Route and Customer Acquisition Costs

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Route and Customer Acquisition Costs

Route and Customer Acquisition Costs

The Company enters into contracts with third parties and licensed video gaming locations throughout the State of Illinois which allow the Company to install and operate video gaming terminals. When video gaming operations commence, payments are primarily due monthly. Gross payments due, based on the number of live locations, are approximately $6.8 million and $6.4 million as of December 31, 2021 and 2020, respectively. Payments are due over varying terms of the individual agreements and are discounted at the Company’s incremental borrowing rate associated with its long-term debt at the time the contract is acquired. The net present value of payments due is $6.0 million and $5.7 million as of December 31, 2021 and 2020, respectively, of which approximately $2.1 million and $1.6 million is included in current liabilities in the accompanying consolidated balance sheets as of December 31, 2021 and 2020, respectively. The route and customer acquisition cost asset is comprised of upfront payments made on the contracts of $18.0 million and $17.7 million as of December 31, 2021 and 2020, respectively. The Company has upfront payments of commissions paid to the third parties for the acquisition of the customer contracts that are subject to a claw back provision if the customer cancels the contract prior to completion. The payments subject to a claw back are $1.5 million and $1.7 million as of December 31, 2021 and 2020, respectively.

Route and customer acquisition costs consist of the following at December 31 (in thousands):

	2021		2020
Cost	$	28,902	$	27,364
Accumulated amortization	(12,989)		(12,113)
Route and customer acquisition costs, net	$	15,913	$	15,251

Amortization expense of route and customer acquisition costs was $1.7 million, $1.8 million and $1.7 million for the years ended December 31, 2021, 2020 and 2019, respectively. Amortization expense of route and customer acquisition costs is slightly lower in 2021 when compared to the prior year as the Company extended the amortization period of its route and customer acquisition costs from 12.4 years to 18 years in the fourth quarter of 2021.