events. The total consideration of $8.8 million includes an estimated $5.0 million of contingent consideration that is payable based on the operating results of AGSi during a twelve-month measurement period that ended on December 31, 2016. The amount of the contingent consideration recorded was estimated at the purchase date and is subject to change based on changes in the estimated operating results of AGSi and has been recorded in other long-term liabilities in the consolidated balance sheet. As of December 31, 2015 the recorded value of the contingent consideration was written off in full to write downs and other charges based on the estimated fair value on that date.

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PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

We have recorded AGSi’s assets acquired and liabilities assumed based on our preliminary estimates of their fair values at the acquisition date. The allocation of the consideration given was allocated to the estimated fair values of the assets acquired and the liabilities assumed, which primarily included $4.9 million of goodwill and $4.2 million of identifiable intangible assets to be amortized over a weighted average period of 3 years.

Intellectual Property Acquisitions

During the quarter ended September 30, 2015, the Company acquired certain intangible assets related to the purchase of table products and table product related intellectual property.  Some of the acquisitions were accounted for as an acquisition of a business and the assets acquired and liabilities assumed were measured based on our preliminary estimates of their fair values at the acquisition dates. The total consideration of $10.0 million includes an estimated $1.5 million of contingent consideration that is payable periodically based on a percentage of product revenue earned on the related table products.  The amount of the contingent consideration recorded was estimated at the purchase date and is subject to change based on changes in the estimated product revenue and has been recorded in other long-term liabilities in the consolidated balance sheet.  The consideration was allocated primarily to goodwill for $3.4 million and intangible assets for $5.7 million, which will be amortized over a weighted average period of 8.5 years.

2014 Acquisitions

On May 6, 2014, the Company purchased100%of the equity of C2 Gaming, LLC (“C2 Gaming”) for $23.3 million in cash, subject to terms outlined in the equity purchase agreement (the “C2 Acquisition Agreement”). C2 Gaming is an innovative manufacturer and developer of EGMs based in Las Vegas, Nevada. The purchase was expected to provide for the distribution of C2 Gaming’s platform and content to an increased number of markets in the United States. The acquisition was funded by an initial cash payment and an agreement to pay the sellers $9.0 million on the one-year anniversary of the closing of the acquisition, which was paid during the quarter ended June 30, 2015. The acquisition also included an amount of contingent consideration of $3.0 million that was payable upon the satisfaction of certain milestones, including the submission and approval of video slot platforms to various jurisdictions as outlined in the C2 Acquisition Agreement.

The following summarizes the consideration paid for C2 Gaming (in thousands):

Paid at close	$	11,000
One-year payment	9,000
Contingent consideration	3,000
Working capital adjustment	273
Total consideration	$	23,273

During the year ended December 31, 2014, the Company paid $0.5 million of the contingent consideration. In May 2015, the C2 Acquisition Agreement was amended to reduce the remaining contingent consideration liability of $2.5 million to $2.1 million and to acknowledge that the milestones of the C2 Acquisition Agreement were satisfied. In July 2015, the Company paid $1.0 million of the contingent consideration, reducing the balance to $1.1 million, which was paid in January 2016.

The allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

At May 6, 2014
Current assets	$	545
Property and equipment	534
Goodwill	13,744
Intangible assets	8,722
Total assets	23,545
Total liabilities	272
Total equity purchase price	$	23,273

F-18

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Our estimates of the fair values of depreciable tangible assets were as follows (in thousands):

	Fair values at May 6, 2014		Average remaining useful life (in years)
Property and equipment	$	534	1 - 5

Our estimates of the fair values of identifiable intangible assets were as follows (in thousands):

	Fair values at May 6, 2014		Average remaining useful life (in years)
Gaming software and technology platforms	$	3,685	3 - 5
Customer relationships	5,037		7
Total intangible assets	$	8,722

The fair value of property and equipment as well as the fair value of gaming content software was determined using cost approaches in which we determined an estimated reproduction or replacement cost, as applicable.

The estimate of the fair value of the acquired gaming software and technology platforms was determined using the relief from royalty method under the income approach, which is a risk-adjusted discounted cash flow approach. The relief from royalty method values an intangible asset by estimating the royalties saved through ownership of the asset.

The estimate of the fair value of the acquired customer relationships was determined using the excess earnings method, which is a risk-adjusted discounted cash flow approach that determines the value of an intangible asset as the present value of the cash flows attributable to such asset after excluding the proportion of the cash flows that are attributable to other assets.

The goodwill recorded as a results of the acquisition is deductible for tax purposes and is attributed to enhanced financial scale, expanded video slot platforms and other strategic benefits. Some of the values and amounts used in the initial application of purchase accounting for our consolidated balance sheet were based on estimates and assumptions.

NOTE 3. PROPERTY AND EQUIPMENT

Property and equipment, net consist of the following (in thousands):

	December 31, 2016			December 31, 2015
Gaming equipment	$	108,635		$	89,361
Other property and equipment	13,900			14,976
Less: Accumulated depreciation	(54,609		)	(37,638		)
Total property and equipment, net	$	67,926		$	66,699

Gaming equipment and other property and equipment are depreciated over the respective useful lives of the assets ranging from three to six years. Depreciation expense was $27.0 million, $23.4 million and $16.8 million for the years ended December 31, 2016, 2015 and 2014, respectively.

F-19

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 4. GOODWILL AND INTANGIBLES

There were no accumulated impairments of goodwill as of December 31, 2016. Changes in the carrying amount of goodwill are as follows (in thousands):

	Gross Carrying Amount
	EGM			Table Products		Interactive			Total
Balance at December 31, 2014	$	77,617		$	—	$	—		$	77,617
Acquisition - Cadillac Jack	171,497			—		—			171,497
Acquisition - AGSi	—			—		4,855			4,855
Acquisition - Intellectual Property	—			2,600		—			2,600
Foreign currency adjustments	(2,282		)	—		—			(2,282		)
Other	(409		)	—		(27		)	(436		)
Balance at December 31, 2015	246,423			2,600		4,828			253,851
Foreign currency adjustments	(3,627		)	—		—			(3,627		)
Purchase accounting adjustment	—			800		—			800
Balance at December 31, 2016	$	242,796		$	3,400	$	4,828		$	251,024

The Company performed an annual impairment test on each of its reporting units as of October 1, 2016.  For the EGM and Table Product reporting units we began with a qualitative assessment, commonly referred to as “Step 0”, and determined it is not more likely than not that the EGM and Table Product reporting units’ fair value of goodwill are less than their carrying value. This qualitative assessment primarily relied on the significant amount of cushion determined in prior year quantitative analyses, favorable current forecasts compared to those used in the prior year analysis, the general economic environment and industry and market conditions. 

For the Interactive reporting unit, which has a goodwill carrying value of $4.8 million, the Company performed a quantitative, or “Step 1” analysis.  In performing the interim Step 1 goodwill impairment test for our Interactive reporting unit, we estimated the fair value of the Interactive reporting unit using an income approach that analyzed projected discounted cash flows. We used projections of revenues and operating costs with estimated growth rates during the forecast period, capital expenditures and cash flows that considered historical and estimated future results and general economic and market conditions, as well as the estimated impact of planned business and operational strategies. The estimates and assumptions used in the discounted cash flow analysis included a terminal year long-term growth rate of 4.0% and an overall discount rate of 15% based on our weighted average cost of capital for the Company and premiums for the small size of the reporting unit and forecast risk.

The Step 1 analysis determined that the Interactive reporting unit’s fair value was greater than its carrying value. 

Intangible assets consist of the following (in thousands):

		December 31, 2016							December 31, 2015
	Useful Life (years)	Gross Value		Accumulated Amortization			Net Carrying Value		Gross Value		Accumulated Amortization			Net Carrying Value
Indefinite lived trade names	Indefinite	$	12,126	$	—		$	12,126	$	12,126	$	—		$	12,126
Trade and brand names	7	13,600		(4,671		)	8,929		13,600		(1,721		)	11,879
Customer relationships	7	165,078		(49,528		)	115,550		170,927		(26,676		)	144,251
Contract rights under development and placement fees	1 - 7	16,488		(5,235		)	11,253		16,311		(548		)	15,763
Gaming software and technology platforms	1 - 7	123,596		(49,014		)	74,582		116,930		(23,735		)	93,195
Intellectual property	10 - 12	12,780		(2,343		)	10,437		14,030		(888		)	13,142
		$	343,668	$	(110,791	)	$	232,877	$	343,924	$	(53,568	)	$	290,356

F-20

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Intangible assets are amortized over their respective estimated useful lives ranging from one to twelve years. Amortization expense related to intangible assets was $53.2 million, $38.3 million and $16.6 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Management reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the years ended December 31, 2015 and 2014, the Company recognized impairment charges related to internally developed gaming titles of $3.4 million and $1.4 million, respectively. There were no impairments related to internally developed gaming titles for the year ended December 31, 2016.

The Company enters into development agreements and placement fee agreements with certain customers to secure floor space under lease agreements for its gaming machines. Amounts paid in connection with the development agreements are repaid to the Company in accordance with the terms of the agreement, whereas placements fees are not reimbursed. For development agreements in the form of a loan, interest income is recognized on the repayment of the notes based on the stated rate or, if not stated explicitly in the development agreement, on an imputed interest rate. If the stated interest rate is deemed to be other than a market rate or zero, a discount is recorded on the note receivable as a result of the difference between the stated and market rate and a corresponding intangible asset is recorded. The intangible asset is recognized in the financial statements as a contract right under development agreement and amortized as a reduction in revenue over the term of the agreement. Placement fees can be in the form of cash paid upfront or free lease periods and are accreted over the life of the contract and the expense is recorded as a reduction of revenue. We recorded a reduction of gaming operations revenue from the accretion of contract rights under development agreements and placement fees of $4.7 million and $0.5 million for the years ended December 31, 2016 and 2015, respectively. The amount amortized in 2014 was nominal.

The estimated amortization expense of definite-lived intangible assets as well as the accretion of contract rights under development and placement fees, for each of the next five years and thereafter is as follows (in thousands):

	Amortization Expense		Placement Fee Accretion
For the year ended December 31,
2017	$	50,153	$	4,564
2018	48,626		3,794
2019	42,064		2,609
2020	25,951		57
2021	7,655		39
Thereafter	35,050		189
Total	$	209,499	$	11,252

NOTE 5. ACCRUED LIABILITIES

Accrued liabilities consist of the following (in thousands):

	December 31,
	2016		2015
Salary and payroll tax accrual	$	6,594	$	5,851
Taxes payable	2,128		2,440
Accrued interest	2		8
C2 Gaming contingent consideration (see Note 2)	—		1,125
Placement fees payable	4,000		4,525
Accrued other	4,978		4,305
Total accrued liabilities	$	17,702	$	18,254

F-21

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 6. LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

	December 31,
	2016			2015
Senior secured credit facilities:
Term loans, interest at LIBOR or base rate plus 8.25% (9.25% at December 31, 2016), net of unamortized discount of $15.1 million and $18.2 million at December 31, 2016 and December 31, 2015, respectively.	$	395,581		$	396,717
Senior secured PIK notes, net of unamortized discount of $3.5 million and $3.9 million at December 31, 2016 and December 31, 2015, respectively.	133,286			118,764
Seller notes	20,116			18,902
Equipment long-term note payable and capital leases	4,792			5,826
Total debt(1)	553,775			540,209
Less: Current portion	(6,537		)	(6,919		)
Long-term debt	$	547,238		$	533,290

^{(1) Pursuant to the adoption of ASU 2015-03, debt issuance costs of $7.8 million were deducted from the carrying amount of related debt as of December 31, 2015.}  

Senior Secured Credit Facilities

On December 20, 2013, the Company entered into our senior secured credit facilities, which consisted of $155.0 million in term loans and a $25.0 million revolving credit facility. On May 29, 2015, the Company entered into incremental facilities for $265.0 million in term loans and on June 1, 2015, the Company entered into an incremental agreement for an additional $15.0 million of incremental revolving commitments. The proceeds of the incremental term loans were used primarily to pay the consideration for the Cadillac Jack acquisition.

The term loans will mature on December 20, 2020, and the revolving credit facility will mature on December 20, 2018. The term loans require scheduled quarterly payments in amounts equal to 0.25% of the original aggregate principal amount of the term loans, with the balance due at maturity. Borrowings under the term loans bear interest at a rate equal to, at the Company’s option, either LIBOR or the base rate, subject to an interest rate floor plus an applicable margin rate. Borrowings under the revolving credit facility bear interest at a rate equal to, at the Company’s option, either LIBOR or the base rate plus an applicable margin rate. In addition, on a quarterly basis, the Company is required to pay each lender under the revolving credit facility a commitment fee in respect of any unused commitments thereunder at a rate of 0.50% per annum.

The senior secured credit facilities are guaranteed by AP Gaming Holdings, LLC, the AP Gaming I, LLC’s (the “Borrower”) material, wholly owned domestic subsidiaries (subject to certain exceptions), and are secured by a pledge by AP Gaming Holdings, LLC of the Borrower’s equity interest directly held by AP Gaming Holdings, LLC and a pledge of substantially all of the existing and future property and assets of the Borrower and the subsidiary guarantors, subject to certain exceptions. The senior secured credit facilities require that the Borrower maintain a maximum net first lien leverage ratio set at a maximum of 5.5 to 1. The senior secured credit facilities contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined. The senior secured credit facilities also contain customary events of default included in similar financing transactions, including, among others, failure to make payments when due, default under other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. The Company was in compliance with the covenants of the senior secured credit facilities at December 31, 2016.

Senior Secured PIK Notes

On May 29, 2015, the Company entered into a note purchase agreement with AP Gaming Holdings, LLC, as subsidiary guarantor (the “Subsidiary Guarantor”), Deutsche Bank AG, London Branch, as purchaser (the “Purchaser”), and Deutsche Bank Trust Company Americas, as collateral agent.  Pursuant to the agreement, the Company issued $115.0 million of its 11.25% senior secured PIK notes due 2021 (the “Notes”) at an issue price of 97% of the principal amount thereof to the Purchaser in a private placement exempt from registration under the Securities Act of 1933, as amended.  The Notes are secured

F-22

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

by the Company’s equity in its subsidiary AP Gaming, Inc., subject to certain limitations including those imposed by gaming laws, and are unconditionally guaranteed by the Subsidiary Guarantor.

Interest on the Notes will accrue at a rate of 11.25% per annum. The Company may elect to pay interest due on the Notes in cash, by increasing the principal of the outstanding Notes or by issuing new Notes (“PIK interest”) for the entire amount of the interest payment or by paying interest partially in cash and partially in PIK interest. Interest on the Notes will accrue from the date of issuance and will be payable on the dates described in more detail in the agreement.  The Notes will mature on May 28, 2021.  The net proceeds of the Notes were used primarily to finance the Cadillac Jack acquisition.

The Notes contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined. The Notes also contains customary events of default included in similar transactions, including, among others, failure to make payments when due, acceleration of other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. At December 31, 2016, the Notes totaled $133.3 million, which includes capitalized interest of $21.8 million.

Seller Notes

On December 20, 2013, the Company issued two promissory notes (the “AGS Seller Notes”) to AGS Holdings, LLC, in the amounts of $2.2 million and $3.3 million, to the previous owners of the Company’s primary operating company. At December 31, 2016, notes payable related to the AGS Seller Notes totaled $7.1 million, which includes capitalized interest of $1.6 million. The AGS Seller Notes accrue interest on the unpaid principal balance at 8.5% per annum and shall be payable semi-annually in arrears on June 30 and December 31, commencing on June 30, 2014. Any interest accrued and payable on any interest payment date will be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of this AGS Seller Notes. All principal and interest under the AGS Seller Notes is due and payable on June 18, 2021, the maturity date. The Company may prepay from time to time all or any portion of the outstanding principal balance due under the AGS Seller Notes.

On May 29, 2015, the Company issued a promissory note to Amaya Inc. (the “Amaya Seller Note”) with an initial principal amount of $12.0 million to satisfy the conditions set forth in the stock purchase agreement for Cadillac Jack. The Amaya Seller Note accrues interest on the unpaid principal amount at 5.0% per annum and is payable semi-annually on June 30 and December 31 (and on May 29, 2023, the maturity date of the note), commencing on June 30, 2015. All interest accrued and payable on any interest payment date will be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of the Amaya Seller Note. All principal under the note is due and payable on May 29, 2023.  The Amaya Seller Note is required to be prepaid under certain circumstances, such as refinancing our senior secured credit facilities or a public equity offering as described in the note agreement. The Company may prepay from time to time all or any portion of the outstanding principal balance due under the Amaya Seller Note.  The Amaya Seller Note includes certain covenants and events of default that are customary for instruments of this type. At December 31, 2016, the Amaya Seller Note totaled $13.0 million, which includes capitalized interest of $1.0 million.

Equipment Long Term Note Payable and Capital Leases

The Company has entered into a financing agreement to purchase certain gaming devices, systems and related equipment and has entered into leases for servers and equipment that are accounted for as capital leases.

Scheduled Maturities of Long-Term Debt

Aggregate contractual future principal payments (excluding the effects of repayments for excess cash flow) of long-term debt for the years following December 31, 2016, are as follows (in thousands):

F-23

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the year ending December 31,
2017	$	6,537
2018	6,350
2019	4,605
2020	397,953
2021	143,920
Thereafter	12,998
Total scheduled maturities	572,363
Unamortized debt discount and debt issuance costs	(18,588		)
Total long-term debt	$	553,775

NOTE 7. STOCKHOLDERS’ EQUITY

Common Stock

The Company’s common stock consists of two classes: class A voting common stock (“Class A Shares”) and class B non-voting common stock (“Class B Shares”). The holders of the Class A Shares are entitled to one vote per share on all matters to be voted on by the stockholders of the Company. The holders of the Class A Shares have no economic rights or privileges, including rights in liquidation, and have no right to receive dividends or any other distributions. The holders of the Class B Shares have no right to vote on any matter to be voted on by the stockholders of the Company. Each holder of Class B Shares is entitled to share equally, share for share, dividends declared, as well as any distributions to the stockholders, and in the event of the Company’s liquidation, dissolution or winding up, is entitled to share ratably in any remaining assets after payment of or provision for liabilities and the liquidation on preferred stock, if any.

On April 28, 2014, our controlling stockholder exchanged its 10,000,000 Class A Shares for 10,000,000 Class B Shares. On May 29, 2015, we issued an additional 4,931,529 Class B Shares to our controlling stockholder for total proceeds of $77.4 million. The funds received from the May 2015 issuance of Class B Shares were used, in addition to proceeds from the issuance of long-term debt, to fund the acquisition of Cadillac Jack.

As of December 31, 2016, 108,307 Class B Shares issued to “Management Holder,” as defined in the Securityholders Agreement dated April 28, 2014 (the “Securityholders Agreement”) were outstanding. The Class B Shares were sold to the Management Holder and are not considered issued for accounting purposes as they contain a substantive performance condition, a “Qualified Public Offering,” as defined in the Securityholders Agreement, which must be probable for the Management Holder to benefit from the ownership of the shares. As a result, shares issued to the Management Holder are not considered issued for accounting purposes until such time that the performance condition is probable and the Company has recorded a liability in other long-term liabilities of $1.3 million for the proceeds from the sale of the Class B Shares. No share-based compensation expense for Class B Shares has been recognized and none will be recognized for these shares until the performance condition is considered to be probable.

Class B Shares that are held by a Management Holder are subject to repurchase rights (the “Repurchase Rights”), as outlined in Section 6 of the Securityholders Agreement, that are contingent on the Management Holder’s termination. The Repurchase Rights enable the Company to recover the Class B Shares issued to a Management Holder without transferring any appreciation of the fair value of the stock to the Management Holder upon certain terminations of the Management Holder’s employment prior to a “Qualified Public Offering”, as defined in the Securityholders Agreement. If a Management Holder’s employment is terminated by the Company prior to the consummation of a Qualified Public Offering for “Cause”, as defined in the Securityholders Agreement, or is terminated by such Management Holder without “Good Reason”, as defined in the Securityholders Agreement, then the Company shall have the right to repurchase all or any portion of the Class B Shares held by such Management Holder for the lesser of original cost and fair market value. If a Management Holder’s employment is terminated by the Company prior to the consummation of a Qualified Public Offering other than as described above and in the Securityholders Agreement, then the Company shall have the right to repurchase all or any portion of the Class B Shares held by such Management Holder for fair market value.

F-24

NOTE 8. WRITE DOWNS AND OTHER CHARGES

During the year ended December 31, 2016, the Company recognized $3.3 million in write-downs and other charges, driven by a $3.3 million impairment of an intangible asset related to a customer contract that the Company expects will provide less benefit than originally estimated from the Cadillac Jack acquisition (a level 3 fair value measurement based on a decrease in projected cash flows). The value of the intangible asset was written down to $1.1 million at an interim date and subsequently fully amortized by December 31, 2016. Additionally the Company recorded a write-down of long-lived assets of $2.0 million related to older generation gaming machines (level 3 fair value measurement based on projected cash flow for the specific assets) in which the long-lived assets were written down to $0, and losses from the disposal of assets of $1.0 million. These charges were offset by a $3.0 million fair value adjustment to a contingent consideration receivable related to the Cadillac Jack acquisition (level 3 fair value measurement based on expected and probable future realization of the receivable).

For the year ended December 31, 2015, the Company recognized $11.8 million in write-downs and other charges primarily related to acquisition related charges of $8.2 million. The Company also recognized a full impairment to intangible assets of $3.4 million related to game titles (level 3 fair value measurement based on projected cash flows for the specific game titles), write offs related to prepaid royalties of $1.3 million, losses from the disposal of assets of $1.3 million and the impairment of long-lived assets of $0.2 million (level 3 fair value measurement based on projected cash flow for the specific assets with an estimated fair value of $0), fair value adjustment of $3.4 million to the asset associated with the stock options of Amaya, Inc. described in Note 2 (level 2 fair value measurement primarily based on the stock price of Amaya, Inc. with a final estimated fair value of $4.9 million), partially offset by write downs of primarily contingent consideration of $6.1 million that is described in Note 2 (level 3 fair value measurements based on projected cash flows).

For the year ended December 31, 2014, the Company recognized $7.1 million in write-downs and other charges primarily related to acquisition charges of $2.8 million, losses from the disposal of assets of $1.9 million, an impairment to intangible assets of $1.4 million (level 3 fair value measurement based on projected cash flow for the specific assets) and an impairment of long-lived assets of $0.8 million (level 3 fair value measurement based on projected cash flow for the specific assets).

NOTE 9. BASIC AND DILUTED LOSS PER SHARE

The Company computes net income (loss) per share in accordance with accounting guidance that requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statement of operations and comprehensive income (loss). Basic EPS is computed by dividing net income (loss) for the period by the weighted average number of shares outstanding during the period. Basic EPS excludes Class B Shares issued to Management Holders until the performance condition or termination event is considered probable (see Note 7). Until such time, the Class B Shares issued to Management Holders will be included in the calculation of diluted EPS using the treasury stock method and are treated as stock options. Diluted EPS is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period, increased by potentially dilutive common shares that were outstanding during the period. Diluted EPS excludes all potential dilutive shares if their effect is anti-dilutive. Potentially dilutive common shares include stock options and restricted stock (see Note 11).

There were no potentially dilutive securities for the years ended December 31, 2016, 2015, 2014.

Excluded from the calculation of diluted EPS for the year ended December 31, 2016 and December 31, 2015, were 50,000 restricted shares and 0.3 million stock options, as such securities were anti-dilutive. Excluded from the calculation of diluted EPS for the year ended December 31, 2014, were 50,000 restricted shares and 0.4 million stock options, as such securities were anti-dilutive.

NOTE 10. BENEFIT PLANS

The Company has established a 401(k) defined contribution plan (the “401(k) Plan”) for its employees. The 401(k) Plan allows employees to contribute up to 15% of their pretax earnings, and the Company may match a percentage of the contributions on a discretionary basis. The expense associated with the 401(k) Plan for the years ended December 31, 2016, 2015 and 2014 was $0.9 million, $0.6 million and $0.3 million, respectively. The increase in the expense associated with the 401(k) Plan in each year is primarily attributable to increased headcount and participation.

On April 28, 2014, the board of directors of the Company approved the 2014 Long-Term Incentive Plan (“LTIP”). Under the LTIP, the Company is authorized to grant nonqualified stock options, rights to purchase Class B Shares, restricted stock, restricted stock units and other awards to be settled in, or based upon, Class B Shares to persons who are directors and employees of and consultants to the Company or any of its subsidiaries on the date of the grant. The LTIP will terminate ten

F-25

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

years after approval by the board. Subject to adjustments in connection with certain changes in capitalization, the maximum number of Class B Shares that may be delivered pursuant to awards under the LTIP is 1,250,000. As of December 31, 2016, approximately 200,000 shares remain available for issuance.

NOTE 11. SHARE-BASED COMPENSATION

Stock Options

The Company has granted stock awards to eligible participants under the LTIP. The stock awards include options to purchase the Company’s Class B Shares. These stock options include a combination of service and market conditions, as further described below. In addition, these stock options include a performance vesting condition, a Qualified Public Offering (see Note 7), which is not considered to be probable as of December 31, 2016. As a result, no share-based compensation expense for stock options has been recognized and none will be recognized for these stock awards until the performance condition is considered to be probable. The amount of unrecognized compensation expense associated with stock options was $6.1 million and for restricted stock was $0.5 million at December 31, 2016. When the performance condition is considered probable, the stock awards will vest in accordance with the underlying service and market conditions.

The Company calculated the grant date fair value of stock options that vest over a service period using the Black Scholes model. For stock options that contain a market condition related to the return on investment that the Company’s stockholders achieve, the options were valued using a lattice-based option valuation model. The assumptions used in these calculations are noted in the following table. Expected volatilities are based on implied volatilities from comparable companies. The expected time to liquidity is based on management’s estimate. The risk-free rate is based on the U.S. Treasury yield curve for a term equivalent to the estimated time to liquidity. The expected dividend yield is 0% for all stock awards.

	Year Ended December 31,
	2016	2015	2014
Option valuation assumptions:
Expected dividend yield	—%	—%	—%
Expected volatility	56%	55%	73%
Risk-free interest rate	1.64%	1.69%	1.63%
Expected term (in years)	6.3	6.4	5.0

Stock option awards represent options to purchase Class B Shares and are granted pursuant to the Company’s LTIP, and include options that the Company primarily classifies as Tranche A, Tranche B and Tranche C.

Tranche A options are eligible to vest in equal installments of 20% on each of the first five anniversaries of the date of the grant, subject to continued employment with the Company or its subsidiaries in addition to the performance vesting condition of a Qualified Public Offering described above. In the event of a termination of employment without cause or as a result of death or disability, any such time based options which would have vested on the next applicable vesting date shall become vested, and the remaining unvested time based options shall be forfeited. In addition, upon a Change in Control (as defined in the Company’s 2014 Long-Term Incentive Plan), subject to continued employment through the date of the Change in Control, all outstanding unvested time based options shall immediately vest. An initial public offering does not qualify as a Change in Control as it relates to the vesting of stock options.

All other option awards are eligible to vest upon the satisfaction of certain performance conditions (collectively, “Performance Options”) in addition to the performance vesting condition of a Qualified Public Offering described above. Tranche B options are eligible to vest based on achievement of an Investor IRR equal to or in excess of 20%, subject to a minimum cash-on-cash return of 2.5 times the Investor Investment (as such terms are defined in the Company’s 2014 Long-Term Incentive Plan). Tranche C options are eligible to vest based on achievement of an Investor IRR equal to or in excess of 25%, subject to a minimum cash-on-cash return of 3.0 times the Investor Investment. In the event of a termination of employment without cause or as a result of death or disability, any Performance Options which are outstanding and unvested will remain eligible to vest subject to achievement of such performance targets (without regard to the continued service requirement) until the first anniversary of the date of such termination. As of December 31, 2016, the Company had 381,666 Performance Options outstanding.

F-26

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

A summary of the changes in stock options outstanding during the year ended December 31, 2016, is as follows:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Term (years)	Aggregate Intrinsic Value
Options outstanding as of December 31, 2015	765,375		$	12.46
Granted	247,600		$	17.01
Canceled	(117,875	)	$	15.25
Options outstanding as of December 31, 2016	895,100		$	13.35	8.2	$	3,457,748

No options expired or were forfeited for the year ended December 31, 2016.

The following is provided for stock options granted:

	Year Ended December 31,
	2016		2015		2014
Weighted average grant date fair value	$	8.96	$	7.44	$	5.38

Restricted awards

During the year ended December 31, 2014, the Company granted 50,000 restricted Class B Shares that vest in five equal installments on each of the first five anniversaries of the grant date in addition to the performance vesting condition of a Qualified Public Offering described above. As of December 31, 2016, the Company had 50,000 unvested restricted shares outstanding with a weighted average grant date fair value of $10. No restricted stock was granted, canceled or forfeited during the years ended December 31, 2016 and 2015. This restricted stock includes a service condition and a performance vesting condition (a Qualified Public Offering), which was not considered to be probable of occurring as of December 31, 2016. As a result, no share-based compensation expense was recognized for the years ended December 31, 2016, 2015 and 2014, and none will be recognized for restricted stock until the performance condition is considered to be probable. When the performance condition is considered probable, the stock awards will vest in accordance with the underlying service condition.

NOTE 12. RESTRUCTURING

We recorded no employee termination and restructuring costs during the year ended December 31, 2016. We recorded employee termination and restructuring costs of $1.4 million and $1.2 million during the years ended December 31, 2015 and 2014, respectively. We do not anticipate additional costs associated with the following plans in excess of amounts accrued below. Employee termination and restructuring costs are classified in selling, general and administrative as well as research and development expense and have been recorded for the following restructuring plans.

Cadillac Jack Integration Plan

In June 2015, we took actions to reduce the staff in all of our locations and to streamline our operations and cost structure. The Company has also entered into retention agreements with certain employees that will be paid upon the completion of their service period.

The following table summarizes the change in our restructuring accruals for the year ended December 31, 2016 (in thousands), which is included in accounts payable and accrued liabilities in the consolidated balance sheets:

	December 31, 2015		Charge to expense		Cash paid		December 31, 2016
Accrued severance	$	37	$	—	$	37	$	—
Total	$	37	$	—	$	37	$	—

F-27

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE 13. INCOME TAXES

The components of loss before provision for income taxes are as follows (in thousands):

	Year ended December 31,
	2016			2015			2014
Domestic	$	(69,020	)	$	(66,728	)	$	(26,187	)
Foreign	(15,354		)	(7,906		)	—
Loss before provision for income taxes	$	(84,374	)	$	(74,634	)	$	(26,187	)

The income tax (benefit) expense is as follows (in thousands):

	Year ended December 31,
	2016			2015			2014
Current:
Federal	$	(958	)	$	932		$	—
State	113			(10		)	7
Foreign	5,865			1,424			—
Total current income tax expense	5,020			2,346			7
Deferred:
Federal	(7,550		)	(34,589		)	2,005
State	(31		)	(2,506		)	177
Foreign	(439		)	(1,340		)	—
Total deferred income (benefit) expense	(8,020		)	(38,435		)	2,182
Income tax (benefit) expense	$	(3,000	)	$	(36,089	)	$	2,189

The reconciliation of income tax at the federal statutory rate to the actual effective income tax rate (benefit) is as follows:

	Year ended December 31,
	2016		2015		2014
Federal statutory rate	(35.0	)%	(35.0	)%	(34.0	)%
Foreign rate differential	0.2	%	0.7	%	—	%
State income taxes, net of federal benefit	—	%	(2.5	)%	(0.8	)%
Nondeductible loan costs	1.8	%	1.5	%	—	%
Nondeductible transaction costs	—	%	1.6	%	—	%
Other differences	3.2	%	0.2	%	0.6	%
Expiration of tax credits	1.9	%	—	%	—	%
Uncertain tax positions	0.6	%	0.3	%	—	%
Valuation allowance	23.7	%	(15.2	)%	42.6	%
	(3.6	)%	(48.4	)%	8.4	%

F-28

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The components of the net deferred tax liability consist of the following (in thousands):

	December 31,
	2016			2015
Deferred tax assets:
Accrued expenses	$	662		$	608
Allowance for bad debt	1,175			1,176
Payroll accruals	1,818			2,085
Foreign tax credits	9,541			8,834
Net operating loss carryforwards	47,019			35,862
Property and equipment, net	1,830			—
Research and development credits	1,420			1,569
Loan costs and interest	3,441			3,519
Other	1,654			2,017
Total deferred tax assets	68,560			55,670
Valuation allowance	(28,211		)	(8,274		)
Deferred tax assets, net of valuation allowance	$	40,349		$	47,396
Deferred tax liabilities:
Prepaid expenses and other	$	(512	)	$	(1,033	)
Intangible assets	(46,785		)	(60,309		)
Property and equipment, net	—			(1,364		)
Deferred tax liabilities	(47,297		)	(62,706		)
Net deferred tax liabilities	$	(6,948	)	$	(15,310	)

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. Due to cumulative foreign losses, there is no deferred tax liability recorded for unremitted foreign earnings.

The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize the existing deferred tax assets. On the basis of this evaluation, as of December 31, 2016, a valuation allowance of $28.2 million has been established against deferred tax assets.

The Company’s Mexican customers are required under the U.S.-Mexico tax treaty to withhold 10% of their payments due to the Company for license fees, which can be used as foreign tax credits on the Company’s U.S. federal income tax return. The foreign tax credits are not refundable, but can be carried forward for 10 years to offset future tax liability. Of the Company’s $9.5 million in foreign tax credits, approximately $1.7 million begin to expire starting in 2017. In addition, the Company has $1.4 million of research and development credits which begin to expire in 2028. A full valuation allowance has been recorded on the foreign tax credits and research and development credits.

The Company has net operating loss (“NOL”) carryforwards for U.S. federal purposes of $115.9 million, in foreign jurisdictions of $18.6 million and various U.S. states of $43.6 million. The U.S. federal NOL carryforwards begin to expire in 2031, the Mexican NOL carryforwards begin to expire in 2021, and the U.S. state NOL carryforwards begin to expire in 2018.

The Company has uncertain tax positions with respect to prior tax filings. The uncertain tax positions, if asserted by taxing authorities, would result in utilization of the Company’s tax credit and operating loss carryovers. The credit and operating loss carryovers presented as deferred tax assets are reflected net of these unrecognized tax benefits.

F-29

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company had the following activity for unrecognized tax benefits in 2016 and 2015 (amounts in thousands):

	December 31, 2016			December 31, 2015
Balance-beginning of year	$	29,523		$	—
Acquisitions	—			29,701
Increases based on tax positions of the current year	1,005			795
Decreases due to lapse of statute	(236		)	—
Increases based on tax positions of the prior years	1,963			—
Decreases based on tax positions of the prior years	(664		)	—
Currency translation adjustments	(1,427		)	(973		)
Balance-end of year	$	30,164		$	29,523

As of December 31, 2014, we have not recorded a reserve for unrecognized tax benefits or penalties.

The Company applies a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes the impact of a tax position in the financial statements when the position is more likely than not of being sustained on audit based on the technical merits of the position.

The total amount of unrecognized tax benefits as of December 31, 2016 was $30.2 million. Of this amount, $11.5 million, if recognized, would be included in our Consolidated Statements of Operations and Comprehensive Loss and have an impact on our effective tax rate. The Company does not anticipate a material reduction of its liability for unrecognized tax benefits before December 31, 2017.

The Company recognizes interest and penalties accrued for unrecognized tax benefits in income tax expense. Related to the unrecognized tax benefits noted above, the Company accrued penalties and interest of $0.4 million during 2016 and in total, as of December 31, 2016, has recognized a liability for penalties and interest of $8.4 million.

The Company entered into an indemnification agreement with the prior owners of Cadillac Jack whereby the prior owners have agreed to indemnify the Company for changes in tax positions by taxing authorities for periods prior to the acquisition. As of December 31, 2016, an indemnification receivable of $16.4 million has been recorded as an other asset in the financial statements. This amount includes the indemnification of the original pre-acquisition tax positions along with any related accrued interest and penalties and is also recorded as a liability for unrecognized tax benefits in other long-term liabilities. The Company concluded that it is probable the indemnification receivable is realizable based on an evaluation of the ability of Cadillac Jack’s prior owner, including a review of its public filings, that demonstrates its financial resources are sufficient to support the amount recorded. If the related unrecognized tax benefits are subsequently recognized, a corresponding charge to relieve the associated indemnification receivables would be recognized in our Consolidated Statements of Operations and Comprehensive Loss and have an impact on operating income.

NOTE 14. COMMITMENTS AND CONTINGENCIES

Leases

The Company leases administrative and warehouse facilities and certain equipment under non-cancelable operating leases. Rent expense was $2.5 million, $2.0 million, and $0.8 million for the years ended December 31, 2016, 2015 and 2014, respectively.

F-30

Future minimum lease payments under these leases in excess of one year as of December 31, 2016 are as follows (in thousands):

For the year ended December 31,
2017	$	1,533
2018	1,177
2019	1,054
2020	1,091
2021	649
Thereafter	157
Total	$	5,661

Other commitments and contingencies

The Company is subject to federal, state and Native American laws and regulations that affect both its general commercial relationships with its Native American tribal customers, as well as the products and services provided to them. Periodically, the Company reviews the status of each significant matter and assesses the potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. If a potential loss from any claim or legal proceeding is considered reasonably possible, the Company discloses an estimate of the possible loss or range of possible loss, or a statement that such an estimate cannot be made. There are no matters that meet the criteria for disclosure outlined above. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to their pending claims and litigation and may revise its estimates. Such revisions in the estimates of the potential liabilities could have a material impact on the results of operations and financial condition.

NOTE 15. OPERATING SEGMENTS

In the fourth quarter of fiscal year 2016, the Company revised its business segment disclosures to report results by segment in accordance with the “management approach.” The management approach designates the internal reporting used by our chief operating decision maker, who is our Chief Executive Officer, for making decisions and assessing performance of our reportable segments.

See Note 1 for a detailed discussion of our three segments. Each segment’s activities include the design, development, acquisition, manufacturing, marketing, distribution, installation and servicing of its product lines. We evaluate the performance of our operating segments based on revenues and segment adjusted EBITDA.

Segment revenues include leasing, licensing, or selling of products within each reportable segment. Segment adjusted EBITDA includes the revenues and operating expenses from each segment adjusted for depreciation, amortization, write downs and other charges, accretion of placement fees, non-cash stock compensation expense, as well as other costs such as certain acquisitions and integration related costs including restructuring and severance charges; legal and litigation expenses including settlement payments; new jurisdictions and regulatory licensing costs; non-cash charges on capitalized installation and delivery; contract cancellation fees; and other adjustments primarily composed of professional fees incurred by the Company for projects, corporate and public filing compliance and other costs deemed to be non-recurring in nature. Revenues in each segment are attributable to third parties and segment operating expenses are directly associated with the product lines included in each segment such as research and development, product approval costs, product-related litigation expenses, sales commissions and other directly-allocable sales expenses. Cost of gaming operations and cost of equipment sales primarily include the cost of products sold, service, manufacturing overhead, shipping and installation.

Segment adjusted EBITDA excludes other income and expense, income taxes and certain expenses that are managed outside of the operating segments.

F-31

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following provides financial information concerning our reportable segments for the years ended December 31:

	2016			2015			2014
Revenues by segment
EGM	$	156,407		$	119,617		$	72,028
Table Products	2,674			1,672			112
Interactive	7,725			2,003			—
Total Revenues	166,806			123,292			72,140
Adjusted EBITDA by segment
EGM	91,729			66,267			40,552
Table Products	(1,663		)	(1,402		)	(343		)
Interactive	(4,727		)	(2,518		)	—
Subtotal	85,339			62,347			40,209
Write downs and other:
Loss on disposal of long lived assets	978			1,275			1,937
Impairment of long lived assets	5,295			4,993			2,327
Fair value adjustments to contingent consideration and other items	(3,000		)	(2,667		)	—
Acquisition costs	(11		)	8,165			2,804
Depreciation and amortization	80,181			61,662			33,405
Accretion of placement fees(1)	4,702			496			58
Non-cash stock compensation	—			4,911			—
Acquisitions & integration related costs including restructuring & severance	5,411			7,818			3,582
Legal & litigation expenses including settlement payments	1,565			1,916			450
New jurisdictions and regulatory licensing costs	1,315			256			266
Non-cash charge on capitalized installation and delivery	1,680			1,441			643
Non-cash charges and loss on disposition of assets	2,478			234			561
Other adjustments	1,809			1,286			2,597
Interest expense	59,963			41,642			17,235
Interest income	(57		)	(82		)	(42		)
Other expense (income)	7,404			3,635			573
Loss before income taxes	$	(84,374	)	$	(74,634	)	$	(26,187	)

(1) Non-cash expense related to the accretion of contract rights under development agreements and placement fees.

The Company’s Chief Operating Decision Maker (the “CODM”) does not receive a report with a measure of total assets or capital expenditures for each reportable segment as this information is not used for the evaluation of segment performance. The CODM assesses the performance of each segment based on adjusted EBITDA and not based on assets or capital expenditures due to the fact that two of the Company’s reportable segments, Table Products and Interactive, are not capital intensive. Any capital expenditure information is provided to the CODM on a consolidated basis. Therefore, the Company has not provided asset and capital expenditure information by reportable segment.

F-32

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following provides financial information concerning our operations by geographic area for the years ended December 31 (in thousands):

	Year ended December 31,
Revenue:	2016		2015		2014
United States	138,510		110,392		72,140
Other	28,296		12,900		—
	166,806		123,292		72,140
	Year ended December 31,
Long-lived assets, end of year:	2016		2015		2014
United States	$	70,208	$	63,858	$	44,045
Other	5,169		6,909		69
	$	75,377	$	70,767	$	44,114

NOTE 16. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables present selected quarterly financial information for 2016 and 2015, as previously reported (in thousands).

	Quarter ended March 31, 2016			Quarter ended June 30, 2016			Quarter ended September 30, 2016			Quarter ended December 31, 2016
Consolidated Income Statement Data:
Revenues	$	40,235		$	42,618		$	41,208		$	42,745
Gross profit[1]	33,792			32,599			33,799			33,643
Loss from operations	(4,206		)	(4,338		)	(7,117		)	(1,403		)
Net (loss) income	(21,066		)	(18,839		)	(21,235		)	(20,234		)
Basic loss per share	(1.41		)	(1.26		)	(1.42		)	(1.36		)
Diluted loss per share	(1.41		)	(1.26		)	(1.42		)	(1.36		)

	Quarter ended March 31, 2015			Quarter ended June 30, 2015			Quarter ended September 30, 2015			Quarter ended December 31, 2015
Consolidated Income Statement Data:
Revenues	$	18,795		$	26,296		$	38,105		$	40,096
Gross profit[1]	15,516			20,429			30,641			31,867
Loss from operations	(3,736		)	(11,339		)	(13,017		)	(1,347		)
Net (loss) income	(9,235		)	2,849			(23,279		)	(8,880		)
Basic income (loss) per share	(0.92		)	0.24			(1.56		)	(0.69		)
Diluted income (loss) per share	(0.92		)	0.24			(1.56		)	(0.69		)

[1] Gross profit is total revenues less cost of gaming operations and cost of equipment sales, exclusive of depreciation and amortization.

F-33

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

ITEM 15(a)(2). FINANCIAL STATEMENT SCHEDULES

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

PLAYAGS, INC.

(PARENT COMPANY ONLY)

CONDENSED BALANCE SHEETS

(in thousands, except share data)

	December 31,
	2016			2015
Assets
Current assets
Cash and cash equivalents	$	10,171		$	25,972
Prepaid expenses	40			63
Total current assets	10,211			26,035
Deferred tax asset	—			3,528
Investment in subsidiaries	153,926			203,390
Total assets	$	164,137		$	232,953
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	36		$	—
Intercompany payables	93			20
Total current liabilities	129			20
Long-term debt	146,284			131,125
Other long-term liabilities	1,296			1,271
Total liabilities	147,709			132,416
Stockholders’ equity:
Common stock	149			149
Additional paid-in capital	177,276			177,276
Retained earnings	(156,451		)	(75,077		)
Accumulated other comprehensive loss	(4,546		)	(1,811		)
Total stockholders’ equity	16,428			100,537
Total liabilities and stockholders’ equity	$	164,137		$	232,953

F-34

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

PLAYAGS, INC.

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF OPERATIONS

(in thousands)

	Year ended December 31,
	2016			2015			2014
Operating expenses
Selling, general and administrative	$	231		$	546		$	1,512
Total operating expenses	231			546			1,512
Loss from operations	(231		)	(546		)	(1,512		)
Other expense (income)
Equity in net loss of subsidiaries	62,450			33,405			26,870
Interest expense	15,165			8,123			—
Interest income	—			(1		)	(6		)
Loss before income taxes	(77,846		)	(42,073		)	(28,376		)
Income tax benefit (expense)	(3,528		)	3,528			—
Net loss	(81,374		)	(38,545		)	(28,376		)
Foreign currency translation adjustment	(2,735		)	(2,099		)	289
Total comprehensive loss	$	(84,109	)	$	(40,644	)	$	(28,087	)

F-35

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

PLAYAGS, INC.

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands, except per share data)

	Year ended December 31,
	2016			2015			2014
Cash flows from operating activities
Net loss	$	(81,374	)	$	(38,545	)	$	(28,376	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Amortization of deferred loan costs and discount	340			143			—
Payment-in-kind interest capitalized	14,819			7,980			—
Equity in net loss of subsidiaries	62,450			33,405			26,870
(Benefit) provision of deferred income tax	3,528			(3,528		)	—
Changes in assets and liabilities that relate to operations:
Prepaid expenses	23			6			(69		)
Intercompany payable/receivable	148			455			455
Accounts payable and accrued liabilities	35			(24		)	24
Net cash (used in) provided by operating activities	(31		)	(108		)	(1,096		)
Cash flows from investing activities
Investment in subsidiaries	(15,720		)	(172,484		)	(11,635		)
Distributions received from subsidiaries	—			1,322			2,737
Net cash used in investing activities	(15,720		)	(171,162		)	(8,898		)
Cash flows from financing activities
Proceeds from issuance of debt	—			111,550			—
Proceeds from issuance of common stock	—			77,425			—
Proceeds from employees in advance of common stock issuance	—			579			1,969
Repurchase of shares issued to management	(50		)	(277		)	—
Payment of deferred loan costs	—			(548		)	—
Net cash provided by financing activities	(50		)	188,729			1,969
Increase (decrease) in cash and cash equivalents	(15,801		)	17,459			(8,025		)
Cash and cash equivalents, beginning of period	25,972			8,513			16,538
Cash and cash equivalents, end of period	$	10,171		$	25,972		$	8,513
Non-cash investing and financing activities:
Subsidiary payment for share repurchase on Company’s behalf	$	—		$	1,000		$	—
Intercompany payable settled as distribution	$	—		$	890		$	—
Incurrence of Amaya Seller Note	$	—		$	12,000		$	—

F-36

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

PLAYAGS, INC.

(PARENT COMPANY ONLY)

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The parent company financial statements of PlayAGS, Inc. (formerly, AP Gaming Holdco, Inc.) (the “ Parent Company”) should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes thereto. For purposes of these condensed financial statements, the Parent Company’s wholly owned and majority owned subsidiaries are recorded based upon its proportionate share of the subsidiaries’ net assets (similar to presenting them on the equity method).

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted since this information is included in the Company’s consolidated financial statements included elsewhere in this Form 10-K.

NOTE 2 - COMMITMENTS AND CONTINGENCIES

The Parent Company is a holding company and, as a result, its ability to pay dividends is dependent on its subsidiaries’ ability to obtain funds and its subsidiaries' ability to provide funds to it. Restrictions are imposed by its subsidiaries' debt instruments, which significantly restrict certain key subsidiaries holding a majority of its assets from making dividends or distributions to the Parent Company. These restrictions are subject to certain exceptions for affiliated overhead expenses as defined in the agreements governing the debt instruments, unless certain financial and non-financial criteria have been satisfied.

Long-term debt of the Parent Company consists of the senior secured PIK notes and the Amaya Seller Note as described below.

Senior Secured PIK Notes

On May 29, 2015, the Company entered into a note purchase agreement with AP Gaming Holdings, LLC, as subsidiary guarantor (the “Subsidiary Guarantor”), Deutsche Bank AG, London Branch, as purchaser (the “Purchaser”), and Deutsche Bank Trust Company Americas, as collateral agent.  Pursuant to the agreement, the Company issued $115.0 million of its 11.25% senior secured PIK notes due 2021 (the “Notes”) at an issue price of 97% of the principal amount thereof to the Purchaser in a private placement exempt from registration under the Securities Act of 1933, as amended.  The Notes are secured by the Company’s equity in its subsidiary AP Gaming, Inc., subject to certain limitations including those imposed by gaming laws, and are unconditionally guaranteed by the Subsidiary Guarantor.

Interest on the Notes will accrue at a rate of 11.25% per annum. The Company may elect to pay interest due on the Notes in cash, by increasing the principal of the outstanding Notes or by issuing new Notes (“PIK interest”) for the entire amount of the interest payment or by paying interest partially in cash and partially in PIK interest. Interest on the Notes will accrue from the date of issuance and will be payable on the dates described in more detail in the agreement.  The Notes will mature on May 28, 2021.  The net proceeds of the Notes were used primarily to finance the Cadillac Jack acquisition.

The Notes contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined. The Notes also contains customary events of default included in similar transactions, including, among others, failure to make payments when due, acceleration of other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. At December 31, 2016, the Notes totaled $133.3 million, which includes capitalized interest of $21.8 million.

Seller Note

On May 29, 2015, the Company issued a promissory note to Amaya Inc. (the “Amaya Seller Note”) with an initial principal amount of $12.0 million to satisfy the conditions set forth in the stock purchase agreement for Cadillac Jack. The Amaya Seller Note accrues interest on the unpaid principal amount at 5.0% per annum and is payable semi-annually on June 30 and December 31 (and on May 29, 2023, the maturity date of the note), commencing on June 30, 2015. All interest accrued and payable on any interest payment date will be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of the Amaya Seller Note. All principal under the note is due and payable on May 29, 2023.  The

F-37

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

Amaya Seller Note is required to be prepaid under certain circumstances described in more detail in the note agreement. The Company may prepay from time to time all or any portion of the outstanding principal balance due under the Amaya Seller Note.  The Amaya Seller Note includes certain covenants and events of default that are customary for instruments of this type. At December 31, 2016, the Amaya Seller Note totaled $13.0 million, which includes capitalized interest of $1.0 million.

F-38

PLAYAGS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Tax-related valuation allowance	Balance at the beginning of period		Charged to tax expense/(benefit)			Purchase accounting adjustments		Impact of foreign currency exchange rate			Balance at the end of period
Year ended December 31, 2016	$	8,274	$	19,962		$	—	$	(25	)	$	28,211
Year ended December 31, 2015	$	14,260	$	(11,787	)	$	5,727	$	74		$	8,274
Year ended December 31, 2014	$	3,050	$	11,210		$	—	$	—		$	14,260

F-39

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

I, David Lopez, certify that:

1.     I have reviewed this Amendment No. 1 on Form 10-K/A of PlayAGS, Inc. (formerly, AP Gaming Holdco, Inc.);

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 18, 2017

/s/ DAVID LOPEZ

David Lopez

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a)

I, Kimo Akiona, certify that:

1.     I have reviewed this Amendment No. 1 on Form 10-K/A of PlayAGS, Inc. (formerly, AP Gaming Holdco, Inc.);

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: December 18, 2017

/s/ KIMO AKIONA

Kimo Akiona

Chief Financial Officer, Chief Accounting Officer and Treasurer

(Principal Financial and Accounting Officer)

EX-32

Exhibit 32

Certification of Principal Executive Officer and Principal Financial Officer

Pursuant to 18 U.S.C. Section 1350

In connection with this Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K of PlayAGS, Inc. (formerly, AP Gaming Holdco, Inc.) (the "Company") for the year ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), David Lopez, as Chief Executive Officer of the Company, and Kimo Akiona, as Treasurer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1.     The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and

2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: December 18, 2017

/s/ DAVID LOPEZ

David Lopez

President and Chief Executive Officer

(Principal Executive Officer)

Date: December 18, 2017

/s/ KIMO AKIONA

Kimo Akiona

Chief Financial Officer, Chief Accounting Officer and Treasurer

(Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to PlayAGS, Inc.. and will be retained by PlayAGS, Inc.. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2016	Mar. 07, 2017	Jun. 30, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	PlayAGS, Inc.
Entity Central Index Key	0001593548
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-K/A
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Amendment Flag	true
Amendment Description	To revise the following: The Report of Independent Registered Public Accounting Firm, included in Item 8, “Financial Statements and Supplemental Data,” did not include reference to the financial statement schedules as being management’s responsibility as it was inadvertently excluded from the Report of Independent Registered Public Accounting Firm; and The description of the accounting treatment for certain items disclosed in the Company’s consolidated financial statements was not precise and required supplemental disclosures. The inclusion of these items had no impact on the total captions as reported in the Company’s consolidated financial statements and no impact on the operations or results of the Company.
Entity Common Stock, Shares Outstanding		15,041,361
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 0

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents	$ 17,977	$ 35,722
Restricted cash	100	100
Accounts receivable, net of allowance of $1,972 and $113, respectively	24,035	23,653
Inventories	10,729	7,087
Prepaid expenses	2,609	4,642
Deposits and other	3,052	2,440
Total current assets	58,502	73,644
Property and equipment, net	67,926	66,699
Goodwill	251,024	253,851
Deferred tax assets	9	37
Intangible assets	232,877	290,356
Other assets	23,754	26,560
Total assets	634,092	711,147
Current liabilities
Accounts payable	8,790	4,776
Accrued liabilities	17,702	18,254
Current maturities of long-term debt	6,537	6,919
Total current liabilities	33,029	29,949
Long-term debt	547,238	533,290
Deferred tax liability - noncurrent	6,957	15,347
Other long-term liabilities	30,440	32,024
Total liabilities	617,664	610,610
Stockholders' equity
Preferred stock at $0.01 par value; 100,000 shares authorized, no shares issued and outstanding	0	0
Common stock at $0.01 par value; 30,000,100 shares authorized; 100 Class A Shares issued and outstanding at December 31, 2016 and 2015, and 14,931,529 Class B Shares issued and outstanding at December 31, 2016 and 2015.	149	149
Additional paid-in capital	177,276	177,276
Accumulated deficit	(156,451)	(75,077)
Accumulated other comprehensive (loss) income	(4,546)	(1,811)
Total stockholders’ equity	16,428	100,537
Total liabilities and stockholders’ equity	$ 634,092	$ 711,147

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Allowance for trade accounts	$ 1,972	$ 113
Preferred stock, par value (in usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	100,000	100,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	30,000,100	30,000,100
Common Class A [Member]
Common stock, shares issued (in shares)	100	100
Common stock, shares outstanding (in shares)	100	100
Common Class B [Member]
Common stock, shares issued (in shares)	14,931,529	14,931,529
Common stock, shares outstanding (in shares)	14,931,529	14,931,529

XML

Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Revenues
Gaming operations	$ 154,857	$ 117,013	$ 68,981
Equipment sales	11,949	6,279	3,159
Total revenues	166,806	123,292	72,140
Operating expenses
Cost of gaming operations	26,736	23,291	14,169
Cost of equipment sales	6,237	1,548	1,607
Selling, general and administrative	46,108	40,088	19,456
Research and development	21,346	14,376	4,856
Write downs and other charges	3,262	11,766	7,068
Depreciation and amortization	80,181	61,662	33,405
Total operating expenses	183,870	152,731	80,561
Loss from operations	(17,064)	(29,439)	(8,421)
Other expense (income)
Interest expense	59,963	41,642	17,235
Interest income	(57)	(82)	(42)
Other expense (income)	7,404	3,635	573
Loss before income taxes	(84,374)	(74,634)	(26,187)
Income tax benefit (expense)	3,000	36,089	(2,189)
Net Income (Loss)	(81,374)	(38,545)	(28,376)
Foreign currency translation adjustment	(2,735)	(2,099)	289
Total comprehensive loss	$ (84,109)	$ (40,644)	$ (28,087)
Basic and diluted loss per common share:
Basic (in usd per share)	$ (5.45)	$ (2.98)	$ (2.84)
Diluted (in usd per share)	$ (5.45)	$ (2.98)	$ (2.84)
Weighted average common shares outstanding:
Basic (in shares)	14,932	12,918	10,000
Diluted (in shares)	14,932	12,918	10,000

XML

Consolidated Statements of Changes in Stockholders’ Equity/Member’s Deficit Statement - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning balance (in shares) at Dec. 31, 2013		100
Beginning balance at Dec. 31, 2013	$ 91,843		$ 99,900	$ (8,156)	$ (1)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(28,376)			(28,376)
Foreign currency translation adjustment	289				289
Ending balance (in shares) at Dec. 31, 2014		100
Ending balance at Dec. 31, 2014	63,756		99,900	(36,532)	288
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(38,545)			(38,545)
Foreign currency translation adjustment	(2,099)				(2,099)
Issuance of common stock (in shares)		49
Issuance of common stock	77,425		77,376
Ending balance (in shares) at Dec. 31, 2015		149
Ending balance at Dec. 31, 2015	100,537		177,276	(75,077)	(1,811)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(81,374)			(81,374)
Foreign currency translation adjustment	(2,735)				(2,735)
Ending balance (in shares) at Dec. 31, 2016		149
Ending balance at Dec. 31, 2016	$ 16,428		$ 177,276	$ (156,451)	$ (4,546)

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities
Net loss	$ (81,374)	$ (38,545)	$ (28,376)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	80,181	61,662	33,405
Accretion of contract rights under development agreements and placement fees	4,702	496	58
Amortization of deferred loan costs and discount	3,542	2,446	1,242
Payment-in-kind interest capitalized	15,396	8,507	481
Provision (benefit) for bad debts	2,290	106	(450)
Imputed interest income	0	(18)	(36)
Loss on disposition of assets	1,149	1,439	1,936
Impairment of assets	4,749	4,989	2,475
(Benefit) provision of deferred income tax	(7,998)	(38,645)	2,189
Changes in assets and liabilities that relate to operations:
Accounts receivable	(3,191)	(342)	(973)
Inventories	307	1,144	806
Prepaid expenses	2,021	(1,466)	(1,349)
Deposits and other	(315)	11,531	(241)
Other assets, non-current	467	869	(1,476)
Accounts payable and accrued liabilities	12,567	(4,770)	2,791
Net cash provided by (used in) operating activities	34,493	9,403	12,482
Cash flows from investing activities
Business acquisitions, net of cash acquired	0	(374,347)	(10,345)
Collection of notes receivable	0	323	205
Change in Canadian tax receivable	0	0	(154)
Purchase of intangible assets	(1,311)	(6,102)	(9,259)
Software development and other expenditures	(6,526)	(6,476)	(5,127)
Proceeds from disposition of assets	87	29	569
Purchases of property and equipment	(32,879)	(15,277)	(9,811)
Net cash used in investing activities	(40,629)	(401,850)	(33,922)
Cash flows from financing activities
Borrowings under the revolving facility	0	11,500	10,000
Repayments under the revolving facility	0	(21,500)	0
Proceeds from issuance of debt	0	369,400	0
Payments on debt	(6,987)	(4,743)	(2,036)
Payment of previous acquisition obligation	(1,125)	(10,000)	0
Payment of financed placement fee obligations	(3,516)	0	0
Repurchase of shares issued to management	(50)	(1,277)	0
Proceeds from issuance of common stock	0	77,425	0
Proceeds from employees in advance of common stock issuance	75	579	1,969
Payment of deferred loan costs	0	(3,837)	(73)
Net cash provided by financing activities	(11,603)	417,547	9,860
Effect of exchange rates on cash and cash equivalents	(6)	(58)	518
Increase (decrease) in cash and cash equivalents	(17,745)	25,042	(11,062)
Cash and cash equivalents, beginning of period	35,722	10,680	21,742
Cash and cash equivalents, end of period	17,977	35,722	10,680
Supplemental cash flow information:
Cash paid during the period for interest	40,060	30,203	15,315
Cash paid during the period for taxes	1,247	840	0
Non-cash investing and financing activities:
Non-cash consideration given in business acquisitions	0	17,233	11,500
Financed placement fees	0	12,391	0
Financed purchase property and equipment	$ 2,662	$ 5,800	$ 2,717

XML

Description of the Business And Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Description of the Business And Summary of Significant Accounting Policies

DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

PlayAGS, Inc. (formerly, AP Gaming Holdco, Inc.) (the “Company,” “AP Gaming,” “we,” “us,” or “our”) is a leading designer and supplier of gaming products and services for the gaming industry. We operate in legalized gaming markets across the globe and provide state-of-the-art, value-add products in three distinct segments: Electronic Gaming Machines (“EGM”), which includes server-based systems and back-office systems that are used by Class II Native American and Mexican gaming jurisdictions and Class III Native American, commercial and charity jurisdictions; Table Products (“Table Products”), which includes live felt table games, side-bets and progressives as well as our newly introduced card shuffler, “DEX”; and Interactive Social Casino Games(“Interactive”), which provides social casino games on desktop and mobile devices. Each segment's activities include the design, development, acquisition, manufacturing, marketing, distribution, installation and servicing of a distinct product line.

The Company filed a Registration Statement on Form 10 on December 12/19/2013, which went effective under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on December 19, 2013.

Electronic Gaming Machines

Our EGM segment offers a selection of video slot titles developed for the global marketplace, which currently includes ICON, Halo, Colossal Diamonds cabinet (“Big Red”), and Orion. In addition to providing complete EGM units, we offer conversion kits that allow existing game titles to be converted to other game titles offered within that operating platform.

Table Products

Our table products include live proprietary table products and side-bets, as well as ancillary table products. Products include both internally developed and acquired proprietary table products, side-bets, and table technology related to blackjack, poker, baccarat, craps and roulette. We have acquired a number of popular brands, including In-Bet, Buster Blackjack, Double Draw Poker and Criss Cross Poker that are based on traditional well-known public domain games such as blackjack and poker; however, these proprietary games provide intriguing betting options that offer more excitement and greater volatility to the player, ultimately enhancing our casino customers’ profitability. Our Tornado product is unique in that it allows players to control the spin of the roulette ball by pressing a remote ball activation device. We believe this mechanism enhances player interaction without altering traditional roulette rules and procedures; similarly, our Double Ball Roulette game creates a unique game experience by allowing players to use two balls instead of one.

Interactive

Our social gaming products are primarily delivered through our mobile apps, Lucky Play Casino and Vegas Fever. The apps contain several game titles available for consumers to play for fun and with coins that they purchase through the app. Some of our most popular social games include content that is also popular in land-based settings such as Colossal Diamonds, So Hot, and Monkey in the Bank.

Principles of Consolidation

The accompanying consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain amounts in the consolidated financial statements for the previous years have been reclassified to be consistent with the current year presentation. These reclassifications had no effect on the previously reported net loss.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make decisions based upon estimates, assumptions, and factors considered relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of the estimates and assumptions. Accordingly, actual results could differ materially from those anticipated.

Revenue Recognition

Gaming Operations

Gaming operations revenue is earned by providing customers with gaming machines, gaming machine content licenses, back-office equipment and linked progressive systems, which are collectively referred to as gaming equipment, under participation arrangements. The participation arrangements convey the right to use the equipment (i.e. gaming machines and related integral software) for a stated period of time, which typically ranges from one to three years and then the contract continues on a month-to-month basis thereafter. In some instances, the Company will enter arrangements for longer periods of time; however, many of these arrangements include the ability of the customer to cancel the contract and return the games to the Company, a provision which renders their contracts effectively month-to-month contracts. Primarily due to these factors, our participation arrangements are accounted for as operating leases. In some instances, we will offer a free trial period during which no revenue is recognized. If during or at the conclusion of the trial period the customer chooses to enter into a lease for the gaming equipment, we commence revenue recognition according to the terms of the agreement.

Under participation arrangements, the Company retains ownership of the gaming equipment installed at the customer facilities and receives either revenue based on a percentage of the win per day generated by the gaming equipment or a daily fee. Thus, in our consolidated financial statements the Company records revenue monthly related to these arrangements and the gaming equipment is recorded in property and equipment, net on our balance sheet and depreciated over the expected life of the gaming equipment.

The majority of the Company’s leases require the Company to provide maintenance throughout the entire term of the lease. In some cases, a performance guarantee exists that, if not met, provides the customer with the right to return the gaming machines to the Company. This performance guarantee is considered a cancellation clause, a provision which renders their contracts effectively month-to-month contracts. Accordingly, the Company accounts for these contract in a similar manner with its other operating leases as described above. Whether contractually required or not, the Company develops and provides new gaming titles throughout the life of the lease. Certain arrangements require a portion of the win per day to be retained by the customer to fund facility-specific marketing, advertising and promotions. These amounts retained by the customer reduce the monthly revenue recognized on each arrangement.

Gaming operations revenue is also earned from the licensing of table product content and is earned and recognized on a fixed monthly rate. Our social gaming products earn revenue from the sale of virtual coins or chips, which is recorded when the purchased coins or chips are used by the customer.

Equipment Sales

Revenues from the stand-alone product sales or separate accounting units are recorded when:

• Pervasive evidence of an arrangement exists;

• The sales price is fixed and determinable;

• Delivery has occurred and services have been rendered; and

• Collectability is reasonably assured.

Equipment sales are generated from the sale of gaming machines and licensing rights to game content software that is installed in the gaming machine, parts, and other ancillary equipment. Also included within the deliverables are delivery, installation and training, all of which occur within a few days of arriving at the customer location. Gaming equipment sales do not include maintenance beyond a standard warranty period. The recognition of revenue from the sale of gaming devices occurs as title and risk of loss have passed to the customer and all other revenue recognition criteria have been satisfied. As the combination of game content software and the tangible gaming device function together to deliver the product’s essential functionality, revenue from the sale of gaming devices is recognized under U.S. GAAP revenue recognition guidance.

The Company enters into revenue arrangements that may consist of multiple deliverables of its products.

For example, gaming equipment arrangements may include the sale of gaming machines and game content conversion kits.

Revenue associated with arrangements with multiple deliverables is allocated to separate units of accounting if (1) the deliverables have value to the customer on a stand-alone basis or (2) the arrangement includes a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and substantially in the control of the Company.

At the inception of a multiple element arrangement, fees under the arrangement are allocated to deliverables based on their relative selling price. When applying the relative selling price method, a hierarchy is used for estimating the selling price based first on vendor-specific objective evidence (“VSOE”), then third-party evidence (“TPE”) and finally management’s estimate of the selling price (“ESP”). Revenue for each unit of accounting is recognized when the relevant recognition criteria for each respective element has been met.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of deposits held at major banks and other marketable securities with original maturities of 90 days or less.

Restricted Cash

Restricted cash amounts represent funds held in escrow as collateral for the Company’s surety bonds for various gaming authorities and funds held to ensure the availability of funds to pay wide-area progressive jackpot awards.

Receivables, Allowance for Doubtful Accounts

Accounts receivable are stated at face value less an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts related to accounts receivable and notes receivable, which are non-interest bearing, deemed to have a high risk of collectability. The Company reviews the accounts receivable and notes receivable on a monthly basis to determine if any receivables will potentially be uncollectible. The Company analyzes historical collection trends and changes in the customers’ payment patterns, customer concentration, and credit worthiness when evaluating the adequacy of the allowance for doubtful accounts. A large percentage of receivables are with Native American tribes and the Company has concentrations of credit risk with several tribes. The Company includes any receivable balances that are determined to be uncollectible in the overall allowance for doubtful accounts. Changes in the assumptions or estimates reflecting the collectability of certain accounts could materially affect the allowance for both accounts and notes receivable.

The following provides financial information concerning the change in our allowance for doubtful accounts (in thousands):

	Allowance for Accounts Receivables Year ended December 31, 2016
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	113	$	(431	)	$	—	$	2,290	$	1,972

	Allowance for Accounts Receivables Year ended December 31, 2015
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	29	$	(22	)	$	—	$	106	$	113

	Allowance for Accounts Receivables Year ended December 31, 2014
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	9	$	(36	)	$	—	$	56	$	29

Inventories

Inventories consist primarily of parts and supplies that are used to repair and maintain machinery and equipment as well as EGMs in production and finished goods held for sale. Inventories are stated at net realizable value. Cost of inventories is determined using the first-in, first-out (“FIFO”) method for all components of inventory. The Company regularly reviews inventory quantities and updates estimates for the net realizable value of inventories. This process includes examining the carrying values of parts and ancillary equipment in comparison to the current fair market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of the inventories, the current and projected sales levels for such products, the projected markets for such products and the costs required to sell the products, including refurbishment costs. Changes in the assumptions or estimates could materially affect the inventory carrying value.

Property and Equipment

The cost of gaming equipment, consisting of gaming equipment as well as other property and equipment, is depreciated over their estimated useful lives, using the straight-line method for financial reporting. The Company capitalizes costs incurred for the refurbishment of used gaming equipment that is typically incurred to refurbish a machine in order to return it to its customer location. The refurbishments extend the life of the gaming equipment beyond the original useful life. Repairs and maintenance costs are expensed as incurred. The Company routinely evaluates the estimated lives used to depreciate assets. The estimated useful lives are as follows:

Gaming equipment	3 to 6 years
Other property and equipment	3 to 6 years

The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. The Company groups long-lived assets for impairment analysis at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, which is typically at the individual gaming machine level or at the cabinet product line level. Impairment testing is performed and losses are estimated when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount.

When the estimated undiscounted cash flows are not sufficient to recover the asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future cash flows expected to be generated by the asset. The Company’s policy is to impair, when necessary, excess or obsolete gaming machines on hand that it does not expect to be used. Impairment is based upon several factors, including estimated forecast of gaming machine demand for placement into casinos. While the Company believes that the estimates and assumptions used in evaluating the carrying amount of these assets are reasonable, different assumptions could affect either the carrying amount or the estimated useful lives of the assets, which could have a significant impact on the results of operations and financial condition.

Intangible Assets

The Company reviews its identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment losses are recognized for identifiable intangibles, other than goodwill, when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount.

When the estimated undiscounted cash flows are not sufficient to recover the intangible asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

Certain trade names have an indefinite useful life and the Company tests these trade names for possible impairment at least annually, on October 1, or whenever events or changes in circumstances indicate that the carrying value may be impaired. We perform a qualitative assessment to determine if it is more likely than not that the fair value of the asset is less than its carrying amount. If we believe, as a result of our qualitative assessment, that it is more likely than not that the fair value of the asset is less than its carrying amount, the quantitative impairment test is required.

Costs of Computer Software

Internally developed gaming software represents the Company’s internal costs to develop gaming titles to utilize on the Company’s gaming machines. Internally developed gaming software is stated at cost and amortized over the estimated useful lives of the software, using the straight-line method. Software development costs are capitalized once technological feasibility has been established and are amortized when the software is placed into service. The computer software we develop reaches technological feasibility when a working model of the computer software is available. Any subsequent software maintenance costs, such as bug fixes and subsequent testing, are expensed as incurred. Discontinued software development costs are expensed when the determination to discontinue is made. Software development costs are amortized over the expected life of the title or group of titles, if applicable, to amortization expense.

On a quarterly basis, or more frequently if circumstances warrant, the Company compares the net book value of its internally developed computer software to the net realizable value on a title or group of title basis. The net realizable value is determined based upon certain assumptions, including the expected future revenues and net cash flows of the gaming titles or group of gaming titles utilizing that software, if applicable.

Goodwill

The excess of the purchase price of an acquired business over the estimated fair value of the assets acquired and the liabilities assumed is recorded as goodwill. The Company tests for possible impairment of goodwill at least annually, on October 1, or when circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company has the option to begin with a qualitative assessment, commonly referred to as “Step 0”, to determine whether it is more likely than not that the reporting unit’s fair value of goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as the general economic environment, industry and market conditions, changes in key assumptions used since the most recently performed valuation and overall financial performance of the reporting units. If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company performs a quantitative goodwill impairment analysis, and depending upon the results of that measurement, the recorded goodwill may be written down and charged to income from operations when its carrying amount exceeds its estimated fair value.

Acquisition Accounting

The Company applies the provisions of ASC 805, “Business Combinations” (ASC 805), in accounting for business acquisitions. It requires us to recognize separately from goodwill the fair value of assets acquired and liabilities assumed on the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are inherently uncertain and subject to refinement and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

Fair Value of Financial Instruments

The Company applies the provisions of ASC 820, “Fair Value Measurements” (ASC 820) to its financial assets and liabilities. Fair value is defined as a market-based measurement intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. ASC 820 also established a fair value hierarchy, which requires an entity to maximize the use of observable inputs when measuring fair value. These inputs are categorized as follows:

• Level 1 - quoted prices in an active market for identical assets or liabilities;

• Level 2 - quoted prices in an active market for similar assets or liabilities, inputs other than quoted prices that are observable for similar assets or liabilities, inputs derived principally from or corroborated by observable market data by correlation or other means; and

• Level 3 - valuation methodology with unobservable inputs that are significant to the fair value measurement.

The carrying values of the Company’s cash and cash equivalents, restricted cash, receivables and accounts payable approximate fair value because of the short term maturities of these instruments. The fair value of our long-term debt is based on the quoted market prices for similar issues (Level 2 inputs). The estimated fair value of our long-term debt was $557.8 million and $529.2 million as of December 31, 2016 and 2015, respectively.

Accounting for Income Taxes

We conduct business globally and are subject to income taxes in U.S. federal, state, local, and foreign jurisdictions. Determination of the appropriate amount and classification of income taxes depends on several factors, including estimates of the timing and probability of realization of deferred income taxes, reserves for uncertain income tax positions and income tax payment timing.

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Taxes on income of our foreign subsidiaries are provided at the tax rates applicable to the tax jurisdictions in which they are located. Future tax benefits are recognized to the extent that realization of those benefits is considered more likely than not and a valuation allowance is established for deferred tax assets which do not meet this threshold.

The recoverability of certain deferred tax assets is based in part on estimates of future income and the timing of temporary differences, and the failure to fully realize such deferred tax assets could result in a higher tax provision in future periods.

We apply the accounting guidance to our uncertain tax positions and under the guidance, we may recognize a tax benefit from an uncertain position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the issue. The amount recognized in the financial statements is the largest benefit that we believe has greater than a 50% likelihood of being realized upon settlement.

We are required to make significant judgments when evaluating our uncertain tax positions and the related tax benefits. We believe our assumptions are reasonable; however, there is no guarantee that the final outcome of the related matters will not differ from the amounts reflected in our income tax provisions and accruals. We adjust our liability for uncertain tax positions based on changes in facts and circumstances such as the closing of a tax audit or changes in estimates. Our income tax provision may be impacted to the extent that the final outcome of these tax positions is different than the amounts recorded.

Contingencies

The Company assesses its exposures to loss contingencies including claims and legal proceedings and accrues a liability if a potential loss is considered probable and the amount can be estimated. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, if the actual loss from a contingency differs from management’s estimate, there could be a material impact on the results of operations or financial position. Operating expenses, including legal fees, associated with contingencies are expensed when incurred.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable, net. Cash equivalents are investment-grade, short-term debt instruments consisting of treasury bills which are maintained with high credit quality financial institutions under repurchase agreements. Cash and cash equivalents are in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of December 31, 2016 and 2015, the Company did not have cash equivalents.

Revenue from gaming operations is concentrated in the Class II gaming and casino industry, primarily located in Oklahoma. For the years ended December 31, 2016, 2015 and 2014, approximately 15%, 20% and 30% of our gaming revenue was derived from one customer, respectively. Another customer accounted for approximately 10% of our gaming operations revenue for the year ended December 31, 2016, with no concentrations noted for the years ended December 31, 2015 and 2014.

For the year ended December 31, 2016, approximately 10% of our gaming revenue was derived in Mexico. For the years ended December 31, 2015 and 2014, the company did not have a concentration of revenue from Mexico exceeding 10%. The Company had one customer with accounts receivable, net equaling approximately 10% of total outstanding accounts receivable, net at December 31, 2016 and none at December 31, 2015 and 2014.

Foreign Currency Translation

The financial statements of the Company’s foreign subsidiaries are translated into U.S. dollars at the period end rate of exchange for asset and liability accounts and the weighted average rate of exchange for income statement accounts. The effects of these translations are recorded as a component of accumulated other comprehensive (loss) income in stockholders’ equity.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs for the year ended December 31, 2016, 2015 and 2014 were $0.7 million, $0.2 million and $0.3 million, respectively.

Research and Development

Research and development costs related primarily to software product development costs and is expensed as incurred until technological feasibility has been established. Employee related costs associated with product development are included in research and development.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued an accounting standards update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies the principles for recognizing revenue from contracts with customers. The amendment outlines a single comprehensive model for entities to depict the transfer of goods or services to customers in amounts that reflect the payment to which a company expects to be entitled in exchange for those goods or services. The amendment also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. The ASU may be adopted using either a full retrospective transition method or a modified retrospective transition method and will be adopted by the Company on January 1, 2018. The Company does not expect adoption of the new revenue standards to have a material impact on its consolidated financial statements as the majority of our revenue is recognized under lease accounting guidance.

In June 2014, the FASB issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period. The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The Company adopted the guidance in the current year and it did not have a material effect on our financial condition, results of of operations or cash flows.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern. The ASU requires management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, consolidated in the aggregate, indicate that it is probable that an entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Currently, there is no guidance in U.S. GAAP for management's responsibility to perform an evaluation. Under the update, management's evaluation is to be performed when preparing financial statements for each annual and interim reporting period and based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The Company adopted the guidance on January 1, 2016 and it did not have a material effect on our financial condition, results of operations or cash flows.

In January 2015, the FASB issued ASU No. 2015-01, Income Statement-Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates from GAAP the concept of extraordinary items. The presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that were previously classified as extraordinary. ASU 2015-01 is effective for the Company on January 1, 2016, with earlier adoption permitted using either a prospective or retrospective method. This ASU did not have a material effect on our financial condition, results of operations or cash flows.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 intends to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.  In August 2015, the FASB issued ASU 2015-15 which clarifies that the guidance issued in April 2015 does not apply to line-of-credit arrangements. According to ASU 2015-15, line-of-credit arrangements will continue to present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the arrangement. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company adopted the guidance on January 1, 2016, with retrospective application in the accompanying Condensed Consolidated Balance Sheet at December 31, 2015. This change in accounting principle resulted in net deferred financing costs of $7.8 million incurred in connection with the issuance of the Company's long-term debt (excluding revolving credit facilities) at December 31, 2015 being reclassified as a direct reduction of the long-term debt balance. The presentation of the net deferred financing costs incurred in connection with the issuance of the Company's revolving credit facilities as of December 31, 2015, are not affected by the adoption of this new accounting guidance and are included in other assets in the accompanying Consolidated Balance Sheet.

In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory. ASU 2015-11 changes the criteria for measuring inventory within the scope of the ASU. Inventory will now be measured at the lower of cost and net realizable value, while the concept of market value will be eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The ASU will be effective for the Company beginning on January 1, 2017. The Company does not expect the provisions of the ASU to have a material effect on our financial condition, results of operations or cash flows.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement to retrospectively apply adjustments made to provisional amounts recognized in a business combination. It requires that an acquirer recognize and disclose adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, which should be calculated as if the accounting had been completed at the acquisition date. The Company adopted the guidance on January 1, 2016. The amendments in this ASU was applied prospectively to adjustments to provisional amounts that occur after the effective date of this ASU with earlier application permitted for financial statements that have not been issued. This guidance did not have a material effect on our financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 intends to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The adoption of this guidance is expected to result in a significant portion of our operating leases, where we are the lessee, to be recognized on our Consolidated Balance Sheets. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with earlier adoption permitted. The Company is currently evaluating the provisions of the amendment and the impact on its future consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 intends to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the provisions of ASU 2016-15 to have a material effect on our financial condition, results of operations or cash flows.

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Acquisitions

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Acquisitions

ACQUISITIONS

Cadillac Jack

On May 29, 2015, the Company acquired 100% of the equity of Amaya Americas Corporation (“Cadillac Jack”), a leading provider of Class II gaming machines for the North American tribal gaming market, with key regions of operation within Alabama, Mexico, and Wisconsin. This acquisition is expected to create growth opportunities in Class II and Class III jurisdictions and expands the Company’s geographic footprint with an EGM installed base of approximately 10,500 units. The combined management teams are complementary and possess years of combined experience that is expected to allow us to effectively grow and improve our business.

The acquisition was funded primarily from cash proceeds of incremental borrowings on our existing term loans, the issuance of senior secured PIK notes, as described in Note 6, and the issuance of additional common stock, as described in Note 7. The consideration also included a promissory note to the seller, Amaya Inc., for $12.0 million, as described in Note 6, as well as a contingent receivable that was recorded at its estimated fair value on the date of the acquisition. The contingent receivable is related to a clause in the stock purchase agreement allowing for a refund of up to $25.0 million if certain deactivated gaming machines in Mexico are not in operation by November 29, 2016. As of December 31, 2016 the estimated fair value of the contingent receivable is recorded in other long-term assets. In the first quarter 2017, the Company reached an agreement with Amaya, Inc. to receive $5.1 million for this contingent receivable.

The following summarizes the consideration paid for Cadillac Jack (in thousands):

Contractual cash purchase price adjusted for working capital	$	369,760
Seller note	12,000
Contingent receivable	(1,300		)
Total consideration	$	380,460

We have recorded Cadillac Jack’s assets acquired and liabilities assumed based on our estimates of their fair values at the acquisition date. The determination of the fair values of the assets acquired and liabilities assumed (and the related determination of estimated lives of depreciable and amortizable tangible and identifiable intangible assets) requires significant judgment and estimates. The estimates and assumptions used include the projected timing and amount of future cash flows and discount rates that reflect risk inherent in the future cash flows.

The allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

	At May 29, 2015
Currents assets(1)	$	34,871
Property and equipment	29,634
Goodwill	171,497
Intangible assets	199,752
Other long-term assets	23,828
Total assets	459,582
Current liabilities	8,636
Deferred tax liability non-current	51,486
Other long-term liabilities	19,000
Total equity purchase price	$	380,460

⁽¹⁾Current assets includes $4.2 million of cash acquired.

Based on our estimates, the total consideration exceeded the aggregate estimated fair value of the acquired assets and assumed liabilities at the acquisition date and has been recorded as goodwill. We attribute this goodwill to our enhanced financial scale and geographic diversification, opportunities for synergies, assembled workforce and other strategic benefits. None of the goodwill associated with the acquisition is deductible for income tax purposes and, as such, no deferred taxes have been recorded related to goodwill.

We included an estimated value of $8.3 million in current assets above and in deposits and other in the consolidated balance sheet related to the value of stock options held by employees of Cadillac Jack. The stock options entitled the holder to purchase shares of Amaya Inc., the former global parent of Cadillac Jack, based on the holder’s continued employment at Cadillac Jack through the vesting date, which was November 29, 2015.

Our estimates of the fair values of depreciable tangible assets are as follows (in thousands):

	Fair values at May 29, 2015		Average remaining useful life (in years)
Gaming equipment	$	23,065	1 - 5
Other property and equipment	6,569		2 - 3
Total property and equipment	$	29,634

Our estimates of the fair values of identifiable intangible assets are as follows (in thousands):

	Fair values at May 29, 2015		Average remaining useful life (in years)
Trade names	$	3,000	5
Brand names	10,600		3 - 5
Customer relationships	107,000		5 - 12
Gaming software and technology platforms	79,152		2 - 7
Total intangible assets	$	199,752

The fair value of gaming equipment and other personal property assets as well as the fair value of gaming content software was primarily determined using cost approaches in which we determined an estimated reproduction or replacement cost, as applicable.

The estimated fair values of acquired trade names, brand names and gaming technology platforms was primarily determined using the royalty savings method, which is a risk-adjusted discounted cash flow approach. The gaming technology platforms include $30.0 million of in-process research and development. The royalty savings method values an intangible asset by estimating the royalties saved through ownership of the asset. The royalty savings method requires identifying the future revenue that would be impacted by the trade name or intellectual property (or royalty-free rights to the assets), multiplying it by a royalty rate deemed to be avoided through ownership of the asset and discounting the projected royalty savings amounts back to the acquisition date.  The royalty rate used in such valuation was based on a consideration of market rates for similar categories of assets.

The estimated fair values of customer relationships was determined using the excess earnings method, which is a risk-adjusted discounted cash flow approach that determines the value of an intangible asset as the present value of the cash flows attributable to such asset after excluding the proportion of the cash flows that are attributable to other assets. The contribution to the cash flows that are made by other assets - such as fixed assets, working capital, workforce and other intangible assets - was estimated through contributory asset capital charges. The value of the acquired customer relationship asset is the present value of the attributed post-tax cash flows, net of the post-tax return on fair value attributed to the other assets.

The estimated fair value of deferred income taxes was determined by applying the appropriate enacted statutory tax rate to the temporary differences that arose on the differences between the financial reporting value and tax basis of the assets acquired and liabilities assumed. We recorded liabilities for estimated uncertain tax positions in other long-term liabilities and a related indemnification receivable in other long-term assets.

The revenue and net loss of Cadillac Jack from the acquisition date through December 31, 2015, are presented below and are included in our consolidated statements of operations and comprehensive loss. These amounts are not necessarily indicative of the results of operations that Cadillac Jack would have realized if it had continued to operate as a stand-alone company during the period presented, primarily due to the elimination of certain headcount and administrative costs since the acquisition date resulting from integration activities or due to costs that are now reflected in our unallocated corporate costs and not allocated to Cadillac Jack.

	From May 29, 2015 through December 31, 2015
Revenue	$	46,075
Net loss	$	17,133

The following unaudited pro forma statements of operations give effect to the Cadillac Jack acquisition as if it had been completed on January 1, 2014. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the acquisition been completed on January 1, 2014. In addition, the unaudited pro forma financial information does not purport to project future operating results. This information is preliminary in nature and subject to change based on final purchase price adjustments. The pro forma statements of operations do not reflect: (1) any anticipated synergies (or costs to achieve synergies) or (2) the impact of non-recurring items directly related to the Cadillac Jack acquisition.

	Year ended December 31,
	2015		2014
Revenue	$	156,110	$	160,341
Net loss	$	54,682	$	83,709

Gamingo Limited

On June 15, 2015, the Company purchased 100% of the equity of Gamingo Limited (formerly known as “RocketPlay”, currently known as “AGSi”), a leading gaming company developing social casino titles for mobile devices. With primary offices in San Francisco and Tel Aviv, AGSi’s flagship product, Lucky Play Casino, gives players a casino-quality experience with EGMs, table products, tournaments, and live events. The total consideration of $8.8 million includes an estimated $5.0 million of contingent consideration that is payable based on the operating results of AGSi during a twelve-month measurement period that ended on December 31, 2016. The amount of the contingent consideration recorded was estimated at the purchase date and is subject to change based on changes in the estimated operating results of AGSi and has been recorded in other long-term liabilities in the consolidated balance sheet. As of December 31, 2015 the recorded value of the contingent consideration was written off in full to write downs and other charges based on the estimated fair value on that date.

We have recorded AGSi’s assets acquired and liabilities assumed based on our preliminary estimates of their fair values at the acquisition date. The allocation of the consideration given was allocated to the estimated fair values of the assets acquired and the liabilities assumed, which primarily included $4.9 million of goodwill and $4.2 million of identifiable intangible assets to be amortized over a weighted average period of 3 years.

Intellectual Property Acquisitions

During the quarter ended September 30, 2015, the Company acquired certain intangible assets related to the purchase of table products and table product related intellectual property.  Some of the acquisitions were accounted for as an acquisition of a business and the assets acquired and liabilities assumed were measured based on our preliminary estimates of their fair values at the acquisition dates. The total consideration of $10.0 million includes an estimated $1.5 million of contingent consideration that is payable periodically based on a percentage of product revenue earned on the related table products.  The amount of the contingent consideration recorded was estimated at the purchase date and is subject to change based on changes in the estimated product revenue and has been recorded in other long-term liabilities in the consolidated balance sheet.  The consideration was allocated primarily to goodwill for $3.4 million and intangible assets for $5.7 million, which will be amortized over a weighted average period of 8.5 years.

2014 Acquisitions

On May 6, 2014, the Company purchased100%of the equity of C2 Gaming, LLC (“C2 Gaming”) for $23.3 million in cash, subject to terms outlined in the equity purchase agreement (the “C2 Acquisition Agreement”). C2 Gaming is an innovative manufacturer and developer of EGMs based in Las Vegas, Nevada. The purchase was expected to provide for the distribution of C2 Gaming’s platform and content to an increased number of markets in the United States. The acquisition was funded by an initial cash payment and an agreement to pay the sellers $9.0 million on the one-year anniversary of the closing of the acquisition, which was paid during the quarter ended June 30, 2015. The acquisition also included an amount of contingent consideration of $3.0 million that was payable upon the satisfaction of certain milestones, including the submission and approval of video slot platforms to various jurisdictions as outlined in the C2 Acquisition Agreement.

The following summarizes the consideration paid for C2 Gaming (in thousands):

Paid at close	$	11,000
One-year payment	9,000
Contingent consideration	3,000
Working capital adjustment	273
Total consideration	$	23,273

During the year ended December 31, 2014, the Company paid $0.5 million of the contingent consideration. In May 2015, the C2 Acquisition Agreement was amended to reduce the remaining contingent consideration liability of $2.5 million to $2.1 million and to acknowledge that the milestones of the C2 Acquisition Agreement were satisfied. In July 2015, the Company paid $1.0 million of the contingent consideration, reducing the balance to $1.1 million, which was paid in January 2016.

The allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

At May 6, 2014
Current assets	$	545
Property and equipment	534
Goodwill	13,744
Intangible assets	8,722
Total assets	23,545
Total liabilities	272
Total equity purchase price	$	23,273

Our estimates of the fair values of depreciable tangible assets were as follows (in thousands):

	Fair values at May 6, 2014		Average remaining useful life (in years)
Property and equipment	$	534	1 - 5

Our estimates of the fair values of identifiable intangible assets were as follows (in thousands):

	Fair values at May 6, 2014		Average remaining useful life (in years)
Gaming software and technology platforms	$	3,685	3 - 5
Customer relationships	5,037		7
Total intangible assets	$	8,722

The fair value of property and equipment as well as the fair value of gaming content software was determined using cost approaches in which we determined an estimated reproduction or replacement cost, as applicable.

The estimate of the fair value of the acquired gaming software and technology platforms was determined using the relief from royalty method under the income approach, which is a risk-adjusted discounted cash flow approach. The relief from royalty method values an intangible asset by estimating the royalties saved through ownership of the asset.

The estimate of the fair value of the acquired customer relationships was determined using the excess earnings method, which is a risk-adjusted discounted cash flow approach that determines the value of an intangible asset as the present value of the cash flows attributable to such asset after excluding the proportion of the cash flows that are attributable to other assets.

The goodwill recorded as a results of the acquisition is deductible for tax purposes and is attributed to enhanced financial scale, expanded video slot platforms and other strategic benefits. Some of the values and amounts used in the initial application of purchase accounting for our consolidated balance sheet were based on estimates and assumptions.

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Property and Equipment

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Abstract]

Property and Equipment

PROPERTY AND EQUIPMENT

Property and equipment, net consist of the following (in thousands):

	December 31, 2016			December 31, 2015
Gaming equipment	$	108,635		$	89,361
Other property and equipment	13,900			14,976
Less: Accumulated depreciation	(54,609		)	(37,638		)
Total property and equipment, net	$	67,926		$	66,699

Gaming equipment and other property and equipment are depreciated over the respective useful lives of the assets ranging from three to six years. Depreciation expense was $27.0 million, $23.4 million and $16.8 million for the years ended December 31, 2016, 2015 and 2014, respectively.

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Goodwill and Intangibles

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles

GOODWILL AND INTANGIBLES

There were no accumulated impairments of goodwill as of December 31, 2016. Changes in the carrying amount of goodwill are as follows (in thousands):

	Gross Carrying Amount
	EGM			Table Products		Interactive			Total
Balance at December 31, 2014	$	77,617		$	—	$	—		$	77,617
Acquisition - Cadillac Jack	171,497			—		—			171,497
Acquisition - AGSi	—			—		4,855			4,855
Acquisition - Intellectual Property	—			2,600		—			2,600
Foreign currency adjustments	(2,282		)	—		—			(2,282		)
Other	(409		)	—		(27		)	(436		)
Balance at December 31, 2015	246,423			2,600		4,828			253,851
Foreign currency adjustments	(3,627		)	—		—			(3,627		)
Purchase accounting adjustment	—			800		—			800
Balance at December 31, 2016	$	242,796		$	3,400	$	4,828		$	251,024

The Company performed an annual impairment test on each of its reporting units as of October 1, 2016.  For the EGM and Table Product reporting units we began with a qualitative assessment, commonly referred to as “Step 0”, and determined it is not more likely than not that the EGM and Table Product reporting units’ fair value of goodwill are less than their carrying value. This qualitative assessment primarily relied on the significant amount of cushion determined in prior year quantitative analyses, favorable current forecasts compared to those used in the prior year analysis, the general economic environment and industry and market conditions. 

For the Interactive reporting unit, which has a goodwill carrying value of $4.8 million, the Company performed a quantitative, or “Step 1” analysis.  In performing the interim Step 1 goodwill impairment test for our Interactive reporting unit, we estimated the fair value of the Interactive reporting unit using an income approach that analyzed projected discounted cash flows. We used projections of revenues and operating costs with estimated growth rates during the forecast period, capital expenditures and cash flows that considered historical and estimated future results and general economic and market conditions, as well as the estimated impact of planned business and operational strategies. The estimates and assumptions used in the discounted cash flow analysis included a terminal year long-term growth rate of 4.0% and an overall discount rate of 15% based on our weighted average cost of capital for the Company and premiums for the small size of the reporting unit and forecast risk.

The Step 1 analysis determined that the Interactive reporting unit’s fair value was greater than its carrying value. 

Intangible assets consist of the following (in thousands):

		December 31, 2016							December 31, 2015
	Useful Life (years)	Gross Value		Accumulated Amortization			Net Carrying Value		Gross Value		Accumulated Amortization			Net Carrying Value
Indefinite lived trade names	Indefinite	$	12,126	$	—		$	12,126	$	12,126	$	—		$	12,126
Trade and brand names	7	13,600		(4,671		)	8,929		13,600		(1,721		)	11,879
Customer relationships	7	165,078		(49,528		)	115,550		170,927		(26,676		)	144,251
Contract rights under development and placement fees	1 - 7	16,488		(5,235		)	11,253		16,311		(548		)	15,763
Gaming software and technology platforms	1 - 7	123,596		(49,014		)	74,582		116,930		(23,735		)	93,195
Intellectual property	10 - 12	12,780		(2,343		)	10,437		14,030		(888		)	13,142
		$	343,668	$	(110,791	)	$	232,877	$	343,924	$	(53,568	)	$	290,356

Intangible assets are amortized over their respective estimated useful lives ranging from one to twelve years. Amortization expense related to intangible assets was $53.2 million, $38.3 million and $16.6 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Management reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the years ended December 31, 2015 and 2014, the Company recognized impairment charges related to internally developed gaming titles of $3.4 million and $1.4 million, respectively. There were no impairments related to internally developed gaming titles for the year ended December 31, 2016.

The Company enters into development agreements and placement fee agreements with certain customers to secure floor space under lease agreements for its gaming machines. Amounts paid in connection with the development agreements are repaid to the Company in accordance with the terms of the agreement, whereas placements fees are not reimbursed. For development agreements in the form of a loan, interest income is recognized on the repayment of the notes based on the stated rate or, if not stated explicitly in the development agreement, on an imputed interest rate. If the stated interest rate is deemed to be other than a market rate or zero, a discount is recorded on the note receivable as a result of the difference between the stated and market rate and a corresponding intangible asset is recorded. The intangible asset is recognized in the financial statements as a contract right under development agreement and amortized as a reduction in revenue over the term of the agreement. Placement fees can be in the form of cash paid upfront or free lease periods and are accreted over the life of the contract and the expense is recorded as a reduction of revenue. We recorded a reduction of gaming operations revenue from the accretion of contract rights under development agreements and placement fees of $4.7 million and $0.5 million for the years ended December 31, 2016 and 2015, respectively. The amount amortized in 2014 was nominal.

The estimated amortization expense of definite-lived intangible assets as well as the accretion of contract rights under development and placement fees, for each of the next five years and thereafter is as follows (in thousands):

	Amortization Expense		Placement Fee Accretion
For the year ended December 31,
2017	$	50,153	$	4,564
2018	48,626		3,794
2019	42,064		2,609
2020	25,951		57
2021	7,655		39
Thereafter	35,050		189
Total	$	209,499	$	11,252

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Accounts Payable and Accrued Liabilities

12 Months Ended

Dec. 31, 2016

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities

ACCRUED LIABILITIES

Accrued liabilities consist of the following (in thousands):

	December 31,
	2016		2015
Salary and payroll tax accrual	$	6,594	$	5,851
Taxes payable	2,128		2,440
Accrued interest	2		8
C2 Gaming contingent consideration (see Note 2)	—		1,125
Placement fees payable	4,000		4,525
Accrued other	4,978		4,305
Total accrued liabilities	$	17,702	$	18,254

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Long-Term Debt

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Long-Term Debt

LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

	December 31,
	2016			2015
Senior secured credit facilities:
Term loans, interest at LIBOR or base rate plus 8.25% (9.25% at December 31, 2016), net of unamortized discount of $15.1 million and $18.2 million at December 31, 2016 and December 31, 2015, respectively.	$	395,581		$	396,717
Senior secured PIK notes, net of unamortized discount of $3.5 million and $3.9 million at December 31, 2016 and December 31, 2015, respectively.	133,286			118,764
Seller notes	20,116			18,902
Equipment long-term note payable and capital leases	4,792			5,826
Total debt(1)	553,775			540,209
Less: Current portion	(6,537		)	(6,919		)
Long-term debt	$	547,238		$	533,290

^{(1) Pursuant to the adoption of ASU 2015-03, debt issuance costs of $7.8 million were deducted from the carrying amount of related debt as of December 31, 2015.}  

Senior Secured Credit Facilities

On December 20, 2013, the Company entered into our senior secured credit facilities, which consisted of $155.0 million in term loans and a $25.0 million revolving credit facility. On May 29, 2015, the Company entered into incremental facilities for $265.0 million in term loans and on June 1, 2015, the Company entered into an incremental agreement for an additional $15.0 million of incremental revolving commitments. The proceeds of the incremental term loans were used primarily to pay the consideration for the Cadillac Jack acquisition.

The term loans will mature on December 20, 2020, and the revolving credit facility will mature on December 20, 2018. The term loans require scheduled quarterly payments in amounts equal to 0.25% of the original aggregate principal amount of the term loans, with the balance due at maturity. Borrowings under the term loans bear interest at a rate equal to, at the Company’s option, either LIBOR or the base rate, subject to an interest rate floor plus an applicable margin rate. Borrowings under the revolving credit facility bear interest at a rate equal to, at the Company’s option, either LIBOR or the base rate plus an applicable margin rate. In addition, on a quarterly basis, the Company is required to pay each lender under the revolving credit facility a commitment fee in respect of any unused commitments thereunder at a rate of 0.50% per annum.

The senior secured credit facilities are guaranteed by AP Gaming Holdings, LLC, the AP Gaming I, LLC’s (the “Borrower”) material, wholly owned domestic subsidiaries (subject to certain exceptions), and are secured by a pledge by AP Gaming Holdings, LLC of the Borrower’s equity interest directly held by AP Gaming Holdings, LLC and a pledge of substantially all of the existing and future property and assets of the Borrower and the subsidiary guarantors, subject to certain exceptions. The senior secured credit facilities require that the Borrower maintain a maximum net first lien leverage ratio set at a maximum of 5.5 to 1. The senior secured credit facilities contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined. The senior secured credit facilities also contain customary events of default included in similar financing transactions, including, among others, failure to make payments when due, default under other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. The Company was in compliance with the covenants of the senior secured credit facilities at December 31, 2016.

Senior Secured PIK Notes

On May 29, 2015, the Company entered into a note purchase agreement with AP Gaming Holdings, LLC, as subsidiary guarantor (the “Subsidiary Guarantor”), Deutsche Bank AG, London Branch, as purchaser (the “Purchaser”), and Deutsche Bank Trust Company Americas, as collateral agent.  Pursuant to the agreement, the Company issued $115.0 million of its 11.25% senior secured PIK notes due 2021 (the “Notes”) at an issue price of 97% of the principal amount thereof to the Purchaser in a private placement exempt from registration under the Securities Act of 1933, as amended.  The Notes are secured by the Company’s equity in its subsidiary AP Gaming, Inc., subject to certain limitations including those imposed by gaming laws, and are unconditionally guaranteed by the Subsidiary Guarantor.

Interest on the Notes will accrue at a rate of 11.25% per annum. The Company may elect to pay interest due on the Notes in cash, by increasing the principal of the outstanding Notes or by issuing new Notes (“PIK interest”) for the entire amount of the interest payment or by paying interest partially in cash and partially in PIK interest. Interest on the Notes will accrue from the date of issuance and will be payable on the dates described in more detail in the agreement.  The Notes will mature on May 28, 2021.  The net proceeds of the Notes were used primarily to finance the Cadillac Jack acquisition.

The Notes contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined. The Notes also contains customary events of default included in similar transactions, including, among others, failure to make payments when due, acceleration of other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. At December 31, 2016, the Notes totaled $133.3 million, which includes capitalized interest of $21.8 million.

Seller Notes

On December 20, 2013, the Company issued two promissory notes (the “AGS Seller Notes”) to AGS Holdings, LLC, in the amounts of $2.2 million and $3.3 million, to the previous owners of the Company’s primary operating company. At December 31, 2016, notes payable related to the AGS Seller Notes totaled $7.1 million, which includes capitalized interest of $1.6 million. The AGS Seller Notes accrue interest on the unpaid principal balance at 8.5% per annum and shall be payable semi-annually in arrears on June 30 and December 31, commencing on June 30, 2014. Any interest accrued and payable on any interest payment date will be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of this AGS Seller Notes. All principal and interest under the AGS Seller Notes is due and payable on June 18, 2021, the maturity date. The Company may prepay from time to time all or any portion of the outstanding principal balance due under the AGS Seller Notes.

On May 29, 2015, the Company issued a promissory note to Amaya Inc. (the “Amaya Seller Note”) with an initial principal amount of $12.0 million to satisfy the conditions set forth in the stock purchase agreement for Cadillac Jack. The Amaya Seller Note accrues interest on the unpaid principal amount at 5.0% per annum and is payable semi-annually on June 30 and December 31 (and on May 29, 2023, the maturity date of the note), commencing on June 30, 2015. All interest accrued and payable on any interest payment date will be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of the Amaya Seller Note. All principal under the note is due and payable on May 29, 2023.  The Amaya Seller Note is required to be prepaid under certain circumstances, such as refinancing our senior secured credit facilities or a public equity offering as described in the note agreement. The Company may prepay from time to time all or any portion of the outstanding principal balance due under the Amaya Seller Note.  The Amaya Seller Note includes certain covenants and events of default that are customary for instruments of this type. At December 31, 2016, the Amaya Seller Note totaled $13.0 million, which includes capitalized interest of $1.0 million.

Equipment Long Term Note Payable and Capital Leases

The Company has entered into a financing agreement to purchase certain gaming devices, systems and related equipment and has entered into leases for servers and equipment that are accounted for as capital leases.

Scheduled Maturities of Long-Term Debt

Aggregate contractual future principal payments (excluding the effects of repayments for excess cash flow) of long-term debt for the years following December 31, 2016, are as follows (in thousands):

For the year ending December 31,
2017	$	6,537
2018	6,350
2019	4,605
2020	397,953
2021	143,920
Thereafter	12,998
Total scheduled maturities	572,363
Unamortized debt discount and debt issuance costs	(18,588		)
Total long-term debt	$	553,775

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Stockholders' Equity

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Stockholders' Equity

STOCKHOLDERS’ EQUITY

Common Stock

The Company’s common stock consists of two classes: class A voting common stock (“Class A Shares”) and class B non-voting common stock (“Class B Shares”). The holders of the Class A Shares are entitled to one vote per share on all matters to be voted on by the stockholders of the Company. The holders of the Class A Shares have no economic rights or privileges, including rights in liquidation, and have no right to receive dividends or any other distributions. The holders of the Class B Shares have no right to vote on any matter to be voted on by the stockholders of the Company. Each holder of Class B Shares is entitled to share equally, share for share, dividends declared, as well as any distributions to the stockholders, and in the event of the Company’s liquidation, dissolution or winding up, is entitled to share ratably in any remaining assets after payment of or provision for liabilities and the liquidation on preferred stock, if any.

On April 28, 2014, our controlling stockholder exchanged its 10,000,000 Class A Shares for 10,000,000 Class B Shares. On May 29, 2015, we issued an additional 4,931,529 Class B Shares to our controlling stockholder for total proceeds of $77.4 million. The funds received from the May 2015 issuance of Class B Shares were used, in addition to proceeds from the issuance of long-term debt, to fund the acquisition of Cadillac Jack.

As of December 31, 2016, 108,307 Class B Shares issued to “Management Holder,” as defined in the Securityholders Agreement dated April 28, 2014 (the “Securityholders Agreement”) were outstanding. The Class B Shares were sold to the Management Holder and are not considered issued for accounting purposes as they contain a substantive performance condition, a “Qualified Public Offering,” as defined in the Securityholders Agreement, which must be probable for the Management Holder to benefit from the ownership of the shares. As a result, shares issued to the Management Holder are not considered issued for accounting purposes until such time that the performance condition is probable and the Company has recorded a liability in other long-term liabilities of $1.3 million for the proceeds from the sale of the Class B Shares. No share-based compensation expense for Class B Shares has been recognized and none will be recognized for these shares until the performance condition is considered to be probable.

Class B Shares that are held by a Management Holder are subject to repurchase rights (the “Repurchase Rights”), as outlined in Section 6 of the Securityholders Agreement, that are contingent on the Management Holder’s termination. The Repurchase Rights enable the Company to recover the Class B Shares issued to a Management Holder without transferring any appreciation of the fair value of the stock to the Management Holder upon certain terminations of the Management Holder’s employment prior to a “Qualified Public Offering”, as defined in the Securityholders Agreement. If a Management Holder’s employment is terminated by the Company prior to the consummation of a Qualified Public Offering for “Cause”, as defined in the Securityholders Agreement, or is terminated by such Management Holder without “Good Reason”, as defined in the Securityholders Agreement, then the Company shall have the right to repurchase all or any portion of the Class B Shares held by such Management Holder for the lesser of original cost and fair market value. If a Management Holder’s employment is terminated by the Company prior to the consummation of a Qualified Public Offering other than as described above and in the Securityholders Agreement, then the Company shall have the right to repurchase all or any portion of the Class B Shares held by such Management Holder for fair market value.

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Write Downs and Other Charges

12 Months Ended

Dec. 31, 2016

Write Downs And Other Charges [Abstract]

Write Downs and Other Charges

WRITE DOWNS AND OTHER CHARGES

During the year ended December 31, 2016, the Company recognized $3.3 million in write-downs and other charges, driven by a $3.3 million impairment of an intangible asset related to a customer contract that the Company expects will provide less benefit than originally estimated from the Cadillac Jack acquisition (a level 3 fair value measurement based on a decrease in projected cash flows). The value of the intangible asset was written down to $1.1 million at an interim date and subsequently fully amortized by December 31, 2016. Additionally the Company recorded a write-down of long-lived assets of $2.0 million related to older generation gaming machines (level 3 fair value measurement based on projected cash flow for the specific assets) in which the long-lived assets were written down to $0, and losses from the disposal of assets of $1.0 million. These charges were offset by a $3.0 million fair value adjustment to a contingent consideration receivable related to the Cadillac Jack acquisition (level 3 fair value measurement based on expected and probable future realization of the receivable).

For the year ended December 31, 2015, the Company recognized $11.8 million in write-downs and other charges primarily related to acquisition related charges of $8.2 million. The Company also recognized a full impairment to intangible assets of $3.4 million related to game titles (level 3 fair value measurement based on projected cash flows for the specific game titles), write offs related to prepaid royalties of $1.3 million, losses from the disposal of assets of $1.3 million and the impairment of long-lived assets of $0.2 million (level 3 fair value measurement based on projected cash flow for the specific assets with an estimated fair value of $0), fair value adjustment of $3.4 million to the asset associated with the stock options of Amaya, Inc. described in Note 2 (level 2 fair value measurement primarily based on the stock price of Amaya, Inc. with a final estimated fair value of $4.9 million), partially offset by write downs of primarily contingent consideration of $6.1 million that is described in Note 2 (level 3 fair value measurements based on projected cash flows).

For the year ended December 31, 2014, the Company recognized $7.1 million in write-downs and other charges primarily related to acquisition charges of $2.8 million, losses from the disposal of assets of $1.9 million, an impairment to intangible assets of $1.4 million (level 3 fair value measurement based on projected cash flow for the specific assets) and an impairment of long-lived assets of $0.8 million (level 3 fair value measurement based on projected cash flow for the specific assets).

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Basic and Diluted Loss Per Share

12 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Basic and Diluted Loss Per Share

BASIC AND DILUTED LOSS PER SHARE

The Company computes net income (loss) per share in accordance with accounting guidance that requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the consolidated statement of operations and comprehensive income (loss). Basic EPS is computed by dividing net income (loss) for the period by the weighted average number of shares outstanding during the period. Basic EPS excludes Class B Shares issued to Management Holders until the performance condition or termination event is considered probable (see Note 7). Until such time, the Class B Shares issued to Management Holders will be included in the calculation of diluted EPS using the treasury stock method and are treated as stock options. Diluted EPS is computed by dividing net income (loss) for the period by the weighted average number of common shares outstanding during the period, increased by potentially dilutive common shares that were outstanding during the period. Diluted EPS excludes all potential dilutive shares if their effect is anti-dilutive. Potentially dilutive common shares include stock options and restricted stock (see Note 11).

There were no potentially dilutive securities for the years ended December 31, 2016, 2015, 2014.

Excluded from the calculation of diluted EPS for the year ended December 31, 2016 and December 31, 2015, were 50,000 restricted shares and 0.3 million stock options, as such securities were anti-dilutive. Excluded from the calculation of diluted EPS for the year ended December 31, 2014, were 50,000 restricted shares and 0.4 million stock options, as such securities were anti-dilutive.

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Benefit Plans

12 Months Ended

Dec. 31, 2016

Retirement Benefits [Abstract]

Benefit Plans

BENEFIT PLANS

The Company has established a 401(k) defined contribution plan (the “401(k) Plan”) for its employees. The 401(k) Plan allows employees to contribute up to 15% of their pretax earnings, and the Company may match a percentage of the contributions on a discretionary basis. The expense associated with the 401(k) Plan for the years ended December 31, 2016, 2015 and 2014 was $0.9 million, $0.6 million and $0.3 million, respectively. The increase in the expense associated with the 401(k) Plan in each year is primarily attributable to increased headcount and participation.

On April 28, 2014, the board of directors of the Company approved the 2014 Long-Term Incentive Plan (“LTIP”). Under the LTIP, the Company is authorized to grant nonqualified stock options, rights to purchase Class B Shares, restricted stock, restricted stock units and other awards to be settled in, or based upon, Class B Shares to persons who are directors and employees of and consultants to the Company or any of its subsidiaries on the date of the grant. The LTIP will terminate ten years after approval by the board. Subject to adjustments in connection with certain changes in capitalization, the maximum number of Class B Shares that may be delivered pursuant to awards under the LTIP is 1,250,000. As of December 31, 2016, approximately 200,000 shares remain available for issuance.

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Share-Based Compensation

12 Months Ended

Dec. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

SHARE-BASED COMPENSATION

Stock Options

The Company has granted stock awards to eligible participants under the LTIP. The stock awards include options to purchase the Company’s Class B Shares. These stock options include a combination of service and market conditions, as further described below. In addition, these stock options include a performance vesting condition, a Qualified Public Offering (see Note 7), which is not considered to be probable as of December 31, 2016. As a result, no share-based compensation expense for stock options has been recognized and none will be recognized for these stock awards until the performance condition is considered to be probable. The amount of unrecognized compensation expense associated with stock options was $6.1 million and for restricted stock was $0.5 million at December 31, 2016. When the performance condition is considered probable, the stock awards will vest in accordance with the underlying service and market conditions.

The Company calculated the grant date fair value of stock options that vest over a service period using the Black Scholes model. For stock options that contain a market condition related to the return on investment that the Company’s stockholders achieve, the options were valued using a lattice-based option valuation model. The assumptions used in these calculations are noted in the following table. Expected volatilities are based on implied volatilities from comparable companies. The expected time to liquidity is based on management’s estimate. The risk-free rate is based on the U.S. Treasury yield curve for a term equivalent to the estimated time to liquidity. The expected dividend yield is 0% for all stock awards.

	Year Ended December 31,
	2016	2015	2014
Option valuation assumptions:
Expected dividend yield	—%	—%	—%
Expected volatility	56%	55%	73%
Risk-free interest rate	1.64%	1.69%	1.63%
Expected term (in years)	6.3	6.4	5.0

Stock option awards represent options to purchase Class B Shares and are granted pursuant to the Company’s LTIP, and include options that the Company primarily classifies as Tranche A, Tranche B and Tranche C.

Tranche A options are eligible to vest in equal installments of 20% on each of the first five anniversaries of the date of the grant, subject to continued employment with the Company or its subsidiaries in addition to the performance vesting condition of a Qualified Public Offering described above. In the event of a termination of employment without cause or as a result of death or disability, any such time based options which would have vested on the next applicable vesting date shall become vested, and the remaining unvested time based options shall be forfeited. In addition, upon a Change in Control (as defined in the Company’s 2014 Long-Term Incentive Plan), subject to continued employment through the date of the Change in Control, all outstanding unvested time based options shall immediately vest. An initial public offering does not qualify as a Change in Control as it relates to the vesting of stock options.

All other option awards are eligible to vest upon the satisfaction of certain performance conditions (collectively, “Performance Options”) in addition to the performance vesting condition of a Qualified Public Offering described above. Tranche B options are eligible to vest based on achievement of an Investor IRR equal to or in excess of 20%, subject to a minimum cash-on-cash return of 2.5 times the Investor Investment (as such terms are defined in the Company’s 2014 Long-Term Incentive Plan). Tranche C options are eligible to vest based on achievement of an Investor IRR equal to or in excess of 25%, subject to a minimum cash-on-cash return of 3.0 times the Investor Investment. In the event of a termination of employment without cause or as a result of death or disability, any Performance Options which are outstanding and unvested will remain eligible to vest subject to achievement of such performance targets (without regard to the continued service requirement) until the first anniversary of the date of such termination. As of December 31, 2016, the Company had 381,666 Performance Options outstanding.

A summary of the changes in stock options outstanding during the year ended December 31, 2016, is as follows:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Term (years)	Aggregate Intrinsic Value
Options outstanding as of December 31, 2015	765,375		$	12.46
Granted	247,600		$	17.01
Canceled	(117,875	)	$	15.25
Options outstanding as of December 31, 2016	895,100		$	13.35	8.2	$	3,457,748

No options expired or were forfeited for the year ended December 31, 2016.

The following is provided for stock options granted:

	Year Ended December 31,
	2016		2015		2014
Weighted average grant date fair value	$	8.96	$	7.44	$	5.38

Restricted awards

During the year ended December 31, 2014, the Company granted 50,000 restricted Class B Shares that vest in five equal installments on each of the first five anniversaries of the grant date in addition to the performance vesting condition of a Qualified Public Offering described above. As of December 31, 2016, the Company had 50,000 unvested restricted shares outstanding with a weighted average grant date fair value of $10. No restricted stock was granted, canceled or forfeited during the years ended December 31, 2016 and 2015. This restricted stock includes a service condition and a performance vesting condition (a Qualified Public Offering), which was not considered to be probable of occurring as of December 31, 2016. As a result, no share-based compensation expense was recognized for the years ended December 31, 2016, 2015 and 2014, and none will be recognized for restricted stock until the performance condition is considered to be probable. When the performance condition is considered probable, the stock awards will vest in accordance with the underlying service condition.

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Restructuring

12 Months Ended

Dec. 31, 2016

Restructuring and Related Activities [Abstract]

Restructuring

RESTRUCTURING

We recorded no employee termination and restructuring costs during the year ended December 31, 2016. We recorded employee termination and restructuring costs of $1.4 million and $1.2 million during the years ended December 31, 2015 and 2014, respectively. We do not anticipate additional costs associated with the following plans in excess of amounts accrued below. Employee termination and restructuring costs are classified in selling, general and administrative as well as research and development expense and have been recorded for the following restructuring plans.

Cadillac Jack Integration Plan

In June 2015, we took actions to reduce the staff in all of our locations and to streamline our operations and cost structure. The Company has also entered into retention agreements with certain employees that will be paid upon the completion of their service period.

The following table summarizes the change in our restructuring accruals for the year ended December 31, 2016 (in thousands), which is included in accounts payable and accrued liabilities in the consolidated balance sheets:

	December 31, 2015		Charge to expense		Cash paid		December 31, 2016
Accrued severance	$	37	$	—	$	37	$	—
Total	$	37	$	—	$	37	$	—

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Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The components of loss before provision for income taxes are as follows (in thousands):

	Year ended December 31,
	2016			2015			2014
Domestic	$	(69,020	)	$	(66,728	)	$	(26,187	)
Foreign	(15,354		)	(7,906		)	—
Loss before provision for income taxes	$	(84,374	)	$	(74,634	)	$	(26,187	)

The income tax (benefit) expense is as follows (in thousands):

	Year ended December 31,
	2016			2015			2014
Current:
Federal	$	(958	)	$	932		$	—
State	113			(10		)	7
Foreign	5,865			1,424			—
Total current income tax expense	5,020			2,346			7
Deferred:
Federal	(7,550		)	(34,589		)	2,005
State	(31		)	(2,506		)	177
Foreign	(439		)	(1,340		)	—
Total deferred income (benefit) expense	(8,020		)	(38,435		)	2,182
Income tax (benefit) expense	$	(3,000	)	$	(36,089	)	$	2,189

The reconciliation of income tax at the federal statutory rate to the actual effective income tax rate (benefit) is as follows:

	Year ended December 31,
	2016		2015		2014
Federal statutory rate	(35.0	)%	(35.0	)%	(34.0	)%
Foreign rate differential	0.2	%	0.7	%	—	%
State income taxes, net of federal benefit	—	%	(2.5	)%	(0.8	)%
Nondeductible loan costs	1.8	%	1.5	%	—	%
Nondeductible transaction costs	—	%	1.6	%	—	%
Other differences	3.2	%	0.2	%	0.6	%
Expiration of tax credits	1.9	%	—	%	—	%
Uncertain tax positions	0.6	%	0.3	%	—	%
Valuation allowance	23.7	%	(15.2	)%	42.6	%
	(3.6	)%	(48.4	)%	8.4	%

The components of the net deferred tax liability consist of the following (in thousands):

	December 31,
	2016			2015
Deferred tax assets:
Accrued expenses	$	662		$	608
Allowance for bad debt	1,175			1,176
Payroll accruals	1,818			2,085
Foreign tax credits	9,541			8,834
Net operating loss carryforwards	47,019			35,862
Property and equipment, net	1,830			—
Research and development credits	1,420			1,569
Loan costs and interest	3,441			3,519
Other	1,654			2,017
Total deferred tax assets	68,560			55,670
Valuation allowance	(28,211		)	(8,274		)
Deferred tax assets, net of valuation allowance	$	40,349		$	47,396
Deferred tax liabilities:
Prepaid expenses and other	$	(512	)	$	(1,033	)
Intangible assets	(46,785		)	(60,309		)
Property and equipment, net	—			(1,364		)
Deferred tax liabilities	(47,297		)	(62,706		)
Net deferred tax liabilities	$	(6,948	)	$	(15,310	)

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. Due to cumulative foreign losses, there is no deferred tax liability recorded for unremitted foreign earnings.

The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize the existing deferred tax assets. On the basis of this evaluation, as of December 31, 2016, a valuation allowance of $28.2 million has been established against deferred tax assets.

The Company’s Mexican customers are required under the U.S.-Mexico tax treaty to withhold 10% of their payments due to the Company for license fees, which can be used as foreign tax credits on the Company’s U.S. federal income tax return. The foreign tax credits are not refundable, but can be carried forward for 10 years to offset future tax liability. Of the Company’s $9.5 million in foreign tax credits, approximately $1.7 million begin to expire starting in 2017. In addition, the Company has $1.4 million of research and development credits which begin to expire in 2028. A full valuation allowance has been recorded on the foreign tax credits and research and development credits.

The Company has net operating loss (“NOL”) carryforwards for U.S. federal purposes of $115.9 million, in foreign jurisdictions of $18.6 million and various U.S. states of $43.6 million. The U.S. federal NOL carryforwards begin to expire in 2031, the Mexican NOL carryforwards begin to expire in 2021, and the U.S. state NOL carryforwards begin to expire in 2018.

The Company has uncertain tax positions with respect to prior tax filings. The uncertain tax positions, if asserted by taxing authorities, would result in utilization of the Company’s tax credit and operating loss carryovers. The credit and operating loss carryovers presented as deferred tax assets are reflected net of these unrecognized tax benefits.

The Company had the following activity for unrecognized tax benefits in 2016 and 2015 (amounts in thousands):

	December 31, 2016			December 31, 2015
Balance-beginning of year	$	29,523		$	—
Acquisitions	—			29,701
Increases based on tax positions of the current year	1,005			795
Decreases due to lapse of statute	(236		)	—
Increases based on tax positions of the prior years	1,963			—
Decreases based on tax positions of the prior years	(664		)	—
Currency translation adjustments	(1,427		)	(973		)
Balance-end of year	$	30,164		$	29,523

As of December 31, 2014, we have not recorded a reserve for unrecognized tax benefits or penalties.

The Company applies a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes the impact of a tax position in the financial statements when the position is more likely than not of being sustained on audit based on the technical merits of the position.

The total amount of unrecognized tax benefits as of December 31, 2016 was $30.2 million. Of this amount, $11.5 million, if recognized, would be included in our Consolidated Statements of Operations and Comprehensive Loss and have an impact on our effective tax rate. The Company does not anticipate a material reduction of its liability for unrecognized tax benefits before December 31, 2017.

The Company recognizes interest and penalties accrued for unrecognized tax benefits in income tax expense. Related to the unrecognized tax benefits noted above, the Company accrued penalties and interest of $0.4 million during 2016 and in total, as of December 31, 2016, has recognized a liability for penalties and interest of $8.4 million.

The Company entered into an indemnification agreement with the prior owners of Cadillac Jack whereby the prior owners have agreed to indemnify the Company for changes in tax positions by taxing authorities for periods prior to the acquisition. As of December 31, 2016, an indemnification receivable of $16.4 million has been recorded as an other asset in the financial statements. This amount includes the indemnification of the original pre-acquisition tax positions along with any related accrued interest and penalties and is also recorded as a liability for unrecognized tax benefits in other long-term liabilities. The Company concluded that it is probable the indemnification receivable is realizable based on an evaluation of the ability of Cadillac Jack’s prior owner, including a review of its public filings, that demonstrates its financial resources are sufficient to support the amount recorded. If the related unrecognized tax benefits are subsequently recognized, a corresponding charge to relieve the associated indemnification receivables would be recognized in our Consolidated Statements of Operations and Comprehensive Loss and have an impact on operating income.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Leases

The Company leases administrative and warehouse facilities and certain equipment under non-cancelable operating leases. Rent expense was $2.5 million, $2.0 million, and $0.8 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Future minimum lease payments under these leases in excess of one year as of December 31, 2016 are as follows (in thousands):

For the year ended December 31,
2017	$	1,533
2018	1,177
2019	1,054
2020	1,091
2021	649
Thereafter	157
Total	$	5,661

Other commitments and contingencies

The Company is subject to federal, state and Native American laws and regulations that affect both its general commercial relationships with its Native American tribal customers, as well as the products and services provided to them. Periodically, the Company reviews the status of each significant matter and assesses the potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. If a potential loss from any claim or legal proceeding is considered reasonably possible, the Company discloses an estimate of the possible loss or range of possible loss, or a statement that such an estimate cannot be made. There are no matters that meet the criteria for disclosure outlined above. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, accruals are based only on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to their pending claims and litigation and may revise its estimates. Such revisions in the estimates of the potential liabilities could have a material impact on the results of operations and financial condition.

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Operating Segments

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Operating Segments

OPERATING SEGMENTS

In the fourth quarter of fiscal year 2016, the Company revised its business segment disclosures to report results by segment in accordance with the “management approach.” The management approach designates the internal reporting used by our chief operating decision maker, who is our Chief Executive Officer, for making decisions and assessing performance of our reportable segments.

See Note 1 for a detailed discussion of our three segments. Each segment’s activities include the design, development, acquisition, manufacturing, marketing, distribution, installation and servicing of its product lines. We evaluate the performance of our operating segments based on revenues and segment adjusted EBITDA.

Segment revenues include leasing, licensing, or selling of products within each reportable segment. Segment adjusted EBITDA includes the revenues and operating expenses from each segment adjusted for depreciation, amortization, write downs and other charges, accretion of placement fees, non-cash stock compensation expense, as well as other costs such as certain acquisitions and integration related costs including restructuring and severance charges; legal and litigation expenses including settlement payments; new jurisdictions and regulatory licensing costs; non-cash charges on capitalized installation and delivery; contract cancellation fees; and other adjustments primarily composed of professional fees incurred by the Company for projects, corporate and public filing compliance and other costs deemed to be non-recurring in nature. Revenues in each segment are attributable to third parties and segment operating expenses are directly associated with the product lines included in each segment such as research and development, product approval costs, product-related litigation expenses, sales commissions and other directly-allocable sales expenses. Cost of gaming operations and cost of equipment sales primarily include the cost of products sold, service, manufacturing overhead, shipping and installation.

Segment adjusted EBITDA excludes other income and expense, income taxes and certain expenses that are managed outside of the operating segments.

The following provides financial information concerning our reportable segments for the years ended December 31:

	2016			2015			2014
Revenues by segment
EGM	$	156,407		$	119,617		$	72,028
Table Products	2,674			1,672			112
Interactive	7,725			2,003			—
Total Revenues	166,806			123,292			72,140
Adjusted EBITDA by segment
EGM	91,729			66,267			40,552
Table Products	(1,663		)	(1,402		)	(343		)
Interactive	(4,727		)	(2,518		)	—
Subtotal	85,339			62,347			40,209
Write downs and other:
Loss on disposal of long lived assets	978			1,275			1,937
Impairment of long lived assets	5,295			4,993			2,327
Fair value adjustments to contingent consideration and other items	(3,000		)	(2,667		)	—
Acquisition costs	(11		)	8,165			2,804
Depreciation and amortization	80,181			61,662			33,405
Accretion of placement fees(1)	4,702			496			58
Non-cash stock compensation	—			4,911			—
Acquisitions & integration related costs including restructuring & severance	5,411			7,818			3,582
Legal & litigation expenses including settlement payments	1,565			1,916			450
New jurisdictions and regulatory licensing costs	1,315			256			266
Non-cash charge on capitalized installation and delivery	1,680			1,441			643
Non-cash charges and loss on disposition of assets	2,478			234			561
Other adjustments	1,809			1,286			2,597
Interest expense	59,963			41,642			17,235
Interest income	(57		)	(82		)	(42		)
Other expense (income)	7,404			3,635			573
Loss before income taxes	$	(84,374	)	$	(74,634	)	$	(26,187	)

(1) Non-cash expense related to the accretion of contract rights under development agreements and placement fees.

The Company’s Chief Operating Decision Maker (the “CODM”) does not receive a report with a measure of total assets or capital expenditures for each reportable segment as this information is not used for the evaluation of segment performance. The CODM assesses the performance of each segment based on adjusted EBITDA and not based on assets or capital expenditures due to the fact that two of the Company’s reportable segments, Table Products and Interactive, are not capital intensive. Any capital expenditure information is provided to the CODM on a consolidated basis. Therefore, the Company has not provided asset and capital expenditure information by reportable segment.

The following provides financial information concerning our operations by geographic area for the years ended December 31 (in thousands):

	Year ended December 31,
Revenue:	2016		2015		2014
United States	138,510		110,392		72,140
Other	28,296		12,900		—
	166,806		123,292		72,140
	Year ended December 31,
Long-lived assets, end of year:	2016		2015		2014
United States	$	70,208	$	63,858	$	44,045
Other	5,169		6,909		69
	$	75,377	$	70,767	$	44,114

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Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2016

Quarterly Financial Information Disclosure [Abstract]

Selected Quarterly Financial Data (Unaudited)

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables present selected quarterly financial information for 2016 and 2015, as previously reported (in thousands).

	Quarter ended March 31, 2016			Quarter ended June 30, 2016			Quarter ended September 30, 2016			Quarter ended December 31, 2016
Consolidated Income Statement Data:
Revenues	$	40,235		$	42,618		$	41,208		$	42,745
Gross profit[1]	33,792			32,599			33,799			33,643
Loss from operations	(4,206		)	(4,338		)	(7,117		)	(1,403		)
Net (loss) income	(21,066		)	(18,839		)	(21,235		)	(20,234		)
Basic loss per share	(1.41		)	(1.26		)	(1.42		)	(1.36		)
Diluted loss per share	(1.41		)	(1.26		)	(1.42		)	(1.36		)

	Quarter ended March 31, 2015			Quarter ended June 30, 2015			Quarter ended September 30, 2015			Quarter ended December 31, 2015
Consolidated Income Statement Data:
Revenues	$	18,795		$	26,296		$	38,105		$	40,096
Gross profit[1]	15,516			20,429			30,641			31,867
Loss from operations	(3,736		)	(11,339		)	(13,017		)	(1,347		)
Net (loss) income	(9,235		)	2,849			(23,279		)	(8,880		)
Basic income (loss) per share	(0.92		)	0.24			(1.56		)	(0.69		)
Diluted income (loss) per share	(0.92		)	0.24			(1.56		)	(0.69		)

[1] Gross profit is total revenues less cost of gaming operations and cost of equipment sales, exclusive of depreciation and amortization.

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Schedule I [Schedule]

12 Months Ended

Dec. 31, 2016

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule I

CONDENSED BALANCE SHEETS

(in thousands, except share data)

	December 31,
	2016			2015
Assets
Current assets
Cash and cash equivalents	$	10,171		$	25,972
Prepaid expenses	40			63
Total current assets	10,211			26,035
Deferred tax asset	—			3,528
Investment in subsidiaries	153,926			203,390
Total assets	$	164,137		$	232,953
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued liabilities	$	36		$	—
Intercompany payables	93			20
Total current liabilities	129			20
Long-term debt	146,284			131,125
Other long-term liabilities	1,296			1,271
Total liabilities	147,709			132,416
Stockholders’ equity:
Common stock	149			149
Additional paid-in capital	177,276			177,276
Retained earnings	(156,451		)	(75,077		)
Accumulated other comprehensive loss	(4,546		)	(1,811		)
Total stockholders’ equity	16,428			100,537
Total liabilities and stockholders’ equity	$	164,137		$	232,953

PLAYAGS, INC.

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF OPERATIONS

(in thousands)

	Year ended December 31,
	2016			2015			2014
Operating expenses
Selling, general and administrative	$	231		$	546		$	1,512
Total operating expenses	231			546			1,512
Loss from operations	(231		)	(546		)	(1,512		)
Other expense (income)
Equity in net loss of subsidiaries	62,450			33,405			26,870
Interest expense	15,165			8,123			—
Interest income	—			(1		)	(6		)
Loss before income taxes	(77,846		)	(42,073		)	(28,376		)
Income tax benefit (expense)	(3,528		)	3,528			—
Net loss	(81,374		)	(38,545		)	(28,376		)
Foreign currency translation adjustment	(2,735		)	(2,099		)	289
Total comprehensive loss	$	(84,109	)	$	(40,644	)	$	(28,087	)

.

(PARENT COMPANY ONLY)

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands, except per share data)

	Year ended December 31,
	2016			2015			2014
Cash flows from operating activities
Net loss	$	(81,374	)	$	(38,545	)	$	(28,376	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Amortization of deferred loan costs and discount	340			143			—
Payment-in-kind interest capitalized	14,819			7,980			—
Equity in net loss of subsidiaries	62,450			33,405			26,870
(Benefit) provision of deferred income tax	3,528			(3,528		)	—
Changes in assets and liabilities that relate to operations:
Prepaid expenses	23			6			(69		)
Intercompany payable/receivable	148			455			455
Accounts payable and accrued liabilities	35			(24		)	24
Net cash (used in) provided by operating activities	(31		)	(108		)	(1,096		)
Cash flows from investing activities
Investment in subsidiaries	(15,720		)	(172,484		)	(11,635		)
Distributions received from subsidiaries	—			1,322			2,737
Net cash used in investing activities	(15,720		)	(171,162		)	(8,898		)
Cash flows from financing activities
Proceeds from issuance of debt	—			111,550			—
Proceeds from issuance of common stock	—			77,425			—
Proceeds from employees in advance of common stock issuance	—			579			1,969
Repurchase of shares issued to management	(50		)	(277		)	—
Payment of deferred loan costs	—			(548		)	—
Net cash provided by financing activities	(50		)	188,729			1,969
Increase (decrease) in cash and cash equivalents	(15,801		)	17,459			(8,025		)
Cash and cash equivalents, beginning of period	25,972			8,513			16,538
Cash and cash equivalents, end of period	$	10,171		$	25,972		$	8,513
Non-cash investing and financing activities:
Subsidiary payment for share repurchase on Company’s behalf	$	—		$	1,000		$	—
Intercompany payable settled as distribution	$	—		$	890		$	—
Incurrence of Amaya Seller Note	$	—		$	12,000		$	—

, INC.

(PARENT COMPANY ONLY)

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The parent company financial statements of PlayAGS, Inc. (formerly, AP Gaming Holdco, Inc.) (the “ Parent Company”) should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes thereto. For purposes of these condensed financial statements, the Parent Company’s wholly owned and majority owned subsidiaries are recorded based upon its proportionate share of the subsidiaries’ net assets (similar to presenting them on the equity method).

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted since this information is included in the Company’s consolidated financial statements included elsewhere in this Form 10-K.

NOTE 2 - COMMITMENTS AND CONTINGENCIES

The Parent Company is a holding company and, as a result, its ability to pay dividends is dependent on its subsidiaries’ ability to obtain funds and its subsidiaries' ability to provide funds to it. Restrictions are imposed by its subsidiaries' debt instruments, which significantly restrict certain key subsidiaries holding a majority of its assets from making dividends or distributions to the Parent Company. These restrictions are subject to certain exceptions for affiliated overhead expenses as defined in the agreements governing the debt instruments, unless certain financial and non-financial criteria have been satisfied.

Long-term debt of the Parent Company consists of the senior secured PIK notes and the Amaya Seller Note as described below.

Senior Secured PIK Notes

On May 29, 2015, the Company entered into a note purchase agreement with AP Gaming Holdings, LLC, as subsidiary guarantor (the “Subsidiary Guarantor”), Deutsche Bank AG, London Branch, as purchaser (the “Purchaser”), and Deutsche Bank Trust Company Americas, as collateral agent.  Pursuant to the agreement, the Company issued $115.0 million of its 11.25% senior secured PIK notes due 2021 (the “Notes”) at an issue price of 97% of the principal amount thereof to the Purchaser in a private placement exempt from registration under the Securities Act of 1933, as amended.  The Notes are secured by the Company’s equity in its subsidiary AP Gaming, Inc., subject to certain limitations including those imposed by gaming laws, and are unconditionally guaranteed by the Subsidiary Guarantor.

Interest on the Notes will accrue at a rate of 11.25% per annum. The Company may elect to pay interest due on the Notes in cash, by increasing the principal of the outstanding Notes or by issuing new Notes (“PIK interest”) for the entire amount of the interest payment or by paying interest partially in cash and partially in PIK interest. Interest on the Notes will accrue from the date of issuance and will be payable on the dates described in more detail in the agreement.  The Notes will mature on May 28, 2021.  The net proceeds of the Notes were used primarily to finance the Cadillac Jack acquisition.

The Notes contain limitations on additional indebtedness, guarantees, incurrence of liens, investments and distributions, as defined. The Notes also contains customary events of default included in similar transactions, including, among others, failure to make payments when due, acceleration of other material indebtedness, breach of covenants, breach of representations and warranties, involuntary or voluntary bankruptcy, and material judgments. At December 31, 2016, the Notes totaled $133.3 million, which includes capitalized interest of $21.8 million.

Seller Note

On May 29, 2015, the Company issued a promissory note to Amaya Inc. (the “Amaya Seller Note”) with an initial principal amount of $12.0 million to satisfy the conditions set forth in the stock purchase agreement for Cadillac Jack. The Amaya Seller Note accrues interest on the unpaid principal amount at 5.0% per annum and is payable semi-annually on June 30 and December 31 (and on May 29, 2023, the maturity date of the note), commencing on June 30, 2015. All interest accrued and payable on any interest payment date will be paid by capitalizing such interest and adding it to (and thereby increasing) the outstanding principal amount of the Amaya Seller Note. All principal under the note is due and payable on May 29, 2023.  The Amaya Seller Note is required to be prepaid under certain circumstances described in more detail in the note agreement. The Company may prepay from time to time all or any portion of the outstanding principal balance due under the Amaya Seller Note.  The Amaya Seller Note includes certain covenants and events of default that are customary for instruments of this type. At December 31, 2016, the Amaya Seller Note totaled $13.0 million, which includes capitalized interest of $1.0 million.

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Schedule II - Valuation and Qualifying Accounts [Schedule]

12 Months Ended

Dec. 31, 2016

Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Tax-related valuation allowance	Balance at the beginning of period		Charged to tax expense/(benefit)			Purchase accounting adjustments		Impact of foreign currency exchange rate			Balance at the end of period
Year ended December 31, 2016	$	8,274	$	19,962		$	—	$	(25	)	$	28,211
Year ended December 31, 2015	$	14,260	$	(11,787	)	$	5,727	$	74		$	8,274
Year ended December 31, 2014	$	3,050	$	11,210		$	—	$	—		$	14,260

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying consolidated financial statements include the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain amounts in the consolidated financial statements for the previous years have been reclassified to be consistent with the current year presentation. These reclassifications had no effect on the previously reported net loss.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make decisions based upon estimates, assumptions, and factors considered relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of the estimates and assumptions. Accordingly, actual results could differ materially from those anticipated.

Revenue Recognition

Revenue Recognition

Gaming Operations

Gaming operations revenue is earned by providing customers with gaming machines, gaming machine content licenses, back-office equipment and linked progressive systems, which are collectively referred to as gaming equipment, under participation arrangements. The participation arrangements convey the right to use the equipment (i.e. gaming machines and related integral software) for a stated period of time, which typically ranges from one to three years and then the contract continues on a month-to-month basis thereafter. In some instances, the Company will enter arrangements for longer periods of time; however, many of these arrangements include the ability of the customer to cancel the contract and return the games to the Company, a provision which renders their contracts effectively month-to-month contracts. Primarily due to these factors, our participation arrangements are accounted for as operating leases. In some instances, we will offer a free trial period during which no revenue is recognized. If during or at the conclusion of the trial period the customer chooses to enter into a lease for the gaming equipment, we commence revenue recognition according to the terms of the agreement.

Under participation arrangements, the Company retains ownership of the gaming equipment installed at the customer facilities and receives either revenue based on a percentage of the win per day generated by the gaming equipment or a daily fee. Thus, in our consolidated financial statements the Company records revenue monthly related to these arrangements and the gaming equipment is recorded in property and equipment, net on our balance sheet and depreciated over the expected life of the gaming equipment.

The majority of the Company’s leases require the Company to provide maintenance throughout the entire term of the lease. In some cases, a performance guarantee exists that, if not met, provides the customer with the right to return the gaming machines to the Company. This performance guarantee is considered a cancellation clause, a provision which renders their contracts effectively month-to-month contracts. Accordingly, the Company accounts for these contract in a similar manner with its other operating leases as described above. Whether contractually required or not, the Company develops and provides new gaming titles throughout the life of the lease. Certain arrangements require a portion of the win per day to be retained by the customer to fund facility-specific marketing, advertising and promotions. These amounts retained by the customer reduce the monthly revenue recognized on each arrangement.

Gaming operations revenue is also earned from the licensing of table product content and is earned and recognized on a fixed monthly rate. Our social gaming products earn revenue from the sale of virtual coins or chips, which is recorded when the purchased coins or chips are used by the customer.

Equipment Sales

Revenues from the stand-alone product sales or separate accounting units are recorded when:

• Pervasive evidence of an arrangement exists;

• The sales price is fixed and determinable;

• Delivery has occurred and services have been rendered; and

• Collectability is reasonably assured.

Equipment sales are generated from the sale of gaming machines and licensing rights to game content software that is installed in the gaming machine, parts, and other ancillary equipment. Also included within the deliverables are delivery, installation and training, all of which occur within a few days of arriving at the customer location. Gaming equipment sales do not include maintenance beyond a standard warranty period. The recognition of revenue from the sale of gaming devices occurs as title and risk of loss have passed to the customer and all other revenue recognition criteria have been satisfied. As the combination of game content software and the tangible gaming device function together to deliver the product’s essential functionality, revenue from the sale of gaming devices is recognized under U.S. GAAP revenue recognition guidance.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of deposits held at major banks and other marketable securities with original maturities of 90 days or less.

Restricted Cash

Restricted Cash

Restricted cash amounts represent funds held in escrow as collateral for the Company’s surety bonds for various gaming authorities and funds held to ensure the availability of funds to pay wide-area progressive jackpot awards.

Receivables, Allowance for Doubtful Accounts

Receivables, Allowance for Doubtful Accounts

Accounts receivable are stated at face value less an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts related to accounts receivable and notes receivable, which are non-interest bearing, deemed to have a high risk of collectability. The Company reviews the accounts receivable and notes receivable on a monthly basis to determine if any receivables will potentially be uncollectible. The Company analyzes historical collection trends and changes in the customers’ payment patterns, customer concentration, and credit worthiness when evaluating the adequacy of the allowance for doubtful accounts. A large percentage of receivables are with Native American tribes and the Company has concentrations of credit risk with several tribes. The Company includes any receivable balances that are determined to be uncollectible in the overall allowance for doubtful accounts. Changes in the assumptions or estimates reflecting the collectability of certain accounts could materially affect the allowance for both accounts and notes receivable.

Inventories

Inventories

Inventories consist primarily of parts and supplies that are used to repair and maintain machinery and equipment as well as EGMs in production and finished goods held for sale. Inventories are stated at net realizable value. Cost of inventories is determined using the first-in, first-out (“FIFO”) method for all components of inventory. The Company regularly reviews inventory quantities and updates estimates for the net realizable value of inventories. This process includes examining the carrying values of parts and ancillary equipment in comparison to the current fair market values for such equipment (less costs to sell or dispose). Some of the factors involved in this analysis include the overall levels of the inventories, the current and projected sales levels for such products, the projected markets for such products and the costs required to sell the products, including refurbishment costs. Changes in the assumptions or estimates could materially affect the inventory carrying value.

Property and Equipment

Property and Equipment

The cost of gaming equipment, consisting of gaming equipment as well as other property and equipment, is depreciated over their estimated useful lives, using the straight-line method for financial reporting. The Company capitalizes costs incurred for the refurbishment of used gaming equipment that is typically incurred to refurbish a machine in order to return it to its customer location. The refurbishments extend the life of the gaming equipment beyond the original useful life. Repairs and maintenance costs are expensed as incurred. The Company routinely evaluates the estimated lives used to depreciate assets. The estimated useful lives are as follows:

Gaming equipment	3 to 6 years
Other property and equipment	3 to 6 years

The Company reviews its property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. The Company groups long-lived assets for impairment analysis at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities, which is typically at the individual gaming machine level or at the cabinet product line level. Impairment testing is performed and losses are estimated when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount.

When the estimated undiscounted cash flows are not sufficient to recover the asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

The Company measures recoverability of assets to be held and used by comparing the carrying amount of an asset to future cash flows expected to be generated by the asset. The Company’s policy is to impair, when necessary, excess or obsolete gaming machines on hand that it does not expect to be used. Impairment is based upon several factors, including estimated forecast of gaming machine demand for placement into casinos. While the Company believes that the estimates and assumptions used in evaluating the carrying amount of these assets are reasonable, different assumptions could affect either the carrying amount or the estimated useful lives of the assets, which could have a significant impact on the results of operations and financial condition.

Intangible Assets

Intangible Assets

The Company reviews its identifiable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment losses are recognized for identifiable intangibles, other than goodwill, when indicators of impairment are present and the estimated undiscounted cash flows are not sufficient to recover the assets’ carrying amount.

When the estimated undiscounted cash flows are not sufficient to recover the intangible asset’s carrying amount, an impairment loss is measured to the extent the fair value of the asset is less than its carrying amount.

Certain trade names have an indefinite useful life and the Company tests these trade names for possible impairment at least annually, on October 1, or whenever events or changes in circumstances indicate that the carrying value may be impaired. We perform a qualitative assessment to determine if it is more likely than not that the fair value of the asset is less than its carrying amount. If we believe, as a result of our qualitative assessment, that it is more likely than not that the fair value of the asset is less than its carrying amount, the quantitative impairment test is required.

Costs of Computer Software

Costs of Computer Software

Internally developed gaming software represents the Company’s internal costs to develop gaming titles to utilize on the Company’s gaming machines. Internally developed gaming software is stated at cost and amortized over the estimated useful lives of the software, using the straight-line method. Software development costs are capitalized once technological feasibility has been established and are amortized when the software is placed into service. The computer software we develop reaches technological feasibility when a working model of the computer software is available. Any subsequent software maintenance costs, such as bug fixes and subsequent testing, are expensed as incurred. Discontinued software development costs are expensed when the determination to discontinue is made. Software development costs are amortized over the expected life of the title or group of titles, if applicable, to amortization expense.

On a quarterly basis, or more frequently if circumstances warrant, the Company compares the net book value of its internally developed computer software to the net realizable value on a title or group of title basis. The net realizable value is determined based upon certain assumptions, including the expected future revenues and net cash flows of the gaming titles or group of gaming titles utilizing that software, if applicable.

Goodwill

Goodwill

The excess of the purchase price of an acquired business over the estimated fair value of the assets acquired and the liabilities assumed is recorded as goodwill. The Company tests for possible impairment of goodwill at least annually, on October 1, or when circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company has the option to begin with a qualitative assessment, commonly referred to as “Step 0”, to determine whether it is more likely than not that the reporting unit’s fair value of goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as the general economic environment, industry and market conditions, changes in key assumptions used since the most recently performed valuation and overall financial performance of the reporting units. If the Company determines that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company performs a quantitative goodwill impairment analysis, and depending upon the results of that measurement, the recorded goodwill may be written down and charged to income from operations when its carrying amount exceeds its estimated fair value.

Acquisition Accounting

Acquisition Accounting

The Company applies the provisions of ASC 805, “Business Combinations” (ASC 805), in accounting for business acquisitions. It requires us to recognize separately from goodwill the fair value of assets acquired and liabilities assumed on the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. Significant estimates and assumptions are required to value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable. These estimates are inherently uncertain and subject to refinement and typically include the calculation of an appropriate discount rate and projection of the cash flows associated with each acquired asset. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company applies the provisions of ASC 820, “Fair Value Measurements” (ASC 820) to its financial assets and liabilities. Fair value is defined as a market-based measurement intended to estimate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. ASC 820 also established a fair value hierarchy, which requires an entity to maximize the use of observable inputs when measuring fair value. These inputs are categorized as follows:

• Level 1 - quoted prices in an active market for identical assets or liabilities;

• Level 2 - quoted prices in an active market for similar assets or liabilities, inputs other than quoted prices that are observable for similar assets or liabilities, inputs derived principally from or corroborated by observable market data by correlation or other means; and

• Level 3 - valuation methodology with unobservable inputs that are significant to the fair value measurement.

The carrying values of the Company’s cash and cash equivalents, restricted cash, receivables and accounts payable approximate fair value because of the short term maturities of these instruments. The fair value of our long-term debt is based on the quoted market prices for similar issues (Level 2 inputs).

Accounting for Income Taxes

Accounting for Income Taxes

We conduct business globally and are subject to income taxes in U.S. federal, state, local, and foreign jurisdictions. Determination of the appropriate amount and classification of income taxes depends on several factors, including estimates of the timing and probability of realization of deferred income taxes, reserves for uncertain income tax positions and income tax payment timing.

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Taxes on income of our foreign subsidiaries are provided at the tax rates applicable to the tax jurisdictions in which they are located. Future tax benefits are recognized to the extent that realization of those benefits is considered more likely than not and a valuation allowance is established for deferred tax assets which do not meet this threshold.

The recoverability of certain deferred tax assets is based in part on estimates of future income and the timing of temporary differences, and the failure to fully realize such deferred tax assets could result in a higher tax provision in future periods.

We apply the accounting guidance to our uncertain tax positions and under the guidance, we may recognize a tax benefit from an uncertain position only if it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the issue. The amount recognized in the financial statements is the largest benefit that we believe has greater than a 50% likelihood of being realized upon settlement.

We are required to make significant judgments when evaluating our uncertain tax positions and the related tax benefits. We believe our assumptions are reasonable; however, there is no guarantee that the final outcome of the related matters will not differ from the amounts reflected in our income tax provisions and accruals. We adjust our liability for uncertain tax positions based on changes in facts and circumstances such as the closing of a tax audit or changes in estimates. Our income tax provision may be impacted to the extent that the final outcome of these tax positions is different than the amounts recorded.

Contingencies

Contingencies

The Company assesses its exposures to loss contingencies including claims and legal proceedings and accrues a liability if a potential loss is considered probable and the amount can be estimated. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Because of uncertainties related to these matters, if the actual loss from a contingency differs from management’s estimate, there could be a material impact on the results of operations or financial position. Operating expenses, including legal fees, associated with contingencies are expensed when incurred.

Concentration of Credit Risk

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable, net. Cash equivalents are investment-grade, short-term debt instruments consisting of treasury bills which are maintained with high credit quality financial institutions under repurchase agreements. Cash and cash equivalents are in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of December 31, 2016 and 2015, the Company did not have cash equivalents.

Foreign Currency Translation

Foreign Currency Translation

The financial statements of the Company’s foreign subsidiaries are translated into U.S. dollars at the period end rate of exchange for asset and liability accounts and the weighted average rate of exchange for income statement accounts. The effects of these translations are recorded as a component of accumulated other comprehensive (loss) income in stockholders’ equity.

Advertising Costs

Advertising Costs

Advertising costs are expensed as incurred.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued an accounting standards update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which clarifies the principles for recognizing revenue from contracts with customers. The amendment outlines a single comprehensive model for entities to depict the transfer of goods or services to customers in amounts that reflect the payment to which a company expects to be entitled in exchange for those goods or services. The amendment also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to annual periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. The ASU may be adopted using either a full retrospective transition method or a modified retrospective transition method and will be adopted by the Company on January 1, 2018. The Company does not expect adoption of the new revenue standards to have a material impact on its consolidated financial statements as the majority of our revenue is recognized under lease accounting guidance.

In June 2014, the FASB issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718):Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period. The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The Company adopted the guidance in the current year and it did not have a material effect on our financial condition, results of of operations or cash flows.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern. The ASU requires management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, consolidated in the aggregate, indicate that it is probable that an entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. Currently, there is no guidance in U.S. GAAP for management's responsibility to perform an evaluation. Under the update, management's evaluation is to be performed when preparing financial statements for each annual and interim reporting period and based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The Company adopted the guidance on January 1, 2016 and it did not have a material effect on our financial condition, results of operations or cash flows.

In January 2015, the FASB issued ASU No. 2015-01, Income Statement-Extraordinary and Unusual Items: Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. ASU 2015-01 eliminates from GAAP the concept of extraordinary items. The presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that were previously classified as extraordinary. ASU 2015-01 is effective for the Company on January 1, 2016, with earlier adoption permitted using either a prospective or retrospective method. This ASU did not have a material effect on our financial condition, results of operations or cash flows.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 intends to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU.  In August 2015, the FASB issued ASU 2015-15 which clarifies that the guidance issued in April 2015 does not apply to line-of-credit arrangements. According to ASU 2015-15, line-of-credit arrangements will continue to present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the arrangement. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company adopted the guidance on January 1, 2016, with retrospective application in the accompanying Condensed Consolidated Balance Sheet at December 31, 2015. This change in accounting principle resulted in net deferred financing costs of $7.8 million incurred in connection with the issuance of the Company's long-term debt (excluding revolving credit facilities) at December 31, 2015 being reclassified as a direct reduction of the long-term debt balance. The presentation of the net deferred financing costs incurred in connection with the issuance of the Company's revolving credit facilities as of December 31, 2015, are not affected by the adoption of this new accounting guidance and are included in other assets in the accompanying Consolidated Balance Sheet.

In July 2015, the FASB issued ASU No. 2015-11, Inventory: Simplifying the Measurement of Inventory. ASU 2015-11 changes the criteria for measuring inventory within the scope of the ASU. Inventory will now be measured at the lower of cost and net realizable value, while the concept of market value will be eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The ASU will be effective for the Company beginning on January 1, 2017. The Company does not expect the provisions of the ASU to have a material effect on our financial condition, results of operations or cash flows.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 eliminates the requirement to retrospectively apply adjustments made to provisional amounts recognized in a business combination. It requires that an acquirer recognize and disclose adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, which should be calculated as if the accounting had been completed at the acquisition date. The Company adopted the guidance on January 1, 2016. The amendments in this ASU was applied prospectively to adjustments to provisional amounts that occur after the effective date of this ASU with earlier application permitted for financial statements that have not been issued. This guidance did not have a material effect on our financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 intends to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The adoption of this guidance is expected to result in a significant portion of our operating leases, where we are the lessee, to be recognized on our Consolidated Balance Sheets. The guidance requires lessees and lessors to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with earlier adoption permitted. The Company is currently evaluating the provisions of the amendment and the impact on its future consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 intends to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the provisions of ASU 2016-15 to have a material effect on our financial condition, results of operations or cash flows.

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Description of the Business And Summary of Significant Accounting Policies Description of the Business And Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of allowance for trade accounts receivable

Changes in the assumptions or estimates reflecting the collectability of certain accounts could materially affect the allowance for both accounts and notes receivable.

The following provides financial information concerning the change in our allowance for doubtful accounts (in thousands):

	Allowance for Accounts Receivables Year ended December 31, 2016
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	113	$	(431	)	$	—	$	2,290	$	1,972

	Allowance for Accounts Receivables Year ended December 31, 2015
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	29	$	(22	)	$	—	$	106	$	113

	Allowance for Accounts Receivables Year ended December 31, 2014
	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Accounts receivable, current	$	9	$	(36	)	$	—	$	56	$	29

Summary of equipment estimated useful lives

The estimated useful lives are as follows:

Gaming equipment	3 to 6 years
Other property and equipment	3 to 6 years

Property and equipment, net consist of the following (in thousands):

	December 31, 2016			December 31, 2015
Gaming equipment	$	108,635		$	89,361
Other property and equipment	13,900			14,976
Less: Accumulated depreciation	(54,609		)	(37,638		)
Total property and equipment, net	$	67,926		$	66,699

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Acquisitions (Tables)

12 Months Ended

Dec. 31, 2016

Cadillac Jack [Member]

Business Acquisition [Line Items]

Summary of consideration paid for the Acquisition

The following summarizes the consideration paid for Cadillac Jack (in thousands):

Contractual cash purchase price adjusted for working capital	$	369,760
Seller note	12,000
Contingent receivable	(1,300		)
Total consideration	$	380,460

Summary of purchase price allocation to the estimated fair values of the assets acquired and liabilities assumed

Our estimates of the fair values of depreciable tangible assets are as follows (in thousands):

	Fair values at May 29, 2015		Average remaining useful life (in years)
Gaming equipment	$	23,065	1 - 5
Other property and equipment	6,569		2 - 3
Total property and equipment	$	29,634

The allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

	At May 29, 2015
Currents assets(1)	$	34,871
Property and equipment	29,634
Goodwill	171,497
Intangible assets	199,752
Other long-term assets	23,828
Total assets	459,582
Current liabilities	8,636
Deferred tax liability non-current	51,486
Other long-term liabilities	19,000
Total equity purchase price	$	380,460

⁽¹⁾Current assets includes $4.2 million of cash acquired.

Estimates of the fair values of identifiable intangible assets acquired

Our estimates of the fair values of identifiable intangible assets are as follows (in thousands):

	Fair values at May 29, 2015		Average remaining useful life (in years)
Trade names	$	3,000	5
Brand names	10,600		3 - 5
Customer relationships	107,000		5 - 12
Gaming software and technology platforms	79,152		2 - 7
Total intangible assets	$	199,752

Business Combination, Pro Forma Information, Actual Since Acquisition

The revenue and net loss of Cadillac Jack from the acquisition date through December 31, 2015, are presented below and are included in our consolidated statements of operations and comprehensive loss. These amounts are not necessarily indicative of the results of operations that Cadillac Jack would have realized if it had continued to operate as a stand-alone company during the period presented, primarily due to the elimination of certain headcount and administrative costs since the acquisition date resulting from integration activities or due to costs that are now reflected in our unallocated corporate costs and not allocated to Cadillac Jack.

	From May 29, 2015 through December 31, 2015
Revenue	$	46,075
Net loss	$	17,133

Business Acquisition, Pro Forma Information

The following unaudited pro forma statements of operations give effect to the Cadillac Jack acquisition as if it had been completed on January 1, 2014. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of what the operating results actually would have been during the periods presented had the acquisition been completed on January 1, 2014. In addition, the unaudited pro forma financial information does not purport to project future operating results. This information is preliminary in nature and subject to change based on final purchase price adjustments. The pro forma statements of operations do not reflect: (1) any anticipated synergies (or costs to achieve synergies) or (2) the impact of non-recurring items directly related to the Cadillac Jack acquisition.

	Year ended December 31,
	2015		2014
Revenue	$	156,110	$	160,341
Net loss	$	54,682	$	83,709

C2 Gaming, LLC [Member]

Business Acquisition [Line Items]

Summary of consideration paid for the Acquisition

The following summarizes the consideration paid for C2 Gaming (in thousands):

Paid at close	$	11,000
One-year payment	9,000
Contingent consideration	3,000
Working capital adjustment	273
Total consideration	$	23,273

Summary of purchase price allocation to the estimated fair values of the assets acquired and liabilities assumed

The allocation of the purchase price to the estimated fair values of the assets acquired and the liabilities assumed was as follows (in thousands):

At May 6, 2014
Current assets	$	545
Property and equipment	534
Goodwill	13,744
Intangible assets	8,722
Total assets	23,545
Total liabilities	272
Total equity purchase price	$	23,273

Our estimates of the fair values of depreciable tangible assets were as follows (in thousands):

	Fair values at May 6, 2014		Average remaining useful life (in years)
Property and equipment	$	534	1 - 5

Estimates of the fair values of identifiable intangible assets acquired

Our estimates of the fair values of identifiable intangible assets were as follows (in thousands):

	Fair values at May 6, 2014		Average remaining useful life (in years)
Gaming software and technology platforms	$	3,685	3 - 5
Customer relationships	5,037		7
Total intangible assets	$	8,722

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Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2016

Property, Plant and Equipment [Abstract]

Summary of gaming equipment, vehicles and other equipment

The estimated useful lives are as follows:

Gaming equipment	3 to 6 years
Other property and equipment	3 to 6 years

Property and equipment, net consist of the following (in thousands):

	December 31, 2016			December 31, 2015
Gaming equipment	$	108,635		$	89,361
Other property and equipment	13,900			14,976
Less: Accumulated depreciation	(54,609		)	(37,638		)
Total property and equipment, net	$	67,926		$	66,699

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Goodwill and Intangibles (Tables)

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the carrying amount of goodwill

There were no accumulated impairments of goodwill as of December 31, 2016. Changes in the carrying amount of goodwill are as follows (in thousands):

	Gross Carrying Amount
	EGM			Table Products		Interactive			Total
Balance at December 31, 2014	$	77,617		$	—	$	—		$	77,617
Acquisition - Cadillac Jack	171,497			—		—			171,497
Acquisition - AGSi	—			—		4,855			4,855
Acquisition - Intellectual Property	—			2,600		—			2,600
Foreign currency adjustments	(2,282		)	—		—			(2,282		)
Other	(409		)	—		(27		)	(436		)
Balance at December 31, 2015	246,423			2,600		4,828			253,851
Foreign currency adjustments	(3,627		)	—		—			(3,627		)
Purchase accounting adjustment	—			800		—			800
Balance at December 31, 2016	$	242,796		$	3,400	$	4,828		$	251,024

Schedule of Intangible Assets and Goodwill

Intangible assets consist of the following (in thousands):

		December 31, 2016							December 31, 2015
	Useful Life (years)	Gross Value		Accumulated Amortization			Net Carrying Value		Gross Value		Accumulated Amortization			Net Carrying Value
Indefinite lived trade names	Indefinite	$	12,126	$	—		$	12,126	$	12,126	$	—		$	12,126
Trade and brand names	7	13,600		(4,671		)	8,929		13,600		(1,721		)	11,879
Customer relationships	7	165,078		(49,528		)	115,550		170,927		(26,676		)	144,251
Contract rights under development and placement fees	1 - 7	16,488		(5,235		)	11,253		16,311		(548		)	15,763
Gaming software and technology platforms	1 - 7	123,596		(49,014		)	74,582		116,930		(23,735		)	93,195
Intellectual property	10 - 12	12,780		(2,343		)	10,437		14,030		(888		)	13,142
		$	343,668	$	(110,791	)	$	232,877	$	343,924	$	(53,568	)	$	290,356

Schedule of estimated amortization expense on software development

The estimated amortization expense of definite-lived intangible assets as well as the accretion of contract rights under development and placement fees, for each of the next five years and thereafter is as follows (in thousands):

	Amortization Expense		Placement Fee Accretion
For the year ended December 31,
2017	$	50,153	$	4,564
2018	48,626		3,794
2019	42,064		2,609
2020	25,951		57
2021	7,655		39
Thereafter	35,050		189
Total	$	209,499	$	11,252

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Accounts Payable and Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2016

Payables and Accruals [Abstract]

Schedule of accounts payable and accrued liabilities

Accrued liabilities consist of the following (in thousands):

	December 31,
	2016		2015
Salary and payroll tax accrual	$	6,594	$	5,851
Taxes payable	2,128		2,440
Accrued interest	2		8
C2 Gaming contingent consideration (see Note 2)	—		1,125
Placement fees payable	4,000		4,525
Accrued other	4,978		4,305
Total accrued liabilities	$	17,702	$	18,254

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Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Schedule of long-term debt

Long-term debt consists of the following (in thousands):

	December 31,
	2016			2015
Senior secured credit facilities:
Term loans, interest at LIBOR or base rate plus 8.25% (9.25% at December 31, 2016), net of unamortized discount of $15.1 million and $18.2 million at December 31, 2016 and December 31, 2015, respectively.	$	395,581		$	396,717
Senior secured PIK notes, net of unamortized discount of $3.5 million and $3.9 million at December 31, 2016 and December 31, 2015, respectively.	133,286			118,764
Seller notes	20,116			18,902
Equipment long-term note payable and capital leases	4,792			5,826
Total debt(1)	553,775			540,209
Less: Current portion	(6,537		)	(6,919		)
Long-term debt	$	547,238		$	533,290

Schedule of aggregate contractual future principal payments

Aggregate contractual future principal payments (excluding the effects of repayments for excess cash flow) of long-term debt for the years following December 31, 2016, are as follows (in thousands):

For the year ending December 31,
2017	$	6,537
2018	6,350
2019	4,605
2020	397,953
2021	143,920
Thereafter	12,998
Total scheduled maturities	572,363
Unamortized debt discount and debt issuance costs	(18,588		)
Total long-term debt	$	553,775

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Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of grant date fair value and related assumptions of Options granted

The expected dividend yield is 0% for all stock awards.

	Year Ended December 31,
	2016	2015	2014
Option valuation assumptions:
Expected dividend yield	—%	—%	—%
Expected volatility	56%	55%	73%
Risk-free interest rate	1.64%	1.69%	1.63%
Expected term (in years)	6.3	6.4	5.0

Schedule of Share-based Compensation, Stock Options, Activity

A summary of the changes in stock options outstanding during the year ended December 31, 2016, is as follows:

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Term (years)	Aggregate Intrinsic Value
Options outstanding as of December 31, 2015	765,375		$	12.46
Granted	247,600		$	17.01
Canceled	(117,875	)	$	15.25
Options outstanding as of December 31, 2016	895,100		$	13.35	8.2	$	3,457,748

Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value

The following is provided for stock options granted:

	Year Ended December 31,
	2016		2015		2014
Weighted average grant date fair value	$	8.96	$	7.44	$	5.38

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Restructuring (Tables)

12 Months Ended

Dec. 31, 2016

Restructuring and Related Activities [Abstract]

Schedule of restructuring liabilities

The following table summarizes the change in our restructuring accruals for the year ended December 31, 2016 (in thousands), which is included in accounts payable and accrued liabilities in the consolidated balance sheets:

	December 31, 2015		Charge to expense		Cash paid		December 31, 2016
Accrued severance	$	37	$	—	$	37	$	—
Total	$	37	$	—	$	37	$	—

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

The components of loss before provision for income taxes are as follows (in thousands):

	Year ended December 31,
	2016			2015			2014
Domestic	$	(69,020	)	$	(66,728	)	$	(26,187	)
Foreign	(15,354		)	(7,906		)	—
Loss before provision for income taxes	$	(84,374	)	$	(74,634	)	$	(26,187	)

Schedule of provision for income tax expense

The income tax (benefit) expense is as follows (in thousands):

	Year ended December 31,
	2016			2015			2014
Current:
Federal	$	(958	)	$	932		$	—
State	113			(10		)	7
Foreign	5,865			1,424			—
Total current income tax expense	5,020			2,346			7
Deferred:
Federal	(7,550		)	(34,589		)	2,005
State	(31		)	(2,506		)	177
Foreign	(439		)	(1,340		)	—
Total deferred income (benefit) expense	(8,020		)	(38,435		)	2,182
Income tax (benefit) expense	$	(3,000	)	$	(36,089	)	$	2,189

Schedule of reconciliation of income tax at the federal statutory rate to the actual effective income tax rate

The reconciliation of income tax at the federal statutory rate to the actual effective income tax rate (benefit) is as follows:

	Year ended December 31,
	2016		2015		2014
Federal statutory rate	(35.0	)%	(35.0	)%	(34.0	)%
Foreign rate differential	0.2	%	0.7	%	—	%
State income taxes, net of federal benefit	—	%	(2.5	)%	(0.8	)%
Nondeductible loan costs	1.8	%	1.5	%	—	%
Nondeductible transaction costs	—	%	1.6	%	—	%
Other differences	3.2	%	0.2	%	0.6	%
Expiration of tax credits	1.9	%	—	%	—	%
Uncertain tax positions	0.6	%	0.3	%	—	%
Valuation allowance	23.7	%	(15.2	)%	42.6	%
	(3.6	)%	(48.4	)%	8.4	%

Schedule of deferred tax liability

The components of the net deferred tax liability consist of the following (in thousands):

	December 31,
	2016			2015
Deferred tax assets:
Accrued expenses	$	662		$	608
Allowance for bad debt	1,175			1,176
Payroll accruals	1,818			2,085
Foreign tax credits	9,541			8,834
Net operating loss carryforwards	47,019			35,862
Property and equipment, net	1,830			—
Research and development credits	1,420			1,569
Loan costs and interest	3,441			3,519
Other	1,654			2,017
Total deferred tax assets	68,560			55,670
Valuation allowance	(28,211		)	(8,274		)
Deferred tax assets, net of valuation allowance	$	40,349		$	47,396
Deferred tax liabilities:
Prepaid expenses and other	$	(512	)	$	(1,033	)
Intangible assets	(46,785		)	(60,309		)
Property and equipment, net	—			(1,364		)
Deferred tax liabilities	(47,297		)	(62,706		)
Net deferred tax liabilities	$	(6,948	)	$	(15,310	)

Summary of Income Tax Contingencies

The Company had the following activity for unrecognized tax benefits in 2016 and 2015 (amounts in thousands):

	December 31, 2016			December 31, 2015
Balance-beginning of year	$	29,523		$	—
Acquisitions	—			29,701
Increases based on tax positions of the current year	1,005			795
Decreases due to lapse of statute	(236		)	—
Increases based on tax positions of the prior years	1,963			—
Decreases based on tax positions of the prior years	(664		)	—
Currency translation adjustments	(1,427		)	(973		)
Balance-end of year	$	30,164		$	29,523

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Schedule of future minimum lease payments

Future minimum lease payments under these leases in excess of one year as of December 31, 2016 are as follows (in thousands):

For the year ended December 31,
2017	$	1,533
2018	1,177
2019	1,054
2020	1,091
2021	649
Thereafter	157
Total	$	5,661

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Operating Segments (Tables)

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The following provides financial information concerning our reportable segments for the years ended December 31:

	2016			2015			2014
Revenues by segment
EGM	$	156,407		$	119,617		$	72,028
Table Products	2,674			1,672			112
Interactive	7,725			2,003			—
Total Revenues	166,806			123,292			72,140
Adjusted EBITDA by segment
EGM	91,729			66,267			40,552
Table Products	(1,663		)	(1,402		)	(343		)
Interactive	(4,727		)	(2,518		)	—
Subtotal	85,339			62,347			40,209
Write downs and other:
Loss on disposal of long lived assets	978			1,275			1,937
Impairment of long lived assets	5,295			4,993			2,327
Fair value adjustments to contingent consideration and other items	(3,000		)	(2,667		)	—
Acquisition costs	(11		)	8,165			2,804
Depreciation and amortization	80,181			61,662			33,405
Accretion of placement fees(1)	4,702			496			58
Non-cash stock compensation	—			4,911			—
Acquisitions & integration related costs including restructuring & severance	5,411			7,818			3,582
Legal & litigation expenses including settlement payments	1,565			1,916			450
New jurisdictions and regulatory licensing costs	1,315			256			266
Non-cash charge on capitalized installation and delivery	1,680			1,441			643
Non-cash charges and loss on disposition of assets	2,478			234			561
Other adjustments	1,809			1,286			2,597
Interest expense	59,963			41,642			17,235
Interest income	(57		)	(82		)	(42		)
Other expense (income)	7,404			3,635			573
Loss before income taxes	$	(84,374	)	$	(74,634	)	$	(26,187	)

(1) Non-cash expense related to the accretion of contract rights under development agreements and placement fees.

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas

The following provides financial information concerning our operations by geographic area for the years ended December 31 (in thousands):

	Year ended December 31,
Revenue:	2016		2015		2014
United States	138,510		110,392		72,140
Other	28,296		12,900		—
	166,806		123,292		72,140
	Year ended December 31,
Long-lived assets, end of year:	2016		2015		2014
United States	$	70,208	$	63,858	$	44,045
Other	5,169		6,909		69
	$	75,377	$	70,767	$	44,114

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Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2016

Quarterly Financial Information Disclosure [Abstract]

Schedule of quarterly financial information

	Quarter ended March 31, 2016			Quarter ended June 30, 2016			Quarter ended September 30, 2016			Quarter ended December 31, 2016
Consolidated Income Statement Data:
Revenues	$	40,235		$	42,618		$	41,208		$	42,745
Gross profit[1]	33,792			32,599			33,799			33,643
Loss from operations	(4,206		)	(4,338		)	(7,117		)	(1,403		)
Net (loss) income	(21,066		)	(18,839		)	(21,235		)	(20,234		)
Basic loss per share	(1.41		)	(1.26		)	(1.42		)	(1.36		)
Diluted loss per share	(1.41		)	(1.26		)	(1.42		)	(1.36		)

	Quarter ended March 31, 2015			Quarter ended June 30, 2015			Quarter ended September 30, 2015			Quarter ended December 31, 2015
Consolidated Income Statement Data:
Revenues	$	18,795		$	26,296		$	38,105		$	40,096
Gross profit[1]	15,516			20,429			30,641			31,867
Loss from operations	(3,736		)	(11,339		)	(13,017		)	(1,347		)
Net (loss) income	(9,235		)	2,849			(23,279		)	(8,880		)
Basic income (loss) per share	(0.92		)	0.24			(1.56		)	(0.69		)
Diluted income (loss) per share	(0.92		)	0.24			(1.56		)	(0.69		)

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Description of the Business And Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Allowance for Doubtful Accounts Receivable [Roll Forward]
Allowance for Accounts Receivables, Beginning Balance	$ 113	$ 29	$ 9
Charge-offs	(431)	(22)	(36)
Recoveries	0	0	0
Provision (benefit) for bad debts	2,290	106	56
Allowance for Accounts Receivables, Ending Balance	$ 1,972	$ 113	$ 29

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Description of the Business And Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Description of Business [Line Items]
Fair value of long-term debt	$ 557.8	$ 529.2
Advertising costs	$ 0.7	$ 0.2	$ 0.3
Sales Revenue, Net [Member]
Description of Business [Line Items]
Concentration Risk, Percentage	15.00%	20.00%	30.00%
Credit Concentration Risk [Member]
Description of Business [Line Items]
Concentration Risk, Percentage	10.00%
Gaming equipment [Member] | Minimum [Member]
Description of Business [Line Items]
Estimated useful life (in years)	3 years
Gaming equipment [Member] | Maximum [Member]
Description of Business [Line Items]
Estimated useful life (in years)	6 years
Other property and equipment [Member] | Minimum [Member]
Description of Business [Line Items]
Estimated useful life (in years)	3 years
Other property and equipment [Member] | Maximum [Member]
Description of Business [Line Items]
Estimated useful life (in years)	6 years
Term Facility [Member] | Accounting Standards Update 2015-03 [Member]
Description of Business [Line Items]
Deferred finance costs, net		$ 7.8
Mexico | Geographic Concentration Risk [Member] | Sales Revenue, Net [Member]
Description of Business [Line Items]
Concentration Risk, Percentage	10.00%

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Acquisitions - Narrative (Details) $ / shares in Units, $ in Thousands					12 Months Ended
	Jul. 15, 2015 USD ($)	Jun. 15, 2015 USD ($)	May 29, 2015 USD ($) unit	May 06, 2014 USD ($)	Dec. 31, 2015 USD ($) $ / shares	Dec. 31, 2014 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($) $ / shares	May 31, 2015 USD ($)	May 06, 2015 USD ($)
Business Acquisition [Line Items]
Goodwill					$ 253,851	$ 77,617		$ 251,024
Business Acquisition, Share Price | $ / shares					$ 0.01			$ 0.01
Cadillac Jack [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents			$ 4,200
Business acquisition, percentage of equity interests acquired			100.00%
Estimated increase in gaming units | unit			10,500
Contingent receivable			$ 8,300
Aggregate purchase price			380,460
Research and Development in Process			30,000
Goodwill			171,497
Intangible assets			199,752
Contingent consideration			(1,300)
Cadillac Jack [Member] | Notes Payable [Member] | Promissory Note 12.0 Million Amaya [Member]
Business Acquisition [Line Items]
Seller note			12,000
Gamingo [Member]
Business Acquisition [Line Items]
Business acquisition, percentage of equity interests acquired		100.00%
Aggregate purchase price		$ 8,800
Business Combination, Contingent Consideration, Liability, Noncurrent		5,000
Goodwill		4,900
Intangible assets		$ 4,200
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		3 years
Intellectual Property Acquisitions [Member]
Business Acquisition [Line Items]
Aggregate purchase price					$ 10,000
Business Combination, Contingent Consideration, Liability, Noncurrent					1,500
Goodwill					3,400
Intangible assets					$ 5,700
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life					8 years 6 months
C2 Gaming, LLC [Member]
Business Acquisition [Line Items]
Business Combination, Working Capital Increase (Decrease)				$ 273
Business acquisition, percentage of equity interests acquired				100.00%
Aggregate purchase price				$ 23,273
Goodwill				13,744
Intangible assets				8,722
One-year payment				9,000
Contingent consideration				$ 3,000
Payments for Previous Acquisition	$ 1,000					$ 500
Business Combination, Contingent Consideration, Liability									$ 2,100	$ 2,500
Business Combination, Contingent Consideration, Liability, Value After Reduction	$ 1,100
Maximum [Member] | Cadillac Jack [Member]
Business Acquisition [Line Items]
Contingent consideration			$ 25,000
Subsequent Event [Member] | Cadillac Jack [Member] | Notes Payable [Member] | Promissory Note 12.0 Million Amaya [Member]
Business Acquisition [Line Items]
Business Combination, Contingent Consideration, Asset							$ 5,100

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Acquisitions - Consideration Paid (Details) - USD ($) $ in Thousands	May 29, 2015	May 06, 2014
Cadillac Jack [Member]
Business Acquisition [Line Items]
Contractual cash purchase price adjusted for working capital	$ 369,760
Contingent consideration	(1,300)
Total consideration	380,460
C2 Gaming, LLC [Member]
Business Acquisition [Line Items]
Business Combination, Working Capital Increase (Decrease)		$ 273
Contractual cash purchase price adjusted for working capital		11,000
One-year payment		9,000
Contingent consideration		3,000
Total consideration		$ 23,273
Promissory Note 12.0 Million Amaya [Member] | Notes Payable [Member] | Cadillac Jack [Member]
Business Acquisition [Line Items]
Seller note	$ 12,000

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Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	May 29, 2015	Dec. 31, 2014	May 06, 2014
Allocation of purchase price to the estimated fair values of the assets acquired and liabilities assumed
Goodwill	$ 251,024	$ 253,851		$ 77,617
Cadillac Jack [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents			$ 4,200
Allocation of purchase price to the estimated fair values of the assets acquired and liabilities assumed
Current assets			34,871
Property and equipment	$ 0		29,634
Goodwill			171,497
Intangible assets			199,752
Other long-term assets			23,828
Total assets			459,582
Current liabilities			8,636
Deferred tax liability non-current			51,486
Other long-term liabilities			19,000
Total equity purchase price			$ 380,460
C2 Gaming, LLC [Member]
Allocation of purchase price to the estimated fair values of the assets acquired and liabilities assumed
Current assets					$ 545
Property and equipment					534
Goodwill					13,744
Intangible assets					8,722
Total assets					23,545
Total liabilities					272
Total equity purchase price					$ 23,273

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Acquisitions - Tangible Assets (Details) - USD ($) $ in Thousands			12 Months Ended
	May 29, 2015	May 06, 2014	Dec. 31, 2016
Minimum [Member] | Gaming equipment [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)			3 years
Maximum [Member] | Gaming equipment [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)			6 years
Cadillac Jack [Member]
Business Acquisition [Line Items]
Gaming equipment	$ 29,634		$ 0
Cadillac Jack [Member] | Gaming equipment [Member]
Business Acquisition [Line Items]
Gaming equipment	23,065
Cadillac Jack [Member] | Other property and equipment [Member]
Business Acquisition [Line Items]
Gaming equipment	$ 6,569
Cadillac Jack [Member] | Minimum [Member] | Gaming equipment [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)	1 year
Cadillac Jack [Member] | Minimum [Member] | Other property and equipment [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)	2 years
Cadillac Jack [Member] | Maximum [Member] | Gaming equipment [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)	5 years
Cadillac Jack [Member] | Maximum [Member] | Other property and equipment [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)	3 years
C2 Gaming, LLC [Member]
Business Acquisition [Line Items]
Gaming equipment		$ 534
C2 Gaming, LLC [Member] | Minimum [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)		1 year
C2 Gaming, LLC [Member] | Maximum [Member]
Business Acquisition [Line Items]
Estimated useful life (in years)		5 years

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Acquisitions - Acquired Intangible Assets (Details) - USD ($) $ in Thousands	May 29, 2015	May 06, 2014
C2 Gaming, LLC [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Total intangible assets		$ 8,722
Cadillac Jack [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 199,752
Trade Names [Member] | Cadillac Jack [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 3,000
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	5 years
Brand Names [Member] | Cadillac Jack [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 10,600
Brand Names [Member] | Cadillac Jack [Member] | Maximum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	5 years
Brand Names [Member] | Cadillac Jack [Member] | Minimum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	3 years
Customer Relationships [Member] | C2 Gaming, LLC [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired		$ 5,037
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		7 years
Customer Relationships [Member] | Cadillac Jack [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 107,000
Customer Relationships [Member] | Cadillac Jack [Member] | Maximum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	12 years
Customer Relationships [Member] | Cadillac Jack [Member] | Minimum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	5 years
Gaming Software And Technology Platforms [Member] | C2 Gaming, LLC [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired		$ 3,685
Gaming Software And Technology Platforms [Member] | C2 Gaming, LLC [Member] | Maximum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		5 years
Gaming Software And Technology Platforms [Member] | C2 Gaming, LLC [Member] | Minimum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		3 years
Gaming Software And Technology Platforms [Member] | Cadillac Jack [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Finite-lived Intangible Assets Acquired	$ 79,152
Gaming Software And Technology Platforms [Member] | Cadillac Jack [Member] | Maximum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	7 years
Gaming Software And Technology Platforms [Member] | Cadillac Jack [Member] | Minimum [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	2 years

XML

Acquisitions Revenue since business combination (Details) - Cadillac Jack [Member] $ in Thousands	7 Months Ended
	Dec. 31, 2015 USD ($)
Business Acquisition [Line Items]
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual	$ 46,075
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual	$ 17,133

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Acquisitions Pro Forma Results (Details) - Cadillac Jack [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Business Acquisition [Line Items]
Business Acquisition, Pro Forma Revenue	$ 156,110	$ 160,341
Business Acquisition, Pro Forma Net Income (Loss)	$ 54,682	$ 83,709

XML

Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Less: Accumulated depreciation	$ (54,609)	$ (37,638)
Total property and equipment, net	67,926	66,699
Gaming equipment [Member]
Property, Plant and Equipment [Line Items]
Gaming equipment, other property and equipment, gross	108,635	89,361
Other property and equipment [Member]
Property, Plant and Equipment [Line Items]
Gaming equipment, other property and equipment, gross	$ 13,900	$ 14,976

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Property and Equipment - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 27.0	$ 23.4	$ 16.8
Minimum [Member] | Gaming equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	3 years
Maximum [Member] | Gaming equipment [Member]
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	6 years

XML

Goodwill and Intangibles - Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Changes in carrying amount of goodwill
Goodwill at beginning of period	$ 253,851	$ 77,617
Foreign currency adjustments	(3,627)	(2,282)
Other	800	(436)
Goodwill at end of period	251,024	253,851
Cadillac Jack [Member]
Changes in carrying amount of goodwill
Acquisition		171,497
Gamingo [Member]
Changes in carrying amount of goodwill
Acquisition		4,855
Intellectual Property Acquisitions [Member]
Changes in carrying amount of goodwill
Goodwill at beginning of period	3,400
Acquisition		2,600
Goodwill at end of period		3,400
EGM
Changes in carrying amount of goodwill
Goodwill at beginning of period	246,423	77,617
Foreign currency adjustments	(3,627)	(2,282)
Other	0	(409)
Goodwill at end of period	242,796	246,423
EGM | Cadillac Jack [Member]
Changes in carrying amount of goodwill
Acquisition		171,497
EGM | Gamingo [Member]
Changes in carrying amount of goodwill
Acquisition		0
EGM | Intellectual Property Acquisitions [Member]
Changes in carrying amount of goodwill
Acquisition		0
Table Products
Changes in carrying amount of goodwill
Goodwill at beginning of period	2,600	0
Foreign currency adjustments	0	0
Other	800	0
Goodwill at end of period	3,400	2,600
Table Products | Cadillac Jack [Member]
Changes in carrying amount of goodwill
Acquisition		0
Table Products | Gamingo [Member]
Changes in carrying amount of goodwill
Acquisition		0
Table Products | Intellectual Property Acquisitions [Member]
Changes in carrying amount of goodwill
Acquisition		2,600
Interactive
Changes in carrying amount of goodwill
Goodwill at beginning of period	4,828	0
Foreign currency adjustments	0	0
Other	0	(27)
Goodwill at end of period	$ 4,828	4,828
Interactive | Cadillac Jack [Member]
Changes in carrying amount of goodwill
Acquisition		0
Interactive | Gamingo [Member]
Changes in carrying amount of goodwill
Acquisition		4,855
Interactive | Intellectual Property Acquisitions [Member]
Changes in carrying amount of goodwill
Acquisition		$ 0

XML

Goodwill and Intangibles - Schedule of Intangibles Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, accumulated amortization	$ (110,791)	$ (53,568)
Intangible assets, gross value	343,668	343,924
Intangible assets, net carrying value	$ 232,877	290,356
Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	1 year
Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	12 years
Trade Names [Member]
Indefinite-lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	$ 12,126	12,126
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	7 years
Finite-lived intangible assets, gross value	$ 13,600	13,600
Finite-lived intangible assets, accumulated amortization	(4,671)	(1,721)
Finite-lived intangible assets, net carrying value	$ 8,929	11,879
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	7 years
Finite-lived intangible assets, gross value	$ 165,078	170,927
Finite-lived intangible assets, accumulated amortization	(49,528)	(26,676)
Finite-lived intangible assets, net carrying value	115,550	144,251
Customer agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross value	16,488	16,311
Finite-lived intangible assets, accumulated amortization	(5,235)	(548)
Finite-lived intangible assets, net carrying value	$ 11,253	15,763
Customer agreements [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	1 year
Customer agreements [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	7 years
Internally Developed Gaming Software [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross value	$ 123,596	116,930
Finite-lived intangible assets, accumulated amortization	(49,014)	(23,735)
Finite-lived intangible assets, net carrying value	$ 74,582	93,195
Internally Developed Gaming Software [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	1 year
Internally Developed Gaming Software [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	7 years
Intellectual Property [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross value	$ 12,780	14,030
Finite-lived intangible assets, accumulated amortization	(2,343)	(888)
Finite-lived intangible assets, net carrying value	$ 10,437	$ 13,142
Intellectual Property [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	10 years
Intellectual Property [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	12 years

XML

Goodwill and Intangibles - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 251,024	$ 253,851	$ 77,617
Amortization expense related to intangible assets	53,200	38,300	16,600
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)	0	3,400	1,400
Accretion of contract rights under development agreements and placement fees	$ 4,702	496	58
Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	1 year
Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, useful life (years)	12 years
Interactive
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 4,828	$ 4,828	$ 0
Long-term growth rate (as a percent)	4.00%
Discount rate (as a percent)	15.00%

XML

Goodwill and Intangibles - Finite-Lived Intangible Assets, Future Amortization Expense (Details) $ in Thousands	Dec. 31, 2016 USD ($)
Amortization Expense
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2017	$ 50,153
2018	48,626
2019	42,064
2020	25,951
2021	7,655
Thereafter	35,050
Finite-lived intangible assets, net carrying value	209,499
Placement Fee Accretion
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2017	4,564
2018	3,794
2019	2,609
2020	57
2021	39
Thereafter	189
Finite-lived intangible assets, net carrying value	$ 11,252

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Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Schedule of accounts payable and accrued liabilities
Salary and payroll tax accrual	$ 6,594	$ 5,851
Taxes payable	2,128	2,440
Accrued interest	2	8
C2 Gaming contingent consideration (see Note 2)	0	1,125
Placement fees payable	4,000	4,525
Accrued other	4,978	4,305
Total accrued liabilities	$ 17,702	$ 18,254

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Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	May 29, 2015
Debt Instrument [Line Items]
Debt, Long-term	$ 553,775	$ 540,209
Less—Amounts due within one year	(6,537)	(6,919)
Long-term debt	547,238	533,290
Payment in Kind (PIK) Note [Member]
Debt Instrument [Line Items]
Debt, Long-term	133,286	118,764	$ 115,000
Unamortized discount	3,500	3,900
Equipment, Long-Term Notes Payable [Member]
Debt Instrument [Line Items]
Debt, Long-term	4,792	5,826
Term Facility [Member]
Debt Instrument [Line Items]
Debt, Long-term	395,581	396,717
Senior Secured Credit Facilities [Member] | Medium-term Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net	0	0
Seller Notes [Member] | Notes Payable [Member]
Debt Instrument [Line Items]
Debt, Long-term	$ 20,116	18,902
Accounting Standards Update 2015-03 [Member] | Term Facility [Member]
Debt Instrument [Line Items]
Deferred finance costs, net		$ 7,800
Base Rate [Member] | Senior Secured Credit Facilities [Member] | Medium-term Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	8.25%	8.25%
Debt Instrument, Interest Rate, Effective Percentage	9.25%
London Interbank Offered Rate (LIBOR) [Member] | Senior Secured Credit Facilities [Member] | Medium-term Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	8.25%	8.25%

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Long-Term Debt - Aggregate Contractual Future Principal Payments (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Debt Disclosure [Abstract]
2017	$ 6,537
2018	6,350
2019	4,605
2020	397,953
2021	143,920
Thereafter	12,998
Total scheduled maturities	572,363
Unamortized debt discount and debt issuance costs	(18,588)
Debt, Long-term	$ 553,775	$ 540,209

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Long-Term Debt - Senior Secured Credit Facilities Narrative (Details)	12 Months Ended
	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	May 29, 2015 USD ($)	Dec. 20, 2013 USD ($) note
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	$ 553,775,000	$ 540,209,000
Term Facility [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	395,581,000	396,717,000
Term Facility [Member] | Subsidiary [Member]
Senior Secured Credit Facilities [Line Items]
Senior secured credit facilities	420,000,000	420,000,000
Payment in Kind (PIK) Note [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	133,286,000	118,764,000	$ 115,000,000
Interest Costs Capitalized	21,800,000
Debt instrument, stated interest rate (as a percent)			11.25%
Issue price percentage of principle amount			97.00%
Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Debt instrument, stated interest rate (as a percent)				8.50%
Equipment, Long-Term Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	$ 4,792,000	5,826,000
Senior Secured Credit Facilities [Member]
Senior Secured Credit Facilities [Line Items]
Line Of Credit Facility, Maximum Net First Lien Leverage Ratio	5.50%
Senior Secured Credit Facilities [Member] | Line of Credit [Member] | Revolving Facility [Member]
Senior Secured Credit Facilities [Line Items]
Senior secured credit facilities			$ 15,000,000	$ 25,000,000
Commitment fee percentage	0.50%
Senior Secured Credit Facilities [Member] | Medium-term Notes [Member]
Senior Secured Credit Facilities [Line Items]
Debt Instrument Periodic Payment Percent Of Outstanding Principal Balance	0.25%
Financing agreement amount			265,000,000	$ 155,000,000
AGS Seller Notes [Domain] | Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Promissory notes issued | note				2
Debt, Long-term	$ 7,100,000
Interest Costs Capitalized	1,600,000
Seller Notes [Member] | Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	20,116,000	$ 18,902,000
Promissory Note 2.2 Million [Member] | Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term				$ 2,200,000
Promissory Note 3.3 Million [Member] | Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term				$ 3,300,000
Promissory Note 12.0 Million Amaya [Member] | Notes Payable [Member]
Senior Secured Credit Facilities [Line Items]
Debt, Long-term	13,000,000		$ 12,000,000
Interest Costs Capitalized	$ 1,000,000
Debt instrument, stated interest rate (as a percent)			5.00%

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Stockholders' Equity (Details) $ in Thousands			12 Months Ended
	May 29, 2015 USD ($) shares	Apr. 28, 2014 shares	Dec. 31, 2016 USD ($) class vote shares	Dec. 31, 2015 USD ($) shares	Dec. 31, 2014 USD ($)
Conversion of Stock [Line Items]
Number of classes of common stock | class			2
Number of votes per share of common stock | vote			1
Proceeds from issuance of common stock | $	$ 77,400		$ 0	$ 77,425	$ 0
Long-term liability from the proceeds from the sale of the Class B Shares | $			$ 1,300
Common Class A [Member]
Conversion of Stock [Line Items]
Number of shares converted (in shares)		10,000,000
Common stock, shares issued (in shares)			100	100
Common Class B [Member]
Conversion of Stock [Line Items]
Number of shares converted (in shares)		10,000,000
Common stock, shares issued (in shares)	4,931,529		14,931,529	14,931,529
Class B common stock issued to management holders [Member]
Conversion of Stock [Line Items]
Common stock, shares issued (in shares)			108,307

XML

Write Downs and Other Charges (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	May 29, 2015
Impaired Assets to be Disposed of by Method Other than Sale [Line Items]
Write downs and other charges	$ 3,262,000	$ 11,766,000	$ 7,068,000
Fees related to acquisition		8,200,000	2,800,000
Impairment of intangible assets	3,300,000	3,400,000	1,400,000
Write-off of prepaids		1,300,000
Gain (loss) on sale of assets	1,000,000	1,300,000	1,900,000
Impairment of long-lived assets	2,000,000	200,000	$ 800,000
Change in amount of contingent consideration	(3,000,000)	6,100,000
Long-lived Assets [Member]
Impaired Assets to be Disposed of by Method Other than Sale [Line Items]
Assets at fair value		0
Equity Option [Member]
Impaired Assets to be Disposed of by Method Other than Sale [Line Items]
Assets at fair value		4,900,000
Assets, fair value adjustment		$ 3,400,000
Cadillac Jack [Member]
Impaired Assets to be Disposed of by Method Other than Sale [Line Items]
Finite-lived intangible assets, gross value	1,100,000
Property and equipment	$ 0			$ 29,634,000

XML

Basic and Diluted Loss Per Share (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive securities	$ 0
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of EPS	50,000	50,000
Employee Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of EPS	300,000	300,000.0	400,000.0

XML

Benefit Plans (Details) - USD ($) $ in Millions		12 Months Ended
	Apr. 28, 2014	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum percentage of pretax earnings employee is eligible to contribute under defined contribution plan		15.00%
401(k) defined contribution plan expense		$ 0.9	$ 0.6	$ 0.3
Long-Term Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incentive plan period	10 years
Long-Term Incentive Plan [Member] | Common Class B [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized under incentive plan (in shares)	1,250,000
Long-Term Incentive Plan [Member] | Common Class B [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant		200,000

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Share-Based Compensation - Narrative (Details)	12 Months Ended
	Dec. 31, 2016 USD ($) $ / shares shares	Dec. 31, 2015 shares	Dec. 31, 2014 anniversary installment shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation options outstanding (in shares)	895,100	765,375
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock option compensation expense | $	$ 6,100,000
Employee Stock Option [Member] | Class B common stock issued to management holders [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend Yield	0.00%	0.00%	0.00%
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock option compensation expense | $	$ 500,000
Nonvested resticted shares outstanding (in shares)	50,000
Weighted average grant date fair value (in dollars per share) | $ / shares	$ 10
Share based compensation restricted stock forfeitures (in shares)	0
Stock options canceled or forfeited during period (in shares)	0
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares issued in period (in shares)			50,000
Stock options granted, number of exercisable installments | installment			5
Stock options granted, number of exercisable anniversaries | anniversary			5
Long-Term Incentive Plan [Member] | Employee Stock Option [Member] | Common Class B [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense | $	$ 0
Long-Term Incentive Plan [Member] | Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation options outstanding (in shares)	400,000
Tranche A [Member] | Long-Term Incentive Plan [Member] | Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Tranche vesting percentage	20.00%
Tranche B [Member] | Long-Term Incentive Plan [Member] | Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Internal rate of return vesting threshold percentage	20.00%
Return on investment threshold ratio	2.5
Tranche C [Member] | Long-Term Incentive Plan [Member] | Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Internal rate of return vesting threshold percentage	25.00%
Return on investment threshold ratio	3.0

XML

Share-Based Compensation - Assumptions (Details) - Class B common stock issued to management holders [Member] - Employee Stock Option [Member]	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend Yield	0.00%	0.00%	0.00%
Risk free interest rate	1.64%	1.69%	1.63%
Expected term	6 years 4 months	6 years 5 months	5 years
Expected volatility	56.00%	55.00%	73.00%

XML

Share-Based Compensation Summary of Changes in Stock Options Outstanding (Details)	12 Months Ended
	Dec. 31, 2016 USD ($) $ / shares shares
Options Rollforward
Outstanding beginning balance (in shares) | shares	765,375
Number of Options, Granted (in shares) | shares	247,600
Number of Options, Canceled (in shares) | shares	(117,875)
Outstanding ending balance (in shares) | shares	895,100
Weighted Average Exercise Price [Abstract]
Weighted Average Exercise Price, beginning balance (in usd per share) | $ / shares	$ 12.46
Options granted, exercise price (in dollars per share) | $ / shares	17.01
Options canceled, exercise price (in dollars per share) | $ / shares	15.25
Weighted Average Exercise Price, ending balance (in usd per share) | $ / shares	$ 13.35
Intrinsic Value, Outstanding Shares | $	$ 3,457,748
Employee Stock Option [Member] | Class B common stock issued to management holders [Member] | Tranche B [Member]
Weighted Average Exercise Price [Abstract]
Weighted Average Remaining Contract Term (years)	8 years 2 months

XML

Share-Based Compensation - Options Weighted Average Grant Date Fair Value (Details) - $ / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair value (in dollars per share)	$ 8.96	$ 7.44	$ 5.38

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Restructuring - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Restructuring and Related Activities [Abstract]
Restructuring costs	$ 0	$ 1,400,000	$ 1,200,000

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Restructuring (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($)
Restructuring Reserve [Roll Forward]
December 31, 2015	$ 37
Charge to expense	0
Cash paid	37
December 31, 2016	0
Accrued Severance [Member]
Restructuring Reserve [Roll Forward]
December 31, 2015	37
Charge to expense	0
Cash paid	37
December 31, 2016	$ 0

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Income Taxes - Provision for income tax expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Domestic	$ (69,020)	$ (66,728)	$ (26,187)
Foreign	(15,354)	(7,906)	0
Loss before income taxes	$ (84,374)	$ (74,634)	$ (26,187)

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Income Taxes - Income tax (benefit) expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Current:
Federal	$ (958)	$ 932	$ 0
State	113	(10)	7
Foreign	5,865	1,424	0
Total current income tax expense	5,020	2,346	7
Deferred:
Federal	(7,550)	(34,589)	2,005
State	(31)	(2,506)	177
Foreign	(439)	(1,340)	0
Deferred Income Tax Expense (Benefit)	(8,020)	(38,435)	2,182
Income tax (benefit) expense	$ (3,000)	$ (36,089)	$ 2,189

XML

Income Taxes - Reconciliation of income tax at the federal statutory rate to the actual effective income tax rate (benefit) (Details)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Federal statutory rate	(35.00%)	(35.00%)	(34.00%)
Foreign rate differential	0.20%	0.70%	(0.00%)
State income taxes, net of federal benefit	(0.00%)	(2.50%)	(0.80%)
Nondeductible loan costs	1.80%	1.50%	(0.00%)
Nondeductible transaction costs	(0.00%)	1.60%	(0.00%)
Other differences	3.20%	0.20%	0.60%
Expiration of tax credits	1.90%	(0.00%)	(0.00%)
Uncertain tax positions	0.60%	0.30%	(0.00%)
Valuation allowance	23.70%	(15.20%)	42.60%
Effective income tax rate	(3.60%)	(48.40%)	8.40%

XML

Income Taxes - Components of net deferred tax liability (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Components of Deferred Tax Assets and Liabilities [Abstract]
Accrued expenses	$ 662	$ 608
Allowance for bad debt	1,175	1,176
Payroll accruals	1,818	2,085
Foreign tax credits	9,541	8,834
Net operating loss carryforwards	47,019	35,862
Property and equipment, net	1,830	0
Research and development credits	1,420	1,569
Loan costs and interest	3,441	3,519
Other	1,654	2,017
Total deferred tax assets	68,560	55,670
Valuation allowance	(28,211)	(8,274)
Deferred tax assets, net of valuation allowance	40,349	47,396
Deferred tax liabilities:
Prepaid expenses and other	(512)	(1,033)
Intangible assets	(46,785)	(60,309)
Property and equipment, net	0	(1,364)
Deferred tax liabilities	(47,297)	(62,706)
Net deferred tax liabilities	$ (6,948)	$ (15,310)

XML

Income Taxes - Unrecognized tax benefits activity (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Reconciliation of Unrecognized Tax Benefits [Roll Forward]
Balance-beginning of year	$ 29,523	$ 0
Acquisitions	0	29,701
Increases based on tax positions of the current year	1,005	795
Decreases due to lapse of statute	(236)	0
Increases based on tax positions of the prior years	1,963	0
Decreases based on tax positions of the prior years	(664)	0
Currency translation adjustments	(1,427)	(973)
Balance-end of year	$ 30,164	$ 29,523

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Income Taxes - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Operating Loss Carryforwards [Line Items]
Deferred tax assets, valuation allowance	$ 28,211	$ 8,274
Mexico foreign tax credit from customer withholdings	10.00%
Tax Credit Carryforward Period	10 years
Tax Credit Carryforward, Amount	$ 9,541	8,834
Foreign tax credits expiring	1,700
Research and development credits	1,420	1,569
Deferred Tax Assets, Operating Loss Carryforwards, Domestic	115,900
Deferred Tax Assets, Operating Loss Carryforwards, Foreign	18,600
Deferred Tax Assets, Operating Loss Carryforwards, State and Local	43,600
Unrecognized Tax Benefits	30,164	$ 29,523	$ 0
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	11,500
Unrecognized Tax Benefits, Income Tax Penalties Accrued	400
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued	8,400
Cadillac Jack [Member]
Operating Loss Carryforwards [Line Items]
Business Combination, Indemnification Assets	$ 16,400

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Commitments and Contingencies (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 2.5	$ 2.0	$ 0.8

XML

Commitments and Contingencies - Future minimum lease payments (Details) $ in Thousands	Dec. 31, 2016 USD ($)
Future Minimum Lease Payments
2017	$ 1,533
2018	1,177
2019	1,054
2020	1,091
2021	649
Thereafter	157
Total	$ 5,661

XML

Operating Segments (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
Total Revenues	$ 42,745	$ 41,208	$ 42,618	$ 40,235	$ 40,096	$ 38,105	$ 26,296	$ 18,795	$ 166,806	$ 123,292	$ 72,140
Loss on disposal of long lived assets									1,149	1,439	1,936
Impairment of long-lived assets									2,000	200	800
Fair value adjustments to contingent consideration and other items									(3,000)	6,100
Acquisition costs										8,200	2,800
Depreciation and amortization									80,181	61,662	33,405
Accretion of placement fees									4,702	496	58
Non-cash charges and loss on disposition of assets									4,749	4,989	2,475
Interest expense									59,963	41,642	17,235
Interest income									(57)	(82)	(42)
Other expense (income)									7,404	3,635	573
Loss before income taxes									(84,374)	(74,634)	(26,187)
Operating Segments
Segment Reporting Information [Line Items]
Total Revenues									166,806	123,292	72,140
Adjusted EBITDA by segment									85,339	62,347	40,209
Operating Segments | EGM
Segment Reporting Information [Line Items]
Total Revenues									156,407	119,617	72,028
Adjusted EBITDA by segment									91,729	66,267	40,552
Operating Segments | Table Games
Segment Reporting Information [Line Items]
Total Revenues									2,674	1,672	112
Adjusted EBITDA by segment									(1,663)	(1,402)	(343)
Operating Segments | Interactive
Segment Reporting Information [Line Items]
Total Revenues									7,725	2,003	0
Adjusted EBITDA by segment									(4,727)	(2,518)	0
Segment Reconciling Items
Segment Reporting Information [Line Items]
Loss on disposal of long lived assets									978	1,275	1,937
Impairment of long-lived assets									5,295	4,993	2,327
Fair value adjustments to contingent consideration and other items									(3,000)	(2,667)	0
Acquisition costs									(11)	8,165	2,804
Depreciation and amortization									80,181	61,662	33,405
Accretion of placement fees									4,702	496	58
Non-cash stock compensation									0	4,911	0
Acquisitions & integration related costs including restructuring & severance									5,411	7,818	3,582
Legal & litigation expenses including settlement payments									1,565	1,916	450
New jurisdictions and regulatory licensing costs									1,315	256	266
Non-cash charge on capitalized installation and delivery									1,680	1,441	643
Non-cash charges and loss on disposition of assets									2,478	234	561
Other adjustments									1,809	1,286	2,597
Interest expense									59,963	41,642	17,235
Interest income									(57)	(82)	(42)
Other expense (income)									$ 7,404	$ 3,635	$ 573

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Operating Segments - Geographic Segments (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
Revenues	$ 42,745	$ 41,208	$ 42,618	$ 40,235	$ 40,096	$ 38,105	$ 26,296	$ 18,795	$ 166,806	$ 123,292	$ 72,140
Long-Lived Assets	75,377				70,767				75,377	70,767	44,114
United States
Segment Reporting Information [Line Items]
Revenues									138,510	110,392	72,140
Long-Lived Assets	70,208				63,858				70,208	63,858	44,045
Other
Segment Reporting Information [Line Items]
Revenues									28,296	12,900	0
Long-Lived Assets	$ 5,169				$ 6,909				$ 5,169	$ 6,909	$ 69

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Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Quarterly Financial Information Disclosure [Abstract]
Revenues	$ 42,745	$ 41,208	$ 42,618	$ 40,235	$ 40,096	$ 38,105	$ 26,296	$ 18,795	$ 166,806	$ 123,292	$ 72,140
Gross profit	33,643	33,799	32,599	33,792	31,867	30,641	20,429	15,516
Loss from operations	(1,403)	(7,117)	(4,338)	(4,206)	(1,347)	(13,017)	(11,339)	(3,736)	(17,064)	(29,439)	(8,421)
Net loss	$ (20,234)	$ (21,235)	$ (18,839)	$ (21,066)	$ (8,880)	$ (23,279)	$ 2,849	$ (9,235)	$ (81,374)	$ (38,545)	$ (28,376)
Basic (in usd per share)	$ (1.36)	$ (1.42)	$ (1.26)	$ (1.41)	$ (0.69)	$ (1.56)	$ 0.24	$ (0.92)	$ (5.45)	$ (2.98)	$ (2.84)
Diluted (in usd per share)	$ (1.36)	$ (1.42)	$ (1.26)	$ (1.41)	$ (0.69)	$ (1.56)	$ 0.24	$ (0.92)	$ (5.45)	$ (2.98)	$ (2.84)

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Schedule I - Balance Sheet (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Current assets
Cash and cash equivalents	$ 17,977	$ 35,722	$ 10,680	$ 21,742
Prepaid expenses	2,609	4,642
Total current assets	58,502	73,644
Deferred tax assets	9	37
Total assets	634,092	711,147
Liabilities and Stockholders’ Equity
Total current liabilities	33,029	29,949
Long-term Debt, Excluding Current Maturities	547,238	533,290
Other long-term liabilities	30,440	32,024
Liabilities	617,664	610,610
Common stock	149	149
Additional paid-in capital	177,276	177,276
Retained Earnings (Accumulated Deficit)	(156,451)	(75,077)
Accumulated other comprehensive (loss) income	(4,546)	(1,811)
Stockholders' Equity Attributable to Parent	16,428	100,537	63,756	91,843
Liabilities and Equity	634,092	711,147
Parent Company [Member]
Current assets
Cash and cash equivalents	10,171	25,972	$ 8,513	$ 16,538
Prepaid expenses	40	63
Total current assets	10,211	26,035
Deferred tax assets	0	3,528
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	153,926	203,390
Total assets	164,137	232,953
Liabilities and Stockholders’ Equity
Accounts Payable and Accrued Liabilities, Current	36	0
Intercompany payables	93	20
Total current liabilities	129	20
Long-term Debt, Excluding Current Maturities	146,284	131,125
Other long-term liabilities	1,296	1,271
Liabilities	147,709	132,416
Common stock	149	149
Additional paid-in capital	177,276	177,276
Retained Earnings (Accumulated Deficit)	(156,451)	(75,077)
Accumulated other comprehensive (loss) income	(4,546)	(1,811)
Stockholders' Equity Attributable to Parent	16,428	100,537
Liabilities and Equity	$ 164,137	$ 232,953

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Schedule I - Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Condensed Financial Statements, Captions [Line Items]
Selling, general and administrative									$ 46,108	$ 40,088	$ 19,456
Total operating expenses									183,870	152,731	80,561
Loss from operations	$ (1,403)	$ (7,117)	$ (4,338)	$ (4,206)	$ (1,347)	$ (13,017)	$ (11,339)	$ (3,736)	(17,064)	(29,439)	(8,421)
Interest expense									59,963	41,642	17,235
Interest income									(57)	(82)	(42)
Income Tax Expense (Benefit)									3,000	36,089	(2,189)
Net loss	$ (20,234)	$ (21,235)	$ (18,839)	$ (21,066)	$ (8,880)	$ (23,279)	$ 2,849	$ (9,235)	(81,374)	(38,545)	(28,376)
Foreign currency translation adjustment									(2,735)	(2,099)	289
Total comprehensive loss									(84,109)	(40,644)	(28,087)
Parent Company [Member]
Condensed Financial Statements, Captions [Line Items]
Selling, general and administrative									231	546	1,512
Total operating expenses									231	546	1,512
Loss from operations									(231)	(546)	(1,512)
Equity in net loss of subsidiaries									62,450	33,405	26,870
Interest expense									15,165	8,123	0
Interest income									0	(1)	(6)
Loss before income taxes									(77,846)	(42,073)	(28,376)
Income Tax Expense (Benefit)									(3,528)	3,528	0
Net loss									(81,374)	(38,545)	(28,376)
Foreign currency translation adjustment									(2,735)	(2,099)	289
Total comprehensive loss									$ (84,109)	$ (40,644)	$ (28,087)

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Schedule I - Cash Flow (Details) - USD ($) $ in Thousands		3 Months Ended								12 Months Ended
	May 29, 2015	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Condensed Financial Statements, Captions [Line Items]
Net loss		$ (20,234)	$ (21,235)	$ (18,839)	$ (21,066)	$ (8,880)	$ (23,279)	$ 2,849	$ (9,235)	$ (81,374)	$ (38,545)	$ (28,376)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of deferred loan costs and discount										3,542	2,446	1,242
Payment-in-kind interest capitalized										15,396	8,507	481
(Benefit) Provision for deferred income tax										(8,020)	(38,435)	2,182
Changes in assets and liabilities that relate to operations:
Prepaid expenses										2,021	(1,466)	(1,349)
Accounts payable and accrued liabilities										12,567	(4,770)	2,791
Net cash provided by (used in) operating activities										34,493	9,403	12,482
Cash flows from investing activities
Net cash used in investing activities										(40,629)	(401,850)	(33,922)
Cash flows from financing activities
Proceeds from issuance of debt										0	369,400	0
Proceeds from Issuance of Common Stock	$ 77,400									0	77,425	0
Proceeds from employees in advance of common stock issuance										75	579	1,969
Repurchase of shares issued to management										(50)	(1,277)	0
Payment of deferred loan costs										0	(3,837)	(73)
Net cash provided by financing activities										(11,603)	417,547	9,860
Increase (decrease) in cash and cash equivalents										(17,745)	25,042	(11,062)
Cash and cash equivalents, beginning of period					35,722				10,680	35,722	10,680	21,742
Cash and cash equivalents, end of period		17,977				35,722				17,977	35,722	10,680
Non-cash investing and financing activities:
Incurrance of Amaya Seller Note										0	17,233	11,500
Parent Company [Member]
Condensed Financial Statements, Captions [Line Items]
Net loss										(81,374)	(38,545)	(28,376)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of deferred loan costs and discount										340	143	0
Payment-in-kind interest capitalized										14,819	7,980	0
Equity in net loss of subsidiaries										62,450	33,405	26,870
(Benefit) Provision for deferred income tax										3,528	(3,528)	0
Changes in assets and liabilities that relate to operations:
Prepaid expenses										23	6	(69)
Intercompany payable/receivable										148	455	455
Accounts payable and accrued liabilities										35	(24)	24
Net cash provided by (used in) operating activities										(31)	(108)	(1,096)
Cash flows from investing activities
Investment in subsidiaries										(15,720)	(172,484)	(11,635)
Distributions received from subsidiaries										0	1,322	2,737
Net cash used in investing activities										(15,720)	(171,162)	(8,898)
Cash flows from financing activities
Proceeds from issuance of debt										0	111,550	0
Proceeds from Issuance of Common Stock										0	77,425	0
Proceeds from employees in advance of common stock issuance										0	579	1,969
Repurchase of shares issued to management										(50)	(277)	0
Payment of deferred loan costs										0	(548)	0
Net cash provided by financing activities										(50)	188,729	1,969
Increase (decrease) in cash and cash equivalents										(15,801)	17,459	(8,025)
Cash and cash equivalents, beginning of period					$ 25,972				$ 8,513	25,972	8,513	16,538
Cash and cash equivalents, end of period		$ 10,171				$ 25,972				10,171	25,972	8,513
Non-cash investing and financing activities:
Subsidiary payment for share repurchase on Company’s behalf										0	1,000	0
Intercompany payable settled as distribution										0	890	0
Incurrance of Amaya Seller Note										$ 0	$ 12,000	$ 0

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Schedule I - Footnote Disclosures (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	May 29, 2015	Dec. 20, 2013
Condensed Financial Statements, Captions [Line Items]
Long-term debt	$ 553,775	$ 540,209
Payment in Kind (PIK) Note [Member]
Condensed Financial Statements, Captions [Line Items]
Long-term debt	133,286	$ 118,764	$ 115,000
Debt instrument, stated interest rate (as a percent)			11.25%
Issue price percentage of principle amount			97.00%
Interest Costs Capitalized	21,800
Payment in Kind (PIK) Note [Member] | Parent Company [Member]
Condensed Financial Statements, Captions [Line Items]
Long-term debt	133,286		$ 115,000
Debt instrument, stated interest rate (as a percent)			11.25%
Issue price percentage of principle amount			97.00%
Interest Costs Capitalized	21,800
Notes Payable [Member]
Condensed Financial Statements, Captions [Line Items]
Debt instrument, stated interest rate (as a percent)				8.50%
Promissory Note 12.0 Million Amaya [Member] | Notes Payable [Member]
Condensed Financial Statements, Captions [Line Items]
Long-term debt	13,000		$ 12,000
Debt instrument, stated interest rate (as a percent)			5.00%
Interest Costs Capitalized	1,000
Promissory Note 12.0 Million Amaya [Member] | Notes Payable [Member] | Parent Company [Member]
Condensed Financial Statements, Captions [Line Items]
Long-term debt	13,000		$ 12,000
Debt instrument, stated interest rate (as a percent)			5.00%
Interest Costs Capitalized	$ 1,000

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Schedule II - Valuation and Qualifying Accounts (Details) - Tax-related valuation allowance - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at the beginning of period	$ 8,274	$ 14,260	$ 3,050
Charged to tax expense/(benefit)	19,962	(11,787)	11,210
Purchase accounting adjustments	0	5,727	0
Impact of foreign currency exchange rate	(25)	74	0
Balance at the end of period	$ 28,211	$ 8,274	$ 14,260