NOTE 4—INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED AFFILIATE

Miami Valley Gaming

During March 2012, the Company entered into a 50% joint venture with Delaware North Companies Gaming & Entertainment Inc. (“DNC”) to develop a new harness racetrack and video lottery terminal (“VLT”) gaming facility in Lebanon, Ohio. Through the joint venture agreement, the Company and DNC formed a new company, Miami Valley Gaming, LLC (“MVG”), to manage both the Company’s and DNC’s interests in the development and operation of the racetrack and VLT gaming facility. On December 21, 2012, MVG completed the purchase of the harness racing licenses and certain assets held by Lebanon Trotting Club Inc. and Miami Valley Trotting Inc. ("MVG Sellers") for total consideration of $60.0 million, of which $10.0 million was funded at closing with the remainder funded through a $50.0 million note payable with a six year term effective upon the commencement of gaming operations. In addition, there is a potential contingent consideration payment of $10.0 million based on the financial performance of the facility during the seven year period after gaming operations commence.

On December 12, 2013, the new facility opened in Lebanon, Ohio on a 120-acre site. The facility includes a 5/8-mile harness racing track and a 186,000-square-foot gaming facility with approximately 1,600 VLTs, which the joint venture may increase to 1,800 VLTs, dependent on customer demand. MVG will invest approximately $212.0 million in the new facility, including a $50.0 million license fee to the Ohio Lottery Commission. One-half of the license fee was funded during 2012 and 2013, and the remaining $25 million license fee will be funded during the fourth quarter of 2014. During the six months ended June 30, 2014, the Company funded $6.5 million in capital contributions to the joint venture.

Since both DNC and the Company have participating rights over MVG, and both must consent to MVG's operating, investing and financing decisions, the Company accounts for MVG using the equity method. Summarized financial information for MVG is comprised of the following (in thousands):



	June 30, 2014		December 31, 2013
Assets
Current assets	$	17,531	$	18,002
Property and equipment, net	146,498		151,434
Other assets, net	80,815		80,665
Total assets	$	244,844	$	250,101

Liabilities and Members' Equity
Current liabilities	$	21,989	$	46,966
Current portion of long-term debt	8,332		8,332
Long-term debt, excluding current portion	29,471		32,426
Other liabilities	75		75
Members' equity	184,977		162,302
Total liabilities and members' equity	$	244,844	$	250,101

The joint venture's long-term debt consists of a $50 million secured note payable from MVG to the MVG Sellers payable quarterly over 6 years at a 5.0% interest rate.



	Three Months Ended						Six Months Ended
	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Gaming revenue	$	34,400		$	—		$	65,563		$	—
Non-gaming revenue	1,913			1,763			3,544			3,204
Net revenues	36,313			1,763			69,107			3,204
Operating and SG&A expenses	26,053			1,803			50,264			3,356
Depreciation & amortization expenses	3,474			(10		)	6,841			13
Pre-opening expenses	—			961			54			1,421
Operating income (loss)	6,786			(991		)	11,948			(1,586		)
Interest and other expenses, net	(1,194		)	—			(2,274		)	—
Net income (loss)	$	5,592		$	(991	)	$	9,674		$	(1,586	)

The Company's 50% share of MVG's results has been included in our accompanying condensed consolidated financial statements for the three and six months ended June 30, 2014 and 2013, as follows (in thousands):



	Three Months Ended					Six Months Ended
	June 30, 2014		June 30, 2013			June 30, 2014		June 30, 2013
Equity in gains (losses) of unconsolidated investments	$	2,796	$	(495	)	$	4,837	$	(793	)

Saratoga Harness Racing, Inc. Joint Venture

On May 13, 2014, the Company announced an agreement to enter into a 50% joint venture with Saratoga Harness Racing, Inc. ("SHRI") to bid on the development, construction and operation of a destination resort casino near Albany, New York. On June 30, 2014, the joint venture filed an application with the New York State Facility Location Board to obtain a license to build and operate a facility with approximately 1,500 slot machines, 56 table games, a 100-room hotel and multiple entertainment and dining options. The expected cost of the project approximates $330 million, which includes a $50 million license fee. The Company intends to fund its share of the joint venture from its Senior Secured Credit Facility. The joint venture is one of five bidders competing for a license in the Capital-Saratoga region of New York, and the Company expects, but cannot guarantee, that the state will award a license to one bidder in this region during the second half of 2014. In addition, subject to regulatory approval, the Company is negotiating the acquisition of an ownership interest in SHRI and a management agreement wherein the Company will manage SHRI properties in Colorado and New York.

During the three months ended June 30, 2014, the Company incurred $0.5 million in equity losses in its other investments segment associated with the license application process. The Company anticipates funding $2.6 million to the joint venture during the third quarter of 2014.