Note 2. Revenue Recognition

Adoption of ASC Topic 606

The adoption of ASC Topic 606 on January 1, 2018 principally affected the presentation of promotional allowances and how the Company measured the liability associated with our customer loyalty programs. The presentation of gross revenues for complimentary goods and services provided to guests with a corresponding offsetting amount included in promotional allowances was eliminated. This adjustment in presentation of promotional allowances did not have an impact on the Company’s historically reported net operating revenues. The majority of such amounts previously included in promotional allowances now offset casino revenues based on an allocation of revenues to performance obligations using stand-alone selling price. Food, beverage, lodging and other services furnished to our guests on a complimentary basis are measured at the respective estimated standalone selling prices and included as revenues within food and beverage, lodging, and retail, entertainment and other, which generally resulted in a corresponding decrease in gaming revenues. The costs of providing such complimentary goods and services are included as expenses within food and beverage, lodging, and retail, entertainment and other.

Additionally, as a result of the adoption of the new standard, certain adjustments and other reclassifications to and between revenue categories and to and between expense categories were required; however, the amounts associated with such adjustments did not have a significant impact on the Company’s previously reported operating income or net income.

Liabilities associated with our customer loyalty programs are no longer valued at cost; rather a deferred revenue model is used to account for the classification and timing of revenue to be recognized related to the redemption of loyalty program liabilities by our customers. Points earned under the Company’s loyalty programs are deemed to be separate performance obligations, and recorded as a reduction of casino revenues when earned at the retail value of such benefits owed to the customer and recognized as departmental revenue based on where such points are redeemed, upon fulfillment of the performance obligation.

The Company elected to adopt the full retrospective method to apply the new guidance to each prior reporting period presented as if it had been in effect since January 1, 2015, with a pre-tax cumulative effect adjustment to our retained earnings upon adoption of $4.7 million. Net of tax, the cumulative effect adjustment to our retained earnings upon adoption was $3.5 million. This was primarily related to our loyalty program point liability, which increased from an estimated incremental cost model to a deferred revenue model at retail value.

Adoption of the new standard did not have a significant impact on our previously reported net revenue, expenses, operating income, and net income. The impact of adoption of the new standard to previously reported selected financial statement information was as follows (in thousands):

	Three Months Ended September 30, 2017
	As Reported			ASC 606 Adjustments			Other Reclassifications⁽¹⁾			As Adjusted
Gross revenues	$	483,036		$	(39,651	)	$	29,493		$	472,878
Promotional allowances		(38,162	)		41,785			(3,623	)		—
Net revenues	$	444,874		$	2,134		$	25,870		$	472,878
Operating income	$	78,924		$	182		$	2,386		$	81,492
Net income	$	29,554		$	133		$	—		$	29,687

	Nine Months Ended September 30, 2017
	As Reported			ASC 606 Adjustments			Other Reclassifications⁽¹⁾			As Adjusted
Gross revenues	$	1,088,754		$	(88,225	)	$	50,368		$	1,050,897
Promotional allowances		(87,776	)		93,838			(6,062	)		—
Net revenues	$	1,000,978		$	5,613		$	44,306		$	1,050,897
Operating income	$	60,955		$	172		$	3,926		$	65,053
Net (loss) income	$	(15,754	)	$	196		$	—		$	(15,558	)

(1)	Other reclassifications are comprised of the reversal of our Lake Charles property from discontinued operations and other reclassifications to conform to current period presentations.

Additionally, adoption of the new standard resulted in a basic earnings per share adjustment from the as reported $0.38 per share to $0.39 per share for the three months ended September 30, 2017. There was no adjustment for the diluted earnings per share for the three months ended September 30, 2017. Adoption of the new standard resulted in a net loss per share adjustment from the as reported $0.25 per share to $0.24 per share for the nine months ended September 30 2018 for both basic and diluted earnings per share.

The Company’s consolidated statement of operations presents net revenue disaggregated by type or nature of the good or service (i.e., casino, pari-mutuel, food and beverage, hotel and other). A summary of net revenues disaggregated by type of revenue and reportable segment is presented below (amounts in thousands). Refer to Note 13 for a discussion of the Company’s reportable segments.

	Three Months Ended September 30, 2018
	West		Midwest		South		East		Central		Corporate and Other		Total
Casino	$	60,912	$	86,331	$	84,299	$	109,637	$	21,698	$	—	$	362,877
Pari-mutuel commissions		—		—		1,854		3,438		—		—		5,292
Food and beverage		27,502		6,867		12,492		9,359		1,933		—		58,153
Hotel		31,583		4,720		6,169		2,308		—		—		44,780
Other		9,095		1,916		1,755		2,980		266		139		16,151
Net revenues	$	129,092	$	99,834	$	106,569	$	127,722	$	23,897	$	139	$	487,253

	Three Months Ended September 30, 2017
	West		Midwest		South		East		Central		Corporate and Other		Total
Casino	$	63,501	$	89,482	$	84,447	$	110,107	$	—	$	—	$	347,537
Pari-mutuel commissions		—		—		1,766		3,345		—		—		5,111
Food and beverage		30,099		7,572		12,669		9,197		—		—		59,537
Hotel		31,737		4,828		7,207		2,190		—		—		45,962
Other		8,987		1,769		1,845		1,957		—		173		14,731
Net revenues	$	134,324	$	103,651	$	107,934	$	126,796	$	—	$	173	$	472,878

	Nine Months Ended September 30, 2018
	West		Midwest		South		East		Central		Corporate and Other		Total
Casino	$	168,342	$	262,138	$	270,802	$	323,030	$	21,698	$	—	$	1,046,010
Pari-mutuel commissions		—		—		7,853		6,554		—		—		14,407
Food and beverage		76,524		20,527		38,936		26,724		1,933		—		164,644
Hotel		77,234		12,775		18,462		5,976		—		—		114,447
Other		24,450		5,795		5,559		8,292		266		377		44,739
Net revenues	$	346,550	$	301,235	$	341,612	$	370,576	$	23,897	$	377	$	1,384,247

	Nine Months Ended September 30, 2017
	West		Midwest		South		East		Central		Corporate and Other		Total
Casino	$	132,563	$	147,469	$	176,616	$	308,036	$	—	$	—	$	764,684
Pari-mutuel commissions		—		—		3,271		6,588		—		—		9,859
Food and beverage		74,593		12,607		29,231		25,236		—		—		141,667
Hotel		69,596		8,282		15,706		5,961		—		—		99,545
Other		20,812		2,934		4,130		6,900		—		366		35,142
Net revenues	$	297,564	$	171,292	$	228,954	$	352,721	$	—	$	366	$	1,050,897