Leases

12 Months Ended

Dec. 31, 2023

9. LEASES

The Company determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate in each of the jurisdictions in which its subsidiaries operate to calculate the present value of lease payments. Lease terms may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that the Company will exercise those options. Operating lease expense is recorded on a straight-line basis over the lease term.

The Company accounts for lease agreements with lease and non-lease components as a single lease component for all asset classes. The Company does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.

The Company’s operating and finance leases include land, casino space, corporate offices, and gaming and other equipment. The leases have remaining lease terms of one month to 48 years. The Master Lease was evaluated as a sale-leaseback of real estate. The Company determined that the Master Lease did not qualify for sale-leaseback accounting and accounted for the transaction as a financing obligation based on the fair value of the real estate assets subject to the Master Lease (see Notes 2 and 7).

The components of lease expense were as follows:


	For the year ended
	December 31,
Amounts in thousands	2023		2022			2021
Operating lease expense	$	5,686	$	5,345	$	5,864

Finance lease expense:
Amortization of right-of-use assets	$	108	$	136	$	128
Interest on lease liabilities		40		29		6
Total finance lease expense	$	148	$	165	$	134

Variable lease expense	$	1,405	$	1,478	$	1,290

Variable lease expense relates primarily to rates based on a percentage of gaming revenue, changes in indexes that are excluded from the lease liability and fluctuations in foreign currency related to leases in Poland.

Supplemental cash flow information related to leases was as follows:


	For the year ended
	December 31,
Amounts in thousands	2023		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	41	$	25	$	6
Operating cash flows from operating leases		5,499		5,168		5,201
Financing cash flows from finance leases		166		157		123

Right-of-use assets obtained in exchange for operating lease liabilities	$	3,718	$	1,076	$	407

Supplemental balance sheet information related to leases was as follows:


	As of		As of
Amounts in thousands	December 31, 2023		December 31, 2022
Operating leases
Leased right-of-use assets, net	$	25,973	$	27,190

Current portion of operating lease liabilities		3,395		3,947
Operating lease liabilities, net of current portion		25,834		26,016
Total operating lease liabilities		29,229		29,963

Finance leases
Finance lease right-of-use assets, gross		1,028		764
Accumulated depreciation		(296)		(175)
Property and equipment, net		732		589

Current portion of finance lease liabilities		199		150
Finance lease liabilities, net of current portion		427		399
Total finance lease liabilities		626		549

Weighted-average remaining lease term
Operating leases		14.6 years		10.5 years
Finance leases		3.4 years		3.6 years

Weighted-average discount rate
Operating leases		8.7%		4.9%
Finance leases		7.7%		7.0%

Maturities of lease liabilities as of December 31, 2023 were as follows:


Amounts in thousands		Operating Leases	Finance Leases
2024	$	4,989	$	240
2025		4,171		221
2026		3,863		143
2027		3,803		72
2028		3,684		39
Thereafter		36,568		—
Total lease payments		57,078		715
Less imputed interest		(27,849)		(89)
Total	$	29,229	$	626