ACCOUNTING FOR LEASES

12 Months Ended

Dec. 31, 2021

ACCOUNTING FOR LEASES

ACCOUNTING FOR LEASES

NOTE 5. ACCOUNTING FOR LEASES

The Company adopted ASU No. 2016-02, “Leases (Topic 842), (“ASC 842”)” which requires leases with durations greater than twelve months to be recognized on the balance sheet.

For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of the lease payments over the lease term. Many of the Company’s leases include rental escalation clauses, renewal options and/or termination options that are factored into its determination of lease payments when appropriate. As permitted by ASC 842, the Company elected not to separate non-lease components from their related lease components.

When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of its leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease commencement.

As of December 31, 2021, the Company’s right of use assets consisted of the Parking Lot Lease, the Driveway Lease (both as defined and discussed in NOTE 12. RELATED PARTY TRANSACTIONS), as well as certain billboard leases.

The table below presents information related to the lease costs for operating leases during 2021 and 2020 (in thousands):

	Year ended		Year ended
	December 31, 2021		December 31, 2020
Short-term lease costs	$	382	$	451
Long-term lease costs		1,432		1,444
Total lease costs	$	1,814	$	1,895

Upon adoption of the new lease standard, incremental borrowing rates used for existing leases were established using the rates in effect as of the lease inception or modification date. The weighted-average incremental borrowing rate of the leases presented in the lease liability as of December 31, 2021 and 2020 was 4.34% and 4.33%, respectively.

The weighted-average remaining lease term of the leases presented in the lease liability as of December 31, 2021 and 2020 was 20.4 and 21.2 years, respectively.

Following is the undiscounted cash flow for the next five years and total of the remaining years to the operating lease liabilities recorded on the balance sheet (in thousands):

	Operating
	Leases
Year ending December 31,
2022	$	1,342
2023		1,072
2024		1,072
2025		1,072
2026		1,072
Thereafter		15,868
Total minimum lease payments		21,498
Less: amount of lease payment representing interest		(7,255)
Present value of future minimum payments		14,243
Less: current obligations under leases		(745)
Long-term lease obligations	$	13,498

Cash paid related to the operating leases presented in the lease liability for the twelve months ended December 31, 2021 and 2020 were $1.5 million and $1.4 million, respectively.

In addition, we lease gaming equipment and had paid $2.5 million, $1.2 million and $1.6 million in the years ended December 31, 2021, 2020 and 2019, respectively. The lease cost is included in the operating expenses.