S-1

As filed with the Securities and Exchange Commission on September 21, 2020

Registration Number 333-          

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Accel Entertainment, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

7900

(Primary Standard Industrial Classification Code Number)

98-1350261

(IRS Employer Identification Number)

140 Tower Drive

Burr Ridge, Illinois 60527

(630) 972 -2235

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Derek Harmer

General Counsel, Chief Compliance Officer and Secretary

140 Tower Drive

Burr Ridge, Illinois 60527

(630) 972 -2235

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Please send copies of all correspondence to:

Robert Freedman, Esq. Nicolas H.R. Dumont, Esq. Fenwick & West LLP 902 Broadway, Suite 14 New York, NY 10010 (212) 430-2600 Alexander D. Lynch, Esq. Barbra J. Broudy, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 (212) 310-8000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act.  ☐

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered(1)	Proposed Maximum Offering Price Per Share	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee(3)(4)
Class A-1 common stock, par value $0.0001 per share	8,320,237(4)	$13.05	$108,579,092.85	$14,093.57

(1) Includes the offering of additional shares of Class A-1 common stock pursuant to the underwriters’ option to purchase additional shares.

(2) Pursuant to Rule 457(c) under the Securities Act, and solely for the purpose of calculating the registration fee, the proposed maximum offering price per share is $13.05, which is average of the $13.20 (high) and $12.89 (low) sales price of our Class A-1 common stock as reported on The New York Stock Exchange on September 14, 2020, which date is within five business days prior to filing this Registration Statement.

(3) Calculated by multiplying the proposed maximum aggregate offering price of securities to be registered by 0.0001298.

(4) Includes an aggregate of 8,320,237 shares of Class A-1 common stock offered by the registrant. As set forth below, 5,479,763 shares of the registrant’s Class A-1 common stock previously registered for resale on Registration No. 333-236501 are being carried forward to this registration statement pursuant to Rule 429 under the Securities Act and are being offered by the selling stockholders named herein. A filing fee of $143,564.95 was previously paid in connection with the prior registration statement.

Pursuant to Rule 429 under the Securities Act, the prospectus filed as part of this registrations statement is being filed as a combined prospectus with respect to (a)             shares of the registrant’s Class A-1 common stock remaining unsold under Registration No. 333-236501 and (b) 8,000,000 shares of the registrant’s Class A-1 common stock offered by the registrant. Pursuant to Rule 429, this registration statement constitutes Post-Effective Amendment No. 2 to Registration No. 333-236501 with respect to the offering of such unsold shares thereunder, which are not currently being terminated by the registrant. No other changes shall be deemed to be made to Registration No. 333-236501 other than with respect to the specific shares being sold hereunder by the selling stockholders. Except to the extent reflected herein, no other changes shall be deemed to be made to Registration No. 333-236501 other than with respect to the specific shares being sold hereunder by the selling stockholders. Such post-effective amendment will become effective concurrently with the effectiveness of this registration statement in accordance with Section 8(a) of the Securities Act.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED SEPTEMBER 21, 2020

PRELIMINARY PROSPECTUS

ACCEL ENTERTAINMENT, INC.

8,000,000 Shares of Class A-1 Common Stock

4,000,000 Shares of Class A-1 Common Stock Offered by the Selling Stockholders

We are offering 8,000,000 shares of our Class A-1 common stock and the selling stockholders named in this prospectus are offering 4,000,000 shares of our Class A-1 common stock. We will not receive any proceeds from the sale of shares of Class A-1 common stock by the selling stockholders pursuant to this prospectus. However, we will pay the expenses, other than underwriting discounts and commissions incurred by the selling stockholders. We intend to use the net proceeds from our offering for general corporate purposes.

You should read this prospectus and any prospectus supplement or amendment carefully before you invest in our securities. Our shares of Class A-1 common stock are traded on the New York Stock Exchange (“NYSE”) under the symbol “ACEL. ” The closing price for our Class A-1 common stock on September 18, 2020, was $14.00 per share, as reported on the NYSE.

We are an “emerging growth company,” as that term is defined under the federal securities laws and, as such, are subject to certain reduced public company reporting requirements.

Investing in our securities involves risks that are described in the “Risk Factors” section beginning on page 17 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this prospectus or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions(1)	$	$
Proceeds, before expenses, to us	$	$
Proceeds, before expenses, to the selling stockholders	$	$

(1) See “Underwriting (Conflicts of Interest)” beginning on page 130 for additional information regarding underwriting compensation.

We have granted the underwriters an option to purchase up to 320,237 additional shares of Class A-1 common stock, and the selling stockholders have granted the underwriters an option to purchase up to 1,479,763 shares of Class A-1 common stock, at the public offering price less the underwriting discount, at any time within 30 days of the date of this prospectus.

The underwriters expect to deliver the shares of Class A-1 common stock to purchasers on or about           , 2020.

Joint Book-Running Managers

Goldman Sachs & Co. LLC	J.P. Morgan
Credit Suisse	Deutsche Bank Securities

Co-Managers

TPG Capital BD, LLC The Raine Group

The date of this prospectus is                 , 2020.

ABOUT THIS PROSPECTUS	1
TRADEMARKS	2
SELECTED DEFINITIONS	3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	7
SUMMARY OF THE PROSPECTUS	8
THE OFFERING	15
RISK FACTORS	17
USE OF PROCEEDS	43
CAPITALIZATION	44
MARKET PRICE, TICKER SYMBOL AND DIVIDEND INFORMATION	45
SELECTED HISTORICAL FINANCIAL INFORMATION OF ACCEL	46
BUSINESS	50
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	65
MANAGEMENT	89
EXECUTIVE COMPENSATION	97
DESCRIPTION OF CAPITAL STOCK	102
SHARES AVAILABLE FOR FUTURE SALE	113
PRINCIPAL AND SELLING STOCKHOLDERS	115
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	118
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS	126
UNDERWRITING (CONFLICTS OF INTEREST)	131
LEGAL MATTERS	136
EXPERTS	136
WHERE YOU CAN FIND MORE INFORMATION	136
INDEX TO CONSOLIDATED FINANCIAL INFORMATION	F-1

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ABOUT THIS PROSPECTUS

Pursuant to Rule 429 under the Securities Act of 1933, as amended (the “Securities Act”), this prospectus is a combined prospectus relating to (a) 5,479,763 shares of Class A-1 common stock offered by the selling stockholders that are currently registered and remain outstanding under Registration No. 333-236501 and (b) 8,320,237 shares of Class A-1 common stock offered by us that are being newly registered hereunder as part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”).

Neither we nor the selling stockholders have authorized anyone to provide any information or to make any representations other than those contained in this prospectus. We and the selling stockholders take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the securities offered hereby and only under circumstances and in jurisdictions where it is lawful to do so. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. This prospectus is not an offer to sell securities, and it is not soliciting an offer to buy securities, in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front of this prospectus only, regardless of the time of delivery of this prospectus or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.

A prospectus supplement or post-effective amendment to the registration statement may also add, update or change information included in this prospectus. Any statement contained in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in such prospectus supplement of post-effective amendment modifies or supersedes such statement. Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement so superseded will be deemed not to constitute a part of this prospectus. You should rely only on the information contained in this prospectus, any applicable prospectus supplement, any related free writing prospectus or any post-effective amendment to the registration statement of which this prospectus forms a part. See “Where You Can Find More Information.”

This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, or will be filed, with the SEC, and you may obtain copies of those documents as described below under “Where You Can Find More Information.”

Unless the context indicates otherwise, references to “the Company,” “Accel,” “we,” “us” and “our” refer to Accel Entertainment, Inc., a Delaware corporation, and its consolidated subsidiaries.

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TRADEMARKS

This document contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

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SELECTED DEFINITIONS

“Accel” means the historical operations of Accel Entertainment, Inc., an Illinois corporation, and its consolidated subsidiaries prior to the Business Combination (as defined below), and following the Business Combination, the operations of Accel Entertainment, Inc., a Delaware corporation, and its consolidated subsidiaries;

“Accel Public Warrants” means the 1,248,154 Accel Warrants issued on a registered basis to Sellers in connection with the Stock Purchase pursuant to the Proxy Statement/Prospectus (as such terms are defined below);

“Accel Stock” means the common stock and preferred stock of Accel prior to the Business Combination;

“Accel Warrants” means warrants exercisable for the shares of Class A-1 common stock (as defined below) of the Company, which include the Pace Warrants, Accel Public Warrants and Business Combination Private Placement Warrants (each as defined below);

“ATMs” means automatic teller machines;

“Business Combination” means the transactions contemplated by the Transaction Agreement (as defined below), which transactions were consummated on November 20, 2019;

“Business Combination Private Placement” refers to the private placement completed in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder to the Business Combination Private Placement Sellers (as defined below) of shares of Class A-1 common stock, shares of Class A-2 common stock (each as defined below) and Accel Warrants in connection with the Business Combination;

“Business Combination Private Placement Sellers” refers to Sellers (as defined below) who are “accredited investors” (as defined by Rule 501 of the Regulation D) and party to either that certain Key Holder Support Agreement or the Holder Support Agreement (each as defined in “Selling Holders—Material Relationships with the Selling Holders”) executed in accordance with the terms of the Transaction Agreement;

“Business Combination Private Placement Warrants” means the 1,196,283 Accel Warrants issued in the Business Combination Private Placement;

“Bylaws” means the Company’s Amended and Restated Bylaws, which came into effect at the Business Combination;

“Charter” means the Company’s Amended and Restated Certificate of Incorporation;

“Class A-1 common stock” means the shares of Class A-1 Common Stock, par value $0.0001 per share, of the Company, or, as applicable, of Pace, immediately following the Pace Domestication, but prior to the Stock Purchase and consummation of the Business Combination;

“Class A-2 common stock” means the shares of Class A-2 Common Stock, par value $0.0001 per share, of the Company, or, as applicable, of Pace, immediately following the Pace Domestication, but prior to the Stock Purchase and consummation of the Business Combination;

“Class F common stock” means the shares of Class F common stock, par value $0.0001 per share, of the Company, or, as applicable, of Pace, immediately following the Pace Domestication, but prior to the Stock Purchase and consummation of the Business Combination;

“Common Stock” means the Class A-1 common stock, the Class A-2 common stock and Class F common stock;

“Company Board” means the board of directors of the Company;

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“Credit Agreement” means that certain Credit Agreement, dated as of November 13, 2019, among Accel Entertainment LLC, as borrower, Capital One, National Association, as Administrative Agent (in such capacity, the “Agent”), Collateral Agent and Issuing Bank and Swing Line Lender, the other lenders party thereto and Capital One, National Association, Fifth Third Bank, CIBC Bank USA, JPMorgan Chase Bank, N.A., and Keybank National Association, as Joint Lead Arrangers and Joint Lead Bookrunners and Mizuho Bank, Ltd., and West Suburban Bank as Co-Documentation Agents, as amended;

“DGCL” means the Delaware General Corporation Law;

“Director Share Exchange” refers to the receipt by the independent directors of Pace of 200,000 shares of Class A-1 common stock, in the aggregate, in exchange for an equal number of their Founder Ordinary Shares pursuant to the terms of those certain letter agreements, dated June 13, 2019, by and between Pace and such independent directors;

“Exchange Act” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder;

“Founder Ordinary Shares” mean the Class F ordinary shares, par value $0.0001 per share, of Pace;

“IGB” means the Illinois Gaming Board;

“Illinois Video Gaming Act” means the Illinois Video Gaming Act and amendments thereto enacted by the Illinois state legislature;

“Initial Pace Holders” means Chad Leat, Kathleen Philips, Robert Suss, Paul Walsh and Kneeland Youngblood;

“Initial Pace Sponsor” means TPG Pace II Sponsor, LLC, a Cayman Islands exempted limited liability company and an affiliate of TPG;

“Investment Private Placement” means the purchase of 4,696,675 shares of Class A-1 common stock, for cash, in a private placement to the PIPE Investors (as defined below) consummated pursuant to the terms of the Subscription Agreements (as defined below in the definition of “PIPE Investors”);

“Grand River Jackpot” means Grand River Jackpot, LLC, an Illinois limited liability company;

“NewCo” means New Pace LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Pace;

“PA Board” means the Pennsylvania Gaming Control Board;

“Pace” means the historical operations of TPG Pace Holdings Corp. prior to the consummation of the Business Combination;

“Pace Domestication” means the domestication of Pace as a Delaware corporation on November 20, 2019;

“Pace Governance” means TPG Pace Governance, LLC, a Cayman Islands limited liability company;

“Pace IPO” means Pace’s initial public offering, consummated on June 30, 2017;

“Pace Private Placement Warrants” means Accel Warrants that were issued to Initial Pace Sponsor in a private placement that closed simultaneously with the consummation of the Pace IPO;

“Pace Public Shares” mean the Class A ordinary shares, par value $0.0001 per share, of Pace;

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“Pace Sponsor Members” means TPG Pace II Sponsor Successor, LLC, a Delaware limited liability company, Pace Governance and Peterson Capital Partners, L.P., collectively;

“Pace Public Warrants” means Accel Warrants that were included in the Pace Public Units (as defined below) sold in the Pace IPO;

“Pace Warrants” means the Pace Public Warrants and the Pace Private Placement Warrants, collectively;

“Pennsylvania Gaming Act” means the Pennsylvania Race Horse Development and Gaming Act and amendments thereto enacted by the Pennsylvania legislature;

“PIPE Investors” means those investors that participated in the Investment Private Placement, consisting of certain investors (the “Original General Investors”) and an affiliate of Pace (the “Pace Affiliate”) that entered into subscription agreements with Pace concurrently with the closing of the Transaction Agreement (such investors, the “Original Investors” and such subscription agreements, the “Original Subscription Agreements”) and an additional investor (the “Additional Investor,” and collectively with the Original General Investors, the “General Investors”) that entered into a subscription agreement with Pace on August 13, 2019 (such subscription agreement, collectively with the Original Subscription Agreements, the “Subscription Agreements”);

“Proxy Statement/Prospectus” means the Definitive Proxy Statement/Prospectus filed with the SEC on October 30, 2019;

“Pace Public Unit” means one Pace Public Share and one-third of a Pace Public Warrant, sold in the Pace IPO;

“Registration Rights Agreement” means that certain registration rights agreement entered into in connection with the consummation of the Business Combination among Pace, the Pace Sponsor Members and certain other persons, including certain members of management of Accel, certain Accel shareholders and the Initial Pace Holders (other than Kneeland Youngblood) and each other person who has executed and delivered a joinder to the Registration Rights Agreement, including any person who (1) became a stockholder of the Company immediately following the Business Combination, (2) either (A) made a written request to the Company to enter into the Registration Rights Agreement or (B) was, immediately following the Business Combination, subject to Section (b)(2) of Rule 144 of the Securities Act with respect to such person’s shares of Class A-1 common stock following the Business Combination and (3) elected to enter into a Registration Rights Agreement;

“Registration Rights Holders” means the parties to the Registration Rights Agreement, other than Pace, together with each other person who executed and delivered a joinder to the Registration Rights Agreement;

“SEC” means the United States Securities and Exchange Commission;

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;

“Seller” means each of the shareholders of Accel named as a Seller in the Transaction Agreement, each of the shareholders of Accel joined to the Transaction Agreement pursuant to that certain Drag-Along Agreement, dated as of June 13, 2019, by and among Pace and each of the Sellers who duly executed and delivered a signature page to the Transaction Agreement as of June 13, 2019 (collectively, the “Sellers”);

“Sponsor Share Exchange” refers to the receipt by the Initial Pace Sponsor of 7,800,000 shares of Class A-1 common stock and 2,000,000 shares of Class A-2 common stock in exchange for its Founder Ordinary Shares, pursuant to the terms of that certain letter agreement dated as of June 13, 2019 (as amended on July 22, 2019) by and among the Initial Pace Sponsor, Pace and the Shareholder Representatives (as defined below in the definition of “Transaction Agreement”);

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“Stock Purchase” means the acquisition by Pace, directly or indirectly, of all of the issued and outstanding Accel Stock held by the Sellers as part of the consummation of the Business Combination;

“TPG” means TPG Global, LLC and its affiliates;

“Transaction Agreement” means that certain Transaction Agreement, dated as of June 13, 2019 (as amended on July 22, 2019 and October 3, 2019), by and among Pace, each of David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein) (in their capacity as representatives of the shareholders of Accel) (the “Shareholder Representatives”) and the Sellers;

“Trust Account” means the trust account of Pace that held the proceeds from the Pace IPO prior to the Business Combination; and

“VGTs” means video gaming terminals.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the information contained in this prospectus contains forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. When contained in this prospectus, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside our management’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. These forward-looking statements are based on information available as of the date of this prospectus, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that results and events could differ materially and adversely from those contained in the forward-looking statements due to a number of factors including, but not limited to:

• The effect of COVID-19 on Accel’s operations and ability to operate;

• Accel’s ability to operate in existing markets or expand into new jurisdictions;

• Accel’s ability to manage its growth effectively;

• Accel’s ability to offer new and innovative products and services that fulfill the needs of licensed establishment partners and create strong and sustained player appeal;

• Accel’s dependence on relationships with key manufacturers, developers and third parties to obtain VGTs, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms;

• the negative impact on Accel’s future results of operations by the slow growth in demand for VGTs and by the slow growth of new gaming jurisdictions;

• Accel’s heavy dependency on its ability to win, maintain and renew contracts with licensed establishment partners;

• unfavorable economic conditions or decreased discretionary spending due to other factors such as terrorist activity or threat thereof, epidemics or other public health issues, civil unrest or other economic or political uncertainties, that could adversely affect Accel’s business, results of operations, cash flows and financial conditions; and

• other risks and uncertainties indicated in this prospectus, including those set forth under the section entitled “Risk Factors” beginning on page 17, and that may be set forth in any applicable prospectus supplement under any similar caption.

Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements. For a discussion of the risks involved in our business and investing in our Class A-1 common stock, see “Risk Factors.” You should read this prospectus and the documents that we have filed as exhibits to the registration statement of which this prospectus is a part completely and with the understanding that our actual future results may be materially different from what we expect. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our securities.

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SUMMARY OF THE PROSPECTUS

This summary highlights information contained elsewhere in this prospectus. Because it is a summary, it does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire prospectus, including our “Management Discussion and Analysis of Financial Condition and Results of Operations,” consolidated financial statements and the related notes and the information set forth under the section “Risk Factors,” along with documents that are filed as exhibits to the registration statement of which this prospectus forms a part. Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. See information set forth under the section entitled “Cautionary Note Regarding Forward-Looking Statements” beginning on page 7.

Overview

The Company is a leading distributed gaming operator in the United States on an Adjusted EBITDA basis, and a preferred partner for local business owners in the Illinois market. The Company’s business consists of the installation, maintenance and operation of VGTs, redemption devices that disburse winnings and contain ATM functionality, and other amusement devices in authorized non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores, which are referred to collectively as “licensed establishments.” The Company also operates a small number of stand-alone ATMs in gaming and non-gaming locations.

Corporate History

The Company was formed as a blank check company named “TPG Pace Holdings Corp.” and incorporated on February 14, 2017, as a Cayman Islands exempted company. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. On June 30, 2017, the Company consummated the Pace IPO and prior to the Business Combination, the Company was a “shell company” as defined under the Exchange Act because it had no operations and nominal assets consisting almost entirely of cash.

In connection with the Business Combination, the Pace Domestication occurred on November 20, 2019, and the Company domesticated as a Delaware corporation. Immediately following the Pace Domestication, the Company changed its name to “Accel Entertainment, Inc.” and consummated the Business Combination, including the Stock Purchase, and following the closing of the Stock Purchase, the merger of Accel with and into NewCo with NewCo surviving such merger. In connection with the Business Combination, the Company also consummated the Sponsor Share Exchange, the Director Share Exchange and the Investment Private Placement on November 20, 2019.

Corporate Information

Our principal executive offices are located at 140 Tower Drive, Burr Ridge, Illinois 60527, and our telephone number is (630) 972-2235. Our website is www.accelentertainment.com. The information found on our website is not part of this prospectus.

Recent Developments

DraftKings Partnership

On September 9, 2020, the Company announced that it has entered into an exclusive agreement with DraftKings Inc. (Nasdaq: DKNG) (“DraftKings”), a leader in the digital sports entertainment and gaming industries. Effective as of September 9, 2020, the Company’s more than 2,350 video gaming locations across the entire State of Illinois

 

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will promote exclusive DraftKings content and programming across all Accel marketing channels, including the Company’s in-location digital display screens, to drive awareness of and retention for sports betting among its loyal player base.

Impact of COVID-19

On July 1, 2020, video gaming resumed in Illinois after the Illinois Gaming Board (“IGB”) made the decision to shut down all video gaming terminals (“VGTs”) across the State of Illinois starting at 9:00 p.m. on March 16, 2020 in response to the COVID-19 outbreak. By the third day of the relaunch, more than 90% of Accel’s locations were live and less than 3% of Accel’s VGTs were inoperative due to resumption protocols.

The shut down that began March 16, 2020 ultimately extended through June 30, 2020. The temporary shutdown of Illinois video gaming impacted all of the gaming days during the three months ended June 30, 2020 and 106 of the 182 gaming days (or 58% of gaming days) during the six months ended June 30, 2020. In light of these events and their effect on the Company’s employees and licensed establishment partners, the Company took action to position the Company to help mitigate the effects of the temporary cessation of operations and to preserve future operating flexibility by, among other things, furloughing approximately 90% of its employees and deferring certain payments to major vendors. Additionally, members of the Company’s senior management decided to voluntarily forgo their base salaries until the resumption of video gaming operations. Beginning in early June, the Company started reinstating employees from furlough in anticipation of resuming operations on July 1, 2020.

As a result of these developments, the Company’s revenues, results of operations, Adjusted EBITDA and cash flows have been materially affected, and the Company expects it to continue for at least as long as COVID-19 is a threat to the public health.

While the IGB has permitted the resumption of all video gaming activities since July 1, 2020 it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events. The situation is rapidly changing and additional impacts to the business may arise that the Company is not aware of currently.

Preliminary Operating Trends

Based on data that is currently available, the following information reflects preliminary operating trends for July and August 2020 compared to the same period in 2019. However, these trends are preliminary estimates only, based solely on currently available information and the limited period that the properties were open in July and August 2020, and we caution you that these trends may not continue and that these trends may not recur at our other locations as they reopen, including as a result of varying levels of restrictions on operations imposed by the IGB or otherwise, customer response and demand, the potential for authorities reimposing restrictions in response to continued developments with the COVID-19 pandemic and other events that could require new closures or delayed reopenings of Accel’s locations and the other factors described under “Risk Factors” in this prospectus.

Accel does not intend to update interim results for the reopened locations. In addition, the results are preliminary, based on management estimates, have not been reviewed by Accel’s auditors, or any other independent accounting firm, and are subject to change. Accel has not yet closed the financial records for the quarter and, as a result, the figures below may not be indicative of final results for these periods in July or August or indicative of the full quarter. As a result, the discussion below constitutes forward-looking statements and, therefore, we caution you that these statements are subject to risks and uncertainties, including possible adjustments and the risk factors highlighted herein under “Risk Factors.”

 

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• Total net revenues were approximately $89.0 million combined for July and August of 2020 as compared to $66.8 million combined for the comparable periods in 2019 and as compared to $81.0 million combined for January and February of 2020; and

• Due to additional expenses to operate responsibly during COVID-19, margins in July and August combined decreased approximately 20 basis points for net (loss) income and 80 basis points for Adjusted EBITDA compared to the prior year period.

Adjusted EBITDA (defined below), is a non-GAAP financial measure and is defined as net (loss) income plus amortization of route and customer acquisition costs and location contracts acquired; stock-based compensation expense; other expenses, net; tax effect of adjustments; depreciation and amortization of property and equipment; interest expense; and provision for income taxes. For additional information regarding Adjusted EBITDA for historical periods and how management uses Adjusted EBITDA to evaluate operating performance, see “Selected Historical Financial Data of Accel and Non-GAAP Financial Measures—Non-GAAP Financial Measures—Adjusted EBITDA and Adjusted net (loss) income.”

In the third quarter of 2020, the Company filed its federal and state income tax returns and identified certain favorable return-to-provision adjustments following engagement of specialized tax technical expertise resulting in a change in estimate relative to the Company’s best estimate used in preparation of the 2019 income tax provision. The Company plans to record this change in estimate and related income tax benefit of approximately $7 million in the third quarter of 2020. 

 

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Accel’s Core Strengths

We believe that the following competitive strengths contribute to our industry leading position:

Gaming-as-a-service platform. When compared with traditional gaming businesses such as casinos, Accel believes its platform benefits from the following advantages:

• “business-to-business” model secured by long-term, exclusive contracts that are typically renewed, allowing for predictable, highly recurring revenue streams with low churn;

• operating a scalable business in fast-growing gaming segments that are primarily served by fragmented, sub-scale providers;

• data reporting solutions and analytics, offering insight and advice to help licensed establishment partners maximize revenues and ultimately grow their businesses;

• state-of-the-art technology-enabled slot machines from leading manufacturers who provide the most captivating titles in slots entertainment;

• comparatively low capital expenses and a comparatively asset-light operating model, in each case, when compared to casinos, which typically provide significantly higher capital-intensive offerings such as hotel accommodations, restaurants and stage-based entertainment;

• highly localized footprint that provides more access to gaming and convenience for consumers, as compared to regional casinos that market to players who may live up to several hours away and are thus prone to disruption of their feeder markets; and

• strong marketing, legal, compliance, cash management, financial and technical support systems, all of which remain in-house to boost efficiency and enhance the ability to serve as a premier gaming-as-a-service provider.

Strong relationships with licensed establishment partners. Accel has prioritized establishing strong, lasting relationships with its licensed establishment partners since its inception. Accel dedicates a relationship manager to each of its licensed establishment partners, who, with support from other personnel, oversees every aspect of partner relationship management and retention. Accel prides itself on providing prompt, reliable service and education, all of which helps to increase referral marketing by its partners. Accel’s relationship managers’ efforts to provide value-added services to their licensed establishment partners result in consistent pre-renewals long before contracts expire and are a key element of our competitive differentiation.

Proven track record in executing and integrating acquisitions. Accel continuously evaluates strategic acquisition opportunities. Accel has a successful track record of identifying, acquiring and integrating competitive operators at favorable terms. Since becoming a licensed terminal operator in 2012, Accel has acquired nine operator companies, adding more than 890 licensed establishments to our total portfolio of 2,312 licensed establishment partners as of December 31, 2019. Accel believes that its industry reputation, scale, proven track record of driving revenue synergies, and public acquisition currency enhances its ability to acquire other operators or licensed establishments on favorable terms and makes Accel a preferred partner of choice.

Diversified revenue base with limited churn. Accel believes that gaming regulations in Illinois facilitate a low revenue concentration per licensed establishment partner, and that its low-limit slots are more resilient to economic downturn as consumers typically continue to engage in locally convenient, lower cost forms of entertainment in such circumstances. Accel’s best-performing licensed establishment accounted for approximately $1.8 million, or less than 1% of gross revenue for the year ended December 31, 2019, its top 20 licensed establishments represented only 5% of gross revenue for the year ended December 31, 2019, and Accel’s licensed establishment partners each contributed an average of approximately $0.2 million of gross revenue for the year ended December 31, 2019. Accel’s voluntary contract renewal rate was over 98% for the

 

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three-year period ended December 31, 2019. While Accel experiences minor business disruptions each year due to business failures or natural disasters affecting licensed establishment partners, many of these sites reopen in subsequent years under new owners, and Accel believes it is best-positioned to reengage with those establishments as new licensed establishment partners because of its reputation and leading market position. Accel’s VGTs are geographically diversified across the state of Illinois, limiting systemic risk due to local weather patterns or regional economic downturns. Accel’s plans to expand into other states may further help to diversify its portfolio.

Deep industry and vendor relationships. Accel’s leading market position has led to strong relationships within its industry and with equipment suppliers. Accel has successfully integrated multiple other operators and believes this successful roll-up strategy positions it well with potential additional local operators who could benefit from Accel’s gaming-as-a-service platform. In addition, Accel’s industry leadership permits it to seek and obtain favorable pricing and supply of key gaming machines. Due to its ability to procure machines and parts easily, Accel is able to rotate machines quickly to licensed establishment partners where they are most needed across its operating footprint. This results in longer, more effective usage and greater lifetimes for Accel’s machines.

Management team. Accel’s management team has deep experience and industry knowledge, with an average of 12 years of gaming industry experience. Accel’s President, Chief Executive Officer and co-founder, Andy Rubenstein, has led Accel since its inception in 2009, and its general counsel, Derek Harmer, and chief financial officer, Brian Carroll, have been with Accel since 2012 and 2014, respectively. Accel believes that its industry-leading management team has a reputation for integrity and compelling customer service.

Company culture and training. Accel believes that it is an employer of choice for talented candidates. Accel’s corporate culture is strong and Accel invests heavily in employees’ success, including devoting significant resources to training and other development programs. Accel also experiences relatively low levels of employee turnover.

Accel’s Growth Opportunities

Accel’s key growth strategies include its plans to:

Maintain competitive advantage in Illinois and increase VGT segment share. Accel believes that there is substantial potential for further growth in Illinois. Accel has been successful in the past in signing competitors’ licensed establishments and has identified approximately 700 such prospects for engagement after current contracts with other partners expire. In particular, Accel sees opportunities for expansion in key local markets, such as Springfield, Bloomington and Decatur, where its VGT segment share is below its share in other regions. Accel also strives to further optimize revenues for VGTs it currently operates through refined data analysis, marketing and other initiatives. Accel seeks to increase distribution possibilities through corporate partners who operate multiple licensed establishments such as chain stores. Accel believes that these corporate businesses tend to favor larger operators who have substantial compliance infrastructures in addition to leading service capabilities. While such licensed establishments have been “second movers” in choosing to adopt video gaming, partnering with reputable operators such as Accel could render deployment of VGTs more attractive. Accel’s leadership position also creates an opportunity for it to take advantage of recent legislative changes in Illinois such as an increased number of allowed VGTs per establishment, higher bet limits, higher win amounts, and larger jackpots. Additionally, Accel may realize the benefits of potential municipal ordinance changes that would permit its business to operate in new municipalities.

Expand operations into Pennsylvania. In November 2017, Pennsylvania’s Governor signed the Pennsylvania Gaming Act. The law authorized, among other forms of gaming, VGT gaming at qualified truck stops. Accel estimates that the total potential VGT market in Pennsylvania is approximately 100 to 150 truck

 

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stops as of December 31, 2019, although municipalities are able to individually opt out from authorizing distributed gaming. Accel believes this market opportunity is attractive and has obtained a conditional terminal operator license from the PA Board. To qualify for gaming, a truck stop must meet requirements that are similar to those in Illinois. Accel has a binding agreement to install VGTs with a partner truck stop establishment in Pennsylvania that has received a conditional license from the PA Board. Accel is also in discussions with other potential partners who have not yet applied for licensure. Accel believes that Pennsylvania is a natural choice for its expansion outside of Illinois when compared to other states due to industry similarities with Illinois. See “Business Our Industry” for more information.

Expand operations in Georgia. The operation of coin-operated amusement machines in Georgia has been regulated by the Georgia Lottery Corporation since April 2013. Games are skill-based with winnings paid in points that may be redeemed for noncash merchandise, prizes, toys, gift certificates, or novelties. The most common type of establishment licensees are convenience stores. Licensed establishments are limited to a maximum of nine machines, unless a municipality specifically limits licensed establishments to a maximum of six machines. In addition, any local governing authority may vote to remove coin operated amusement machines from its jurisdiction upon 60 days’ advance notice. On June 12, 2020, we announced our agreement to acquire, subject to regulatory approvals including the Georgia Lottery Corporation, Tom’s Amusement Company, Inc., a Southeastern U.S. amusement operator and Master Licensee in the state of Georgia. The acquisition of Tom’s Amusement’s adds 11 Georgia Coin Operated Amusement Machine Class B locations to the Accel portfolio, including a total of 65 Class B COAM terminals.

Establish Player Rewards Program to further drive growth. As part of its gaming-as-a-service suite of offerings, Accel has considered offering a Player Rewards Program for players when permitted. The anticipated terms of the program will provide for players to accumulate points each time they use Accel’s products and may provide points that can be redeemed for rewards. Accel believes this program will result in increased brand loyalty from licensed establishment partners by rewarding players for using Accel’s VGTs. This opt-in program is expected to allow data analysis with respect to each player, location and machine, which will in turn permit Accel to better assess performance and serve its partners. Although player rewards programs are not specifically prohibited in Illinois, applicable regulations have not been enacted, and the IGB has not approved any player rewards programs for any terminal operator. Accel has not applied to the IGB to establish any such program but expects to apply in the event of applicable regulation enactment.

Expand operations to other states. Various states and other jurisdictions have proposed legislation permitting VGTs or other forms of gaming in the past. These states include Indiana, Missouri and Mississippi. Accel may also choose to expand operations through strategic acquisitions or otherwise in other, more mature gaming jurisdictions where VGTs are currently legal, such as Virginia, Louisiana, Montana, Nevada, Oregon, South Dakota and West Virginia. Accel may attempt to seek approval to operate in additional jurisdictions that authorize video gaming. Accel believes it would be a favored entrant into any such markets given its track record of success and compliance. Accel believes its market opportunity measured by gross revenue could grow by 2025 to approximately $3 billion in Illinois, assuming further penetration in existing cities, legalization of opt-our municipalities such as Chicago and growth rates of its business consistent with historical trends. Accel further believes its market opportunity to be approximately $10 billion including those other states where VGTs are currently legal, approximately $20 billion in other states where commercial and tribal casinos are legal assuming adoption of VGT gaming at 20% of current casino revenues in those states, and $30 billion across the United States including new product lines such as sports betting. 

Expand ancillary service offerings to licensed establishments. While distributing and servicing amusement devices such as jukeboxes, dartboards, pool tables, pinball machines and other ancillary equipment, such as redemption devices and stand-alone ATMs, is not the primary focus of its business, Accel believes that these services provide a key point for ongoing customer contact and enhances its image as a “one-stop shop” for entertainment devices, including, for example, through Accel’s partnerships with complementary service 

 

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providers such as DraftKings. Accel has observed that licensed establishment partners appreciate these services and continue to rely on Accel to provide them. Providing these services can also serve as a point of initial contact with potential partners who may decide to avail themselves later of Accel’s primary gaming services. As a result, Accel intends to continue prioritizing the installation of these devices and equipment.

 

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THE OFFERING

Class A-1 common stock offered by us 8,000,000 shares (or 8,320,237 shares if the underwriters exercise their option to purchase additional shares in full)

Class A-1 common stock offered by selling stockholders 4,000,000 shares (or 5,479,763 shares if the underwriters exercise their option to purchase additional shares in full)

Option to purchase additional shares of Class A-1 common stock We have granted the underwriters an option to purchase up to an aggregate of 320,237 shares of Class A-1 common stock and the selling stockholders have granted the underwriters an option to purchase up to an aggregate of 1,479,763 shares of Class A-1 common stock. This option is exercisable, in whole or in part, within 30 days after the date of this prospectus.

Class A-1 common stock to be outstanding immediately after this offering 91,784,083 shares (or 92,104,320 shares if the underwriters exercise their option to purchase additional shares in full).

Use of proceeds We estimate that after deducting underwriting discounts and commissions and estimated offering expenses payable by us, we will receive approximately $         million of net proceeds from this offering.

We currently intend to use the net proceeds from the offering for general corporate purposes which may include capital expenditures, repayment of debt, potential acquisitions and strategic business transactions.

We will not receive any proceeds from the sale of shares of Class A-1 common stock by the selling stockholders, including pursuant to the underwriters’ exercise of their option to purchase additional shares. We will, however, bear the costs associated with the sale of shares by the selling stockholders, other than underwriting discounts and commissions. See “Use of Proceeds”.

Risk Factors Investing in our Class A-1 common stock involves a high degree of risk. See “Risk Factors” in this prospectus.

NYSE Symbol “ACEL.”

Underwriting (Conflicts of Interest) An affiliate of TPG Capital BD, LLC, an underwriter in this offering, is a selling stockholder in this offering. As a result of the foregoing relationship, TPG Capital BD, LLC is deemed to have a “conflict of interest” within the meaning of FINRA Rule 5121. In addition, Gordon Rubenstein, one of our directors and a selling stockholder, is an employee of The Raine Group LLC. Raine Securities LLC, an underwriter in this offering, is a controlled affiliate of The Raine Group LLC. As a result of the foregoing relationship, Raine

 

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Securities LLC is also deemed to have a “conflict of interest” within the meaning of FINRA Rule 5121. Accordingly, this offering will be made in compliance with the applicable provisions of FINRA Rule 5121. Pursuant to that rule, the appointment of a qualified independent underwriter is not necessary in connection with this offering. In accordance with FINRA Rule 5121(c), no sales of the shares will be made to any discretionary account over which TPG Capital BD, LLC or Raine Securities LLC exercises discretion without the prior specific written approval of the account holder.

The number of shares of Class A-1 common stock to be outstanding immediately after this offering is based on 83,784,083 shares of Class A-1 common stock outstanding as of September 18, 2020 and does not include (i) 293,921 shares of Class A-1 common stock reserved for issuance under the Accel Entertainment, Inc. 2011 Plan (the “2011 Plan”), (ii) 603,253 shares of Class A-1 common stock reserved for issuance under the Accel Entertainment, Inc. 2016 Plan (the “2016 Plan”), (iii) 3,104,403 shares of Class A-1 common stock reserved for issuance under the Accel Entertainment, Inc. Long Term Incentive Plan (the “LTIP”), (iv) 208,382 shares of Class A-1 common stock issuable upon the exercise of outstanding options to purchase shares of our Class A-1 common stock outstanding as of September 18, 2020 and with a weighted average exercise price of $2.74, and (v) 1,452,867 shares of Class A-1 common stock underlying Accel’s warrants.

 

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RISK FACTORS

An investment in any securities offered pursuant to this prospectus involves risk and uncertainties. You should consider carefully the risk factors below before, in addition to other information contained in this prospectus. Any of the risk factors could significantly and negatively affect our business, financial condition, results of operations, cash flows, and prospects and the trading price of our securities. You could lose all or part of your investment. Furthermore, additional risks and uncertainties of which we are currently unaware, or which we currently consider to be immaterial, could have a material adverse effect on our business, financial condition or results of operations.

The outbreak and spread of the novel coronavirus disease known as COVID-19 has had, and could continue to have, an adverse impact on our business, operations and financial condition for an extended period of time.

On March 11, 2020 the World Health Organization declared the novel coronavirus disease (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. The global and national impact of COVID-19 could be immense and the length of the pandemic and its ultimate economic and human toll cannot yet be determined.

On March 16, 2020, the IGB issued an order requiring the suspension of all video gaming operations at all licensed video gaming establishments of any kind in Illinois (the “IGB Closure Order”). Additionally, on March 21, 2020, Illinois Governor J.B. Pritzker issued an executive order (the “Illinois Executive Order”) requiring the closure of all “non-essential” businesses and also requiring all individuals living within the State of Illinois to “stay at home” other than in the case of limited exceptions. The IGB Closure Order and the Illinois Executive Order were each extended multiple times. The Illinois Executive Order was canceled on June 26, 2020 as non-essential businesses were allowed to open at limited capacities. In response to the cancellation of the Illinois Executive Order, the IGB allowed video gaming operations to resume on July 1, 2020. The mandated complete shutdown of our licensed establishment partners’ gaming operations and our VGTs by the IGB Closure Order substantially and adversely impacted our business, operations and financial condition. In addition, we have been, and will continue to be further, negatively impacted by related developments, including heightened governmental regulations and travel advisories, recommendations by the U.S. Department of State and the Centers for Disease Control and Prevention, and travel bans and restrictions, each of which has impacted, and is expected to continue to significantly impact, travel of customers to our licensed establishment partners.

While the IGB has announced the resumption of all video gaming activities effective July 1, 2020, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events. It is difficult to predict at this time how quickly customers will return to our licensed establishment partners, which may be a function of continued concerns over safety and/or depressed consumer sentiment due to adverse economic conditions, including job losses. Demand for the video gaming and non-gaming services provided by our licensed establishment partners may remain weak for a significant length of time and we cannot predict if and when such demand will return to pre-outbreak demand, if at all. We also cannot predict whether all of our licensed establishment partners will re-open and continue operating, or if they do, whether they will choose to renew their contracts with Accel at pre-outbreak levels or at all. Certain of our licensed establishment partners may go out of business. We may be adversely impacted as a result of the adverse impact our licensed establishment partners suffer.

While our operations workforce returns to support our business, we continue to allow office employees to work from home, which, if continued, may have a substantial impact on employee attendance and productivity, may cause employee turnover, disrupt access to facilities, equipment, networks, corporate systems, books and records and may add additional expenses and strain on our business. Now that the IGB Closure and Illinois Executive Orders are lifted and our operations resume, we may experience difficulties in resuming our operations to pre-closure levels, and our ability to serve our clients may be disrupted or inconsistent with pre-closure service, all or any of which could have a material adverse effect on our business, operations and financial condition.

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Further, our business may be negatively impacted by the adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth resulting from the impact of COVID-19.

Additionally, given the existing impact of COVID-19 on our business, operations and financial condition and potential future impact, we can make no assurances that we will be able to successfully pursue expansion of gaming operations into new jurisdictions or that such jurisdictions will pass laws and regulations allowing VGT gaming, the opening of new licensed establishments, the addition of new VGTs and amusement machines in existing licensed establishments or the acquisition of other terminal operators.

There may be other adverse consequences to our business, operations and financial condition from the spread of COVID-19 that we have not considered. We have never previously experienced a complete cessation of our business operations, and as a consequence, our ability to predict the impact of such a cessation on our business and future prospects is inherently uncertain. We can offer no assurances that the effects of COVID-19 are temporary or that any losses that are incurred as a result of these uncertainties will be regained if and when this crisis has passed. As a result, COVID-19 may continue to have an adverse impact on our business, operations and financial condition for an extended period of time.

Accel’s ability to operate in existing markets or expand into new jurisdictions could be adversely affected by difficulties, delays, or failures by Accel or its stakeholders in obtaining or maintaining required licenses or approvals.

Accel operates only in jurisdictions where gaming is legal. The gaming industry is subject to extensive governmental regulation by federal, state, and local governments, which customarily includes some form of licensing or regulatory screening of operators, suppliers, manufacturers and distributors and their applicable affiliates, their major shareholders, officers, directors and key employees. In addition, certain gaming products and technologies must be certified or approved in certain jurisdictions in which Accel operates, and these regulatory requirements vary from jurisdiction to jurisdiction. The scope of the approvals required can be extensive. Regulators review many facets of an applicant or holder of a license, including its financial stability, integrity and business experience. While the regulatory requirements vary by jurisdiction, most require:

• licenses and/or permits;

• documentation of qualifications, including evidence of financial stability;

• other required approvals for companies who design, assemble, supply or distribute gaming equipment and services; and

• individual suitability of officers, directors, major equity holders, lenders, key employees and business partners.

Accel may not be able to obtain or maintain all necessary registrations, licenses, permits or approvals, or could experience delays related to the licensing process which could adversely affect its operations and ability to retain key employees. If Accel fails to obtain a license required in a particular jurisdiction for games and VGTs, hardware or software or have such license revoked, it will not be able to expand into, or continue doing business in, such jurisdiction. Any delay, difficulty or failure by Accel to obtain or retain a required license or approval in one jurisdiction could negatively impact the ability to obtain or retain required licenses and approvals in other jurisdictions, or affect eligibility for a license in other jurisdictions, which can negatively affect opportunities for growth. For example, if Accel’s license to operate in Illinois is not renewed as a result of a failure to satisfy suitability requirements or otherwise, its ability to obtain or maintain a license in Pennsylvania or Georgia may be harmed. Unexpected changes or concessions required by local, state or federal regulatory authorities could involve significant additional costs and delay. The necessary permits, licenses and approvals may not be obtained within the anticipated time frames, or at all. Additionally, licenses, approvals or findings of suitability may be revoked, suspended or conditioned at any time. If a license, approval or finding of suitability is required by a

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regulatory authority and Accel fails to seek or does not receive the necessary approval, license or finding of suitability, or if it is granted and subsequently revoked, it could have an adverse effect on Accel’s results of operations, cash flows and financial condition.

While Accel has received a conditional terminal operator license from the PA Board, there can be no assurance that the final license will be obtained on terms necessary to achieve its objectives, or at all. While Accel does not expect that the composition of the PA Board will change prior to the next Pennsylvania gubernatorial election in 2022, there can be no assurances with respect thereto, and any changes in composition to the PA Board could alter existing interpretations or enforcement of the Pennsylvania Gaming Act, or otherwise affect the status of Accel’s pending final license before the PA Board. In Illinois, Accel was granted its original license to conduct business as a terminal operator of VGTs by the IGB in 2012, and has most recently had its license renewed in April 2019, retroactive to March 2019 for a period of one year. Renewal is subject to, among other things, continued satisfaction of suitability requirements.

In addition to any licensing requirements, all of Accel’s licensed establishment partners are required to be licensed, and delays in or failure to obtain approvals of these licenses may adversely affect results of operations, cash flows and financial condition. Accel and certain of its affiliates, major stockholders (generally persons and entities beneficially owning a specified percentage (typically 5% or more) of equity securities), directors, officers and key employees are subject to extensive background investigations, personal and financial disclosure obligations and suitability standards in its businesses. Certain jurisdictions may require the same from Accel’s lenders or key business partners. The failure of these individuals and business entities to submit to such background checks and provide required disclosure, or delayed review or denial of application resulting from such submissions, could jeopardize Accel’s ability to obtain or maintain licensure in such jurisdictions. Any delay, difficulty, or failure by any of Accel’s major stockholders, directors, officers, key employees, products or technology, to obtain or retain a required license or approval in one jurisdiction could negatively impact its licensure in other jurisdictions, which can ultimately negatively affect opportunities for growth. In addition, the failure of Accel’s officers, directors, key employees or business partners, equity holders, or lenders to obtain or maintain licenses in one or more jurisdictions may require Accel to modify or terminate its relationship with such officers, directors, key employees or business partners, equity holders, or lenders, or forego doing business in such jurisdiction. The licensing procedures and background investigations of the authorities that regulate Accel’s businesses may inhibit potential investors from becoming significant stockholders, inhibit existing stockholders from retaining or increasing their ownership, or inhibit existing stockholders from selling their shares to potential investors who are found unsuitable to hold Accel stock by gaming authorities or whose stock ownership may adversely affect Accel’s ability to obtain, maintain, renew or qualify for a license, contract, franchise or other regulatory approval from a gaming authority.

If Accel fails to manage its growth effectively, Accel may be unable to execute its business plan or maintain high levels of service and customer satisfaction.

Accel has experienced, and expects to continue to experience, rapid growth, which has placed, and may continue to place, significant demands on its management and its operational and financial resources. Since its inception, Accel has acquired 10 distributed gaming operators adding more than 930 licensed establishments to its portfolio of over 2,300 total licensed establishments as of June 30, 2020. Accel has also experienced significant growth in the number of licensed establishment partners and players, and in the amount of data that it supports. Additionally, Accel’s organizational structure will become more complex as it scales its operational, financial and management controls to support additional jurisdictions as well as its reporting systems and procedures.

To manage growth in operations and personnel, Accel will need to continue to grow and improve its operational, financial, and management controls and reporting systems and procedures. Accel may require significant capital expenditures and the allocation of valuable management resources to grow and change in these areas without undermining its culture, which has been central to growth so far. Accel’s expansion has placed, and expected future growth will continue to place, a significant strain on management, customer experience, data analytics,

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sales and marketing, administrative, financial, and other resources. If Accel fails to manage its anticipated growth and change in a manner consistent with its reputation, the quality of its services may suffer, which could negatively affect its brand and reputation and harm its ability to attract licensed establishment partners and players.

Accel’s success depends on its ability to offer new and innovative products and services that fulfill the needs of licensed establishment partners and create strong and sustained player appeal.

Accel’s success depends upon its ability to fulfill the needs of licensed establishment partners and players by offering new and innovative products and services on a timely basis. Consumer preferences for games are usually cyclical and difficult to predict, and even the most successful content remains popular for only limited periods of time, unless refreshed with new content or otherwise enhanced. If Accel fails to accurately anticipate the needs of licensed establishments and player preferences, it could lose business to competitors, which would adversely affect Accel’s results of operations, cash flows and financial condition. Accel may not have the financial resources needed to introduce new products or services on a timely basis or at all.

Accel’s business depends on content for VGTs, stand-alone ATMs, redemption devices, and amusement devices that is developed by third-party suppliers. Accel believes that creative and appealing game content results in more players visiting its licensed establishment partners, which offers more revenue for licensed establishment partners and provides them with a competitive advantage, which in turn enhances Accel’s revenue and ability to attract new business and to retain existing business. The success of such content is dependent on these suppliers’ ability to anticipate changes in consumer tastes, preferences and requirements and deliver to Accel in sufficient quantities and on a timely basis a desirable, high-quality and price-competitive mix of products. Accel’s suppliers’ products may fail to meet the needs of licensed establishment partners due to changes in consumer preference or Accel’s suppliers may be unable to maintain a sufficient inventory to satisfy the requirements of licensed establishment partners. In addition, suppliers must obtain regulatory approvals for new products, and such approvals may be delayed or denied. Accordingly, Accel may not be able to sustain the success of its existing game content or effectively obtain from third parties products and services that will be widely accepted both by licensed establishment partners and players.

Accel’s suppliers may also increase their prices due to increasing demand for their products from Accel’s competitors. Further, because there exists a limited number of suppliers in the distributed gaming business, an increase in supplier pricing may limit Accel’s ability to seek alternate sources of gaming content and may result in increased operating expenses. See “—Accel is dependent on relationships with key manufacturers, developers and third parties to obtain VGTs, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms” for more information.

Accel is dependent on relationships with key manufacturers, developers and third parties to obtain VGTs, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms.

The supply of Accel’s VGTs, stand-alone ATMs, redemption devices and amusement devices depends upon the manufacture, development, assembly, design, maintenance and repair of such products by certain key providers, as well as regulatory approval for these products. Accel’s operating results could be adversely affected by an interruption or cessation in the supply of these items, a serious quality assurance lapse, including as a result of the insolvency of any key provider, or regulatory issues related to key providers’ products or required licenses. Additionally, certain components of our VGTs are sourced from China, where outbreaks of the COVID-19 or other widespread public health problems have led to quarantines, shutdowns, shipping or logistics changes, or other disruptions that could impair our ability to obtain VGTs and VGT components. Accel has achieved significant cost savings through centralized purchasing of equipment and non-equipment. However, as a result, Accel is exposed to the credit and other risks of having a small number of key suppliers. While Accel makes every effort to evaluate counterparties prior to entering into long-term and other significant procurement contracts, it cannot predict the impact on suppliers of the current economic environment and other developments

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in their respective businesses. Insolvency, financial difficulties, supply chain delays, regulatory issues or other factors may result in Accel’s suppliers not being able to fulfill the terms of their agreements. Further, such factors may render suppliers unwilling to extend contracts that provide favorable terms to Accel, or may force them to seek to renegotiate existing contracts.

Failure of key suppliers to meet their delivery commitments could result in Accel being in breach of and subsequently losing contracts with key licensed establishment partners. Although Accel believes it has alternative sources of supply for the equipment and other supplies used in its business, the limited number of suppliers in the distributed gaming business could lead to delays in the delivery of products or components, and possible resultant breaches of contracts that it is party to with licensed establishment partners, increases in the prices it must pay for products or components, problems with product quality or components coming to the end of their life and other concerns. Accel may be unable to find adequate replacements for suppliers within a reasonable time frame, on favorable commercial terms or at all.

Certain of Accel’s products and services, including a Player Rewards Program that Accel intends to implement, include know-your-customer programs or technologies supplied by third parties. These programs and technologies could be an important aspect of products and services because they can confirm certain information with respect to players and prospective players, such as age, identity and location. Payment processing programs and technologies, typically provided by third parties, are also a necessary feature of Accel’s products and services. In the event that these products and technologies are not made available to Accel on acceptable terms, or in the event that they are defective, Accel’s results of operations, cash flows and financial condition may be materially adversely affected.

Accel’s future results of operations may be negatively impacted by slow growth in demand for VGTs and by the slow growth of new gaming jurisdictions.

Slow growth or declines in the demand for VGTs could reduce the demand for Accel’s services and negatively impact results of operations, cash flows and financial condition. Moreover, even with the expansion of gaming into new jurisdictions, the opening of new licensed establishments and the addition of new VGTs and amusement machines in existing licensed establishments, demand for Accel’s services could decline due to the desires of licensed establishment partners, unfavorable economic conditions, failure to obtain regulatory approvals and the availability of financing. Accordingly, Accel may not be successful in placing additional VGTs or amusement machines with additional licensed establishments. See “—The outbreak and spread of the novel coronavirus disease known as COVID-19 has had, and could continue to have, an adverse impact on our business, operations and financial condition for an extended period of time” for more information.

Accel depends heavily on its ability to win, maintain and renew contracts with licensed establishment partners, and it could lose substantial revenue if it is unable to renew certain of its contracts on substantially similar terms or at all.

Accel’s contracts with its licensed establishment partners generally contain initial multi-year terms. Contracts entered into prior to February 2018 typically contain automatic renewal provisions that provide the individual partner with an option to terminate within a specified time frame. As a result of the IGB rule changes, contracts entered into after February 2018 do not contain renewal provisions, automatic or otherwise. At the end of a contract term, licensed establishment partners may choose to extend their engagement by signing a new contract or may sign with a competitor terminal operator, in their sole discretion.

While Accel has historically experienced high rates of contract extension or renewal, these rule changes may lead to declines in contract extension or renewal. The termination, expiration or failure to renew one or more of its contracts with its licensed establishment partners could cause it to lose substantial revenue, which could have an adverse effect on its ability to win or renew other contracts or pursue growth initiatives.

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In addition, Accel may not be able to obtain new or renewed contracts with licensed establishment partners that contain terms that are as favorable as Accel’s current terms in its current contracts, and any less favorable contract terms or diminution in scope could negatively impact Accel’s business.

Additionally, Accel’s revenue, business, result of operations, cash flows and financial condition could be negatively affected if its licensed establishment partners sell or merge themselves or their licensed establishments with other entities. Upon the sale or merger of such licensed establishments, Accel’s licensed establishment partners could choose to no longer partner with Accel and decide to contract with its competitors.

Outbreak of health epidemics such as COVID-19 may adversely affect our business, results of operations and financial condition.

Any outbreaks of contagious diseases and other adverse public health developments in regions where we, our customers and suppliers operate or are considering operations could have a material and adverse effect on our business, results of operations and financial condition. For example, the recent outbreak of COVID-19 has resulted in significant governmental measures being implemented to control the spread of the virus, including quarantines, travel restrictions, manufacturing restrictions, declarations of states of emergency, business shutdown and restrictions on the movement of employees in many regions of China and certain other countries, including the United States. COVID-19, or similar or related diseases, may result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect our suppliers’ supply to us, and demand for our customers’ products. The outbreak and any preventative or protective actions that governments or we may take in response to COVID-19 may result in a period of business disruption, reduced customer traffic and reduced operations. While our business is typically from local patrons, any of these events could materially and adversely affect our business, results of operations and financial condition. The extent of the impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 and the actions to contain COVID-19 or treat its impact, among others.

Unfavorable economic conditions or decreased discretionary spending due to factors such as terrorist activity or threat thereof, epidemics or other public health issues, civil unrest or other economic or political uncertainties, may adversely affect Accel’s business, results of operations, cash flows and financial condition.

Unfavorable economic conditions, including recession, economic slowdown, decreased liquidity in the financial markets, decreased availability of credit and relatively high rates of unemployment, could have a negative effect on Accel’s business. Unfavorable economic conditions could cause licensed establishment partners to shut down or ultimately declare bankruptcy, which could adversely affect Accel’s business. Unfavorable economic conditions may also result in volatility in the credit and equity markets. The difficulty or inability of licensed establishment partners to generate or obtain adequate levels of capital to finance their ongoing operations may cause some to close or ultimately declare bankruptcy. Accel cannot fully predict the effects that unfavorable social, political and economic conditions and economic uncertainties and decreased discretionary spending could have on its business.

Accel’s revenue is largely driven by players’ disposable incomes and level of gaming activity. Unfavorable economic conditions may reduce the disposable incomes of players at licensed establishment partners and may result in fewer players visiting licensed establishment partners, reduced play levels, and lower amounts spent per visit, adversely affecting Accel’s results of operations and cash flows. Adverse changes in discretionary consumer spending or consumer preferences, which may result in fewer players visiting licensed establishment partners and reduced frequency of visits and play levels, could also be driven by an unstable job market, outbreaks (or fear of outbreaks) of contagious diseases, such as the COVID-19 outbreak, or other factors. Socio-political factors such as terrorist activity or threat thereof, civil unrest or other economic or political uncertainties that contribute to consumer unease may also result in decreased discretionary spending by players and have a negative effect on Accel.

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Accel’s revenue growth and future success depends on its ability to expand into new markets, which may not occur as anticipated or at all.

Accel’s future success and growth depend in large part on the successful addition of new licensed establishments as partners (whether through organic growth, conversion from competitors or partner relationships) and on the entry into new markets, including other licensed jurisdictions such as Pennsylvania, where Accel was recently granted a conditional license as a VGT terminal operator and Georgia, where Accel recently acquired Tom’s Amusement Company, Inc., a Southeastern U.S. amusement operator and Master Licensee. These markets are new to Accel and its success depends in part on displacing entrenched competitors who are familiar with these markets and are known to players. In many cases, Accel is attempting to enter into or expand its presence in these new markets and where the appeal and success of VGTs and other forms of entertainment has not yet been proven. In some cases, Accel may need to develop or expand its sales channels and leverage the relationships with its licensed establishment partners in order to execute this strategy. There can be no assurance that video gaming will have success with new licensed establishment partners or in new markets, or that it will succeed in capturing a significant or even acceptable market share in any new markets, including Pennsylvania and Georgia. In addition, it is possible that Accel will not be able to enter the Pennsylvania market at all, due to regulatory or other concerns. See “ —Accel is subject to strict government regulations that are constantly evolving and may be amended, repealed, or subject to new interpretations, which may limit existing operations, have an adverse impact on the ability to grow or may expose Accel to fines or other penalties.” If Accel fails to successfully expand into these markets, it may have difficulty growing its business and may lose business to its competitors.

Accel’s business is geographically concentrated, which subjects it to greater risks from changes in local or regional conditions.

Accel currently installs VGTs and amusement devices in licensed establishments primarily in Illinois. Due to this geographic concentration, Accel’s results of operations, cash flows and financial condition are subject to greater risks from changes in local and regional conditions, such as:

• changes in local or regional economic conditions and unemployment rates;

• changes in local and state laws and regulations, including gaming laws and regulations;

• a decline in the number of residents in or near, or visitors to, licensed establishment partners;

• changes in the local or regional competitive environment; and

• adverse weather conditions and natural disasters (including weather or road conditions that limit access to licensed establishments).

Accel largely depends on local markets of licensed establishments for players. Local competitive risks and the failure of licensed establishment partners to attract a sufficient number of guests, players and other visitors in these locations could adversely affect Accel’s business. As a result of the geographic concentration of Accel’s businesses, it faces a greater risk of a negative impact on its results of operations, cash flows and financial condition in the event that Illinois is more severely impacted by any such adverse condition, as compared to other areas in the United States. If Accel is successful in expanding its operations into Pennsylvania or other gaming jurisdictions, it may face similar concentration risk there.

If Accel fails to offer a high-quality experience, its business and reputation may suffer.

Once Accel installs VGTs and amusement machines in licensed establishment partners, those licensed establishment partners rely on support from Accel to resolve any related issues. High-quality user and location education and customer service to the licensed establishments have been key to Accel’s brand and is important for the successful marketing and sale of its products and services and to increase the number of VGTs and amusement machines at licensed establishments. The importance of high-quality customer service to the licensed establishments will increase as Accel expands its business and pursues new licensed establishment partners and

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potentially expands into new jurisdictions. For instance, if Accel does not help its licensed establishment partners quickly resolve issues, whether those issues are regulatory, technical, or data related, and provide an effective ongoing level of support, its ability to retain or renew contracts with its licensed establishment partners could suffer and its reputation with existing or potential licensed establishment partners may be harmed. In some cases, Accel depends on third parties to resolve such issues, the performance of which is out of Accel’s control. Further, Accel’s success is highly dependent on business reputation and positive recommendations from existing licensed establishment partners. Any failure to maintain high-quality levels of service, or a market perception that Accel does not maintain a high-quality service to licensed establishments, could harm its reputation, its ability to market to existing and prospective licensed establishment partners, and Accel’s results of operations, cash flows and financial condition.

In addition, as Accel continues to grow its operations and expand into additional jurisdictions, Accel needs to be able to provide efficient support that meets the needs of its licensed establishment partners. The number of licensed establishments with Accel’s products has grown significantly and that may place additional pressure on its support organization. As Accel’s base of licensed establishment partners continues to grow, it may need to increase the number of relationship managers, customer service and other personnel it employs to provide personalized account management, assistance to its licensed establishment partners in navigating regulatory applications and ongoing compliance concerns, and customer service, training, and revenue optimization. If Accel is not able to continue to provide high levels of customer service, its reputation, as well as Accel’s results of operations, cash flows and financial condition, could be harmed.

Accel’s revenue growth and ability to achieve and sustain profitability will depend, in part on being able to expand its sales force and increase the productivity of its sales force.

Most of Accel’s revenue has been attributable to the efforts of its sales force, which consists of both in-house personnel and independent agents. In order to increase Accel’s revenue and achieve and sustain profitability, Accel intends to increase the size of its sales force to generate additional revenue from new and existing licensed establishment partners.

Accel’s ability to achieve significant revenue growth will depend, in large part, on its success in recruiting, training, and retaining sufficient numbers of in-house and independent sales personnel to support growth. New sales personnel require significant training and can take a number of months to achieve full productivity. Accel’s recent hires and planned hires may not become productive as quickly as expected and if new sales employees and agents do not become fully productive on the timelines that have been projected or at all, Accel’s revenue may not increase at anticipated levels and its ability to achieve long-term projections may be negatively impacted. In addition, as Accel continues to grow, a larger percentage of its sales force will be new to Accel and its business, which may adversely affect Accel’s sales if it cannot train its sales force quickly or effectively. Attrition rates may increase, and Accel may face integration challenges as it continues to seek to expand its sales force. Accel also believes that there is significant competition for sales personnel with the skills that it requires in the industries in which it operates, and may be unable to hire or retain sufficient numbers of qualified individuals in the markets where it operates or plans to operate. If Accel is unable to hire and train sufficient numbers of effective sales personnel or agents, or if the sales personnel or agents are not successful in obtaining new licensed establishment partners or promoting activity within Accel’s existing licensed establishment partners, Accel’s business may be adversely affected.

Accel periodically changes and adjusts its sales organization in response to market opportunities, competitive threats, management changes, product and service introductions or enhancements, acquisitions, sales performance, increases in sales headcount, cost levels, and other internal and external considerations. Any future sales organization changes may result in a temporary reduction of productivity, which could negatively affect Accel’s rate of growth. In addition, any significant change to the way Accel structures the compensation of its sales organization may be disruptive and may affect revenue growth.

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Accel’s inability to complete acquisitions and integrate acquired businesses successfully could limit its growth or disrupt its plans and operations.

Accel continues to pursue expansion and acquisition opportunities in gaming and related businesses. Accel’s ability to succeed in implementing its strategy will depend to some degree upon its ability to identify and complete commercially viable acquisitions. Accel may not be able to find acquisition opportunities on acceptable terms or at all, or obtain necessary financing or regulatory approvals to complete potential acquisitions.

Accel may not be able to successfully integrate any businesses that it acquires or do so within intended timeframes. Accel could face significant challenges in managing and integrating its acquisitions and combined operations, including acquired assets, operations and personnel. In addition, the expected cost synergies associated with such acquisitions may not be fully realized in the anticipated amounts or within the contemplated timeframes or cost expectations, which could result in increased costs and have an adverse effect on Accel’s results of operations, cash flows and financial condition. Accel expects to incur incremental costs and capital expenditures related to its contemplated integration activities.

Acquisition transactions may disrupt Accel’s ongoing business. The integration of acquisitions will require significant time and focus from management and may divert attention from the day-to-day operations of the combined business or delay the achievement of strategic objectives. Accel’s business may be negatively impacted following the acquisitions if it is unable to effectively manage expanded operations.

Accel faces significant competition from other gaming and entertainment operations, and Accel’s success in part relies on maintaining Accel’s competitive advantages and market share in key markets.

Accel faces significant competition from suppliers and other operators of VGTs and dartboards, pool tables, pinball and other related non-gaming equipment at licensed establishment partners. Accel competes on the basis of the responsiveness of its services, and the popularity, content, features, quality, functionality, accuracy, reliability of its products. In order to remain competitive and maintain Accel’s existing market share, Accel must continuously offer popular, high-quality games in a timely manner and new services or enhancements to its existing services. These services or enhancements may not be well received by licensed establishment partners or consumers, even if well reviewed and of high quality. In addition, some of Accel’s current and future competitors may enjoy substantial competitive advantages over it, such as greater name recognition, longer operating histories, or greater financial, technical, and other resources. These companies may use these advantages to offer services that respond better to the needs of licensed establishment partners, spend more on advertising and brand marketing, expand their operations, or respond more quickly and effectively than Accel does or can to new or changing opportunities, technologies, standards, regulatory conditions or requirements, or player preferences. These competitors could use these advantages to capture additional market share to Accel’s detriment in key markets. Additionally, Accel could lose some or all of the competitive advantages that it currently enjoys over its current and potential competitors. Accel also faces high levels of competition related to newly legalized gaming jurisdictions and for openings of new or expanded licensed establishments. Accel’s success depends on its ability to successfully enter new markets and compete successfully for new business, which is not certain to occur. Any of these developments could have an adverse effect on Accel’s results of operations, cash flows and financial condition and could result in a loss of market share in key markets.

Accel operates in the highly competitive gaming industry, and Accel’s success depends on its ability to effectively compete with numerous types of businesses in a rapidly evolving, and potentially expanding, gaming environment

While Accel’s operations face competition from many forms of leisure and entertainment activities, including shopping, athletic events, television and movies, concerts, and travel, Accel faces particularly robust competition from other forms of gaming. The gaming industry is characterized by an increasingly high degree of competition among a large number of participants on both a local and national level, including casinos, Internet gaming,

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sports betting, sweepstakes and poker machines not located in casinos, horse racetracks, including those featuring slot machines and/or table games, fantasy sports, real money iGaming, and other forms of gaming, such as, Internet-based lotteries, sweepstakes, and fantasy sports, and Internet-based or mobile-based gaming platforms, which allow their players to wager on a wide variety of sporting events and/or play casino games from home or in non-casino settings. This could divert players from using Accel’s products in licensed establishment partners, and adversely affect its business. Even Internet wagering services that are illegal under federal and state law but operate from overseas locations, may nevertheless be accessible to domestic gamblers and divert players from visiting licensed establishment partners to play on Accel’s VGTs.

The availability of competing gaming activities could increase substantially in the future. Voters and state legislatures may seek to supplement traditional tax revenue sources of state governments by authorizing or expanding gaming in Illinois, adjacent states or jurisdictions where Accel plans to operate in the future, such as Pennsylvania or Georgia. For example, on June 2, 2019, the Illinois legislature passed a significant gaming expansion bill authorizing the addition of multiple casinos to the state, including a casino in Chicago, permitting slot and table games at three horse racetracks, adding slot machines to two airports and creating licensing criteria for those eligible to provide sports betting services. In addition, other jurisdictions are considering or have already recently legalized, implemented and expanded gaming, and there are proposals across the country that would legalize Internet poker and other varieties of Internet gaming in a number of states and at the federal level. For example, Pennsylvania recently enacted legislation allowing regulated online poker and casino-style games within the commonwealth and legalizing sports betting in casinos. In addition, established gaming jurisdictions could award additional gaming licenses or permit the expansion or relocation of existing gaming operations (including VGTs). See “ —Accel’s revenue growth and future success depends on its ability to expand into new markets, including Pennsylvania, which may not occur as anticipated or at all” for more information. While Accel believes it is well positioned to take advantage of certain of these opportunities, expansion of gaming in other jurisdictions (both legal and illegal) could further compete with Accel’s VGTs, which could have an adverse impact on Accel’s results of operations, cash flows and financial condition.

The concentration and evolution of the VGT manufacturing industry could impose additional costs on Accel.

A majority of Accel’s revenue is attributable to VGTs and related systems supplied by it at licensed establishment partners. A substantial majority of the VGTs sold in the U.S. in recent years have been manufactured by a few select companies, and there has been extensive consolidation within the gaming equipment sector in recent years, including the acquisitions of Bally Technologies, Inc. (which had acquired SHFL Entertainment, Inc.) and WMS Industries, Inc. by Scientific Games Corporation (“Scientific Games”) and International Game Technology PLC by GTECH S.p.A, respectively.

Consolidation may force Accel to enter into purchase arrangements for new VGTs that are more expensive to operate than its existing VGTs. If the newer VGTs do not result in sufficient incremental revenues to offset the potential increased investment and costs, it could damage Accel’s profitability. In the event that Accel loses a supplier, it may be unable to replace such supplier, and Accel’s remaining suppliers may increase fees and costs. See “ — An increase in Accel’s borrowing costs would negatively affect its financial condition, cash flow and results of operations.”

Accel’s operations are largely dependent on the skill and experience of its management and key personnel. The loss of management and other key personnel could significantly harm Accel’s business, and it may not be able to effectively replace members of management who may leave Accel.

Accel’s success and competitive position are largely dependent upon, among other things, the efforts and skills of its senior executives and management team, including Andrew H. Rubenstein as the Chief Executive Officer and President, Karl Peterson as Chairman of the Company Board, Brian Carroll as Chief Financial Officer and Derek Harmer as General Counsel, Chief Compliance Officer and Secretary. Although Accel has entered into employment agreements with senior executives and key personnel, there can be no assurance that these

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individuals will remain employed. If Accel loses the services of any members of its management team or other key personnel, its business may be significantly impaired.

Accel relies on assumptions and estimates to calculate certain key metrics, and real or perceived inaccuracies in such metrics may harm its reputation and negatively affect its business.

Accel regularly reviews metrics, including the number of players and other measures, to evaluate growth trends, measure performance and make strategic decisions. Additionally, Accel commits significant amounts of resources and employee time to understanding the inherent historical patterns of gaming results within individual licensed establishment partners. Accel uses this pattern recognition process to implement more optimal gaming layouts for licensed establishment partners, with the goal of generating increased gaming revenue.

Certain of Accel’s key metrics, including the average post-acquisition net video gaming revenue per VGT per day (“hold-per-day”) and a number of other measures to evaluate growth trends and the quality of marketing and player behaviors, are calculated using data from Scientific Games, a contractor of the IGB. Scientific Games and the IGB may calculate certain metrics differently, which could limit the comparability of Accel’s key metrics and those of its competitors, who may use a different methodology to calculate similar metrics. For example, the IGB calculates average hold-per-day and other metrics using the number of VGTs that are active at the end of a given month, while Scientific Games uses the number of VGTs that are active at least one day during a month. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics” for more information. While Accel believe these figures to be reasonable and that its reliance on them is justified, there can be no assurance that such figures are reliable or accurate. Should Accel decide to review these or other figures, it may discover material inaccuracies, including unexpected errors in its internal data that result from technical or other errors. If Accel determines that any of its metrics are not accurate, they may be required to revise or cease reporting such metrics and such changes may harm Accel’s reputation and business.

Accel is subject to strict government regulations that are constantly evolving and may be amended, repealed, or subject to new interpretations, which may limit existing operations, have an adverse impact on the ability to grow or may expose Accel to fines or other penalties.

Accel is subject to the rules, regulations, and laws applicable to gaming, including, but not limited to, the Illinois Video Gaming Act, the Pennsylvania Gaming Act and the Georgia Lottery for Education Act. These gaming laws and related regulations are administered by the IGB and PA Board, respectively, which are regulatory boards with broad authority to create and interpret gaming regulations and to regulate gaming activities. These gaming authorities are authorized to:

• adopt additional rules and regulations under the implementing statutes;

• investigate violations of gaming regulations;

• enforce gaming regulations and impose disciplinary sanctions for violations of such laws, including fines, penalties and revocation of gaming licenses;

• review the character and fitness of manufacturers, distributors and operators of gaming services and equipment and make determinations regarding their suitability or qualification for licensure;

• review and approve transactions (such as acquisitions, material commercial transactions, securities offerings and debt transactions); and

• establish and collect related fees and/or taxes.

Although Accel plans to maintain compliance with applicable laws as they evolve and to generally maintain good relations with regulators, there can be no assurance that Accel will do so, and that law enforcement or gaming regulatory authorities will not seek to restrict Accel’s business in their jurisdictions or institute enforcement

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proceedings if Accel is not compliant. There can be no assurance that any instituted enforcement proceedings will be favorably resolved, or that such proceedings will not have an adverse effect on its ability to retain and renew existing licenses or to obtain new licenses in other jurisdictions. Gaming authorities may levy fines against Accel or seize certain assets if Accel violates gaming regulations. Accel’s reputation may also be damaged by any legal or regulatory investigation, regardless of whether Accel is ultimately accused of, or found to have committed, any violation. A negative regulatory finding or ruling in one jurisdiction could have adverse consequences in other jurisdictions, including with gaming regulators.

In addition to regulatory compliance risk, Illinois, Pennsylvania, Georgia or any other states or other jurisdiction in which Accel operates or may operate (including jurisdictions at the county, district, municipal, town or borough level), certain jurisdictions may amend or repeal gaming enabling legislation or regulations. Changes to gaming enabling legislation or new interpretations of existing gaming laws may hinder or prevent Accel from continuing to operate in the jurisdictions where it currently conducts business, which could increase operating expenses and compliance costs or decrease the profitability of operations. Repeal of gaming enabling legislation could result in losses of capital investments and revenue, limit future growth opportunities and have an adverse effect on Accel’s results of operations, cash flows and financial condition. If any jurisdiction in which Accel operates were to repeal gaming enabling legislation, there could be no assurance that Accel could sufficiently increase revenue in other markets to maintain operations or service existing indebtedness. In particular, the enactment of unfavorable legislation or government efforts affecting or directed at VGT manufacturers or gaming operators, such as referendums to increase gaming taxes or requirements to use local distributors, would likely have a negative impact on operations. For example, the Illinois legislature has recently approved a gaming expansion bill that, in addition to providing for an increased number of possible gaming venues, also increases Illinois state tax on gaming revenue. Additionally, membership changes within regulatory agencies could impact operations. The IGB in particular has experienced significant personnel changes since the commencement of Accel’s VGT operations in 2012. Changes in the composition of the IGB can impact current rules, regulations, policies, enforcement trends and overall agendas of the IGB.

Accel is obligated to develop and maintain proper and effective internal control over financial reporting. Accel has identified three material weaknesses in its internal control over financial reporting and if remediation of these material weaknesses is not effective, or if Accel fails to develop and maintain an effective system of disclosure controls and internal control over financial reporting, its ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired and its reputation and business could be adversely affected. In addition, the presence of material weaknesses increases the risk of material misstatement of the consolidated financial statements.

Accel is currently a public company and is required, pursuant to Section 404(a) of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of its internal control over financial reporting on its Annual Report on Form 10-K. Effective internal control over financial reporting is necessary for reliable financial reports and, together with adequate disclosure controls and procedures, such internal controls are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause Accel to fail to meet its reporting obligations. Ineffective internal controls could also cause investors to lose confidence in reported financial information, which could have a negative effect on the trading price of our Class A-1 common stock.

The report by management will need to include disclosure of any material weaknesses identified in internal control over financial reporting. However, for as long as Accel is an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) following the consummation of the Business Combination, its independent registered public accounting firm will not be required to attest to the effectiveness of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). Management’s assessment of internal controls, when implemented, could detect problems with internal controls, and an independent assessment of the effectiveness of internal controls by Accel’s auditors could detect further problems that management’s assessment might not, and could result in the

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identification of material weaknesses that were not otherwise identified. Undetected material weaknesses in internal controls could lead to financial statement restatements and require Accel to incur the expense of remediation.

In connection with the preparation of its consolidated financial statements for 2018, Accel identified a number of adjustments to its consolidated financial statements that resulted in a restatement of previously issued financial statements. These adjustments related to accounting for business acquisitions and subsequent accounting, accounting for route and customer acquisition costs and related liabilities, classification of items on the consolidated statements of stockholders’ equity and cash flows, accounting for income taxes, and other miscellaneous adjustments. Accel identified the cause of these adjustments was due to three material weaknesses in internal controls. A material weakness is a deficiency or combination of deficiencies in its internal control over financial reporting such that there is a reasonable possibility that a material misstatement of its consolidated financial statements would not be prevented or detected on a timely basis. This deficiency could result in additional misstatements to its consolidated financial statements that would be material and would not be prevented or detected on a timely basis.

The following three material weaknesses in internal control over financial reporting were identified, which are not remediated as of December 31, 2019, or currently:

• a material weakness related to review of the consolidated financial statements and certain of the associated accounting analyses, journal entries and accounting reconciliations due, in part, to the lack of formally documented accounting policies and procedures, as well as headcount necessary to support consistent, timely and accurate financial reporting in accordance with U.S. GAAP;

• a material weakness in the design and implementation of internal controls relating to business combination accounting and route and customer acquisition cost accounting due to the absence of formalized internal controls surrounding the determination of the fair value for assets acquired and liabilities assumed in business combinations, the accounting for initial route and customer acquisition costs and the accounting for such assets; and

• a material weakness related to general information technology controls including the design and implementation of access and change management internal controls.

Accel has begun evaluating and implementing additional processes, procedures and internal controls in order to remediate these material weaknesses, however, it cannot assure you that these or other measures will fully remediate the material weaknesses in a timely manner. As part of the remediation plan to address the material weakness identified above, Accel has hired additional accounting and finance employees with the specific technical accounting and financial reporting experience necessary for a public company. Accel has hired these personnel after considering the appropriateness of each individual’s experience and believe that these personnel are qualified to serve in their current respective roles. In addition, Accel has begun to implement more formal accounting policies and procedures to support timely and accurate financial reporting in accordance with GAAP. Accel will continue to assess the adequacy of its accounting and finance personnel and resources, and will add additional personnel, as well as adjust its resources, as necessary, commensurate with any increase in the size and complexity of its business. Accel also increased the depth and level of review procedures with regard to financial reporting and internal control procedures. If Accel is unable to remediate these material weaknesses, or otherwise maintain effective internal control over financial reporting, it may not be able to report its financial results accurately, prevent fraud or file its periodic reports in a timely manner. If Accel’s remediation of these material weaknesses is not effective, if Accel’s independent registered public accounting firm is unable to express an opinion on the effectiveness of its internal control or if it experiences additional material weaknesses or otherwise fails to maintain an effective system of internal controls in the future, it may not be able to accurately or timely report its financial condition or results of operations, which may cause Accel to become subject to investigation or sanctions by the SEC or adversely affect investor confidence in Accel and, as a result, the value of our Class A-1 common stock. There can be no assurance that all existing material weaknesses have been

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identified, or that additional material weaknesses will not be identified in the future. In addition, if Accel is unable to continue to meet its financial reporting obligations following the consummation of the Business Combination, it may not be able to remain listed on the NYSE.

Accel may be liable for product defects or other claims relating to its products that it provides to its licensed establishment partners.

The products that Accel provides to its licensed establishment partners could be defective, fail to perform as designed or otherwise cause harm to players or licensed establishment partners. If any of the products Accel provides are defective, Accel may be required to recall the products and/or repair or replace them, which could result in substantial expenses and affect profitability. In the event of any repair or recall, Accel could be dependent on the services, responsiveness or product stock of key suppliers, and any delay in their ability to resupply or assist in servicing key products could affect its ability to maintain the VGTs in licensed establishment partners. Any problem with the performance of Accel’s products could harm its reputation, which could result in a loss of existing or potential licensed establishments and players. In addition, the occurrence of errors in, or fraudulent manipulation of, Accel’s products or software may give rise to claims by licensed establishment partners or by players, including claims by licensed establishment partners for lost revenues and related litigation that could result in significant liability. Any claims brought against Accel by licensed establishment partners or players may result in the diversion of management’s time and attention, expenditure of large amounts of cash on legal fees and payment of damages, lower demand for products or services, or injury to reputation. Accel’s insurance or recourse against other parties may not sufficiently cover a judgment against it or a settlement payment, and any insurance payment is subject to customary deductibles, limits and exclusions. In addition, a judgment against Accel or a settlement could make it difficult for it to obtain insurance in the coverage amounts necessary to adequately insure its businesses, or at all, and could materially increase insurance premiums and deductibles. Software bugs or malfunctions, errors in distribution or installation of Accel’s software, failure of products to perform as approved by the appropriate regulatory bodies or other errors or malfunctions, may subject Accel to investigation or other action by gaming regulatory authorities, including fines.

Litigation may adversely affect Accel’s business, results of operations, cash flows and financial condition.

Accel may become subject to litigation claims in the operation of its business, including, but not limited to, with respect to employee matters, alleged product and system malfunctions, alleged intellectual property infringement and claims relating to contracts, licenses and strategic investments. Accel may incur significant expense defending or settling any such litigation. Additionally, adverse judgments that may be decided against Accel could result in significant monetary damages or injunctive relief that could adversely affect Accel’s ability to conduct business, its results of operations, cash flows and financial condition. See “Business—Legal Proceedings” for more information.

Accel’s results of operations, cash flows and financial condition could be affected by natural events in the locations in which it or its licensed establishment partners, suppliers or regulators operate.

Accel may be impacted by severe weather and other geological events, including hurricanes, tornados, earthquakes, floods or tsunamis that could disrupt operations or the operations of its licensed establishment partners, suppliers, data service providers and regulators. Natural disasters or other disruptions at any of Accel’s facilities or suppliers’ facilities may impair or delay the operation, development, provisions or delivery of its products and services. Additionally, disruptions experienced by Accel’s regulators due to natural disasters or otherwise could delay the introduction of new products or entry into new jurisdictions where regulatory approval is necessary. While Accel insures against certain business interruption risks, there can be no assurance that such insurance will adequately compensate for any losses incurred as a result of natural or other disasters. Any serious disruption to Accel’s operations, or those of its licensed establishment partners, suppliers, data service providers, or regulators, could have an adverse effect on Accel’s results of operations, cash flows and financial condition.

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If Accel’s estimates or judgments relating to critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, its operating results could be adversely affected.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in its consolidated financial statements and accompanying notes. Accel bases its estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances, as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity as of the date of the financial statements, and the amount of revenue and expenses, during the periods presented, that are not readily apparent from other sources. Significant assumptions and estimates used in preparing consolidated financial statements include among other things, the useful lives for depreciable and amortizable assets, income tax provisions, the evaluation of the future realization of deferred tax assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with business acquisitions, the initial selection of useful lives for depreciable and amortizable assets in conjunction with business acquisitions, contingencies, and the expected term of share-based compensation awards and stock price volatility when computing share-based compensation expense. Accel’s operating results may be adversely affected if assumptions change or if actual circumstances differ from assumed circumstances, which could cause its operating results to fall below the expectations of industry or financial analysts and investors, resulting in a decline in the trading price of its common stock.

Additionally, Accel regularly monitors compliance with applicable financial reporting standards and reviews relevant new accounting pronouncements and drafts thereof. As a result of new standards, changes to existing standards, and changes in interpretation, Accel may be required to change accounting policies, alter operational policies and implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or it may be required to restate published financial statements. Such changes to existing standards or changes in their interpretation may cause an adverse deviation from Accel’s revenue and operating profit target, which may negatively impact results of operations, cash flows and financial condition.

Accel may not have adequate insurance for potential liabilities.

In the ordinary course of business, Accel has, and in the future may become the subject of, various claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters. Accel maintains insurance to cover these and other potential losses, and is subject to various self-retentions, deductibles and caps under its insurance. Accel faces the following risks with respect to insurance coverage:

• Accel may not be able to continue to obtain insurance on commercially reasonable terms;

• Accel may incur losses from interruptions of business that exceed insurance coverage;

• Accel may be faced with types of liabilities that will not be covered by insurance;

• Accel’s insurance carriers may not be able to meet their obligations under the policies; or

• the dollar amount of any liabilities may exceed policy limits.

Even a partially uninsured claim, if successful and of significant size, could have an adverse effect on Accel’s results of operations, cash flows and financial condition. Even in cases where Accel maintains insurance coverage, its insurers may raise various objections and exceptions to coverage that could make uncertain the timing and amount of any possible insurance recovery.

Accel’s business depends on the protection of intellectual property and proprietary information.

Accel believes that its success depends, in part, on protecting its intellectual property. Accel’s intellectual property includes certain trademarks and copyrights relating to its products and services, and proprietary or

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confidential information that is not subject to patent or similar protection. As of December 31, 2019, Accel owned five registered trademarks and 91 registered domain names. Accel’s success may depend, in part, on its ability to obtain protection for the trademarks, trade dress, names, logos or symbols under which it markets products and to obtain copyright and patent protection for proprietary technologies, designs, software and innovations. There can be no assurance that Accel will be able to build and maintain consumer value in its trademarks, obtain patent, trademark or copyright protection or that any patent, trademark or copyright will provide competitive advantages.

Accel’s intellectual property protects the integrity of its systems, products and services. Competitors may independently offer similar or superior products, software or systems, which could negatively impact results of operations, cash flows and financial condition. In cases where Accel’s technology or product is not protected by enforceable intellectual property rights, such independent development may result in a significant diminution in the value of such technology or product.

Accel also relies on trade secrets and proprietary knowledge and enters into confidentiality agreements with employees and independent contractors regarding trade secrets and proprietary information, however, there can be no assurance that the obligation to maintain the confidentiality of trade secrets and proprietary information will be honored.

Accel may, in the future, make claims of infringement, invalidity or enforceability against third parties. This could:

• cause Accel to incur greater costs and expenses in the protection of intellectual property;

• potentially negatively impact its intellectual property rights;

• cause one or more of its patents, trademarks, copyrights or other intellectual property interests to be ruled or rendered unenforceable or invalid; or

• divert management’s attention and resources.

Gaming opponents persist in their efforts to curtail the expansion of legalized gaming, which, if successful, could limit the growth of operations.

There is significant debate over, and opposition to, the gaming industry. There can be no assurance that this opposition will not succeed in preventing the legalization of gaming in jurisdictions where it is presently prohibited, prohibiting or limiting the expansion of gaming where it is currently permitted or causing the repeal of legalized gaming in any jurisdiction. Such opposition could also lead these jurisdictions to adopt legislation or impose a regulatory framework to govern gaming that restricts Accel’s ability to advertise games or substantially increases costs to comply with these regulations. Accel continues to devote significant attention to monitoring these developments, however, Accel cannot accurately predict the likelihood, timing, scope or terms of any state or federal legislation or regulation relating to its business. Any successful effort to curtail the expansion of, or limit or prohibit, legalized gaming could have an adverse effect on Accel’s results of operations, cash flows and financial condition.

For example, the Illinois legislature approved a gaming expansion bill in June 2019 that, in addition to providing for an increased number of possible gaming venues, also increased Illinois state tax on gaming revenue. Any tax increase by the state of Illinois, whether levied on licensed establishments or Accel, could have an adverse effect on Accel’s results of operations, cash flows and financial condition. Current and future appointees to the IGB may enact, change or rescind other rules and regulations in a way that negatively affects business.

Accel may not be able to capitalize on the expansion of gaming or other trends and changes in the gaming industries, including due to laws and regulations governing these industries, and other factors.

Accel participates in new and evolving aspects of the gaming industries. These industries involve significant risks and uncertainties, including legal, business and financial risks. The fast-changing environment in these

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industries can make it difficult to plan strategically and can provide opportunities for competitors to grow their businesses at Accel’s expense. Consequently, future results of operations, cash flows and financial condition are difficult to predict and may not grow at expected rates.

Part of Accel’s strategy is to take advantage of the liberalization of regulations covering these industries on a municipality and state basis, which can be a protracted process. To varying degrees, governments have taken steps to change the regulation of VGTs through the implementation of new or revised licensing and taxation regimes. For example, in addition to the State-issued gaming licenses, gaming licenses are also governed on a municipality-level in Illinois. While Accel has contracted for exclusive rights to operate in licensed establishments in over 600 different municipalities in Illinois, all of which have no prohibition or restriction with respect to gaming, there are many other municipalities that have “opt out” or “anti-gambling” ordinances which prohibit a range of activities characterized from “devices of chance” to “any gambling.” While a number of these municipalities have removed the ordinance or introduced an amendment to permit gaming activities germane to Accel’s business, they or other municipalities may choose to prohibit or limit gambling in the future. Additionally, Pennsylvania currently only permits the operation of VGTs at truck stops. While there are currently efforts to permit the expansion of VGTs into additional types of establishments, there can be no assurance that such efforts will succeed. Accel cannot predict the timing, scope or terms of the implementation or revision of any such state, federal or local laws or regulations, or the extent to which any such laws and regulations may facilitate or hinder its strategy.

Accel’s success depends on the security and integrity of the systems and products offered, and security breaches or other disruptions could compromise certain information and expose Accel to liability, which could cause Accel’s business and reputation to suffer.

Accel believes that success depends, in large part, on providing secure products, services and systems to licensed establishments and players, and on the ability to avoid, detect, replicate and correct software and hardware anomalies and fraudulent manipulation of products and services. Accel’s business sometimes involves the storage, processing and transmission of proprietary, confidential and personal information, and any future player program it may institute will also involve such information. Accel also maintains certain other proprietary and confidential information relating to its business and personal information of its personnel. All of Accel’s products, services and systems are designed with security features to prevent fraudulent activity. Despite these security measures, Accel’s products, services and systems may be vulnerable to attacks by licensed establishment partners, players, retailers, vendors or employees, or breaches due to cyber-attacks, viruses, malicious software, computer hacking, security breaches or other disruptions. Expanded use of the Internet and other interactive technologies may result in increased security risks for Accel and its licensed establishment partners because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not foreseeable or recognized until launched against a target and Accel may be unable to anticipate these techniques or to implement adequate preventative measures. Furthermore, hackers and data thieves are becoming increasingly sophisticated and could operate large-scale and complex automated attacks. Any security breach or incident could result in unauthorized access to, misuse of, or unauthorized acquisition of certain data, the loss, corruption or alteration of this data, interruptions in operations or damage to computers or systems or those of certain players or third-party platforms. Any of these incidents could expose Accel to claims, litigation, fines and potential liability. Accel’s ability to prevent anomalies and monitor and ensure the quality and integrity of its products and services is periodically reviewed and enhanced, and Accel regularly assesses the adequacy of security systems, including the security of its games and software, to protect against any material loss to licensed establishment partners and players, as well as the integrity of its products and services and its games. However, these measures may not be sufficient to prevent future attacks, breaches or disruptions.

There is a risk that Accel’s products, services or systems may be used to defraud, launder money or engage in other illegal activities at licensed establishments. Accel’s gaming machines have also experienced anomalies in the past. Games and gaming machines may be replaced by Accel and other gaming machine operators if they do not perform according to expectations, or they may be shut down by regulators. The occurrence of anomalies in,

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or fraudulent manipulation of, Accel’s gaming machines or other products and services, may give rise to claims from players or licensed establishment partners, may lead to claims for lost revenue and profits and related litigation by licensed establishment partners and may subject Accel to investigation or other action by regulatory authorities, including suspension or revocation of licenses or other disciplinary action. Additionally, in the event of the occurrence of any such issues with Accel’s products and services, substantial resources may be diverted from other projects to correct these issues, which may delay other projects and the achievement of strategic objectives. Further, third party hosted solution providers that provide services to Accel, such as Rackspace or Salesforce, could also be a source of security risk in the event of a failure of their own security systems and infrastructure.

Accel’s level of indebtedness could adversely affect results of operations, cash flows and financial condition.

As of June 30, 2020, Accel had total indebtedness of $407.2 million, all of which was borrowed under the Credit Agreement. As of June 30, 2020, there remained approximately $49.5 million of availability under the Credit Agreement.

Accel’s level of indebtedness could affect its ability to obtain financing or refinance existing indebtedness; require Accel to dedicate a significant portion of its cash flow from operations to interest and principal payments on indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures and other general corporate purposes, increase its vulnerability to adverse general economic, industry or competitive developments or conditions and limit its flexibility in planning for, or reacting to, changes in its businesses and the industries in which it operates or in pursuing its strategic objectives. In addition, Accel is exposed to the risk of higher interest rates as a significant portion of its borrowings are at variable rates of interest. If interest rates increase, the interest payment obligations would increase even if the amount borrowed remained the same, and results of operations, cash flows and financial condition could be negatively impacted. All of these factors could place Accel at a competitive disadvantage compared to competitors that may have less debt.

An increase in Accel’s borrowing costs could negatively affect its financial condition, cash flow and results of operations.

Certain of Accel’s VGTs and amusement machines acquisitions are financed using revolving credit facilities and bank loans. Accel’s financing agreements include variable interest rates and regular required interest, fee and amortization payments. If Accel is unable to generate sufficient revenue to offset the required payments, it could have an adverse effect on Accel’s results of operations, cash flows and financial condition. In addition, Accel is not currently involved in any interest rate hedging activities. Any such hedging activities could require Accel to incur additional costs, and there can be no assurance that Accel would be able to successfully protect itself from any or all negative interest rate fluctuations at a reasonable cost.

Accel may not have sufficient cash flows from operating activities, cash on hand and available borrowings under its Credit Agreement to finance required capital expenditures under new contracts and meet other cash needs.

Accel’s business generally requires significant upfront capital expenditures for VGTs and amusement machines, software customization and implementation, systems and equipment installation and telecommunications configuration. In connection with the signing or renewal of a gaming or amusement contract, Accel may provide new equipment or impose new service requirements at a licensed establishment, which may require additional capital expenditures in order to enter into or retain the contract. Historically, Accel has funded these upfront costs through cash flows generated from operations, available cash on hand and borrowings under the Credit Agreement.

In addition, since Accel is not paid for expenses and services, Accel may incur upfront costs (which may be significant) prior to receipt of any revenue under such arrangements. Accel’s ability to generate revenue and to

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continue to procure new contracts will depend on, among other things, its then present liquidity levels or its ability to obtain additional financing on commercially reasonable terms.

If Accel does not have adequate liquidity or is unable to obtain financing for these upfront costs and other cash needs on favorable terms or at all, it may not be able to pursue certain contracts, which could result in the loss of business or restrict the ability to grow. Moreover, Accel may not realize the return on investment that it anticipates on new or renewed contracts due to a variety of factors, including lower than anticipated retail sales or amounts wagered, higher than anticipated capital or operating expenses and unanticipated regulatory developments or litigation. Accel may not have adequate liquidity to pursue other aspects of its strategy, including bringing products and services to new licensed establishment partners or new or underpenetrated geographies (including through equity investments) or pursuing strategic acquisitions. In the event Accel pursues significant acquisitions or other expansion opportunities, conducts significant repurchases of outstanding securities, or refinances or repays existing debt, it may need to raise additional capital either through the public or private issuance of equity or debt securities or through additional borrowings under its existing financing arrangements, which sources of funds may not necessarily be available on acceptable terms, if at all.

Accel may not have sufficient cash flows from operating activities to service all of its indebtedness and other obligations, and may be forced to take other actions to satisfy obligations, which may not be successful.

Accel’s ability to make payments on and to refinance indebtedness and other obligations depends on its results of operations, cash flows and financial condition, which in turn are subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. Accel may not be able to maintain a level of cash flows from operating activities sufficient to pay the principal, premium, if any, and interest on its indebtedness and other obligations.

Accel is required to make scheduled payments of principal in respect of the term loans under the Credit Agreement. Accel may also, from time to time, repurchase, or otherwise retire or refinance debt, through subsidiaries or otherwise. Such activities, if any, will depend on prevailing market conditions, contractual restrictions and other factors, and the amounts involved may or may not be material. If Accel needs to refinance all or part of its indebtedness at or before maturity, there can be no assurance that Accel will be able to obtain new financing or to refinance any of its indebtedness on commercially reasonable terms or at all.

Accel’s lenders, including the lenders participating in its delayed draw and/or revolving credit facilities under the Credit Agreement, may become insolvent or tighten their lending standards, which could make it more difficult for Accel to borrow under its delayed draw and/or revolving credit facilities or to obtain other financing on favorable terms or at all. Accel’s results of operations, cash flows and financial condition could be adversely affected if Accel is unable to draw funds under its delayed draw and/or revolving credit facilities because of a lender default or to obtain other cost-effective financing. Any default by a lender in its obligation to fund its commitment under the delayed draw and/or revolving credit facilities (or its participation in letters of credit) could limit Accel’s liquidity to the extent of the defaulting lender’s commitment. If Accel is unable to generate sufficient cash flow in the future to meet commitments, it may be required to adopt one or more alternatives, such as refinancing or restructuring indebtedness, selling material assets or operations or seeking to raise additional debt or equity capital. In addition, borrowings under Accel’s existing revolving credit facilities may be subject to capacity under an available borrowing base.

Indebtedness impose certain restrictions that may affect the ability to operate its business. Failure to comply with any of these restrictions could result in the acceleration of the maturity of indebtedness and require Accel to make payments on indebtedness. Were this to occur, Accel would not have sufficient cash to pay accelerated indebtedness.

Agreements governing Accel’s indebtedness impose, and future financing agreements are likely to impose, operating and financial restrictions on activities that may adversely affect its ability to finance future operations

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or capital needs or to engage in new business activities. In some cases, these restrictions require Accel to comply with or maintain certain financial tests and ratios. Subject to certain exceptions, Accel’s credit facilities restrict its ability to, among other things:

• incur or guarantee additional indebtedness;

• make loans to others;

• make investments;

• merge or consolidate with another entity;

• make dividends and certain other payments, including payment of junior debt;

• create liens that secure indebtedness and guarantees thereof;

• transfer or sell assets;

• enter into transactions with affiliates;

• change the nature of Accel’s business;

• enter into certain burdensome agreements;

• make certain accounting changes; and

• in the case of Accel Entertainment, Inc., change its passive holding company status.

In addition, the Credit Agreement contains financial covenants that require Accel to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of (i) (A) consolidated EBITDA minus (B) the sum of (i) cash taxes, (ii) 3.00% of consolidated revenue, (iii) operator earnout payments and (iv) regularly scheduled dividend payments that are financed with internally generated cash flow to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after November 20, 2019 and determined on the basis of the four most recently ended fiscal quarters of Accel for which financial statements have been or are required to have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights. If an event of default (as such term is defined in the Credit Agreement) occurs, the administrative agent on behalf of the lenders would be entitled to take various actions under certain circumstances, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto. Cross-default provisions may also be triggered. Under these circumstances, Accel might not have, or be able to obtain, sufficient funds or other resources to satisfy all of its obligations. In addition, the limitations imposed by financing agreements on Accel’s ability to incur additional debt, cause subsidiaries to guarantee certain debt, pay dividends or make other distributions, or take other actions might significantly impair its ability to obtain other financing.

There can be no assurance that Accel will be granted waivers or amendments to these agreements if for any reason it is unable to comply with these obligations or that it will be able to refinance its debt on terms acceptable or at all.

Risk Factors Relating to Our Common Stock

This offering and future sales of substantial amounts of Class A-1 common stock in the public market, or the perception that such sales may occur, could cause the market price for our Class A-1 common stock to decline.

The sale of shares of our Class A-1 common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Class A-1 common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

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Upon the closing of this offering, we expect to have outstanding an aggregate of 91,784,083 shares of Class A-1 common stock (or 92,104,320 if the underwriters exercise their option to purchase additional shares in full), based on 83,784,083 shares outstanding on September 18, 2020 and including the 8,000,000 shares of Class A-1 common stock offered by us in this offering.

In connection with this offering, we, our executive officers and directors and the selling stockholders have entered into lock-up agreements with the underwriters of this offering, under which we and they have agreed, or will agree, that, subject to certain exceptions, we and they will not sell, dispose of or hedge any shares or any securities convertible into or exchangeable for shares of our Class A-1 common stock until 60 days after the date of the final prospectus relating to this offering. At any time and without public notice, Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC may, in their sole discretion, release all or some of the securities.

The transfer restrictions in the lock-up agreement with the underwriters and the Stockholders Agreement include certain exclusions, including customary carve-outs. A transfer of shares pursuant to such carve-outs could result in additional shares becoming freely tradable prior to the expiration of the applicable lock-up period.

In addition, we have reserved a total of 293,921 shares of Class A-1 common stock for issuance under our 2011 Plan, 603,253 shares of Class A-1 common stock for issuance under our 2016 Plan and 3,104,403 shares of Class A-1 common stock for issuance under our LTIP, 208,382 shares of Class A-1 common stock issuable upon the exercise of outstanding options to purchase shares of our Class A-1 common stock outstanding as of September 18, 2020 and with a weighted average exercise price of $2.74, and 1,452,867 shares of Class A-1 common stock underlying Accel’s warrants. Any shares of Class A-1 common stock that we issue under our 2011 Plan, 2016 Plan or LTIP or other equity incentive plans that we may adopt in the future would dilute the percentage ownership held by the investors who purchase shares of Class A-1 common stock in this offering.

As restrictions on resale end or if these stockholders exercise their sale, exchange or registration rights and sell shares or are perceived by the market as intending to sell shares, the market price of our shares of Class A-1 common stock could drop significantly. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A-1 common stock or other securities.

In the future, we may also issue securities in connection with investments, acquisitions or capital raising activities. In particular, the number of shares of our Class A-1 common stock issued in connection with an investment or acquisition, or to raise additional equity capital, could constitute a material portion of our then-outstanding shares of our Class A-1 common stock. Any such issuance of additional securities in the future may result in additional dilution to you or may adversely impact the price of our Class A-1 common stock.

We have broad discretion over the use of net proceeds we receive from the sale of shares of Class A-1 common stock in this offering, and despite our efforts may not use them in a manner that increases the value of your investment.

Our management has broad discretion to use the net proceeds we receive from the sale of shares of Class A-1 common stock in this offering for general corporate purposes and could spend these funds in ways that do not improve our results of operations or enhance the value of our Class A-1 common stock. The failure by our management to apply these funds effectively could have an adverse effect on our business and cause the price of our Class A-1 common stock to decline.

The underwriters of this offering may waive or release parties to the lock-up agreements entered into in connection with this offering, which could adversely affect the price of our Class A-1 common stock.

We, all of our directors and executive officers and the selling stockholders have entered or will enter into lock-up agreements pursuant to which we and they will be subject to certain restrictions with respect to the sale or other

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disposition of our Class A-1 common stock until 60 days after the date of the final prospectus relating to this offering. Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as the representatives of the underwriters, at any time and without notice, may release all or any portion of the Class A-1 common stock subject to the foregoing lock-up agreements. See “Underwriting” for more information on these agreements. If the restrictions under the lock-up agreements are waived, then the Class A-1 common stock, subject to compliance with the Securities Act or exceptions therefrom, will be available for sale into the public markets, which could cause the market price of our Class A-1 common stock to decline and impair our ability to raise capital. Sales of a substantial number of shares upon expiration of the lock-up agreements, the perception that such sales may occur, or early release of these agreements, could cause our market price to fall or make it more difficult for you to sell your Class A-1 common stock at a time and price that you deem appropriate.

TPG Global, LLC, or TPG, Clairvest Group Inc., or Clairvest, and members of the Rubenstein Family own a significant portion of Common Stock and have representation on the Company Board. TPG and Clairvest, through their respective affiliates, and members of the Rubenstein Family may have interests that differ from those of other stockholders.

As of September 18, 2020, approximately 10.81% of the shares of our Class A-1 common stock were beneficially owned by Karl Peterson, TPG Pace Governance, LLC and TPG Pace II Sponsor Successor, LLC and approximately 20.17% of the shares of our Class A-1 common stock were beneficially owned by affiliates of Clairvest. Following the consummation of the Business Combination, (i) three directors were jointly nominated by Pace, an affiliate of TPG, the Sellers and the Shareholder Representatives to serve on the Company Board, (ii) another two directors were jointly nominated by Pace, an affiliate of TPG and the Shareholder Representatives and (iii) one director was jointly nominated by TPG and Clairvest. While Accel’s subsidiaries (including those holding gaming licenses) manage their respective operations in the ordinary course, TPG and Clairvest may be able to significantly influence the outcome of matters submitted for action by directors of the Company Board, subject to the Company’s directors’ obligation to act in the interest of all of the Company’s stakeholders, and for stockholder action, including the designation and appointment of the Company Board (and committees thereof) and approval of significant corporate transactions, including business combinations, consolidations and mergers. So long as TPG and Clairvest continue to directly or indirectly own a significant amount of Accel’s outstanding equity interests and any individuals affiliated with TPG and Clairvest are members of the Company Board and/or any committees thereof, TPG and Clairvest may be able to exert substantial influence on Accel and may be able to exercise its influence in a manner that is not in the interests of Accel’s other stakeholders. TPG’s and Clairvest influence over Accel’s management could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of Class A-1 common stock to decline or prevent public stockholders from realizing a premium over the market price for Class A-1 common stock. Additionally, TPG and Clairvest and their respective affiliates are in the business of making investments in companies and owning real estate, and may from time to time acquire and hold interests in businesses that compete directly or indirectly with Accel or that supply Accel with goods and services. TPG, Clairvest, or their respective affiliates may also pursue acquisition opportunities that may be complementary to (or competitive with) Accel’s business, and as a result those acquisition opportunities may not be available to Accel. Prospective investors should consider that the interests of TPG and Clairvest may differ from their interests in material respects.

In addition, as of September 18, 2020, approximately 10.31% of the shares of our Class A-1 common stock were beneficially owned by Mr. A. Rubenstein, approximately 3.63% of the shares of our Class A-1 common stock were beneficially owned by his brother, Mr. G. Rubenstein, and Mr. A. Rubenstein, together with Mr. G. Rubenstein and their father, Mr. Jeffrey Rubenstein (together, the “Rubenstein Family”) collectively beneficially own approximately 17.67% of the shares of our Class A-1 common stock. Although each of Mr. A. Rubenstein, Mr. G. Rubenstein, and Mr. J. Rubenstein each disclaim legal or beneficial ownership of any shares of Class A-1 common stock owned or controlled by the others, the Rubenstein Family have and may exert significant influence over corporate actions requiring stockholder approval. In addition, each of Mr. A. Rubenstein and Mr. G. Rubenstein are members of the Company Board. As a result, the Rubenstein Family, including Mr. A. Rubenstein and Mr. G. Rubenstein may be able to significantly influence the outcome of matters submitted for

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director action, subject to Accel’s director’s obligation to act in the interest of all of Accel’s stakeholders, and for stockholder action, including the designation and appointment of the Company Board (and committees thereof) and approval of significant corporate transactions, including business combinations, consolidations and mergers. So long as the Rubenstein Family, including Mr. A. Rubenstein and Mr. G. Rubenstein continues to directly or indirectly own a significant amount of Accel’s outstanding equity interests and any individuals affiliated with members of the Rubenstein Family are members of the Company Board and/or any committees thereof, and the Rubenstein Family, including Mr. A. Rubenstein and Mr. G. Rubenstein may be able to exert substantial influence on Accel and may be able to exercise its influence in a manner that is not in the interests of Accel’s other stakeholders. The Rubenstein Family, including Mr. A. Rubenstein’s and Mr. G. Rubenstein’s influence over Accel’s management could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of Accel, which could cause the market price of Class A-1 common stock to decline or prevent public stockholders from realizing a premium over the market price for Class A-1 common stock. Prospective investors should consider that the interests of the Rubenstein Family may differ from their interests in material respects. In addition, pursuant to the Transaction Agreement and subject to certain limitations set forth in the Transaction Agreement, any person who held (together with such person’s affiliates) at least 8% of the outstanding shares of Class A-1 common stock immediately following the closing of the Stock Purchase in connection with the Business Combination, had the right to nominate an individual to be a member of the Company Board. So long as any such stockholder with director nomination rights continues to directly or indirectly own a significant amount of Accel’s outstanding equity interests and any individuals affiliated with such stockholder are members of the Company Board and/or any committees thereof, such major stockholder may be able to exert substantial influence on Accel and may be able to exercise its influence in a manner that is not in the interests of Accel’s other stakeholders. This influence over Accel’s management could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of Accel, which could cause the market price of Class A-1 common stock to decline or prevent public stockholders from realizing a premium over the market price for Class A-1 common stock.

Holders of Common Stock are subject to certain gaming regulations, and if a holder is found unsuitable by a gaming authority, that holder would not be able to, directly or indirectly, beneficially own Common Stock.

Holders of Common Stock are subject to certain gaming regulations. In Illinois, Pennsylvania and other regulated gaming jurisdictions, gaming laws can require any holder of Common Stock to be disclosed, file an application, be investigated, and qualify or have his, her or its suitability determined by gaming authorities. Gaming laws in Illinois, Pennsylvania and other regulated gaming jurisdictions also require any person who acquires beneficial ownership of more than 5% of voting securities of a gaming company to notify the gaming authorities, and gaming authorities may require such holders to apply for qualification or a finding of suitability, subject to limited exceptions for “institutional investors” that hold a company’s voting securities for investment purposes only. If a holder is found unsuitable by a gaming authority, that holder would not be able to, directly or indirectly, beneficially own Common Stock.

Gaming authorities have very broad discretion in determining whether an applicant should be deemed suitable. For any cause deemed reasonable by the gaming authorities, subject to certain administrative proceeding requirements, gaming regulators in Illinois, Pennsylvania or elsewhere would have the authority to (i) deny any application; (ii) limit, condition, restrict, revoke, or suspend any license, registration, finding of suitability or approval, including revoking any licenses held by Accel to conduct business in the state or (iii) fine any person licensed, registered, or found suitable or approved. Any person required by a gaming authority to be found suitable, who is found unsuitable by the gaming authority, may not hold, directly or indirectly, the beneficial ownership of any voting security or beneficial or record ownership of any non-voting security or any debt security of any public corporation that is registered with the gaming authority beyond the time prescribed by the gaming authority. A finding of unsuitability by a particular gaming authority in Illinois, Pennsylvania or elsewhere will impact that person’s ability to associate or affiliate with gaming licensees in that particular

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jurisdiction and could impact the person’s ability to associate or affiliate with gaming licensees in other jurisdictions.

Accel is a holding company and depends on the ability of Accel’s subsidiaries to pay dividends.

Accel has never declared or paid any cash dividends, nor does Accel intend to pay cash dividends. Accel is a holding company without any direct operations and will have no significant assets other than Accel’s ownership interest in its subsidiaries. Accordingly, Accel’s ability to pay dividends will depend upon the financial condition, liquidity and results of operations of, and Accel’s receipt of dividends, loans or other funds from, its subsidiaries. Accel’s subsidiaries are separate and distinct legal entities and have no obligation to make funds available to Accel. In addition, there are various statutory, regulatory and contractual limitations and business considerations on the extent, if any, to which Accel’s subsidiaries may pay dividends, make loans or otherwise provide funds to Accel. For example, the ability of Accel’s subsidiaries to make distributions, loans and other payments to it for the purposes described above and for any other purpose will be limited by the terms of the Credit Agreement.

The market price and trading volume of Class A-1 common stock may be volatile and could decline significantly.

The stock markets, including the NYSE have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for the Class A-1 common stock, the market price of Class A-1 common stock may be volatile and could decline significantly. In addition, the trading volume in Class A-1 common stock may fluctuate and cause significant price variations to occur. If the market price of Class A-1 common stock declines significantly, you may be unable to resell your Class A-1 common stock at or above the market price of Class A-1 common stock as of the date hereof. Accel cannot assure you that the market price of Class A-1 common stock will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:

• the realization of any of the risk factors presented in this prospectus;

• actual or anticipated differences in Accel’s estimates, or in the estimates of analysts, for Accel’s revenues, Adjusted EBITDA, results of operations, level of indebtedness, liquidity or financial condition;

• additions and departures of key personnel;

• failure to comply with the requirements of the NYSE;

• failure to comply with the Sarbanes-Oxley Act or other laws or regulations;

• changes to gaming laws, regulations or enforcement policies of applicable gaming authorities;

• future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of Accel’s capital stock;

• publication of research reports about Accel, its licensed establishments or the video gaming terminal industry generally;

• the performance and market valuations of other similar companies;

• commencement of, or involvement in, litigation involving Accel;

• broad disruptions in the financial markets, including sudden disruptions in the credit markets;

• speculation in the press or investment community;

• actual, potential or perceived control, accounting or reporting problems; and

• changes in accounting principles, policies and guidelines.

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In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result in substantial costs and divert Accel’s management’s attention and resources, which could have a material adverse effect on Accel.

If securities or industry analysts do not publish research, publish inaccurate or unfavorable research or cease publishing research about Accel, our share price and trading volume could decline significantly.

The market for our Class A-1 common stock will depend in part on the research and reports that securities or industry analysts publish about Accel or its business. If one or more of the analysts who cover Accel downgrade their opinions about Class A-1 common stock, publish inaccurate or unfavorable research about Accel, or cease publishing about it regularly, demand for Class A-1 common stock could decrease, which might cause our share price and trading volume to decline significantly.

Future issuances of debt securities and equity securities may adversely affect Accel, including the market price of its securities and may be dilutive to existing stockholders.

In the future, Accel may incur debt or issue equity ranking senior to its securities. Those securities will generally have priority upon liquidation. Such securities also may be governed by an indenture or other instrument containing covenants restricting Accel’s operating flexibility. Additionally, any convertible or exchangeable securities that Accel issues in the future may have rights, preferences and privileges more favorable than those of Accel’s securities. Because Accel’s decision to issue debt or equity in the future will depend on market conditions and other factors beyond its control, Accel cannot predict or estimate the amount, timing, nature or success of future capital raising efforts. As a result, future capital raising efforts may reduce the market price of Accel’s securities and be dilutive to existing stockholders.

Accel is an “emerging growth company,” and Accel cannot be certain if the reduced SEC reporting requirements applicable to emerging growth companies will make its securities less attractive to investors, which could have a material and adverse effect on Accel, including its growth prospects.

Accel is an “emerging growth company” as defined in the JOBS Act. Accel will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following June 30, 2022, the fifth anniversary of the IPO of Pace, (b) in which Accel has total annual gross revenue of at least $1.0 billion or (c) in which Accel is deemed to be a large accelerated filer, which means the market value of Class A-1 common stock that is held by non-affiliates exceeds $700 million as of the last business day of the prior second fiscal quarter, and (ii) the date on which Accel has issued more than $1.0 billion in non-convertible debt during the prior three-year period. Accel intends to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, whether or not they are classified as “emerging growth companies,” including, but not limited to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that Accel’s independent registered public accounting firm provide an attestation report on the effectiveness of Accel’s internal control over financial reporting and reduced disclosure obligations regarding executive compensation in Accel’s periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. The JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in the Securities Act for complying with new or revised accounting standards. Accel has not chosen to “opt out” of this extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, Accel, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of Accel’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Accel cannot predict if investors will find its securities less attractive because it intends to rely on certain of these exemptions and benefits under the JOBS Act. If some investors find Accel

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securities less attractive as a result, there may be a less active, liquid and/or orderly trading market for Accel’s securities and the market price and trading volume of its securities may be more volatile and decline significantly.

Provisions in Accel’s Charter designate the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain times of actions and proceedings that may be initiated by Accel’s stockholders, and provisions in Accel’s Bylaws also provide that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act which could limit the ability of Accel’s stockholders to obtain a favorable judicial forum for disputes with Accel or with its directors, officers or employees and may discourage stockholders from bringing such claims.

The Charter provides that, to the fullest extent permitted by law, unless Accel consents to the selection of an alternative forum, and subject to the Court of Chancery of the State of Delaware having personal jurisdiction over the parties named as defendants therein, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for:

• any derivative action or proceeding brought on behalf of Accel;

• any action asserting a claim of breach of a fiduciary duty owed by any of Accel’s directors or officers to Accel or its stockholders, creditors or other constituents;

• any action asserting a claim against Accel or any of its directors or officers arising pursuant to any provision of the DGCL, the Charter or the Bylaws (as either may be amended and/or restated from time to time); or

• any action asserting a claim against Accel that is governed by the internal affairs doctrine.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Accel or any of its directors, officers, or other employees, which may discourage lawsuits with respect to such claims. However, stockholders will not be deemed to have waived Accel’s compliance with the federal securities laws and the rules and regulations thereunder and this provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act, which provides for the exclusive jurisdiction of the federal courts with respect to all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. The Bylaws also provide that the federal district courts of the United States are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. If a court were to find the choice of forum provision contained in the Charter to be inapplicable or unenforceable in an action, Accel may incur additional costs associated with resolving such action in other jurisdictions, which could harm Accel’s business, results of operations and financial condition.

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USE OF PROCEEDS

We estimate that the net proceeds from our issuance and sale of shares of our Class A-1 common stock in this offering will be approximately $        million (or                  shares if the underwriters exercise their option to purchase additional shares in full), after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any of the proceeds from the sale of Class A-1 common stock offered by the selling stockholders. We will, however, bear the costs associated with the sale of shares by the selling stockholders, other than underwriting discounts and commissions.

We intend to use the net proceeds from the offering for general corporate purposes which may include capital expenditures, repayment of debt, potential acquisitions and strategic business transactions.

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CAPITALIZATION

The following table sets forth Accel’s cash and cash equivalents and capitalization as of June 30, 2020:

• On an actual basis; and

• On an as adjusted basis to reflect the issuance of shares of common stock by us in this offering and the receipt of approximately $        million in net proceeds from the sale of such shares (assuming the underwriters do not exercise their option to purchase additional shares).

This table should be read in conjunction with “Use of Proceeds,” Accel’s audited financial statements and related notes, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information, included elsewhere in this prospectus.

	As of June 30, 2020
(In thousands, except par value and share amounts)	Actual			As Adjusted
Cash and cash equivalents	$	148,834		$
Revolving credit facility	$	50,500		$
Term Loan		234,000
Delayed Draw Term Loan		122,688
Total debt		407,188
Stockholders’ equity:
Preferred Stock, par value of $0.0001; 1,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2020		—
Class A-1 common stock, par value $0.0001; 250,000,000 shares authorized; 78,382,405 shares issued and outstanding at June 30, 2020; 86,382,405 shares issued and outstanding, as adjusted		8
Class A-2 common stock, par value $0.0001; 10,000,000 shares authorized; 3,403,363 shares issued and outstanding at June 30, 2020		1
Additional paid-in capital		108,732
Accumulated deficit		(43,710	)
Total stockholders’ equity		65,031
Total capitalization	$	472,219		$

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MARKET PRICE, TICKER SYMBOL AND DIVIDEND INFORMATION

Market Price and Ticker Symbol

Our Class A-1 common stock is currently listed on the NYSE under the symbol “ACEL.”

The closing price of the Class A-1 common stock on September 18, 2020, was $14.00.

Holders

As of September 18, 2020, there were 107 holders of record of our Class A-1 common stock. Such numbers do not include beneficial owners holding our securities through nominee names.

Dividend Policy

The Company has not paid any cash dividends on its Class A-1 common stock to date. The payment of cash dividends in the future will be dependent upon the Company’s revenues and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends will be within the discretion of the Company Board at such time.

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SELECTED HISTORICAL FINANCIAL DATA OF ACCEL AND NON-GAAP FINANCIAL MEASURES

The following tables present selected financial data for (i) the six-month period ended June 30, 2020 and as of June 30, 2020 and 2019 and (ii) each fiscal year in the three-year period ended December 31, 2019 for Consolidated Statements of Operations, Cash Flows and Other Data, and the two-year period ended December 31, 2019 for Consolidated Balance Sheets Data. The selected financial data below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and related notes thereto contained elsewhere in this prospectus.

The condensed consolidated statements of income data and consolidated statements of cash flows data for the six-month periods ended June 30, 2020 and 2019, and the consolidated balance sheet data as of June 30, 2020, are derived from Accel’s unaudited condensed consolidated financial statements contained herein. The consolidated statements of income data and consolidated statements of cash flows data for the years ended December 31, 2019, 2018 and 2017, and the consolidated balance sheet data as of December 31, 2019 and 2018, are derived from Accel’s audited consolidated financial statements contained herein.

Our historical results are not necessarily indicative of the results that should be expected in the future and the selected financial data is not intended to replace the consolidated financial statements and related notes thereto included elsewhere in this prospectus. Accel presents below certain statistical data and comparative information commonly used in the gaming industry to monitor performance. Management uses this information for financial planning, strategic planning and employee compensation decisions.

In response to the COVID-19 outbreak, the IGB decided to shut down all VGTs across the State of Illinois starting at 9:00 p.m. on March 16, 2020 and ultimately extended the shutdown through June 30, 2020. The temporary shutdown of Illinois video gaming impacted all of the gaming days during the three months ended June 30, 2020 and 106 of the 182 gaming days (or 58% of gaming days) during the six months ended June 30, 2020. While the IGB has announced the resumption of all video gaming activities effective July 1st, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events.

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Consolidated Statements of Operations, Cash Flows and Other Data

	Six Months Ended June 30,						Year Ended December 31,
(in thousands, except key metrics data)	2020			2019			2019			2018			2017
	(Unaudited)						(Audited)
Consolidated Statements of Operations Data:
Total net revenues	$	105,607		$	201,692		$	424,385		$	331,993		$	248,435
Operating (loss) income		(21,696	)		17,975			13,336			24,869			18,170
(Loss) income before income tax (benefit) expense		(28,434	)		11,772			(665	)		15,225			10,065
Net (loss) income	$	(23,240	)	$	8,323		$	(5,864	)	$	10,803		$	8,311
Consolidated Statements of Cash Flows Data:
Net cash (used in) provided by operating activities	$	(17,284	)	$	26,083		$	45,565		$	44,343		$	33,097
Net cash used in investing activities		(4,002	)		(10,548	)		(151,532	)		(73,547	)		(70,870	)
Net cash provided by (used in) financing activities		44,717			(8,257	)		139,141			46,122			59,081
Other Financial Data:
Adjusted EBITDA(1)	$	6,095		$	40,669		$	79,594		$	63,815		$	46,865
Adjusted net (loss) income(2)	$	(7,402	)	$	15,071		$	22,695		$	23,136		$	17,310
Key Metrics:
Licensed establishments(3)		2,335			1,762			2,312			1,686			1,442
Video gaming terminals(4)		11,108			8,082			10,499			7,649			6,439
Average remaining contract term (years)(5)		6.8			7.4			6.9			7.6			8.3
Hold-per-day(6) (in whole dollars)	$	124		$	137		$	130		$	125		$	115

(1) Adjusted EBITDA is defined as net (loss) income plus amortization of route and customer acquisition costs and location contracts acquired; stock-based compensation expense; other expenses, net; tax effect of adjustments; depreciation and amortization of property and equipment; interest expense; and provision for income taxes. For additional information on Adjusted EBITDA and a reconciliation of net (loss) income to Adjusted EBITDA, see “—Non-GAAP Financial Measures—Adjusted EBITDA and Adjusted net (loss) income.”

(2) Adjusted Net (loss) income is defined as net (loss) income plus amortization of route and customer acquisition costs and location contracts acquired; stock-based compensation expense; other expenses, net; and tax effect of adjustments. For additional information on Adjusted net (loss) income and a reconciliation of net (loss) income to Adjusted net (loss) income, see “—Non-GAAP Financial Measures—Adjusted EBITDA and Adjusted net (loss) income.”

(3) Based on Scientific Games International third-party terminal operator portal data which is updated at the end of each gaming day and includes licensed establishments that may be temporarily closed but still connected to the central system. This metric is utilized by Accel to continually monitor growth from existing locations, organic openings, acquired locations, and competitor conversions.

(4) Based on Scientific Games International third-party terminal operator portal data which is updated at the end of each gaming day and includes VGTs that may be temporarily shut off but still connected to the central system. This metric is utilized by Accel to continually monitor growth from existing locations, organic openings, acquired locations, and competitor conversions.

(5) Calculated by determining the average expiration date of all outstanding contracts, and then subtracting the applicable measurement date. The IGB limited the length of contracts entered into after February 2, 2018 to a maximum of eight years with no automatic renewals.

(6) Calculated by dividing the difference between cash deposited in all VGTs and tickets issued to players by the average number of VGTs in operation during the period being measured, and then further dividing such quotient by the number of days in such period.

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Consolidated Balance Sheets Data

	As of June 30,		As of December 31,
(in thousands)	2020		2019		2018
	(Unaudited)		(Audited)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	148,834	$	125,403	$	92,229
Total current assets		179,821		151,495		102,011
Property and equipment, net		123,759		119,201		92,442
Total assets		525,276		509,317		335,174
Total current liabilities		50,475		54,946		85,882
Total long-term liabilities		409,770		368,846		192,174
Stockholders’ equity		65,031		85,525		57,118

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted net income are non-GAAP financial measures and are key metrics used to monitor ongoing core operations. Management of Accel believes Adjusted EBITDA and Adjusted net income enhance the understanding of Accel’s underlying drivers of profitability and trends in Accel’s business and facilitate company-to-company and period-to- period comparisons, because these non-GAAP financial measures exclude the effects of certain non-cash items or represent certain nonrecurring items that are unrelated to core performance. Management of Accel also believes that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance and to evaluate Accel’s ability to fund capital expenditures, service debt obligations and meet working capital requirements.

Adjusted net (loss) income and Adjusted EBITDA

	Six Months Ended June 30,						Year Ended December 31,
(in thousands)	2020			2019			2019			2018			2017
Net (loss) income	$	(23,240	)	$	8,323		$	(5,864	)	$	10,803		$	8,311
Adjustments:
Amortization of route and customer acquisition costs and location contracts acquired(1)		11,130			8,927			17,975			14,681			9,792
Stock-based compensation(2)		2,387			256			2,236			453			804
Other expenses, net(3)		4,336			1,370			19,649			3,030			1,331
Tax effect of adjustments(4)		(2,015	)		(3,805	)		(11,301	)		(5,831	)		(2,928	)
Adjusted net (loss) income	$	(7,402	)	$	15,071		$	22,695		$	23,136		$	17,310
Depreciation and amortization of property and equipment		9,938			12,141			26,398			20,782			16,768
Interest expense		6,738			6,203			12,860			9,644			8,105
Income tax (benefit) expense		(3,179	)		7,254			16,500			10,253			4,682
Loss on debt extinguishment		—			—			1,141			—			—
Adjusted EBITDA	$	6,095		$	40,669		$	79,594		$	63,815		$	46,865

(1) Route and customer acquisition costs consist of upfront cash payments and future cash payments to third party sales agents to acquire the licensed video gaming establishments that are not connected with a business combination. Accel amortizes the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items. Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the

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contract. Future cash payments do not include cash costs associated with renewing customer contracts as Accel does not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 10 years. “Amortization of route and customer acquisition costs and location contracts acquired” aggregates the non- cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired.

(2) Stock-based compensation consists of options, restricted stock units and warrants.

(3) Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring expenses including expenses relating to lobbying efforts and legal expenses in Pennsylvania, lobbying efforts in Missouri and a settlement in connection with a gaming acquisition, and (iii) non-recurring expenses associated with the Business Combination.

(4) Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations.

Adjusted EBITDA for the six months ended June 30, 2020 was $6.1 million, a decrease of $34.6 million, or 85.0%, compared to prior year period primarily due to the impact of the temporary shutdown of video gaming in the state of Illinois due to the COVID-19 outbreak.

Adjusted EBITDA for the year ended December 31, 2019 was $79.6 million, an increase of $15.8 million, or 24.7%, compared to year ended December 31, 2018. The increase was primarily attributable to an increase in licensed establishments and VGTs.

Adjusted EBITDA for the year ended December 31, 2018 was $63.8 million, an increase of $16.9 million, or 36.1%, compared to year ended December 31, 2017. The increase in Adjusted EBITDA is attributable to both organic growth of the business as well as the acquisitions of Skyhigh Gaming on August 1, 2018, G3 Gaming on October 16, 2018, (collectively, the “2018 Acquisitions”). The increase was primarily attributable to an increase in licensed establishments and VGTs.

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BUSINESS

Overview

We are a leading distributed gaming operator in the United States on an Adjusted EBITDA basis, and a preferred partner for local business owners in the Illinois market. Our business consists of the installation, maintenance and operation of VGTs, redemption devices that disburse winnings and contain ATM functionality, and other amusement devices in authorized non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores, which are referred to collectively as “licensed establishments.” We also operate stand-alone ATMs in gaming and non-gaming locations. Accel has been licensed by the IGB since 2012 and holds a conditional license from the PA Board. In July 2020, the Georgia Lottery Corporation approved one of our consolidated subsidiaries as a Master Licensee.

Our gaming-as-a-service platform provides local businesses with a turnkey, capital efficient gaming solution. We own all of our VGT equipment and manage the entire operating process for our licensed establishment partners. We also offer our licensed establishment partners VGT solutions that appeal to players who patronize those businesses. We devote significant resources to licensed establishment partner retention, and seek to provide prompt, personalized player service and support, which we believe is unparalleled among other distributed gaming operators. Dedicated relationship managers assist licensed establishment partners with regulatory applications and compliance onboarding, train licensed establishment partners on how to engage with players and potential players, monitor individual gaming areas for compliance, cleanliness and comfort and recommend potential changes to improve both player gaming experience and overall revenue for each licensed establishment. We also provide weekly gaming revenue reports to our licensed establishment partners and analyze and compare gaming results within individual licensed establishment partners. This information is used to determine an optimal selection of games, layouts and other ideas to generate foot traffic for our licensed establishment partners with the goal of generating increased gaming revenue. Further, our in-house collections and security personnel provide highly secure cash transportation and vault management services. Our best-in-class technicians ensure minimal downtime through proactive service and routine maintenance. As a result, Accel’s voluntary contract renewal rate was over 98% for the three-year period ended December 31, 2019.

In addition to our VGT business, we also install, operate and service redemption devices that have ATM functionality, stand-alone ATMs and amusement devices, including jukeboxes, dartboards, pool tables, pinball machines and other related entertainment equipment. These operations provide a complementary source of lead generation for our VGT business by offering a “one-stop” source of additional equipment for its licensed establishment partners.

Impact of COVID-19

The COVID-19 outbreak is having a significant impact on global markets as a result of supply chain and production disruptions, workforce restrictions, travel restrictions, reduced consumer spending and sentiment, amongst other factors, which are, individually or in the aggregate, negatively affecting the financial performance, liquidity and cash flow projections of many companies in the United States and abroad.

In response to the COVID-19 outbreak, the IGB made the decision to shut down all VGTs across the State of Illinois starting at 9:00 p.m. on March 16, 2020 and ultimately extended the shutdown through June 30, 2020. As a result, we borrowed $65 million on our delayed draw term loan in March 2020 to increase our cash position and help preserve our financial flexibility. The temporary shutdown of Illinois video gaming impacted 106 of the 182 gaming days (or 58% of gaming days) during the first half of 2020. In light of these events and their effect on Accel’s employees and licensed establishment partners, we took action to reduce our monthly cash expenses down to $2 to $3 million during the shutdown to position us to help mitigate the effects of the temporary cessation of operations by, among other things, furloughing approximately 90% of our employees and deferring certain payments to major vendors. Additionally, members of our senior management decided to voluntarily forgo their base salaries until the resumption of video gaming operations. Beginning in early June, we started reinstating employees from furlough in order to properly resume operations.

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As a result of these developments, our revenues, results of operations and cash flows have been materially affected. The situation is rapidly changing and additional impacts to the business and financial results may arise that we are not aware of currently. In close consultation with the Illinois Department of Public Health and the governor, the IGB issued resumption protocols to guide casino and terminal operators in their resumption planning. Based on those protocols, we provided a Pandemic Resumption Plan to the IGB to guide our operations upon the resumption of gaming on July 1, 2020 at 9:00 a.m. Our plan included working with our licensed establishment partners to, among other things:

• follow social distancing requirements within the gaming area by moving the gaming equipment or installing spacers that meet IGB guidelines;

• determine how personal protective equipment usage requirements will be observed and enforced;

• develop procedures and schedules for cleaning, disinfecting and sanitizing the establishment as well the gaming area, including the VGTs; and

• proper signage to remind patrons of social distancing requirements, proper hand washing, use of sanitizers, use of personal protective equipment, and to stay at home if feeling sick.

Accel supports these measures to protect the safety of our fellow Illinois citizens, as the health and safety of players and licensed partner establishments is of paramount importance to us. We have been in constant contact with our licensed partner establishments to keep them aware of current developments, and have been working with them through this plan. As a result, by day 3 of the relaunch, more than 90% of Accel’s locations were live and less than 3% of Accel’s VGTs were down due to resumption protocols.

We have incurred non-recurring, one-time expenses of $1.3 million and $1.9 million for the three and six months ended June 30, 2020, respectively, for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown. These costs are included within other expenses, net. We also spent $1.4 million in capital costs related to the purchase of IGB-mandated spacers for our VGTs to promote social distancing requirements within the gaming area and incurred operating expenses of $0.3 million related to cleaning, disinfecting and sanitizing supplies.

While the IGB has announced the resumption of all video gaming activities effective July 1, 2020, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events.

Accel’s Core Strengths

We believe that the following competitive strengths contribute to our industry leading position:

• Gaming-as-a-service platform. When compared with traditional gaming businesses such as casinos, Accel believes its platform benefits from the following advantages:

• “business-to-business” model secured by long-term, exclusive contracts that are typically renewed, allowing for predictable, highly recurring revenue streams with low churn;

• operating a scalable business in fast-growing gaming segments that are primarily served by fragmented, sub-scale providers;

• data reporting solutions and analytics, offering insight and advice to help licensed establishment partners maximize revenues and ultimately grow their businesses;

• state-of-the-art technology-enabled slot machines from leading manufacturers who provide the most captivating titles in slots entertainment;

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• comparatively low capital expenses and a comparatively asset-light operating model, in each case, when compared to casinos, which typically provide significantly higher capital-intensive offerings such as hotel accommodations, restaurants and stage-based entertainment;

• highly localized footprint that provides more access to gaming and convenience for consumers, as compared to regional casinos that market to players who may live up to several hours away and are thus prone to disruption of their feeder markets; and

• strong marketing, legal, compliance, cash management, financial and technical support systems, all of which remain in-house to boost efficiency and enhance the ability to serve as a premier gaming-as-a-service provider.

• Strong relationships with licensed establishment partners. Accel has prioritized establishing strong, lasting relationships with its licensed establishment partners since its inception. Accel dedicates a relationship manager to each of its licensed establishment partners, who, with support from other personnel, oversees every aspect of partner relationship management and retention. Accel prides itself on providing prompt, reliable service and education, all of which helps to increase referral marketing by its partners. Accel’s relationship managers’ efforts to provide value-added services to their licensed establishment partners result in consistent pre-renewals long before contracts expire and are a key element of our competitive differentiation.

• Proven track record in executing and integrating acquisitions. Accel continuously evaluates strategic acquisition opportunities. Accel has a successful track record of identifying, acquiring and integrating competitive operators at favorable terms. Since becoming a licensed terminal operator in 2012, Accel has acquired 10 operator companies, adding more than 930 licensed establishments to our total portfolio of 2,312 licensed establishment partners as of December 31, 2019. Accel believes that its industry reputation, scale, proven track record of driving revenue synergies, and public acquisition currency enhances its ability to acquire other operators or licensed establishments on favorable terms and makes Accel a preferred partner of choice.

• Diversified revenue base with limited churn. Accel believes that gaming regulations in Illinois facilitate a low revenue concentration per licensed establishment partner, and that its low-limit slots are more resilient to economic downturn as consumers typically continue to engage in locally convenient, lower cost forms of entertainment in such circumstances. Accel’s best-performing licensed establishment accounted for approximately $1.8 million, or less than 1% of gross revenue for the year ended December 31, 2019, its top 20 licensed establishments represented only 5% of gross revenue for the year ended December 31, 2019 and Accel’s licensed establishment partners each contributed an average of approximately $0.2 million of gross revenue for the year ended December 31, 2019. Accel’s voluntary contract renewal rate was over 98% for the three-year period ended December 31, 2019. While Accel experiences minor business disruptions each year due to business failures or natural disasters affecting licensed establishment partners, many of these sites reopen in subsequent years under new owners, and Accel believes it is best-positioned to reengage with those establishments as new licensed establishment partners because of its reputation and leading market position. Accel’s VGTs are geographically diversified across the state of Illinois, limiting systemic risk due to local weather patterns or regional economic downturns. Accel’s plans to expand into other states may further help to diversify its portfolio.

• Deep industry and vendor relationships. Accel’s leading market position has led to strong relationships within its industry and with equipment suppliers. Accel has successfully integrated multiple other operators, and believes this successful roll-up strategy positions it well with potential additional local operators who could benefit from Accel’s gaming-as-a-service platform. In addition, Accel’s industry leadership permits it to seek and obtain favorable pricing and supply of key gaming machines. Due to its ability to procure machines and parts easily, Accel is able to rotate machines quickly to licensed establishment partners where they are most needed across its operating footprint. This results in longer, more effective usage and greater lifetimes for Accel’s machines.

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• Management team. Accel’s management team has deep experience and industry knowledge, with an average of 12 years of gaming industry experience. Accel’s President, Chief Executive Officer and co-founder, Andy Rubenstein, has led Accel since its inception in 2009, and its general counsel, Derek Harmer, and chief financial officer, Brian Carroll, have been with Accel since 2012 and 2014, respectively. Accel believes that its industry-leading management team has a reputation for integrity and compelling customer service.

• Company culture and training. Accel believes that it is an employer of choice for talented candidates. Accel’s corporate culture is strong and Accel invests heavily in employees’ success, including devoting significant resources to training and other development programs. Accel also experiences relatively low levels of employee turnover.

Accel’s Growth Opportunities

Accel’s key growth strategies include its plans to:

• Maintain competitive advantage in Illinois and increase VGT segment share. Accel believes that there is substantial potential for further growth in Illinois. Accel has been successful in the past in signing competitors’ licensed establishments and has identified approximately 700 such prospects for engagement after current contracts with other partners expire. In particular, Accel sees opportunities for expansion in key local markets, such as Springfield, Bloomington and Decatur, where its VGT segment share is below its share in other regions. Accel also strives to further optimize revenues for VGTs it currently operates through refined data analysis, marketing and other initiatives. Accel seeks to increase distribution possibilities through corporate partners who operate multiple licensed establishments such as chain stores. Accel believes that these corporate businesses tend to favor larger operators who have substantial compliance infrastructures in addition to leading service capabilities. While such licensed establishments have been “second movers” in choosing to adopt video gaming, partnering with reputable operators such as Accel could render deployment of VGTs more attractive. Accel’s leadership position also creates an opportunity for it to take advantage of recent legislative changes in Illinois such as an increased number of allowed VGTs per establishment, higher bet limits, higher win amounts, and larger jackpots. Additionally, Accel may realize the benefits of potential municipal ordinance changes that would permit its business to operate in new municipalities.

• Expand operations into Pennsylvania. In November 2017, Pennsylvania’s Governor signed the Pennsylvania Gaming Act. The law authorized, among other forms of gaming, VGT gaming at qualified truck stops. Accel estimates that the total potential VGT market in Pennsylvania is approximately 100 to 150 truck stops as of December 31, 2019, although municipalities are able to individually opt out from authorizing distributed gaming. Accel believes this market opportunity is attractive and has obtained a conditional terminal operator license from the PA Board. To qualify for gaming, a truck stop must meet requirements that are similar to those in Illinois. Accel has a binding agreement to install VGTs with a partner truck stop establishment in Pennsylvania that has received a conditional license from the PA Board. Accel is also in discussions with other potential partners who have not yet applied for licensure. Accel believes that Pennsylvania is a natural choice for its expansion outside of Illinois when compared to other states due to industry similarities with Illinois. See “ —Our Industry” for more information.

• Expand operations in Georgia. The operation of coin-operated amusement machines in Georgia has been regulated by the Georgia Lottery Corporation since April 2013. Games are skill-based with winnings paid in points that may be redeemed for noncash merchandise, prizes, toys, gift certificates, or novelties. The most common type of establishment licensees are convenience stores. Licensed establishments are limited to a maximum of nine machines, unless a municipality specifically limits licensed establishments to a maximum of six machines. In addition, any local governing authority may vote to remove coin operated amusement machines from its jurisdiction upon 60 days’ advance notice. On June 12, 2020, we announced our agreement to acquire, subject to regulatory approvals including the Georgia Lottery Corporation, Tom’s Amusement Company, Inc., a Southeastern U.S. amusement operator and Master Licensee in the state of Georgia. The acquisition of Tom’s Amusement’s adds 11 Georgia Coin Operated Amusement Machine Class B locations to the Accel portfolio, including a total of 65 Class B COAM terminals.

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• Establish Player Rewards Program to further drive growth. As part of its gaming-as-a-service suite of offerings, Accel has considered offering a Player Rewards Program for players when permitted. The anticipated terms of the program will provide for players to accumulate points each time they use Accel’s products, and may provide points that can be redeemed for rewards. Accel believes this program will result in increased brand loyalty from licensed establishment partners by rewarding players for using Accel’s VGTs. This opt-in program is expected to allow data analysis with respect to each player, location and machine, which will in turn permit Accel to better assess performance and serve its partners. Although player rewards programs are not specifically prohibited in Illinois, applicable regulations have not been enacted, and the IGB has not approved any player rewards programs for any terminal operator. Accel has not applied to the IGB to establish any such program, but expects to apply in the event of applicable regulation enactment.

• Expand operations to other states. Various states and other jurisdictions have proposed legislation permitting VGTs or other forms of gaming in the past. These states include Indiana, Missouri and Mississippi. Accel may also choose to expand operations through strategic acquisitions or otherwise in other, more mature gaming jurisdictions where VGTs are currently legal, such as Virginia, Louisiana, Montana, Nevada, Oregon, South Dakota and West Virginia. Accel may attempt to seek approval to operate in additional jurisdictions that authorize video gaming. Accel believes it would be a favored entrant into any such markets given its track record of success and compliance.

• Expand ancillary service offerings to licensed establishments. While distributing and servicing amusement devices such as jukeboxes, dartboards, pool tables, pinball machines iGaming and other ancillary equipment, such as redemption devices and stand-alone ATMs, is not the primary focus of its business, Accel believes that these services provide a key point for ongoing customer contact and enhances its image as a “one-stop shop” for entertainment devices, including, for example, through Accel’s partnerships with complementary service providers such as DraftKings. Accel has observed that licensed establishment partners appreciate these services and continue to rely on Accel to provide them. Providing these services can also serve as a point of initial contact with potential partners who may decide to avail themselves later of Accel’s primary gaming services. As a result, Accel intends to continue prioritizing the installation of these devices and equipment.

Our Industry

We operate within the U.S. distributed gaming industry, which consists of the installation and service of slot machines at non-casino licensed establishments. Generally, a VGT or slot machine is any electronic video game machine that, upon insertion of cash, electronic cards or vouchers, or any combination thereof, is available to play or simulate the play of a video game, including but not limited to video poker and slots, and utilizes a video display and microprocessors in which players may receive free games or credits that can be redeemed for cash. Currently, all VGTs operated by us only accept cash. Distributed gaming is currently legal in Illinois, Louisiana, Montana, Nevada, Oregon, Pennsylvania, South Dakota and West Virginia. Other states such as Georgia have a similar but separately regulated coin-operated amusement machine market. We believe that the distributed gaming industry is supported by generally favorable trends, including an increasing number of states approving, or contemplating approving, gaming to increase tax revenues, broader acceptance in the U.S. of gaming generally, including online and digital gaming, an aging population that appreciates the convenience of gaming entertainment close to home, expected resilience through economic downturns and attractive revenue and return on invested capital profiles when compared to traditional gaming venues, such as casinos. We believe that, as an increasing number of jurisdictions have legalized distributed gaming, the industry has witnessed both a growing player base and increased variety of higher quality game profiles available through VGTs.

Our operations are based primarily in Illinois. We have been licensed as a terminal operator in Illinois under the Illinois Video Gaming Act since 2012. We were one of the first VGT operators licensed in Illinois. The Illinois distributed gaming industry has grown significantly since 2012, with 7,180 licensed establishments operating a total of 33,294 VGTs as of December 31, 2019, according to Scientific Games International’s

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terminal operator portal and the Video Gaming Revenue Reports published by the IGB. According to the IGB, approximately 1,378 out of approximately 1,497 municipalities in Illinois do not prohibit the operation of VGTs. VGTs in Illinois can be played in licensed bars, restaurants, gaming cafes, truck stops, fraternal organizations, veterans’ organizations, and other retail establishments, including some convenience stores, in areas accessible only to players who are 21 years of age or older. Gaming revenue in Illinois from VGTs generates significant tax revenue, amounting to approximately $530 million in fiscal year 2019, according to the IGB Video Gaming Report showing Statewide Allocation Summary from January 2019 to December 2019. The Illinois state legislature has recently increased applicable marginal tax rates on gaming from 30% to 33% effective July 1, 2019 and from 33% to 34% effective July 1, 2020. While the increase in gaming tax rates could negatively impact the distributed gaming industry, we believe other recent legislative changes, such as an increase in the number of permitted VGTs at a given location, an increase in maximum wager limits and maximum win payouts are expected to drive overall video gaming demand upward.

The IGB generally oversees gambling and video gaming operations in the state of Illinois. The IGB is authorized to issue licenses to distributed gaming operators and has broad disciplinary authority over Illinois’s distributed gaming industry which includes the power to fine operators and licensed establishments for non-compliance with IGB regulations. As enforcement efforts and incidents of discipline among licensees increase, fine amounts for noncompliance have also increased. While the IGB has licensed a significant number of new video gaming establishments in recent years, it has also experienced an increase in its application backlog. In addition, Illinois’ governor is empowered to appoint board members to the IGB and select its administrator for the IGB to ultimately approve. Not only do new appointments have the potential to change the composition of the IGB, they can impact current rules, regulations, policies and agendas of the IGB, which may result in increased enforcement measures or further delays in licensing new establishments. The IGB dictates the maximum bet, maximum win, and approves payout percentages for games played on VGTs which are required by regulation to exceed 80%. Generally, suppliers have designed VGTs to include between 6 and 49 games. In 2019, payout percentages for VGTs across Illinois averaged approximately 92%, according to the Video Gaming Revenue Reports published by the IGB. In the same period, Accel’s payouts ranged from 88% to 95%, with an average of 92%. Additionally, newly-passed Illinois legislation has increased the maximum number of VGTs that may be operated at a given licensed establishment from five to six, with certain qualifying truck stop licensed establishments allowed to operate up to ten VGTs. This newly-passed legislation has also increased the maximum wager that may be placed on a VGT from $2.00 to $4.00 and the maximum win from a single play from $500 to $1,199. All VGTs are monitored and controlled by the IGB through a central communications system. The IGB has recently established minimum standards that licensed establishment partner contracts must meet, including limiting the length of contracts entered into after February 2, 2018 to a maximum of eight years with no automatic renewals.

We have made substantial investments in regulatory training and compliance for its staff and licensed establishment partners. Accel has designed and implemented systems and controls that facilitate compliance with applicable regulatory requirements in Illinois and is working on implementing similar systems and controls for the anticipated start of live gaming in Pennsylvania.

As of May 15, 2019, we hold a conditional license as a Terminal Operator in Pennsylvania under the Pennsylvania Race Horse Development and Gaming Act, although Accel has not yet commenced any gaming operations in Pennsylvania. In November 2017, Pennsylvania’s Governor signed the Pennsylvania Gaming Act. The law authorized, among other forms of gaming, VGT gaming at qualified truck stops. We believe that Pennsylvania is a natural choice for our expansion outside of Illinois when compared to other states due to gaming industry similarities with Illinois, including similar regulatory requirements, similar VGT suppliers and truck stops as a type of licensed establishment partner in both jurisdictions. We believe the current total addressable market in Pennsylvania consists of approximately 100 to 150 truck stop establishments although municipalities are able to individually opt out from authorizing distributed gaming. These establishments consist of corporate truck stops and individual and corporate convenience stores that meet current regulatory requirements for VGT installation. As of September 16, 2020, 106 truck stops have applied for licensure with the

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PA Board. Of those 106 applicants, 35 have been issued a conditional license, which permits the guarantee to operate until a final license is issued, 40 have been issued final licenses, 14 have surrendered their conditional licenses, six have requested to withdraw their license applications and one has been denied. As of September 16, 2020, 16 terminal operators had applied for licensure with the PA Board. Of those 16, 14 have been either issued a conditional license, including Accel, or a final license, with two applications still pending with the PA Board. We are in discussions with potential partners who have not yet applied for licensure.

The operation of coin-operated amusement machines in Georgia has been regulated by the Georgia Lottery Corporation since April 2013. Games are skill-based with winnings paid in points that may be redeemed for noncash merchandise, prizes, toys, gift certificates, or novelties. The most common type of establishment licensees are convenience stores. Licensed establishments are limited to a maximum of nine machines, unless a municipality specifically limits licensed establishments to a maximum of six machines. In addition, any local governing authority may vote to remove coin operated amusement machines from its jurisdiction upon 60 days’ advance notice. On July 22, 2020, we completed our acquisition of Tom’s Amusement Company, Inc., a Southeastern U.S. amusement operator and Master Licensee in the state of Georgia. The acquisition of Tom’s Amusement’s adds 11 Georgia Coin Operated Amusement Machine Class B locations to the Accel portfolio, including a total of 65 Class B COAM terminals.

In addition, our marketing and sales efforts are subject to the rules and regulations of the regulatory gaming bodies and municipal laws and regulations in the jurisdictions where we do business, including rules promulgated by the IGB, the PA Board and local municipalities in Illinois. These rules generally require sales agent registration, include prohibitions related to inducements and restrict certain advertising and promotional activities.

We may also enter states other than Pennsylvania that currently permit or may consider permitting VGTs. Indiana, Missouri and Mississippi have proposed legislation permitting VGTs or other forms of gaming in the past, and VGTs are currently legal in Louisiana, Montana, Nevada, Oregon, South Dakota and West Virginia. Other states, counties or municipalities facing tax revenue shortfalls or other fiscal pressure may adopt similar measures.

Business Model and Capabilities

Accel provides a full suite of services and capabilities to enhance its business. These include:

• Sales team that drives the initial acquisition of licensed establishment partners. Accel has a dedicated internal sales team that drives sourcing of new licensed establishment partners. Accel also uses external independent sales agents. When seeking to sign a new licensed establishment partner, Accel’s marketing team employs a data-driven sales process to identify and nurture leads using a variety of digital and traditional strategies to drive organic VGT partnerships and preference. Accel’s marketing team uses email, social media, blogs, search engine optimization, paid search and display advertising to create a robust pipeline of leads. Sales teams are incentivized based on a competitive commission-based structure, which has driven performance. Accel believes that it can continue to attract talented sales employees.

• Dedicated on-boarding process that works with new licensed establishments to provide quick access to VGTs and other equipment. Accel engages with licensed establishment partners through every step of the VGT installation process. This process begins with providing assistance with preparation and submission of a license application to the applicable gaming regulatory board and educating each licensed establishment partner on legal and regulatory topics to minimize compliance issues. Accel assists in the design and construction of gaming areas in licensed establishments, including advising with respect to Illinois Video Gaming Act requirements that restrict access to persons under 21 years of age. Accel then delivers VGTs to the licensed establishment partner after receipt of the proper state and municipal licenses, which typically takes between two and six months from submission to receipt of approval to operate VGTs.

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• Relationship management team that offers value to licensed establishment partners. Each of Accel’s licensed establishment partners has a dedicated relationship manager who works with the licensed establishment partner in maximizing revenue, based upon the licensed establishment’s unique characteristics. Compliance support is offered to assist the licensed establishment partner with understanding gaming regulations, optimizing services that analyze video gaming data against established benchmarks to assess and improve performance, offering marketing advice ranging from traditional advertising and signage to social media advice, providing industry tracking and reporting measured against Accel’s industry data, and delivering ongoing training for licensed establishment partner staff.

• Digital and data analytics team that helps licensed establishment partners capture gaming revenue. Accel’s digital and data analytics team studies the VGT market and licensed establishment partner performance to provide insight and advice to maximize gaming revenue. The team actively monitors machine optimization, service analytics, video game popularity analytics, marketing and player behavior to identify new opportunities and provide insights to maximize gaming revenues. Typical suggestions might involve adding new games, switching machines, adding machines or changing machine location within a licensed establishment. The digital and data analytics team also seeks to improve the quality of customer service and satisfaction by monitoring service calls to identify trends and solutions with the goal of optimizing response time to decrease periods of machine inoperability.

• Dedicated legal and compliance function that assists licensed establishment partners to remain in regulatory compliance. Accel’s legal and compliance team provides support and resources related to licensed establishment regulatory compliance, which includes sending compliance reminders and industry updates to licensed establishment partners on a regular basis. It does not dispense legal advice to licensed establishment partners but may recommend that licensed establishment partners obtain legal counsel in certain instances. In addition, the legal and compliance team participates in lobbying measures, which includes working with gaming regulators and trade associations to encourage legislation and regulation which may be favorable to the distributed gaming industry. Accel also regularly works with regulators in other states as they explore the legalization of VGTs.

• Strong relationships with equipment manufacturers to provide top-flight machines and software that help attract players. Accel partners and has entered into purchase agreements with many industry-leading manufacturers of VGTs. Accel benefits from favorable pricing and other terms with respect to its supplier partners. Accel believes that by providing world-class premium equipment, it can assist licensed establishment partners in securing competitive advantages. By using high-quality equipment, Accel aims to limit downtime and help maximize revenue and player retention.

• Cash collection and analytics. Accel offers cash collection and analytics services at multiple strategic locations across Illinois to help ensure secure, fast and accurate collection of revenue for licensed establishment partners. Additionally, Accel’s data team provides information to its treasury department enabling it to deliver efficient, secure, and optimized collection services. These cash collection locations function as a key point of contact for licensed establishment partners, and Accel believes that this service differentiates it from most of its competitors.

• Marketing services that aid in player awareness and gameplay. In addition to its business-to-business focus, Accel’s marketing team uses a variety of player marketing strategies to drive player preference, loyalty, and increase play at Accel locations. Player marketing initiatives include a dedicated player website, AEPlayer.com, a statewide player sweepstakes including a tablet based in-location entry option as well as a mobile app, player email and text messaging communications, indoor and outdoor signage, cooperative location advertising and other media to increase awareness and encourage gameplay. Accel believes that these initiatives increase Accel’s branding at each location. Accel believes that it has the most extensive and accomplished marketing team in the Illinois VGT segment.

• Best-in-class technicians who assist licensed establishment partners in the event of any mechanical or software issues with the devices Accel provides. Accel leverages technology and data-driven algorithms to enable a 24/7 call center to direct service technicians all across Illinois. These technicians serve to prevent

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and solve technical issues with VGTs at licensed establishment partners in a timely manner. Accel’s service tracking process begins when a licensed establishment partner identifies an issue at their licensed establishment and contacts the service center. As of December 31, 2019, more than 17% of service issues are resolved by the call center directly without the need to dispatch any technician. In the event a technician is required, 92% of customer service issues are addressed on a first-time technician dispatch, with an average response time of 50 to 60 minutes. Replacement parts for VGTs, if required, are sourced from Accel’s offices and warehouses located across the state. Accel uses system analytics across its gaming-as-a-service platform to keep track of parts used and, if necessary, order new parts for delivery to various warehouses. A similar system is being designed for anticipated live gaming operations in Pennsylvania.

• Sports betting. Accel believes it is well positioned to participate in the fast-growing sports betting segment that has recently been legalized in Illinois. While Accel expects to remain focused on video gaming in the near future and has not applied to the IGB or otherwise to engage in these activities, it may consider doing so in the future.

Licensed Establishments and VGTs

As of June 30, 2020, Accel operates 11,108 VGTs in 2,335 licensed establishments. Licensed establishments typically include bars, restaurants, gaming cafes, truck stops, fraternal organizations, veterans’ organizations, and other retail establishments.

Accel enters into long-term exclusive location and VGT use agreements with its licensed establishment partners, or master exclusive VGT use agreements with licensed establishment partners who have several licensed establishments. Under those agreements, Accel has the exclusive right to place VGTs and redemption devices in such licensed establishments. Once proper licenses are received, Accel experiences minimal delay related to the installation of VGTs in those licensed establishments. As of June 30, 2020, the average remaining term on Accel’s agreements is 6.8 years. Excluding the acquisition of Grand River Jackpot on September 16, 2019, Accel’s exclusive contracts with its licensed establishment partners have remaining terms averaging approximately 7.0 years. In addition, Accel’s voluntary contract renewal rate for the three-year period ended December 31, 2019 was over 98%.

Under these agreements, Accel is responsible for providing hardware and related software, accounting and reporting functions as required by the Illinois Video Gaming Act and/or Pennsylvania Gaming Act, and placement of devices such as stand-alone ATMs and redemption devices at the discretion of the licensed establishment.

Under IGB regulations, tax and administrative fees in Illinois are required to be split evenly between VGT operators and licensed establishments. Accordingly, Accel shares the responsibility with its licensed establishment partners of the payment of a 33% tax on gross gaming revenue, with such tax to increase to 34% beginning on July 1, 2020. In accordance with IGB regulations, Accel further shares the responsibility of a 0.8513% administrative fee with its licensed establishment partners, payable to Scientific Games International, the company that maintains the central communications system to which all VGTs across Illinois are connected. The remaining after-tax profits from a video gaming terminal, 50% shall be paid to Accel and 50% shall be paid to the licensed establishment in accordance with Illinois state law. Accel typically remits the amount to licensed establishment partners on a weekly basis. Accel’s agreements with licensed establishment partners are typically not subject to termination rights by licensed establishment partners in the event of a sale or relocation of the licensed establishments during the term of the agreements, though termination may occur upon closure of the business or if the licensed establishment partner chooses to terminate at the end of a term.

In addition, Accel has a very limited number of revenue-share agreements with other licensed terminal operators in Illinois, which provide splitting gross gaming revenue. For the year ended December 31, 2019, revenue shared with other terminal operators accounted for less than 1% of gross revenue.

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Suppliers

Accel installs cutting-edge software and multi-game VGTs, at each licensed establishment, from leading manufacturers such as Scientific Games International, WMS (owned by Scientific Games International), IGT, Bally (owned by Scientific Games International), Novomatic and Aristocrat. Under agreements with these manufacturers, Accel is able to provide more than 20 different types of VGT models and 200 different games to licensed establishment partners. Accel believes its efforts to procure VGTs from various sources better enables it to meet the needs of licensed establishment partners and players.

Accel purchases VGTs in upright and slant varieties. Games include different varieties of slots, poker, and keno games. Accel routinely meets with existing and potential manufacturers in the market to discuss performance, service trends, and feedback from licensed establishment partners and players. Accel purchases VGTs from certain suppliers under master purchase agreements and purchase orders. Under these master purchase agreements with certain suppliers, pricing is determined by purchase commitments made for delivery over defined periods. Accel generally pays its suppliers within 90 days after the date of invoice. Accel also purchases redemption devices, amusement devices and stand-alone ATMs from reputable suppliers such as NRT, Touch Tunes, Arachnid, and Diamond.

Competition

Accel competes on the basis of the responsiveness of its services to players, and the popularity, content, features, quality, functionality, accuracy and reliability of its products. Accel generally does not consider pricing to be a factor in its VGT business as all minimum and maximum wagers are mandated by the IGB and all revenue splits with the licensed establishments are mandated by the IGB and by law. Accel believes most licensed establishments focus on player appeal, customer service and reputation when making their decisions to collaborate with terminal operators. In Illinois, Accel currently competes with 52 terminal operators that operate in 4,910 gaming establishments as of December 31, 2019. The top five terminal operators with which Accel principally competes are J&J Ventures Gaming, LLC, Gold Rush Amusements, Inc., Illinois Gaming Investors LLC, Gaming & Entertainment Management-Illinois LLC, and Illinois Gaming Systems, LLC. Together with Accel, they operate in more than 71% of all licensed establishments in Illinois, and the top 10 terminal operators in Illinois operate in approximately 85% of all licensed establishments. Accel currently operates VGTs and/or amusement devices in 32% of all establishments licensed to operate VGTs in Illinois.

Accel faces particularly robust competition from other forms of gaming. The distributed gaming industry is characterized by an increasingly high degree of competition among a large number of participants on both a local and national level, including casinos, Internet gaming, sports betting, sweepstakes and poker machines not located in casinos, horse racetracks, including those featuring slot machines and/or table games, fantasy sports, real money iGaming, and other forms of gaming. In addition, Internet-based lotteries, sweepstakes, and fantasy sports, and Internet-based or mobile-based gaming platforms, which allow their customers to wager on a wide variety of sporting events and/or play casino games from home or in non-casino settings and could divert players from using Accel’s products in its licensed establishments. Even Internet wagering services that may be illegal under federal and state law but operate from overseas locations, may nevertheless sometimes be accessible to domestic gamblers and divert players from visiting licensed establishment partners to play on Accel’s VGTs.

The availability of other forms of gaming could increase substantially in the future. Voters and state legislatures may seek to supplement traditional sources of tax revenue by authorizing or expanding gaming. For example, on June 2, 2019, the Illinois legislature passed a significant gaming expansion bill authorizing the addition of more casinos to the state, including a casino in Chicago, permitting slot and table games at three horse racetracks, adding slot machines to two Illinois airports, and sports betting at a variety of approved establishments throughout the state. In addition, jurisdictions are considering or have already recently legalized, implemented and expanded gaming, and there are proposals across the country that would legalize Internet poker and other varieties of Internet gaming in a number of states and at the federal level. Pennsylvania enacted legislation

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allowing regulated online poker and casino-style games within the commonwealth and legalizing sports betting in casinos. Established gaming jurisdictions could also award additional gaming licenses or permit the expansion or relocation of existing gaming operations, including VGTs. While Accel believes it is well positioned to take advantage of certain of these opportunities, expansion of gaming in other jurisdictions, both legal and illegal, could further compete with its VGTs.

In addition to competition from other forms of gaming and entertainment and the expansion thereof, Accel’s business faces significant competition from suppliers and other terminal operators, stand-alone ATMs, jukeboxes, dartboards, pool tables, pinball machines and related entertainment machines. Accel’s operations also face competition from many forms of leisure and entertainment activities, including shopping, athletic events, television and movies, concerts, and travel. See “Risk Factors—Risks Related to Our Business—Accel operates in the highly competitive gaming industry, and Accel’s success depends on its ability to effectively compete with numerous types of businesses in a rapidly evolving, and potentially expanding, gaming environment.”

Intellectual property

Accel owns or has rights to use the trademarks, service marks or trade names that it uses or will use in conjunction with the operation of its business. In the highly competitive gaming industry, trademarks, service marks, trade names and logos are important to the success of its business.

As of December 31, 2019, Accel owned five registered trademarks and 91 registered domain names. Accel also relies on software or technologies that it licenses from third parties. These licenses may not continue to be available to Accel on commercially reasonable terms in the future and as a result, Accel may be required to obtain substitute software or technologies. See “Risk Factors—Risks Related to Our Business—Accel’s business depends on the protection of intellectual property and proprietary information.”

Seasonality

Accel’s results of operations can fluctuate due to seasonal trends and other factors. For example, the gross revenue per machine per day is typically lower in the summer when players will typically spend less time indoors at licensed establishment partners, and higher in cold weather between February and April, when players will typically spend more time indoors at licensed establishment partners. Holidays, vacation seasons and sporting events may also cause Accel’s results to fluctuate.

Corporate Information

Accel was formed as a corporation under Illinois law on December 8, 2010. Upon the consummation of the Pace Domestication and the Business Combination, Accel merged with and into NewCo, with NewCo surviving the merger as a subsidiary of Pace. Pace changed its name to Accel Entertainment, Inc. Accel is the sole owner of the IL Operating Subsidiary, Accel Entertainment Gaming (PA), LLC, a Pennsylvania limited liability company formed in 2018 for the purposes of providing video gaming services in Pennsylvania and Bulldog Gaming, LLC, a Georgia limited liability company formed in 2020 for the purposes of providing video gaming services in Georgia. Accel’s principal facility and headquarters office building are located at 140 Tower Drive, Burr Ridge, Illinois 60527 and its telephone number is (630) 972-2235. Accel’s website address is https://www.accelentertainment.com/. The information contained on, or that can be accessed through, Accel’s website is not incorporated by reference into, and is not a part of, this prospectus.

Employees

As of June 30, 2020, Accel employed approximately 745 people in Illinois. None of Accel’s employees are represented by a labor union or covered by a collective bargaining agreement. Accel believes its current staffing levels to be adequate for its needs and operations, and that relations with employees are generally good.

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Properties

We own our 58,000 sq. ft. corporate headquarters in Burr Ridge, Illinois. This facility houses service, support and sales functions for the Chicagoland region. It also houses the executive management team, as well as several other business units and shared services such as compliance, human resources, information technology, security, fleet, finance/accounting, data digital, sales, service, amusements, and marketing and service units. The facility supports Accel’s 24/7 Service Solutions Call Center, as well as onsite route management and collection processing. This facility also contains Accel’s largest warehouse, from which equipment installations, preparation, programming, and repairs occur, as well as VGT quality assurance processes and general storage. In this facility there is an IGB-approved secured storage site for sensitive video gaming equipment and materials.

We also own facilities in Peoria, Springfield, Glen Carbon and Rockford, all of which are located in Illinois, that support our operations.

We also lease an additional 14 locations throughout Illinois that are used to support our operations and provide warehousing for our equipment.

We believe that our current facilities are in good working order and are capable of supporting our operations for the foreseeable future; however, we will continue to evaluate buying or leasing additional space as needed to accommodate our growth.

Legal Proceedings

Lawsuits and claims are filed against Accel from time to time in the ordinary course of business, including related to employment agreements and non-compete clauses and agreements. Other than settled matters explained as follows, these actions are in various stages, and no judgments or decisions have been rendered. Management, after reviewing matters with legal counsel, believes that the outcome of such matters are not expected to have a material adverse effect on our financial position or results of operations.

Accel has been involved in a series of related litigated matters stemming from claims that Accel wrongly contracted with 10 different licensed establishments (the “Defendant Establishments”) in 2012 in violation of the contractual rights held by J&J Ventures Gaming, LLC (“J&J”), as further described below.

On August 21, 2012, one of Accel’s operating subsidiaries entered into certain agreements with Jason Rowell (“Rowell”), a member of Action Gaming LLC (“Action Gaming”), which was an unlicensed terminal operator that had exclusive rights to place and operate VGTs within a number of establishments, including the Defendant Establishments. Under agreements with Rowell, Accel agreed to pay him for each licensed establishment which decided to enter into exclusive location agreements with Accel. In late August and early September 2012, each of the Defendant Establishments signed separate location agreements with Accel, purporting to grant it the exclusive right to operate VGTs in those establishments. Separately, on August 24, 2012, Action Gaming sold and assigned its rights to all its location agreements to J&J, including its exclusive rights with the Defendant Establishments (the “J&J Assigned Agreements”). At the time of the assignment of such rights to J&J, the Defendant Establishments were not yet licensed by the IGB.

Action Gaming, J&J, and other parties, collectively, the Plaintiffs, filed a complaint against Accel, Rowell, and other parties in the Circuit Court of Cook County (the “Circuit Court”), on August 31, 2012, as amended on November 1, 2012, December 19, 2012, and October 3, 2013, alleging, among other things, that Accel aided and abetted Rowell in breaches of his fiduciary duties and contractual obligations with Action Gaming and tortiously interfered with Action Gaming’s contracts with Rowell and agreements assigned to J&J. The complaint seeks damages and injunctive and equitable relief. On January 24, 2018, Accel filed a motion to dismiss for lack of subject matter jurisdiction, as further described below. On May 14, 2018, the Circuit Court denied Accel’s motion to dismiss and granted a stay to the case, pending a ruling from the IGB on the validity of the J&J Assigned Agreements.

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From 2013 to 2015, the Plaintiffs filed additional claims, including J&J Ventures Gaming, LLC et al. v. Wild, Inc. (“Wild”), in various circuit courts seeking declaratory judgements with a number of establishments, including each of the Defendant Establishments, requesting declarations that, among other things, J&J held the exclusive right to operate VGTs at each of the Defendant Establishments as a result of the J&J Assigned Agreements. Accel was granted leave to intervene in all of the declaratory judgements. The circuit courts found that the J&J Assigned Agreements were valid because each of the underlying location agreements were between an unlicensed establishment and an unlicensed terminal operator, and therefore did not constitute use agreements that were otherwise precluded from assignment under the IGB’s regulations. Upon Accel’s appeal, the Illinois Appellate Court, Fifth District (the “District Court”), vacated the circuit courts’ judgments and dismissed the appeals, holding that the IGB had exclusive jurisdiction over the matter that formed the basis of the parties’ claims, and declined to consider the merits of the parties’ disputes. On September 22, 2016, and after the IGB intervened, the Supreme Court of Illinois issued a judgment in Wild, affirming the District Court’s decision vacating the circuit courts’ judgments for lack of subject matter jurisdiction and dismissing the appeals, determining that the IGB has exclusive jurisdiction to decide the validity and enforceability of VGT use agreements.

Between May 2017 and September 2017, both Accel and J&J filed petitions with the IGB seeking adjudication of the rights of the parties and the validity of the use agreements. Those petitions have been fully briefed and remain pending. There is no indication as to when the IGB will rule on the petitions. Accel does not have a present estimate regarding the potential damages, if any, that could potentially be awarded in this litigation and, accordingly, have established no reserves relating to such matters. There are also petitions pending with the IGB which could lead to Accel obtaining new locations.

On October 7, 2019, Accel filed a lawsuit in the Circuit Court of Cook County against Jason Rowell and other parties related to Mr. Rowell’s breaches of his non-compete agreement with Accel. Accel alleged that Mr. Rowell and a competitor were working together to interfere with Accel’s customer relationships. That lawsuit, which seeks equitable relief and legal damages, has not yet been served. On November 7, 2019, Mr. Rowell filed a lawsuit in the Circuit Court of Cook County against Accel alleging that he had not received certain equity interests in Accel to which he was allegedly entitled under his agreement. Accel intends to defend itself against the allegations. Accel does not have a present estimate regarding the potential damages, nor does it believe any payment of damages is probable, and, accordingly, has established no reserves relating to these matters.

On July 2, 2019, Illinois Gaming Investors, LLC filed a lawsuit against Accel. The lawsuit alleges that a current employee violated his non-competition agreement with Illinois Gaming Investors, LLC, and together with Accel, wrongfully solicited prohibited licensed video gaming locations. The lawsuit on its face seeks damages of $10,000,000. The parties are engaging in discovery. We are in the process of defending this lawsuit, and have not accrued any amounts as losses related to this suit are not probable or reasonably estimable.

Business of Pace and Certain Information Regarding the Business Combination

Pace was a blank check company incorporated on February 14, 2017 as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Pace neither engaged in any operations nor generated any revenue during its existence. Based on its business activities, Pace was a “shell company” as defined under the Exchange Act because it had no operations and nominal assets consisting almost entirely of cash.

Prior to the Pace IPO, on February 22, 2017, Initial Pace Sponsor purchased 11,500,000 Founder Ordinary Shares for an aggregate purchase price of $25,000, or approximately $0.002 per share. On June 19, 2017, Initial Pace Sponsor transferred 40,000 Founder Ordinary Shares to each of Pace’s five independent directors at their original purchase price. On August 14, 2017, Initial Pace Sponsor forfeited 250,000 Founder Ordinary Shares on

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the expiration of the unexercised portion of the underwriters’ over-allotment option. As of June 30, 2019, Initial Pace Sponsor and five independent directors, collectively, held 11,250,000 Founder Ordinary Shares.

On June 30, 2017, Pace consummated the Pace IPO of 45,000,000 Pace Public Units (which included the purchase of 5,000,000 Pace Public Units subject to the underwriters’ 6,000,000 Pace Public Unit over-allotment option) at a price of $10.00 per Pace Public Unit, generating gross proceeds of $450,000,000 before underwriting discounts and expenses. Each Pace Public Unit consisted of one Pace Public Share and one-third of one Pace Public Warrant. Each Pace Public Warrant entitled the holder to purchase one-third of one Pace Public Share for $11.50 per share. Simultaneous with the closing of the Pace IPO, Pace completed the private placement of an aggregate 7,333,333 Pace Private Placement Warrants to Initial Pace Sponsor, each exercisable to purchase one Pace Public Share for $11.50 per share, at a price of $1.50 per Pace Private Placement Warrant.

Pace received gross proceeds from the Pace IPO and the sale of the Pace Private Placement Warrants of $450,000,000 and $11,000,000, respectively, for an aggregate of $461,000,000. $450,000,000 of the gross proceeds was deposited in the Trust Account with Continental Stock Transfer & Trust Company (the “Trustee”). At the closing of the Pace IPO, the remaining $11,000,000 was held outside of the Trust Account, of which $9,000,000 was used to pay underwriting discounts and $300,000 was used to repay notes payable to Initial Pace Sponsor, with the balance reserved to pay accrued offering and formation costs, business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. A portion of interest income on the funds held in the Trust Account was permitted to be released to Pace to pay tax obligations. On January 2, 2018, Pace invested the funds held in the Trust Account in a money market account invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act, having a maturity of 180 days or less, or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act. On September 12, 2019, Pace transferred a portion of the funds held in the Trust Account to a non-interest bearing U.S.-based trust account at J.P. Morgan Chase Bank, N.A.

On August 17, 2017, Pace announced that, commencing August 18, 2017, holders of the 45,000,000 Pace Public Units sold in the Pace IPO may elect to separately trade the Pace Public Shares and Pace Public Warrants included in the Pace Public Units. Those Pace Public Units not separated continued to trade on the NYSE under the symbol “TPGH.U” and the Pace Public Shares and Pace Public Warrants that are separated continued to trade on the NYSE under the symbols “TPGH” and “TPGH.WS,” respectively.

On June 13, 2019, Pace entered into the Transaction Agreement with respect to the Business Combination.

On September 20, 2019, Pace held an extraordinary general meeting (the “Extension EGM”). At the Extension EGM, the following matters were submitted to and approved by the holders of Pace Public Shares: (i) a proposal to amend Pace’s amended and restated memorandum and articles of association (the “Articles”) at the time of the Extension EGM and (ii) a proposal to amend Pace’s Investment Management Trust Agreement, dated June 27, 2017, by and between Pace and the Trustee, to extend the date on which to commence liquidating the Trust Account in the event Pace had not consummated a business combination prior to September 30, 2019, from September 30, 2019 to December 31, 2019. In connection with this vote, the holders of 3,247,267 Pace Public Shares indicated that they wished to exercise their right under Pace’s Articles to redeem their Pace Public Shares for cash at a redemption price of approximately $10.29 per share, for an aggregate redemption amount of approximately $33,416,715. These Pace Public Shares were redeemed on September 25, 2019, in accordance with the Articles. As of September 30, 2019 proceeds and interest totaling approximately $429,732,943 were held in the Trust Account.

On November 20, 2019, Pace and Accel consummated the Business Combination pursuant to the Transaction Agreement. Pursuant to the Transaction Agreement and in connection therewith, Pace completed the Stock Purchase and, following the closing of the Stock Purchase, Accel merged with and into NewCo, with NewCo surviving such merger.

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In connection with the consummation of the Business Combination, Pace changed its name to Accel Entertainment, Inc.

Immediately prior to the Stock Purchase, Pace domesticated (or transferred by way of continuation as a matter of Cayman Islands law) as a Delaware corporation (the “Pace Domestication”) in accordance with Section 388 of the DGCL, whereupon, by virtue of the filing of the Charter with the Secretary of State of Delaware, (i) each Pace Public Share converted into one Class A-1 Share, (ii) each Founder Ordinary Share converted into one Class F Share and (iii) the Pace Private Placement Warrants held by Initial Pace Sponsor and the Pace Public Warrants, in each case, entitled the holder to acquire a corresponding number of Class A-1 common stock on the same terms as in effect immediately prior to the effective time of the Pace Domestication.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information that management believes is relevant to an understanding and assessment of our consolidated financial condition and results of operations. You should read this discussion in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this prospectus. This discussion and analysis of our financial condition and results of operations also contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those set forth under the section entitled “Risk Factors.”

Company Overview

Accel is a leading distributed gaming operator in the United States on an Adjusted EBITDA basis, and a preferred partner for local business owners in the Illinois market. Accel’s business consists of the installation, maintenance and operation of VGTs, redemption devices that disburse winnings and contain ATM functionality, and other amusement devices in authorized non- casino locations such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores, which are referred to collectively as “licensed establishments.” Accel also operates a small number of stand-alone ATMs in gaming and non- gaming locations. Accel has been licensed by the Illinois Gaming Board since 2012 and holds a conditional license from the PA Board. In July 2020, the Georgia Lottery Corporation approved one of Accel’s consolidated subsidiaries as a Master Licensee. Accel operates 11,108 video gaming terminals across 2,335 locations in the State of Illinois as of June 30, 2020 and 10,499 video gaming terminals across 2,312 locations in the State of Illinois as of December 31, 2019.

Impact of COVID-19

The COVID-19 outbreak is having a significant impact on global markets as a result of supply chain and production disruptions, workforce restrictions, travel restrictions, reduced consumer spending and sentiment, amongst other factors, which are, individually or in the aggregate, negatively affecting the financial performance, liquidity and cash flow projections of many companies in the United States and abroad.

In response to the COVID-19 outbreak, the IGB made the decision to shut down all VGTs across the State of Illinois starting at 9:00 p.m. on March 16, 2020 and ultimately extended the shutdown through June 30, 2020. As a result, we borrowed $65 million on our delayed draw term loan in March 2020 to increase our cash position and help preserve our financial flexibility. The temporary shutdown of Illinois video gaming impacted 106 of the 182 gaming days (or 58% of gaming days) during the first half of 2020. In light of these events and their effect on Accel’s employees and licensed establishment partners, we took action to reduce our monthly cash expenses down to $2 to $3 million during the shutdown to position us to help mitigate the effects of the temporary cessation of operations by, among other things, furloughing approximately 90% of our employees and deferring certain payments to major vendors. Additionally, members of our senior management decided to voluntarily forgo their base salaries until the resumption of video gaming operations. Beginning in early June, we started reinstating employees from furlough in order to properly resume operations.

As a result of these developments, our revenues, results of operations and cash flows have been materially affected. The situation is rapidly changing and additional impacts to the business and financial results may arise that we are not aware of currently.

In close consultation with the Illinois Department of Public Health and the governor, the IGB issued resumption protocols to guide casino and terminal operators in their resumption planning. Based on those protocols, we

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provided a Pandemic Resumption Plan to the IGB to guide our operations upon the resumption of gaming on July 1, 2020 at 9:00 a.m. Our plan included working with our licensed establishment partners to, among other things:

• follow social distancing requirements within the gaming area by moving the gaming equipment or installing spacers that meet IGB guidelines;

• determine how personal protective equipment usage requirements will be observed and enforced;

• develop procedures and schedules for cleaning, disinfecting and sanitizing the establishment as well the gaming area, including the VGTs; and

• proper signage to remind patrons of social distancing requirements, proper hand washing, use of sanitizers, use of personal protective equipment, and to stay at home if feeling sick.

Accel supports these measures to protect the safety of our fellow Illinois citizens, as the health and safety of players and licensed partner establishments is of paramount importance to us. We have been in constant contact with our licensed partner establishments to keep them aware of current developments, and have been working with them through this plan. As a result, by day 3 of the relaunch, more than 90% of Accel’s locations were live and less than 3% of Accel’s VGTs were down due to resumption protocols.

We have incurred non-recurring, one-time expenses of $1.3 million and $1.9 million for the three and six months ended June 30, 2020, respectively, for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown. These costs are included within other expenses, net. We also spent $1.4 million in capital costs related to the purchase of IGB-mandated spacers for our VGTs to promote social distancing requirements within the gaming area and incurred operating expenses of $0.3 million related to cleaning, disinfecting and sanitizing supplies.

While the IGB has announced the resumption of all video gaming activities effective July 1st, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events.

Components of Performance

Revenues

Net video gaming. Net video gaming revenue represents net cash received from gaming activities, which is the difference between gaming wins and losses. Net video gaming revenue includes the amounts earned by the licensed establishments and is recognized at the time of gaming play.

Amusement. Amusement revenue represents amounts collected from amusement devices operated at various licensed establishments and is recognized at the point the amusement device is used.

ATM fees and other revenue. ATM fees and other revenue represents fees charged for the withdrawal of funds from Accel’s redemption devices and stand-alone ATMs and is recognized at the time of the ATM transaction.

Operating Expenses

Video gaming expenses. Gaming expenses consist of (i) a 33% tax on net video gaming revenue (such tax increased from 30% beginning on July 1, 2019 and will increase to 34% beginning on July 1, 2020) that is payable to the IGB, (ii) an administrative fee (0.8513% currently) payable to Scientific Games International, the third-party contracted by IGB to maintain the central system to which all VGTs across Illinois are connected and (iii) establishment revenue share, which is defined as 50% of gross gaming revenue after subtracting the tax and administrative fee.

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General and administrative. General and administrative expenses consist of operating expense and general and administrative (“G&A”) expense. Operating expense includes payroll and related expense for service technicians, route technicians, route security, and preventative maintenance personnel. Operating expense also includes vehicle fuel and maintenance, ATM and amusement commissions and fees, and non-capitalizable parts expenses. Operating expenses are generally proportionate to the number of licensed establishments and VGTs. G&A expense includes payroll and related expense for account managers, business development managers, marketing, and other corporate personnel. In addition, G&A includes marketing, information technology, insurance, rent and professional fees.

Depreciation and amortization of property and equipment. Depreciation is computed using the straight-line method over the estimated useful lives of the individual assets. Leasehold improvements are amortized over the shorter of the useful life or the lease.

Amortization of route and customer acquisition costs and location contracts acquired. Route and customer acquisition costs consist of fees paid at the inception of contracts entered into with third parties and licensed video gaming establishments throughout the State of Illinois which allow Accel to install and operate video gaming terminals. The route and customer acquisition costs and route and customer acquisition costs payable are recorded at the net present value of the future payments using a discount rate equal to Accel’s incremental borrowing rate associated with its long-term debt. Route and customer acquisition costs are amortized on a straight-line basis beginning on the date the location goes live and amortized over the estimated life of the contract, including expected renewals.

Location contracts acquired in a business combination are recorded at fair value and then amortized as an intangible asset on a straight-line basis over the expected useful life of 10 years.

Interest expense, net

Interest expense, net consists of interest on Accel’s current and prior credit facilities, amortization of financing fees, and accretion of interest on route and customer acquisition costs payable. Interest on the current credit facility is payable monthly on unpaid balances at the variable per annum LIBOR rate plus an applicable margin, as defined under the terms of the credit facility, ranging from 1.75% to 2.75% depending on the first lien net leverage ratio. Interest on our prior credit facility was payable monthly on unpaid balances at the variable per annum LIBOR rate plus an applicable margin, as defined under the terms of the prior credit facility, ranging from 1.70% to 2.50% depending on the ratio of total net debt to EBITDA. Interest expense, net also consists of interest income on convertible promissory notes from another terminal operator that bear interest at 3% per annum.

Income tax (benefit) expense

Income tax (benefit) expense consists mainly of taxes (receivable) payable to national, state and local authorities. Deferred income taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of the assets and liabilities.

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Results of Operations

The following table summarizes Accel’s results of operations on a consolidated basis for the three months ended June 30, 2020 and 2019:

	Three Months Ended June 30,					Increase / (Decrease)
(in thousands, except %’s)	2020			2019		Change ($)			Change (%)
Revenues:
Net video gaming	$	—		$	100,994	$	(100,994	)		(100.0	)%
Amusement		260			1,348		(1,088	)		(80.7	)%
ATM fees and other revenue		119			1,925		(1,806	)		(93.8	)%
Total revenues		379			104,267		(103,888	)		(99.6	)%
Operating expenses:
Video gaming expenses		—			66,082		(66,082	)		(100.0	)%
General and administrative		10,451			17,476		(7,025	)		(40.2	)%
Depreciation and amortization of property and equipment		5,071			6,100		(1,029	)		(16.9	)%
Amortization of route and customer acquisition costs and location contracts acquired		5,565			4,624		941			20.4	%
Other expenses, net		3,132			730		2,402			329.0	%
Total operating expenses		24,219			95,012		(70,793	)		(74.5	)%
Operating (loss) income		(23,840	)		9,255		(33,095	)		(357.6	)%
Interest expense, net		2,489			3,156		(667	)		(21.1	)%
(Loss) income before income tax (benefit) expense		(26,329	)		6,099		(32,428	)		(531.7	)%
Income tax (benefit) expense		(5,055	)		1,771		(6,826	)		(385.4	)%
Net (loss) income	$	(21,274	)	$	4,328	$	(25,602	)		(591.5	)%

Revenues

Total revenues for the three months ended June 30, 2020 were $0.4 million, a decrease of $103.9 million, or 99.6%, compared to the prior year period. This decline was driven by a decrease in net video gaming revenue of $101.0 million, or 100.0%, a decrease in amusement revenue of $1.1 million, or 80.7% and a decrease in ATM fees and other revenue of $1.8 million, or 93.8%. The decrease in revenue is attributable to the shutdown of Illinois video gaming due to the COVID-19 outbreak which resulted in no gaming days for the three months ended June 30, 2020.

Video gaming expenses

Total video gaming expenses for the three months ended June 30, 2020 decreased $66.1 million, or 100.0%, compared to the prior year period attributable to the shutdown of Illinois video gaming due to the COVID-19 outbreak.

General and administrative

Total general and administrative expenses for the three months ended June 30, 2020 were $10.5 million, a decrease of $7.0 million, or 40.2%, compared to the prior year period. The decrease was attributable to a reduction to our monthly cash expenses during the IGB mandated shutdown which included furloughing approximately 90% of our employees.

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Depreciation and amortization of property and equipment

Depreciation and amortization of property and equipment for the three months ended June 30, 2020 was $5.1 million, a decrease of $1.0 million, or 16.9%, compared to the prior year period. The decrease in depreciation and amortization is the result of a change in estimate in which we extended the useful lives of our video gaming terminals and equipment from 7 to 10 years. The impact of this change in estimate for the second quarter of 2020 was a net decrease in depreciation expense of $1.9 million. Partially offsetting this decrease was an increased number of licensed establishments and VGTs.

Amortization of route and customer acquisition costs and location contracts acquired

Amortization of route and customer acquisition costs and location contracts acquired for the three months ended June 30, 2020 was $5.6 million, an increase of $0.9 million, or 20.4%, compared to the prior year period. The increase is primarily attributable to our business and asset acquisitions and their related performance, partially offset by the favorable impact from the adoption of Topic 606 which increased the period over which route and customer acquisition costs are amortized to include expected renewals.

Other expenses, net

Other expenses, net for the three months ended June 30, 2020 were $3.1 million, an increase of $2.4 million, or 329.0%, compared to the prior year period. Included in Other expenses, net for the three months ended June 30, 2020 were non-recurring, one-time expenses of $1.3 million for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown.

Interest expense, net

Interest expense, net for the three months ended June 30, 2020 was $2.5 million, a decrease of $0.7 million, or 21.1%, compared to the prior year period primarily due to lower rates and interest income on the convertible notes, partially offset by an increase in borrowings. For the three months ended June 30, 2020, the weighted average interest rate was approximately 2.7% compared to a rate of approximately 4.6% for the prior year period.

Income tax (benefit) expense

Income tax benefit for the three months ended June 30, 2020 was $5.1 million, a decrease of $6.8 million, or 385.4%, compared to the prior year period which had income tax expense of $1.8 million. The effective tax rate for the three months ended June 30, 2020 was 19.2% compared to 29.0% in the prior year period. The lower tax rate in the second quarter of 2020 was due to permanent differences related to stock options, transaction costs and executive compensation.

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The following table summarizes Accel’s results of operations on a consolidated basis for the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30,					Increase / (Decrease)
(in thousands, except %‘s)	2020			2019		Change ($)			Change (%)
Revenues:
Net video gaming	$	101,575		$	195,169	$	(93,594	)		(48.0	)%
Amusement		1,952			2,786		(834	)		(29.9	)%
ATM fees and other revenue		2,080			3,737		(1,657	)		(44.3	)%
Total revenues		105,607			201,692		(96,085	)		(47.6	)%
Operating expenses:
Video gaming expenses		67,980			127,703		(59,723	)		(46.8	)%
General and administrative		33,919			33,600		319			0.9	%
Depreciation and amortization of property and equipment		9,938			12,141		(2,203	)		(18.1	)%
Amortization of route and customer acquisition costs and location contracts acquired		11,130			8,927		2,203			24.7	%
Other expenses, net		4,336			1,346		2,990			222.1	%
Total operating expenses		127,303			183,717		(56,414	)		(30.7	)%
Operating (loss) income		(21,696	)		17,975		(39,671	)		(220.7	)%
Interest expense, net		6,738			6,203		535			8.6	%
(Loss) income before income tax (benefit) expense		(28,434	)		11,772		(40,206	)		(341.5	)%
Income tax (benefit) expense		(5,194	)		3,449		(8,643	)		(250.6	)%
Net (loss) income	$	(23,240	)	$	8,323	$	(31,563	)		(379.2	)%

Revenues

Total revenues for the six months ended June 30, 2020 were $105.6 million, a decrease of $96.1 million, or 47.6%, compared to the prior year period. This decline was driven by a decrease in net video gaming revenue of $93.6 million, or 48.0%, a decrease in amusement revenue of $0.8 million, or 29.9% and a decrease in ATM fees and other revenue of $1.7 million, or 44.3%. The decrease in net video gaming revenue is largely attributable to the temporary shutdown of Illinois video gaming since March 16, 2020, due to the COVID-19 outbreak which impacted 106 of the 182 gaming days (or 58% of gaming days) in the first half of 2020, partially offset by the acquisition of Grand River Jackpot on September 16, 2019, which collectively contributed $12.3 million in net video gaming revenue. Excluding Grand River Jackpot, net video gaming revenue decreased in the first half of 2020 by $105.9 million, or 54.3%, compared to the prior period, largely attributable to the previously mentioned temporary shutdown of Illinois video gaming due to the COVID-19 outbreak, partially offset by an increase in the number of licensed establishments and VGTs.

Video gaming expenses

Total video gaming expenses for the six months ended June 30, 2020 were $68.0 million, a decrease of $59.7 million, or 46.8%, compared to the prior year period. The components of video gaming expenses as a percentage of revenue of 64.4% for the six months ended June 30, 2020 was slightly higher than the 63.3% for the six months ended June 30, 2019 due to the increase in the gaming tax from 30% to 33% on July 1, 2019. The decrease of $59.7 million was the result of the previously mentioned temporary shutdown of Illinois video gaming due to the COVID-19 outbreak.

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General and administrative

Total general and administrative expenses for the six months ended June 30, 2020 were $33.9 million, an increase of $0.3 million, or 0.9%, compared to the prior year period. We experienced higher costs related to professional fees and stock-based compensation, partially offset by a reduction in our monthly cash expenses during the IGB mandated shutdown which included furloughing approximately 90% of our employees.

Depreciation and amortization of property and equipment

Depreciation and amortization of property and equipment for the six months ended June 30, 2020 was $9.9 million, a decrease of $2.2 million, or 18.1%, compared to the prior year period. The decrease in depreciation and amortization is the result of a change in estimate in which we extended the useful lives of our video gaming terminals and equipment from 7 to 10 years. The impact of this change in estimate for the first half of 2020 was a net decrease in depreciation expense of $4.5 million. Partially offsetting this decrease was an increased number of licensed establishments and VGTs. Depreciation and amortization as a percentage of revenue was 9.4% for the six months ended June 30, 2020 compared to 6.0% for the prior year period.

Amortization of route and customer acquisition costs and location contracts acquired

Amortization of route and customer acquisition costs and location contracts acquired for the six months ended June 30, 2020 was $11.1 million, an increase of $2.2 million, or 24.7%, compared to the prior year period. The increase is primarily attributable to our business and asset acquisitions and their related performance, partially offset by the favorable impact from the adoption of Topic 606 which increased the period over which route and customer acquisition costs are amortized to include expected renewals. Amortization of route and customer acquisition costs and location contracts acquired as a percentage of revenue was 10.5% for the six months ended June 30, 2020 compared to 4.4% for the prior year period.

Other expenses, net

Other expenses, net for the six months ended June 30, 2020 were $4.3 million, an increase of $3.0 million, or 222.1%, compared to the prior year period. Included in Other expenses, net for the six months ended June 30, 2020 were non-recurring, one-time expenses of $1.9 million for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown as well as additional non-recurring costs related to public company registration statements, partially offset by a favorable revaluation of consideration payable in connection with gaming acquisitions.

Interest expense, net

Interest expense, net for the six months ended June 30, 2020 was $6.7 million, an increase of $0.5 million, or 8.6%, compared to the prior year period primarily due to an increase in borrowings, partially offset by lower rates and interest income on the convertible notes. For the six months ended June 30, 2020, the weighted average interest rate was approximately 3.3% compared to a rate of approximately 4.6% for the prior year period.

Income tax (benefit) expense

Income tax benefit for the six months ended June 30, 2020 was $5.2 million, a decrease of $8.6 million, or 250.6%, compared to the prior year period which had income tax expense of $3.4 million. The effective tax rate for the six months ended June 30, 2020 was 18.3% compared to 29.3% in the prior year period. The lower tax rate in the first half of 2020 was due to permanent differences related to stock options, transaction costs and executive compensation.

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The following table summarizes Accel’s results of operations on a consolidated basis for the years ended December 31, 2019 and 2018:

	Year Ended December 31,					Increase / Decrease
(in thousands, except %’s)	2019			2018		Change			Change %
Revenues:
Net video gaming	$	410,636		$	321,711	$	88,925			27.6	%
Amusement		5,912			4,199		1,713			40.8	%
ATM fees and other revenue		7,837			6,083		1,754			28.8	%
Total revenues		424,385			331,993		92,392			27.8	%
Operating expenses:
Video gaming expenses		271,999			210,507		61,492			29.2	%
General and administrative		75,028			58,157		16,871			29.0	%
Depreciation and amortization of property and equipment		26,398			20,782		5,616			27.0	%
Amortization of route and customer acquisition costs and location contracts acquired		17,975			14,681		3,294			22.4	%
Other expenses, net		19,649			2,997		16,652			555.6	%
Total operating expenses		411,049			307,124		103,925			33.8	%
Operating income		13,336			24,869		(11,533	)		(46.4	)%
Interest expense		12,860			9,644		3,216			33.3	%
Loss on debt extinguishment		1,141			—		1,141			—
(Loss) income before income tax expense		(665	)		15,225		(15,890	)		(104.4	)%
Income tax expense		5,199			4,422		777			17.6	%
Net (loss) income	$	(5,864	)	$	10,803	$	(16,667	)		(154.3	)%

Revenues

Total revenues for the year ended December 31, 2019 were $424.4 million, an increase of $92.4 million, or 27.8%, compared to the year ended December 31, 2018. This growth was driven by an increase in net video gaming revenue of $88.9 million, or 27.6%, an increase in amusement revenue of $1.7 million, or 40.8% and an increase in ATM fees and other revenue of $1.8 million, or 28.8%. The increase in net video gaming revenue is partially attributable to the 2018 Acquisitions and the acquisition of Grand River Jackpot on September 16, 2019, which collectively contributed $39.6 million in net video gaming revenue to the above comparative increase. Excluding all acquisitions, net video gaming revenue increased in 2019 by $48.3 million, or 21.2%, compared to the prior period, largely due to an increase in the number of licensed establishments and VGTs.

Video gaming expenses

Total video gaming expenses for the year ended December 31, 2019 were $272.0 million, an increase of $61.5 million, or 29.2%, compared to the year ended December 31, 2018. The components of video gaming expenses as a percentage of revenue of 64.1% for the year ended December 31, 2019 was slightly higher than the 63.4% for the year ended December 31, 2018 due to the increase in the gaming tax from 30% to 33% on July 1, 2019. The increase of $61.5 million was the result of an increase in net video gaming revenue and corollary increase in gaming tax at a higher tax rate, as well as, establishment revenue share costs and required payments to the IGB’s third-party system administrator.

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General and administrative

Total general and administrative expenses for the year ended December 31, 2019 were $75.0 million, an increase of $16.9 million, or 29.0%, compared to the year ended December 31, 2018. The increase was primarily attributable to a $9.4 million increase in operating costs that increase variably based on the number of licensed establishments and VGTs, which includes increases in payroll and employee related expenses, licenses, permits and marketing expenses.

Depreciation and amortization of property and equipment

Depreciation and amortization of property and equipment for the year ended December 31, 2019 was $26.4 million, an increase of $5.6 million, or 27.0%, compared to the year ended December 31, 2018. The increase in depreciation and amortization is the result of increased number of licensed establishments and VGTs. Depreciation and amortization as a percentage of revenue was 6.2% for the year ended December 31, 2019 compared to 6.3% for the comparable prior year period.

Amortization of route and customer acquisition costs and location contracts acquired

Amortization of route and customer acquisition costs and location contracts acquired for the year ended December 31, 2019 was $18.0 million, an increase of $3.3 million, or 22.4%, compared to the year ended December 31, 2018. The increase is primarily attributable to our business and asset acquisitions and their related performance, partially offset by the favorable impact from the adoption of Topic 606 of $1.1 million which increased the period over which route and customer acquisition costs are amortized to include expected renewals. Amortization of route and customer acquisition costs and location contracts acquired as a percentage of revenue decreased to 4.2% from 4.4% for the year ended December 31, 2019 and 2018, respectively.

Other expenses, net

Other expenses, net for the year ended December 31, 2019 were $19.6 million, an increase of $16.7 million, or 555.6%, compared to the year ended December 31, 2018. The increase was largely attributed to one-time expenses for the Business Combination and larger fair value adjustments associated with the revaluation of contingent consideration liabilities related to acquisitions.

Interest expense

Interest expense for the year ended December 31, 2019 was $12.9 million, an increase of $3.2 million, or 33.3%, compared to the year ended December 31, 2018 primarily due to an increase in borrowings related to our business and asset acquisitions. For the year ended December 31, 2019, the weighted average interest rate was approximately 4.5% compared to the average interest rate of approximately 4.60% for the year ended December 31, 2018.

Loss on debt extinguishment

Loss on debt extinguishment of $1.1 million for the year ended December 31, 2019 was recorded in connection with the extinguishment of our Prior Credit Facility in November 2019. For more information on the extinguishment of our Prior Credit Facility see Liquidity and Capital Resources later in this section.

Income tax expense

Income tax expense for the year ended December 31, 2019 was $5.2 million, an increase of $0.8 million, or 17.6%, compared to the year ended December 31, 2018. Income tax expense increased due to permanent differences attributable to transaction costs associated with the Business Combination and executive compensation.

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The following table summarizes Accel’s results of operations on a consolidated basis for the years ended December 31, 2018 and 2017:

	Year Ended December 31,				Increase /Decrease
(in thousands, except %’s)	2018		2017		Change		Change %
Revenues:
Net video gaming	$	321,711	$	240,235	$	81,476		33.9	%
Amusement		4,199		3,422		777		22.7	%
ATM fees and other revenue		6,083		4,778		1,305		27.3	%
Total revenues		331,993		248,435		83,558		33.6	%
Operating expenses:
Video gaming expenses		210,507		157,010		53,497		34.1	%
General and administrative		58,157		45,364		12,793		28.2	%
Depreciation and amortization of property and equipment		20,782		16,768		4,014		23.9	%
Amortization of route and customer acquisition costs and location contracts acquired		14,681		9,792		4,889		49.9	%
Other expenses, net		2,997		1,331		1,666		125.2	%
Total operating expenses		307,124		230,265		76,859		33.4	%
Operating income		24,869		18,170		6,699		36.9	%
Interest expense		9,644		8,105		1,539		19.0	%
Income before income tax expense		15,225		10,065		5,160		51.3	%
Income tax expense		4,422		1,754		2,668		152.1	%
Net income	$	10,803	$	8,311	$	2,492		30.0	%

Revenues

Total revenues for the year ended December 31, 2018 were $332.0 million, an increase of $83.6 million, or 33.6%, compared to the year ended December 31, 2017. This growth was driven by an increase in net video gaming revenue of $81.5 million, or 33.9%, an increase in amusement revenue of $0.8 million, or 22.7%, and an increase in ATM fees and other revenue of $1.3 million, or 27.3%. The increase is partially attributable to the 2018 Acquisitions and Accel’s 2017 purchase of Fair Share Gaming, LLC and Fair Share Amusement Company, a licensed terminal operator in the state of Illinois and an operator of amusement games and ATMs for $60,000,000 (the “Fair Share Gaming Acquisition”), which collectively contributed $29.9 million of incremental net video gaming revenue to the above comparative increase. Excluding all acquisitions, net video gaming revenue for year ended December 31, 2018 increased by $48.6 million, or 27.1%, compared to the year ended December 31, 2017, largely due to an increase in the number of licensed establishments and VGTs.

Video gaming expenses

Total video gaming expenses for the year ended December 31, 2018 were $210.5 million, an increase of $53.5 million, or 34.1%, compared to the year ended December 31, 2017. The components of gaming expenses as a percentage of revenue remained relatively consistent from 2017 to 2018 and, as a result, gaming expenses as a percentage of revenue was 63.4% for the year ended December 31, 2018 compared to 63.2% the year ended December 31, 2017, reflecting proportional increases in revenue and gaming expenses. The increase of $53.5 million was the result of an increase in net video gaming revenue and corollary increase in gaming tax and establishment revenue share costs, along with required payments to the IGB’s third-party system administrator.

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General and administrative

Total general and administrative expenses for the year ended December 31, 2018 were $58.2 million, an increase of $12.8 million, or 28.2%, compared to the year ended December 31, 2017. General and administrative expenses as a percentage of revenue improved to 17.5% in year ended December 31, 2018 compared to 18.3% for the prior year. This improvement was realized considering a $10.7 million increase in payroll and employee related expenses resulting from an increase in employee headcount to support new licensed establishments and VGTs, as well as expense related to the use of salesforce™ customer relationship management (“CRM”), a cloud-based system expected to improve the efficiency and effectiveness of Accel’s sales and operation teams.

Depreciation and amortization of property and equipment

Depreciation and amortization for the year ended December 31, 2018 was $20.8 million, an increase of $4.0 million, or 23.9%, compared to the year ended December 31, 2017. The increase was primarily attributable to additional gaming equipment for new licensed establishments and purchased licensed establishments. Depreciation and amortization as a percentage of revenue was 6.3% for the year ended December 31, 2018 compared to 6.7% for the year ended December 31, 2017.

Amortization of route and customer acquisition costs and location contracts acquired

Amortization of route and customer acquisition costs and location contracts acquired for the year ended December 31, 2018 was $14.7 million, an increase of $4.9 million, or 49.9%, compared to the year ended December 31, 2017. The increase is primarily attributable to the Fair Share Gaming Acquisition in 2017. These increases are offset by certain route acquisition liabilities that were extinguished related to prior periods. Amortization of route and customer acquisition costs and location contracts acquired as a percentage of revenue increased from 3.9% to 4.4% for the year ended December 31, 2017 and 2018, respectively.

Other expenses, net

Other expenses, net for the year ended December 31, 2018 were $3.0 million, an increase of $1.7 million, or 125.1%, compared to the year ended December 31, 2017. The increase was largely attributed lobbying efforts in Pennsylvania to allow route gaming, and a revaluation of consideration payable in connection with the gaming acquisitions.

Interest expense

Interest expense for the year ended December 31, 2018 was $9.6 million, an increase of $1.5 million, or 19.0%, compared to year ended December 31, 2017 primarily due to a $50.1 million increase in Accel’s senior secured debt due to the 2018 Acquisitions.

Income tax expense

Income tax expense for the year ended December 31, 2018 was $4.4 million, an increase of $2.7 million, or 152.2%, compared to year ended December 31, 2017. Income tax expense increased due to Accel’s increase in income before income tax expense and the impact of the prior revaluation of deferred tax assets and liabilities offset by lower federal tax rates in 2018 resulting from the Tax Cuts and Jobs Act of 2017.

Key Business Metrics

Accel uses a variety of statistical data and comparative information commonly used in the gaming industry to monitor the performance of the business, none of which are prepared in accordance with GAAP, and therefore

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should not be viewed as indicators of operational performance. Accel’s management uses this information for financial planning, strategic planning and employee compensation decisions. The key indicators include:

• Number of licensed establishments;

• Number of VGTs;

• Average remaining contract term (years); and

• Hold-per-day.

Number of licensed establishments

The number of licensed establishments is calculated based on data provided by Scientific Games, a contractor of the IGB. Terminal operator portal data is updated at the end of each gaming day and includes licensed establishments that may be temporarily closed but still connected to the central system. Accel utilizes this metric to continually monitor growth from organic openings, purchased licensed establishments, and competitor conversions. Competitor conversions occur when a licensed establishment chooses to change terminal operators.

Number of video game terminals (VGTs)

The number of VGTs in operation is based on Scientific Games terminal operator portal data which is updated at the end of each gaming day and includes VGTs that may be temporarily shut off but still connected to the central system. Accel utilizes this metric to continually monitor growth from existing licensed establishments, organic openings, purchased licensed establishments, and competitor conversions.

Average remaining contract term

Average remaining contract term is calculated by determining the average expiration date of all outstanding contracts with Accel’s current licensed establishment partners, and then subtracting the applicable measurement date. The IGB limited the length of contracts entered into after February 2, 2018 to a maximum of eight years with no automatic renewals.

Hold-per-day

Hold-per-day is calculated by dividing the difference between cash deposited in all VGTs and tickets issued to players by the average number of VGTs in operation during the period being measured, and then dividing the calculated amount by the number of operating days in such period.

The following table sets forth information with respect to Accel’s licensed establishments, number of VGTs, and average remaining contract term as of June 30, respectively:

	As of June 30,				Increase / (Decrease)
	2020		2019		Change $			Change %
Licensed establishments		2,335		1,762		573			32.5	%
Video gaming terminals		11,108		8,082		3,026			37.4	%
Average remaining contract term (years)(1)		6.8		7.4		(0.6	)		(8.1	)%

(1) Excluding the Grand River Jackpot acquisition, the Average remaining contract life was 7.0 years as of June 30, 2020.

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The following table sets forth information with respect to Accel’s hold-per-day for the three and six months ended June 30, respectively:

	June 30				Increase / (Decrease)
	2020		2019		Change $			Change %
Hold-per-day—for the three months ended(1)		—	$	139	$	(139	)		(100.0	)%
Hold-per-day—for the six months ended(2)	$	124	$	137	$	(13	)		(9.5	)%

(1) There were no gaming days for the three months ended June 30, 2020, due to the IGB mandated COVID-19 shutdown.

(2) Excluding the Grand River Jackpot acquisition, Hold-per-day was $132 for the six months ended June 30, 2020. Hold per day for the six months ended June 30, 2020 is computed based on 76-eligible days of gaming (excludes 106 non-gaming days due to the IGB mandated COVID-19 shutdown).

The following tables set forth information with respect to Accel’s licensed establishments, number of VGTs, average remaining contract term and hold-per-day as of and for the years ended December 31, 2019, 2018 and 2017, respectively.

	As of and for the year ended December 31,				Increase / Decrease
	2019		2018		Change			Change %
Licensed establishments		2,312		1,686		626			37.1	%
Video gaming terminals		10,499		7,649		2,850			37.3	%
Average remaining contract term (years)(1)		6.9		7.6		(0.7	)		(9.2	)%
Hold-per-day(2)	$	130	$	125	$	5			4.0	%

(1) Excluding the Grand River Jackpot acquisition, the average remaining contract life was 7.2 years as of December 31, 2019.

(2) Excluding the Grand River Jackpot acquisition, Hold-per-day was $133 for the year ended December 31, 2019.

	As of and for the year ended December 31,				Increase / Decrease
	2018		2017		Change			Change %
Licensed establishments		1,686		1,442		244			16.9	%
Video gaming terminals		7,649		6,439		1,210			18.8	%
Average remaining contract term (years)		7.6		8.3		(0.7	)		(8.4	)%
Hold-per-day	$	125	$	115	$	10			8.7	%

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted net income are non-GAAP financial measures and are key metrics used to monitor ongoing core operations. Management of Accel believes Adjusted EBITDA and Adjusted net income enhance the understanding of Accel’s underlying drivers of profitability and trends in Accel’s business and facilitate company-to-company and period-to-period comparisons, because these non-GAAP financial measures exclude the effects of certain non-cash items or represent certain nonrecurring items that are unrelated to core performance. Management of Accel also believe that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance and to evaluate Accel’s ability to fund capital expenditures, service debt obligations and meet working capital requirements.

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Adjusted net (loss) income and Adjusted EBITDA

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Net (loss) income	$	(21,274	)	$	4,328		$	(23,240	)	$	8,323
Adjustments:
Amortization of route and customer acquisition costs and location contracts acquired(1)		5,565			4,624			11,130			8,927
Stock-based compensation(2)		1,327			128			2,387			256
Other expenses, net(3)		3,132			754			4,336			1,370
Tax effect of adjustments(4)		(2,343	)		(2,311	)		(2,015	)		(3,805	)
Adjusted net (loss) income	$	(13,593	)	$	7,523		$	(7,402	)	$	15,071
Depreciation and amortization of property and equipment		5,071			6,100			9,938			12,141
Interest expense, net		2,489			3,156			6,738			6,203
Income tax (benefit) expense		(2,712	)		4,082			(3,179	)		7,254
Adjusted EBITDA	$	(8,745	)	$	20,861		$	6,095		$	40,669

(1) Route and customer acquisition costs consist of upfront cash payments and future cash payments to third party sales agents to acquire the licensed video gaming establishments that are not connected with a business combination. Accel amortizes the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items. Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the contract. Future cash payments do not include cash costs associated with renewing customer contracts as Accel does not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 10 years. “Amortization of route and customer acquisition costs and location contracts acquired” aggregates the non-cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired.

(2) Stock-based compensation consists of options, restricted stock units and warrants.

(3) Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring expenses including expenses relating to lobbying efforts and legal expenses in Pennsylvania and lobbying efforts in Missouri, (iii) non-recurring expenses and (iv) non-recurring costs associated with COVID-19.

(4) Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations.

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Adjusted EBITDA for the three months ended June 30, 2020, was a loss of $8.7 million, a decrease of $29.6 million, or 141.9%, compared to the prior year period. Adjusted EBITDA for the six months ended June 30, 2020, was $6.1 million, a decrease of $34.6 million, or 85.0%, compared to prior year period. Both the three and six month periods ended June 30, 2020, were lower primarily due to the impact of the previously mentioned temporary shutdown of video gaming in the state of Illinois due to the COVID-19 outbreak.

	Year Ended December 31,
(in thousands)	2019			2018			2017
Net (loss) income	$	(5,864	)	$	10,803		$	8,311
Adjustments:
Amortization of route and customer acquisition costs and location contracts acquired(1)		17,975			14,681			9,792
Stock-based compensation(2)		2,236			453			804
Other expenses, net(3)		19,649			3,030			1,331
Tax effect of adjustments(4)		(11,301	)		(5,831	)		(2,928	)
Adjusted net income	$	22,695		$	23,136		$	17,310
Depreciation and amortization of property and equipment		26,398			20,782			16,768
Interest expense		12,860			9,644			8,105
Income tax expense		16,500			10,253			4,682
Loss on debt extinguishment		1,141			—			—
Adjusted EBITDA	$	79,594		$	63,815		$	46,865

(1) Route and customer acquisition costs consist of upfront cash payments and future cash payments to third party sales agents to acquire the licensed video gaming establishments that are not connected with a business combination. Accel amortizes the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items. Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the contract. Future cash payments do not include cash costs associated with renewing customer contracts as Accel does not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 10 years. “Amortization of route and customer acquisition costs and location contracts acquired” aggregates the non-cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired.

(2) Stock-based compensation consists of options, restricted stock units and warrants.

(3) Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring expenses including expenses relating to lobbying efforts and legal expenses in Pennsylvania, lobbying efforts in Missouri and a settlement in connection with a gaming acquisition, and (iii) non-recurring expenses associated with the Business Combination.

(4) Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations.

Adjusted EBITDA for the year ended December 31, 2019 was $79.6 million, an increase of $15.8 million, or 24.7%, compared to year ended December 31, 2018. The increase was primarily attributable to an increase in licensed establishments and VGTs.

Adjusted EBITDA for the year ended December 31, 2018 was $63.8 million, an increase of $16.9 million, or 36.1%, compared to year ended December 31, 2017. The increase in Adjusted EBITDA is attributable to both

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organic growth of the business as well as the 2018 Acquisitions (as defined in “Management’s Discussion and Analysis of Financial Condition and Result of Operations”). The increase was primarily attributable to an increase in licensed establishments and VGTs.

Liquidity and Capital Resources

In order to maintain sufficient liquidity, Accel reviews its cash flow projections and available funds with its Board of Directors to consider modifying its capital structure and seeking additional sources of liquidity, if needed. The availability of additional liquidity options will depend on the economic and financial environment, Accel’s credit, its historical and projected financial and operating performance, and continued compliance with financial covenants. As a result of possible future economic, financial and operating declines, possible declines in Accel’s creditworthiness and potential non-compliance with financial covenants, Accel may have less liquidity than anticipated, fewer sources of liquidity than anticipated, less attractive financing terms and less flexibility in determining when and how to use the liquidity that is available.

Accel believes that its cash and cash equivalents, cash flows from operations and borrowing availability under its senior secured credit facility will be sufficient to meet its capital requirements for the next twelve months. Accel’s primary short-term cash needs are paying operating expenses, servicing outstanding indebtedness and funding near term acquisitions. As of June 30, 2020, Accel had $148.8 million in cash and cash equivalents.

In response to the decision by the IGB to shut down all VGTs across the State of Illinois due to the COVID-19 outbreak, we took action to reduce our projected monthly cash expenses down to $2-$3 million during the shutdown to position us to help mitigate the effects of the temporary cessation of operations. The actions taken include furloughing approximately 90% our employees and deferring certain payments to major vendors. Additionally, members of our management team decided to voluntarily forgo their salaries until the resumption of video gaming operations. We also borrowed $65 million on our delayed draw term loan in March 2020 to increase our cash position and help preserve our financial flexibility.

2019 Senior Secured Credit Facility

On November 13, 2019, in order to refinance its prior credit facility, for working capital and other general purposes, we entered into a credit agreement (the “Credit Agreement”) as borrower, Accel and our wholly-owned domestic subsidiaries, as a guarantor, the banks, financial institutions and other lending institutions from time to time party thereto, as lenders, the other parties from time to time party thereto and Capital One, National Association, as administrative agent (in such capacity, the “Agent”), collateral agent, issuing bank and swingline lender, providing for a:

• $100.0 million revolving credit facility, including a letter of credit facility with a $10.0 million sublimit and a swing line facility with a $10.0 million sublimit,

• $240.0 million initial term loan facility, and

• $125.0 million additional term loan facility.

As of June 30, 2020, there remained approximately $49.5 million of availability under the Credit Agreement.

The obligations under the Credit Agreement are guaranteed by Accel and our wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”). The obligations under the Credit Agreement are secured by substantially all of assets of the Guarantors, subject to certain exceptions. Certain future-formed or acquired wholly-owned domestic subsidiaries of the Company will also be required to guarantee the Credit Agreement and grant a security interest in substantially all of its assets (subject to certain exceptions) to secure the obligations under the Credit Agreement.

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Borrowings under the Credit Agreement bear interest, at Accel’s option, at a rate per annum equal to either (a) the adjusted LIBOR rate (“LIBOR”) (which cannot be less than zero) for interest periods of 1, 2, 3 or 6 months (or if consented to by (i) each applicable Lender, 12 months or any period shorter than 1 month or (ii) the Agent, a shorter period necessary to ensure that the end of the relevant interest period would coincide with any required amortization payment ) plus the applicable LIBOR margin or (b) the alternative base rate (“ABR”) plus the applicable ABR margin. ABR is a fluctuating rate per annum equal to the highest of (i) the Federal Funds Effective Rate plus 1/2 of 1.0%, (ii) the prime rate announced from time to time by Capital One, National Association and (iii) LIBOR for a 1-month Interest Period on such day plus 1.0%. The Credit Agreement also includes provisions for determining a replacement rate when LIBOR is no longer available. As of June 30, 2020, the weighted-average interest rate was approximately 3.33%.

Interest is payable quarterly in arrears for ABR loans, at the end of the applicable interest period for LIBOR loans (but not less frequently than quarterly) and upon the prepayment or maturity of the underlying loans. Accel is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the revolving credit facility and the additional term loan facility. Additionally, we are required to pay an upfront fee with respect to any funded additional term loans.

The applicable LIBOR and ABR margins and the commitment fee rate are calculated based upon the first lien net leverage ratio of Accel and its restricted subsidiaries on a consolidated basis, as defined in the Credit Agreement. Until the delivery of the initial financial statements under the Credit Agreement, the revolving loans and term loans bear interest, at the option of Accel, at either

(a) ABR plus a margin of 1.25% or

(b) LIBOR plus a margin of 2.25%.

The additional term loan facility is available for borrowings until the first anniversary of November 13, 2019 (the “Closing Date”). Each of the revolving loans and the term loans mature on November 13, 2024.

The term loans and, once drawn, the additional term loans will amortize at an annual rate equal to approximately 5.00% per annum. Upon the consummation of certain non-ordinary course asset sales, we may be required to apply the net cash proceeds thereof to prepay outstanding term loans and additional term loans. The loans under the Credit Agreement may be prepaid without premium or penalty, subject to customary LIBOR “breakage” costs.

The Credit Agreement contains certain customary affirmative and negative covenants and events of default, and requires Accel and certain of its affiliates obligated under the Credit Agreement to make customary representations and warranties in connection with credit extensions thereunder.

In addition, the Credit Agreement requires Accel to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of consolidated EBITDA to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after the Closing Date and determined on the basis of the four most recently ended fiscal quarters of Accel for which financial statements have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights.

If an event of default (as such term is defined in the Credit Agreement) occurs, the lenders would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto.

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Accel was in compliance with all debt covenants as of June 30, 2020. Given our assumptions about the future impact of COVID-19 on the gaming industry, which could be materially different due to the inherent uncertainties of future restrictions on the industry, we expect to meet our cash obligations as well as remain in compliance with the debt covenants in our credit facility for the next 12 months. However, given the uncertainty of COVID-19 and the resulting potential impact to the gaming industry and our future assumptions, as well as to provide additional financial flexibility, we and the other parties thereto amended the Credit Agreement on August 4, 2020 to provide a waiver of financial covenant breach for the periods ended September 30, 2020 through March 31, 2021 of the First Lien Net Leverage Ratio and Fixed Charge Coverage Ratio (each as defined under the Credit Agreement).

Prior Credit Facility

Accel’s Prior Credit Facility was a senior secured first lien credit facility, as amended, that consisted of a $125.0 million term loan, a contract draw loan facility of $170.0 million and a revolving credit facility of $85.0 million. Accel’s prior credit facility was with a syndicated group of banks with CIBC Bank USA, as administrative agent for the lenders. Included in the revolving credit facility and contract draw loan were swing line sub-facilities of $5.0 million each.

The Prior Credit Facility was paid off with the proceeds from the 2019 Senior Secured Credit Facility.

Cash Flows

The following table summarizes Accel’s net cash provided by or used in operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with our condensed consolidated financial statements and the notes thereto included in this filing:

	Six Months Ended June 30,
(in thousands)	2020			2019
Net cash (used in) provided by operating activities	$	(17,284	)	$	26,083
Net cash used in investing activities		(4,002	)		(10,548	)
Net cash provided by (used in) financing activities		44,717			(8,257	)

Net cash (used in) provided by operating activities

For the six months ended June 30, 2020, net cash used in operating activities was $17.3 million, a decrease of $43.4 million over the comparable period. In addition to our decrease in net income, we had $1.5 million in payments on contingent consideration and experienced a decrease in working capital adjustments.

Net cash used in investing activities

For the six months ended June 30, 2020, net cash used in investing activities was $4.0 million, a decrease of $6.5 million over the comparable period and was primarily attributable to less cash used to purchase property and equipment.

Net cash provided by (used in) financing activities

Cash from financing activities is primarily used to fund acquisitions, purchases of property and equipment, and for working capital requirements. For the six months ended June 30, 2020, net cash provided by financing activities was $44.7 million, an increase of $53.0 million over the comparable period. The increase was primarily due to an increase in net borrowings on Accel’s credit facility, partially offset by higher payments on consideration payable.

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Year ended December 31, 2019, 2018 and 2017

The following table summarizes Accel’s net cash provided by or used in operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this prospectus:

	Year Ended December 31,
(in thousands)	2019			2018			2017
Net cash provided by operating activities	$	45,565		$	44,343		$	33,097
Net cash used in investing activities		(151,532	)		(73,547	)		(70,870	)
Net cash provided by financing activities		139,141			46,122			59,081

Net cash provided by operating activities

For the year ended December 31, 2019, net cash provided by operating activities was $45.6 million, an increase of $1.2 million over the comparable period of 2018. The increase was primarily attributable to an increase in gaming revenue from licensed establishments acquired from the 2018 Acquisitions and the 2019 acquisition of Grand River Jackpot.

For the year ended December 31, 2018, net cash provided by operating activities was $44.3 million, an increase of $11.2 million over the comparable period of 2017. The increase was primarily attributable to an increase in gaming revenue from new licensed establishments gained from the 2018 Acquisitions, and the full-year impact of licensed establishments from the Fair Share Gaming Acquisition in July 2017.

For the year ended December 31, 2017, net cash provided by operating activities was $33.1 million, an increase of $8.3 million over the comparable period of 2016. The increase was primarily attributable to an increase in gaming revenue from new licensed establishments and licensed establishments from the Fair Share Gaming Acquisition in July 2017.

Net cash used in investing activities

For the year ended December 31, 2019, net cash used in investing activities was $151.5 million, an increase of $78.0 million over the comparable period of 2018 and was primarily attributable to more cash used to fund business and asset acquisitions and our investment in convertible notes of $30 million. We anticipate our capital expenditures will be approximately $25 million in 2020.

For the year ended December 31, 2018, net cash used in investing activities was $73.5 million, an increase of $2.7 million over the comparable period of 2017. Capital spending, net of disposal of property and equipment, was $22.1 million and primarily attributable to purchases of video gaming equipment. Cash used for the 2018 Acquisitions, net of cash acquired, totaled $51.4 million.

For the year ended December 31, 2017, net cash used in investing activities was $70.9 million, an increase of $19.3 million over the comparable period of 2016. The increase in cash used was primarily attributed to the Fair Share Gaming Acquisition and purchases of gaming equipment for new and existing licensed establishments. Capital spending, net of disposal of property and equipment, was $23.4 million and primarily attributable to purchases of video gaming equipment. Cash used for the Fair Share Gaming Acquisition, net of cash acquired, totaled $45.1 million.

Net cash provided by financing activities

Cash from financing activities is primarily used to fund acquisitions, purchases of property and equipment, and for working capital requirements.

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For the year ended December 31, 2019, net cash used in financing activities was $139.1 million, an increase of $93.0 million over the comparable period of 2018. The increase was due to increased borrowings on Accel’s credit facility to fund our business and asset acquisitions.

For the year ended December 31, 2018, net cash provided by financing activities was $46.1 million, a decrease of $13.0 million over the comparable period of 2017. The decrease was due to increased paydowns on Accel’s credit facility.

For the year ended December 31, 2017, net cash provided by financing activities was $59.1 million, an increase of $9.8 million over the comparable period of 2016. The increase was due to additional borrowings on Accel’s credit facility for the Fair Share Gaming Acquisition.

Critical Accounting Policies and Estimates

Accel prepares its consolidated financial statements in accordance with U.S. GAAP. In applying accounting principles, it is often required to use estimates. These estimates consider the facts, circumstances and information available, and may be based on subjective inputs, assumptions and information known and unknown to Accel. Material changes in certain of the estimates that Accel uses could affect, by a material amount, its consolidated financial position and results of operations. Although results may vary, Accel believes its estimates are reasonable and appropriate. The following describes certain significant accounting policies that involve more subjective and complex judgments where the effect on Accel’s consolidated financial position and operating performance could be material.

Revenue recognition

Accel generates revenues in the State of Illinois from the following types of services: Video gaming terminals, Amusements and ATMs. Revenue is disaggregated by type of revenue and is presented on the face of the consolidated statements of operations. Video gaming revenue is the win from gaming activities, which is the difference between gaming wins and losses. Amusement revenue represents amounts collected from machines operated at various licensed establishments. ATM fees and other revenue represents fees charged for the withdrawal of funds from Accel’s redemption devices and stand-alone ATMs.

Accel determined that in a gaming environment, whenever a customer’s money has been accepted by a machine, we have an obligation (an implied contract) to provide the customer access to the game and honor the outcome of the game (in the case of video gaming terminals). Accel determined that the implied contract is entered into between us and customers satisfies the requirements of a contract under Topic 606, as (i) the contract is legally enforceable with the customer, (ii) the arrangement identifies the rights of the parties, (iii) the contract has commercial substance, and (iv) the cash is received upfront from the customer so its collectability is probable. The gaming service is a single performance obligation in each implied contract with the customer. Accel applies the portfolio approach of all wins and losses by VGT daily to determine the total transaction price of the portfolio of implied contracts. Accel recognizes revenue when the single performance obligation is satisfied, which is at the completion of each game.

Route and customer acquisition costs

Accel’s route and customer acquisition costs consist of fees paid, typically an upfront payment and future installment payments over the life of the contract, entered into with third parties and licensed establishments throughout the State of Illinois. These contracts are non-cancelable and allow Accel to install and operate VGTs in various establishments throughout the State of Illinois. The upfront payment and future installment payments are recorded at the net present value using a discount rate equal to Accel’s incremental borrowing costs. Route acquisition costs are amortized on a straight-line basis beginning on the date the location goes live and amortized over the life of the contract, which upon adoption of Topic 606, includes expected renewals. Accel records the

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accretion of interest on the route installment payments in the consolidated statements of operations as a component of interest expense, net. For locations that close prior to the end of the contractual term, Accel writes-off the net book value of the route and the related installment payables not yet paid and records a gain or loss in the consolidated statements of operations as a component of general and administrative expense. Additionally, most of the route acquisition contracts allow Accel to clawback some upfront and installment payments over the first few years of a contract if the location is unable to secure the appropriate licensing or it goes out of business prior to the end of the contract term. In the case of instances where a claw-back is triggered and Accel assesses it as recoverable, a receivable will be recorded. Upfront payments with a claw-back prior to a location going live are capitalized and will not begin amortization until the respective licensed establishment commences operations.

Consideration payable

Consideration payable consists of amounts payable related to certain business acquisitions as well as contingent consideration for future licensed establishment performance related to certain business acquisitions. The contingent consideration is measured at fair value on a recurring basis. Accel uses a discounted cash flow analysis to determine the value of contingent consideration upon acquisition and updates this estimate on a recurring basis. The significant assumptions in the cash flow analysis include the probability adjusted projected revenues after state taxes, a discount rate as applicable to each acquisition, and the estimated number of licensed establishments at which Accel commences operations during the contingent consideration period. The changes in the fair value of contingent consideration are recognized within Accel’s consolidated statements of operations as other expenses, net.

Business combinations and goodwill

For acquisitions meeting the definition of a business combination, the acquisition method of accounting is used. The acquisition date is the date on which Accel obtains operating control over the acquired business.

The consideration paid is determined on the acquisition date and is the sum of the fair values of the assets acquired by Accel and the liabilities assumed by Accel, including the fair value of any asset or liability resulting from a deferred consideration arrangement. Acquisition-related costs, such as professional fees, are excluded from the consideration transferred and are expensed as incurred.

Any contingent consideration is measured at its fair value on the acquisition date, recorded as a liability and accreted over its payment term in Accel’s consolidated statements of operations as other expenses, net.

Goodwill is measured as the excess of the consideration transferred over the fair value of the net identifiable assets acquired and liabilities assumed. Historically, the fair value determinations of net identifiable assets acquired and liabilities assumed for each of Accel’s business combinations did not result in the recognition of goodwill. On September 16, 2019, Accel acquired Grand River

Jackpot which was accounted for as a business combination using the acquisition method of accounting. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed resulted in goodwill of $34.5 million.

Accel reviews goodwill for impairment annually, as of October 1st, and whenever events or changes in circumstances indicate that the carrying value of the goodwill may not be recoverable. We compare the fair value of the reporting unit to its carrying value. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, we would record an impairment loss equal to the difference. Given the very short timeframe between the initial recording of the goodwill and our annual impairment test on October 1, 2019, we did not perform a full valuation by a third party to determine the fair value of our goodwill. Instead, we assessed qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of our goodwill is less than its carrying amount. In performing this assessment, we considered such factors as our historical performance; our growth opportunities in existing markets; new markets; and new products.

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We also referenced our forecasts of revenue, operating income, and capital expenditures. If a valuation by a third party was performed, we would have been required us to make significant estimates and assumptions such as company forecasts, discount rates and growth rates, among others. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the goodwill, the amount of the goodwill impairment charge, or both.

Change in Estimate

During the first quarter of 2020, we conducted a review of our estimates of depreciable lives for our video gaming terminals and equipment. As a result of this review, we extended the useful lives of our video gaming terminals and equipment from 7 to 10 as the equipment is lasting longer than originally estimated. We have many video gaming terminals and equipment that were purchased when we started operations that are still being used today. The impact of this change in estimate for the three and six months ended June 30, 2020, was a net decrease in depreciation expense of $1.9 million and $4.5 million, and $1.5 million and $3.7 million net of tax, respectively.

Quarterly Results of Operations

The following table presents unaudited consolidated statement of operations data for each of the quarters ended March 31, 2020, June 30, 2020 and the four quarters ended December 31, 2019 and 2018. We believe that all necessary adjustments have been included to fairly present the quarterly information when read in conjunction with our annual consolidated financial statements and related notes. The operating results for any quarter are not necessarily indicative of the results for any subsequent quarter.

(in thousands, except per share data)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2020:
Total revenues	$	105,228		$	379		$	—		$	—
Operating income (loss)		2,144			(23,840	)		—			—
Loss before income taxes		(2,105	)		(26,329	)		—			—
Net loss		(1,966	)		(21,274	)		—			—
Net loss per common share:
Basic(1)		(0.03	)		(0.27	)		—			—
Diluted(1)		(0.03	)		(0.27	)		—			—
2019:
Total revenues	$	97,425		$	104,267		$	101,294		$	121,399
Operating income (loss)		8,720			9,255			1,018			(5,657	)
Income (loss) before income taxes		5,673			6,099			(2,297	)		(10,140	)
Net income (loss)		3,995			4,328			(1,598	)		(12,589	)
Net (loss) income per common share:
Basic(1)		0.07			0.07			(0.03	)		(0.18	)
Diluted(1)		0.06			0.07			(0.03	)		(0.18	)
2018:
Total revenues	$	78,425		$	80,940		$	81,713		$	90,915
Operating income		7,092			6,766			4,681			6,330
Income before income taxes		5,038			4,554			2,514			3,119
Net income		3,593			3,233			2,126			1,851
Net income per common share:
Basic(1)		0.06			0.06			0.04			0.03
Diluted(1)		0.06			0.05			0.03			0.03

(1) Share amounts have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 3 to the consolidated financial statements.

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As previously discussed, we incurred higher operating expenses in the third and fourth quarter of 2019 attributable to one-time expenses related to the Business Combination. The loss in the fourth quarter of 2019 was also impacted by larger fair value adjustments associated with the revaluation of contingent consideration liabilities related to acquisitions. Revenues in the fourth quarter of 2019 were positively impacted by the Grand River Jackpot acquisition.

As an EGC, we elected to use the non-public effective date and adopted the Topic 606 in the fourth quarter of 2019 for the annual period ended December 31, 2019. Our quarterly financial statement disclosure for the first nine months of 2019 reflect the previous accounting standard of Topic 605 and will not be restated for the adoption of Topic 606. The cumulative impact of the new revenue standard for fiscal year 2019 was recorded in the fourth quarter and reflects the adjustment as if we adopted the standard as of January 1, 2019.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Contractual Obligations

The following table sets forth Accel’s obligations and commitments to make future payments under contracts and contingent commitments as of June 30, 2020 (in thousands):

	Less than 1 Year		Due in 1 to 3 years		Due in 3 to 5 years		Due in over 5 years		Total
Credit facility principal payments(1)	$	18,250	$	36,500	$	352,438	$	—	$	407,188
Interest payments on credit facility(2)		10,110		18,873		11,612		—		40,595
Operating lease obligations(3)		208		207		32		—		447
Total contractual obligations	$	28,568	$	55,580	$	364,081	$	—	$	448,229

(1) Term Loans require quarterly principal payments of 1.25% of the outstanding loan amounts on the Closing Date.

(2) Interest payable monthly on unpaid balances at variable per annum LIBOR rate plus applicable margin.

(3) Represents leased office space under agreements expiring between January 2020 through December 2023.

Route acquisition costs payable

Accel enters into contracts with third parties and licensed establishments throughout the State of Illinois which allow Accel to install and operate VGTs. Payments are due over varying terms of the individual agreements and are discounted at Accel’s incremental borrowing cost at the time the contract is acquired. As of June 30, 2020 and December 31, 2019, route acquisition costs payable was $6.4 million and $6.5 million, respectively. The cost payable is included on Accel’s balance sheets as a liability as its deemed to be both probable and estimable based on all available information; however, contractual payments are contingent upon continued future operations of the licensed establishments including ongoing compliance with licensing requirements.

Consideration payable

Consideration payable consists of amounts payable related to certain business acquisitions as well as contingent consideration for future licensed establishment performance related to certain business acquisitions. The contingent consideration is measured at fair value on a recurring basis. Accel uses a discounted cash flow analysis to determine the value of contingent consideration upon acquisition and updates this estimate on a

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recurring basis. The significant assumptions in the cash flow analysis include the probability adjusted projected revenues after state taxes, a discount rate as applicable to each acquisition, and the estimated number of licensed establishments at which Accel commences operations during the contingent consideration period. The changes in the fair value of contingent consideration are recognized within Accel’s condensed consolidated statements of operations in other expenses, net. As of June 30, 2020 and December 31, 2019, the consideration payable balance was $19.8 million and $26.7 million, respectively.

Seasonality

Accel’s results of operations can fluctuate due to seasonal trends and other factors. For example, the gross revenue per machine per day is typically lower in the summer when players will typically spend less time indoors at licensed establishment partners, and higher in cold weather between February and April, when players will typically spend more time indoors at licensed establishment partners. Holidays, vacation seasons, and sporting events may also cause Accel’s results to fluctuate.

Quantitative and qualitative disclosure about market risk

Market risk represents the risk of loss that may impact Accel’s financial position due to adverse changes in financial market prices and rates. Market risk exposure is primarily the result of fluctuations in interest rates as well as, to a lesser extent, inflation.

Interest rate risk

Accel is exposed to interest rate risk in the ordinary course of its business. Accel’s borrowings under its senior secured credit facility were $407.2 million as of June 30, 2020. If the underlying interest rates were to increase by 1.0%, or 100 basis points, the increase in interest expense on Accel’s floating rate debt would negatively impact Accel’s future earnings and cash flows by approximately $4.1 million annually, assuming the balance outstanding under Accel’s credit facility remained at $407.2 million. Cash and cash equivalents are held in cash vaults, highly liquid, checking and money market accounts, VGTs, redemption terminals, ATMs, and amusement equipment. As a result, these amounts are not materially affected by changes in interest rates.

Inflation Risk

Accel does not believe that inflation has had a material effect on its results of operations, cash flows and financial condition in the last three years. Inflation may become a greater risk in the event of changes in current economic conditions and governmental fiscal policy.

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MANAGEMENT

Directors and Executive Officers

The following table lists the names, ages and positions of our current executive officers and directors:

Name	Age		Title
Andrew Rubenstein		51	Chief Executive Officer, President and Director
Karl Peterson (2)(3)(4)		49	Chairman and Director
Brian Carroll		57	Chief Financial Officer
Derek Harmer		52	General Counsel, Chief Compliance Officer and Secretary
Mark Phelan		51	Chief Revenue Officer
Michael Marino		40	Chief Commercial Officer
Ryan Hammer		43	President, Gaming Operations
Gordon Rubenstein		48	Director
Kathleen Philips (1)(2)(3)		53	Director
David W. Ruttenberg (1)(3)(4)		78	Director
Eden Godsoe (1)(2)(4)		50	Director
Kenneth B. Rotman		53	Director
Dee Robinson (3)(4)		59	Director

(1) Member of the audit committee

(2) Member of the compensation committee

(3) Member of the nominating and governance committee

(4) Member of the compliance committee

Each of the directors will serve until his or her successor is appointed or, if earlier, upon such director’s resignation, removal or death.

Directors

A brief biography of each of our directors is set forth below.

Andrew Rubenstein has served as Accel’s Chief Executive Officer, Chairman (prior to the Business Combination) and a director since January 2013. Mr. A. Rubenstein is also a Manager of Accel Entertainment Gaming, LLC, a subsidiary of Accel and a regulated gaming entity in the state of Illinois. In 2009, Mr. A. Rubenstein founded Accel and served as founding chairman of the Accel Board (as defined in “Certain Relationships and Related Transactions”). Prior to serving as Accel’s founding chairman, Mr. A. Rubenstein was a co-owner and an executive of Seven, LLC and was an owner and operator of the largest liquor store chain in central Illinois by revenue, Super Liquors, Inc. Mr. A. Rubenstein is a graduate of Brandeis University where he earned a Bachelor of Arts degree, with honors, in Economics and Master of Arts degree in International Finance and Economics. We believe that Mr. Rubenstein’s prior experience working at Accel Entertainment as the CEO makes him well qualified to serve as a member of the Company Board.

Karl Peterson is a Senior Partner of TPG and Managing Partner of TPG Pace Group, the firm’s effort to sponsor special purpose acquisition companies and other permanent capital solutions for companies. Mr. Peterson served as a director, President and Chief Executive Officer of Pace from February of 2017 through the consummation of the Business Combination. Previously, he served as a director, President and Chief Executive Officer of Pace Holdings Corp. from its inception in 2015 through its business combination with Playa Hotels & Resorts B.V. in March of 2017.

From 2010 through 2016, Mr. Peterson was Managing Partner of TPG Europe LLP. Since rejoining TPG in 2004, Mr. Peterson has led investments for TPG in technology, media, financial services, and travel sectors. Prior

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to 2004, he was a co-founder and the president and chief executive officer of Hotwire.com and served as the company’s President and Chief Executive Officer. He led the business from its inception through its sale to InterActiveCorp in 2003. Before Hotwire, Mr. Peterson was a principal at TPG in San Francisco, and from 1992 to 1995 he was a financial analyst at Goldman Sachs & Co. LLC. Mr. Peterson is currently a director of Sabre Corporation and Playa Hotels & Resorts B.V.

Mr. Peterson is a graduate of the University of Notre Dame, where he earned a Bachelor of Business Administration Degree with High Honors. Mr. Peterson is well-qualified to serve as a director because of his significant directorship experience, his broad experience in the technology, media, financial services and travel sectors and his previous role as a director of Pace Holdings Corp. We believe that Mr. Peterson’s prior experience with high growth companies, especially in media, makes him well qualified to serve as a member of the Company Board.

Gordon Rubenstein is Managing Partner of Raine Ventures where he leads the Raine Group’s venture capital platform. He is also the Co-Founder of Accel, is one of the original and current Managers of Accel Entertainment Gaming, LLC, and serves on the Company Board and also has held the title of Vice Chairman. Prior to joining Raine in 2013, Mr. G. Rubenstein founded and managed Pacific Partners, an operationally-focused venture capital partnership with backing from George Soros, Sam Zell, leading technology executives and entrepreneurs as well as partners from KKR, Silver Lake and Freeman Spogli. In addition, Mr. G. Rubenstein co-founded Astro Gaming (acquired by Skullcandy (Nasdaq: SKUL)), and Rave Digital Media (acquired by AMC Entertainment). Currently, Mr. G. Rubenstein serves on the boards of directors of Tastemade Inc., Happn and TVTime. Additionally, Mr. G. Rubenstein served on the board of directors of Cheddar until stepping down after its sale to Altice (ATUS). In addition, he is an observer to several other Raine Venture partner company boards. Mr. G. Rubenstein has an A.B. from the University of Michigan. He serves on the San Francisco Education Fund Leadership Counsel and lives in San Francisco with his wife and three children. We believe that Mr. Rubenstein’s experience in high growth companies, the gaming industry, and experience at Accel makes him well qualified to serve as a member of the Company Board.

Kathleen Philips served as a director of Pace from June 2017 through the consummation of the Business Combination. Ms. Philips has served as an advisor at Zillow Group, Inc. since January 2019. During her tenure with Zillow Group, Ms. Philips has held many leadership positions, including chief legal officer from September 2014 until December 2018, secretary from July 2010 until December 2018, chief financial officer and treasurer from August 2015 until May 2018, chief operating officer from August 2013 to August 2015 and general counsel from July 2010 to September 2014. Prior to joining Zillow Group, Ms. Philips served as general counsel at FanSnap, Inc., a search engine for live event tickets, from June 2008 to June 2010, as general counsel at Pure Digital Technologies, Inc., the producer of Flip Video camcorders, from September 2007 to June 2008, and as general counsel at StubHub, Inc., an online live event ticket marketplace, from May 2005 to April 2006. Ms. Philips served as general counsel at Hotwire, Inc. from 2001 to 2004 and as its corporate counsel from 2000 to 2001. Ms. Philips was an attorney in private practice at Cooley Godward LLP from 1998 to 2000 and at Stoel Rives LLP from 1997 to 1998. Ms. Philips holds a B.A. in Political Science from the University of California, Berkeley, and a J.D. from the University of Chicago. Ms. Philips is well-qualified to serve as a director because of her senior management experience at a growth-oriented, publicly-traded company. We believe that Ms. Philips’s wide range of legal experience with rapidly growing companies makes her well qualified to serve as a member of the Company Board.

David W. Ruttenberg has served as Accel’s director since 2013, and served as Chairman of the compensation committee of the Accel Board until the consummation of the Business Combination. Mr. Ruttenberg founded and served as Chairman of Belgravia Group Limited, a real estate development company, since 2014. In addition, Mr. Ruttenberg is the founder and President of Lakewest, Inc. (a real estate investment company), President of Lakeden Ltd. (a real estate investment company), Partner of Lakewest Venture Partners (a venture investment company), Ruttenberg, Gilmartin and Reis LLC (law firm) and President of David C. & Sarajean Ruttenberg Arts Foundation (a private operating foundation). Mr. Ruttenberg received his Bachelor of Science degree in

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Economics from Cornell University and his Juris Doctor degree from Northwestern School of Law. We believe that Mr. Ruttenberg’s business expertise, financial acumen and business industry contacts make him well qualified to serve as a member of the Company Board.

Eden Godsoe is currently the Vice President of Operations at Zeus Living. In this role, Ms. Godsoe manages all aspects of operations including customer experience, field operations and supply chain. Prior to joining Zeus Living, Ms. Godsoe served as Vice President of Strategy and Market Effectiveness at Sunrun where she was responsible for setting the corporate strategy and operating plan as well as implementing growth and margin initiatives. Prior to Sunrun, Ms. Godsoe was the Founder and CEO of two startups—FaveRave, an employee engagement and workforce insights platform, and SkinnyScoop, a consumer polling and social curation platform. Earlier in her career, Ms. Godsoe was the Director of Sales, Marketing and Customer Service at Comcast and Director of Product Management and Marketing at Covad Communications. Ms. Godsoe began her career as an M&A financial analyst at Morgan Stanley. Ms. Godsoe holds an M.B.A. from Stanford Graduate School of Business and a B.A. in Economics and Philosophy from the University of Western Ontario. She currently serves on the board of SMART, a San Francisco non-profit, and has previously served on the board of the Stanford Business School Fund. We believe that Ms. Godsoe’s past experience running her own startups makes her well qualified to serve as a member of the Company Board.

Kenneth B. Rotman is the Chief Executive Officer and Managing Director of Clairvest Group Inc., a publicly-traded Toronto-based private equity firm (Toronto Stock Exchange: CVG). He has more than 25 years of experience as a private equity investor. Prior to joining Clairvest in October 1993, Mr. Rotman spent just under three years at E. M. Warburg, Pincus & Co. where Mr. Rotman principally focused on media, communications and manufacturing transactions in North America and the United Kingdom. In addition to serving on the board of directors of Clairvest, he has participated on the boards of numerous public and private companies, including: Also Energy, MAG Aerospace, Discovery Air, Top Aces, Light Tower Rental, PEER 1 Network Enterprises, Hudson Valley Waste, Shepellfgi, Sparkling Spring Water and Winters Brothers Waste Systems. Mr. Rotman also serves on the board of directors of numerous charitable organizations. He earned a B.A. from Tufts University in 1988, a M.Sc. from the London School of Economics in 1989 and a M.B.A. from New York University Stern School of Business in 1991. We believe that Mr. Rotman’s experience with Clairvest and extensive business experience with a variety of companies makes him well qualified to serve as a member of the Company Board.

Dee Robinson is the founder and CEO of Robinson Hill, Inc., a Chicago-based concessions management firm founded in 1995 with locations in non-traditional venues focusing on airports. Prior to Robinson Hill, Ms. Robinson founded product merchandiser Unity Square, which sold ethnic-inspired products through a strategic partnership with Sears, Roebuck and Company. She has also served as an advertising executive for Leo Burnett and an associate product director for Johnson and Johnson Consumer Products Company, with additional experience in commercial banking at Ameritrust and Northern Trust. Ms. Robinson holds an M.B.A. from Northwestern University, Kellogg School of Management and a B.A. from the University of Pennsylvania. We believe that Ms. Robinson’s commercial success and gaming experience make her well qualified to serve as a member of the Company Board.

Officers

A brief biography of each of our officers (other than Andrew Rubenstein) is set forth below. Please see the section entitled “—Directors” for biographical information about Andrew Rubenstein.

Brian Carroll has served as Accel’s Chief Financial Officer since 2014. Prior to joining Accel in 2014, Mr. Carroll was the Chief Executive Officer of Calumet Holdings International (a photographic and lighting retailer and manufacturer) consisting of 7 operating companies throughout the U.S, China and the balance throughout Europe. Prior to joining Calumet, Mr. Carroll served as Vice President of Finance for Chef Solutions Holdings—a food manufacturing subsidiary of Lufthansa Airlines which was then sold to the private equity arm

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of Jay Alix Partners (American consulting firm best known for its work in the turnaround space.). Prior to joining Chef Solutions, Mr. Carroll was the principal for LCK Consulting which provided complex financial and litigation-related consulting. Additionally, from 2002 to 2004 Mr. Carroll was appointed as Special Master mediating complex financial litigation for the United States District Court for the Southern District of Ohio. Mr. Carroll is a C.P.A., and holds a Bachelor of Business Administration degree in Finance from Loyola University Chicago, a Master of Business Administration degree from DePaul University and a Juris Doctor degree from University of Illinois-Chicago John Marshall Law School.

Derek Harmer served as Accel’s General Counsel, Chief Compliance Officer and Secretary since 2012, and currently serves as Secretary of the Company. Mr. Harmer has served as Vice President and Secretary of the Illinois Gaming Machine Operators Association for the past four years. Prior to joining Accel in 2012, Mr. Harmer was the President of Stadium Technology Group, a software and systems company dedicated to creating race and sports book management systems for kiosk and mobile platforms. Prior to joining Stadium Technology Group, Mr. Harmer served as Senior Vice President of Progressive Gaming International Corporation where he oversaw a strategic business unit created to commercialize emerging gaming technologies. Prior to joining Progressive Gaming International Corporation, Mr. Harmer served in various management positions at WMS Gaming Inc. and as Deputy Attorney General in the state of Nevada, Gaming Division, where he was in house counsel to the Nevada Gaming Control Board and Nevada Gaming Commission. Mr. Harmer received his Bachelor of Arts degree in Criminal Justice from the University of Illinois-Chicago and his Juris Doctor degree from Drake University.

Mark Phelan has served as Accel’s Chief Revenue Officer since 2017. Prior to joining Accel in 2017, Mr. Phelan has worked as a Director of Research and Portfolio Manager at SFG Asset Advisors, an investment office. Prior to this experience, Mr. Phelan was the Chief Executive Officer of M22 Capital LLC, a Registered Investment Advisor that managed capital for high net worth individuals, from 2011 to 2013. He also served as a Managing Director of Piper Jaffray & Co., an investment banking platform, from 2004 to 2011. Prior to Piper Jaffray, Mr. Phelan served as the Head of Asian Derivatives Trading at DRW Trading Group. Mr. Phelan received his Bachelor of Arts in English Language and Literature/Letters from the University of Chicago, a Masters of Arts in International Relations and Affairs from the University of Chicago and a Master of Business Administration from the University of Chicago Booth School of Business.

Michael Marino has served as Accel’s Chief Commercial Officer since March 2020. Prior to joining Accel, Mr. Marino most recently served the last three years as Senior Vice President of Marketing and Chief Experience Officer at Caesars Entertainment where he managed the end-to-end customer journey including oversight of Caesars Rewards, the gaming industry’s leading loyalty program, partnerships, advertising, brand, digital and online hotel distribution. He also helped expand Caesars’ efforts in sports inclusive of marketing, partnerships and betting. Mr. Marino’s earlier roles at Caesars included oversight of marketing analytics, Vice President and Chief of Staff to the Chairman & CEO and Senior Vice President of loyalty and digital. Prior to Caesars, Mr. Marino worked four years as a management consultant at Bain & Company and five years in a variety of marketing, risk management, strategy and M&A roles at Capital One Financial. Mr. Marino holds a B.S. in Computer Science from the University of Virginia and an MBA from the Darden School of Business at the University of Virginia.

Ryan Hammer has served as Accel’s President of Gaming Operations since March 2020. Prior to joining Accel, Mr. Hammer most recently served as Senior Vice President & General Manager at Caesars Entertainment, where he oversaw operations at five Las Vegas resorts. Mr. Hammer began his career with the company in 2003 as an Analytics Manager and since that time has held a number of executive roles of increasing importance in finance, human resources and operations, and across five markets including Chicago, Louisville, Atlantic City, St. Louis and Las Vegas. Mr. Hammer holds a B.S. in Finance from Southern Illinois University, an MBA from Indiana University’s Kelley School of Business, and a J.D. from Indiana University’s Maurer School of Law. He is currently a board member for the Junior Achievement of Southern Nevada.

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Director and Executive Officer Qualifications

The Company has not formally established any specific, minimum qualifications that must be met by each of its officers or directors or specific qualities or skills that are necessary for one or more of its officers or members of the Company Board to possess. However, the Company expects generally to evaluate the following qualities in evaluating candidates for director and officer positions: educational background, diversity of professional experience, including whether the person is a current or was a former chief executive officer or chief financial officer of a public company or the head of a division of a prominent international organization, knowledge of the Company’s business, integrity, professional reputation, independence, wisdom, and ability to represent the best interests of the Company’s stockholders.

A majority of the members of the Company Board meet the criteria for independence under applicable SEC and NYSE rules. The Nominating and Governance Committee of the Company Board will prepare policies regarding director qualification requirements and the process for identifying and evaluating director candidates for adoption by the Company Board.

The above-mentioned attributes, along with the leadership skills and other experiences of the Company’s officers and the Company Board members described above, are expected to provide the Company with a diverse range of perspectives and judgment necessary to facilitate the Company’s goals of stockholder value appreciation through organic and acquisition growth.

Number and Terms of Office of Officers and Directors

The Company Board is divided into three classes with staggered three-year terms: Class I, Class II and Class III. The number of directors in each class shall be as nearly equal as possible. Upon expiration of the term of a class of directors, directors for that class will be elected for three-year terms at the annual meeting of stockholders in the year in which that term expires. As a result, only one class of directors will be elected at each annual meeting of Accel stockholders, with the other classes continuing for the remainder of their respective three-year terms. The term of office of Class I directors, which consist of Karl Peterson, Andrew Rubenstein and Dee Robinson, will expire at the 2023 annual meeting of stockholders. The initial term of office of Class II directors, which consists of Gordon Rubenstein and David W. Ruttenberg, will expire at the 2021 annual meeting of stockholders. The initial term of office of Class III directors, which consists of Eden Godsoe, Kathleen Philips and Kenneth B. Rotman, will expire at the 2022 annual meeting of stockholders.

The Charter and Bylaws, which came into effect upon the consummation of the Business Combination, provide that only the Company Board may fill vacancies on the Company Board by a vote of the majority of the Company Board then in existence. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so as to maintain the number of directors in each class as nearly equal as possible.

The Company’s officers are elected by the Company Board and serve at the discretion of the Company Board, rather than for specific terms of office. The Company Board is authorized to appoint persons to the offices set forth in the Charter as it deems appropriate. The Bylaws provide that the Company’s officers may consist of a Chief Executive Officer, a Chief Financial Officer, Secretary, Chairman, Treasurer, Presidents, Vice Presidents, Assistant Secretaries and such other offices as may be determined by the Company Board.

Director Independence

NYSE listing standards require that a majority of the Company Board be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the Company Board, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Messrs. Ruttenberg, Rotman and Peterson and Mses. Godsoe, Robinson and Philips are independent pursuant to the NYSE listing rules.

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Board Leadership Structure

Currently, our leadership structure separates the roles of Chairman of the Board and Chief Executive Officer, with Mr. Rubenstein serving as our Chief Executive Officer and Mr. Peterson serving as our Chairman of the Board. Our board believes that separating these roles provides the appropriate balance between strategy development, flow of information between management and the board of directors, and oversight of management. We believe this provides guidance for our board of directors, while also positioning our Chief Executive Officer as the leader of the Company in the eyes of our customers, employees, and other stakeholders. As Chairman, Mr. Peterson, among other responsibilities, presides over regularly scheduled meetings of the Company Board, serves as a liaison between the directors, and performs such additional duties as the Company Board may otherwise determine and delegate. By having Mr. Peterson serve as Chairman of the Company Board, Mr. Rubenstein is better able to focus his attention on running our Company. Additionally, as of February 27, 2020, Mr. Gordon Rubenstein serves as the Vice Chairman of the Company Board. His responsibilities as Vice Chairman include acting as a resource to other members of the Company Board in respect of industry practices, competitive landscape, regulatory issues, business opportunities and other matters, and leading Company Board meetings in conjunction with the Chairman of the Company Board, Mr. Peterson, or acting in such capacity in his absence.

Board Committees

Upon the consummation of the Business Combination, the Company Board established three standing committees, each of which will have the composition and responsibilities described below. NYSE rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent. The Company Board may from time to time establish other committees to facilitate the Company’s governance. Members serve on these committees until their resignation or until otherwise determined by the Company Board. Each committee shall operate under a written charter approved by the Company Board that satisfies the applicable rules of the SEC and the listing standards of the NYSE.

Audit Committee

The Audit Committee (the “Audit Committee”) consists of three members appointed by the Company Board, with one member serving as the chairperson. As of July 13, 2020, the members of the Audit Committee were Kathleen Philips (Chair), David W. Ruttenberg and Eden Godsoe. The chairperson of the Audit Committee qualifies as an “audit committee financial expert” as that term is as defined in Item 407(d) of Regulation S-K promulgated under the Securities Act. This designation does not impose any duties, obligations, or liabilities that are greater than are generally imposed on members of the Company’s Audit Committee and the Company Board. Each of the Audit Committee members must meet the requirements for independence under the current NYSE rules and SEC rules and regulations. Under Rule 10A-3 under the Exchange Act, in order to be considered independent, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (i) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (ii) be an affiliated person of the listed company or any of its subsidiaries. Effective upon the consummation of the Business Combination, the Company Board adopted an Audit Committee Charter, pursuant to which the Audit Committee is responsible for, among other things:

• selecting a firm to serve as the independent registered public accounting firm to audit the Company’s consolidated financial statements;

• ensuring the independence of the independent registered public accounting firm;

• discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, the Company’s interim and year-end operating results;

• establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters;

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• considering the adequacy of the Company’s internal controls and internal audit function:

• reviewing proposed waivers of the global code of conduct for directors, executive officers, and employees (with waivers for directors or executive officers to be approved by the board of directors);

• reviewing material related party transactions or those that require disclosure;

• selecting a firm to serve as the independent registered public accounting firm to audit the Company’s consolidated financial statements; and

• approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm.

Compensation Committee

The Compensation Committee (the “Compensation Committee”) consists of three members appointed by the Company Board, with one member serving as the chairperson. As of July 13, 2020, the members of the Compensation Committee were Karl Peterson, Kathleen Philips and Eden Godsoe (Chair). The composition of the Compensation Committee must meet the requirements for independence under the current NYSE rules and SEC rules and regulations. Additionally, each member of the Compensation Committee will be a non-employee director, as defined in Rule 16b-3 promulgated under the Exchange Act. Effective upon the consummation of the Business Combination, the Company Board adopted a Compensation Committee Charter, pursuant to which the Compensation Committee is responsible for, among other things:

• reviewing and approving the compensation of the Company’s executive officers, other than the Company’s chief executive officer;

• evaluating the performance of the Company’s chief executive officer in light of the Company’s goals and objectives;

• reviewing and recommending to the Company Board the compensation of the Company’s directors;

• administering the Company’s cash and equity incentive plans;

• reviewing and approving, or making recommendations to the Company Board with respect to, incentive compensation and equity plans; and

• reviewing the Company’s overall compensation policies.

Nominating and Governance Committee

The Nominating and Governance Committee (the “Nominating and Governance Committee”) consists of three members appointed by the Company Board, with one member serving as the chairperson. As of July 13, 2020, the members of the Nominating and Governance Committee were Karl Peterson (Chair), Kathleen Philips, David W. Ruttenberg and Dee Robinson. The composition of the Nominating and Governance Committee must meet the requirements for independence under the current NYSE rules and SEC rules and regulations. Effective upon the consummation of the Business Combination, the Company Board adopted a Nominating and Governance Committee Charter, pursuant to which the Nominating and Governance Committee is responsible for, among other things:

• identifying and recommending candidates for membership on the Company Board;

• recommending directors to serve on board committees;

• reviewing and recommending the Company’s corporate governance guidelines and policies;

• reviewing senior management succession, including with respect to the chief executive officer;

• evaluating, and overseeing the process of evaluating, the performance of the Company Board and individual directors; and

• assisting the Company Board on corporate governance matters.

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Compliance Committee

The Compliance Committee (the “Compliance Committee”) consists of three members appointed by the Company Board, with one member serving as the chairperson. As of July 13, 2020, the members of the Compliance Committee were Karl Peterson, David W. Ruttenberg (Chair), Eden Godsoe and Dee Robinson. Effective upon the consummation of the Business Combination, the Company Board adopted a Compliance Committee Charter, pursuant to which the Compliance Committee’s principal functions are:

• ensuring compliance with gaming laws, regulations, policies applicable to the operations of the Company in all jurisdictions in which it conducts business;

• providing appropriate reports to gaming authorities advising the authorities of the Company’s compliance efforts;

• performing due diligence in respect of proposed transactions and associations; and

• collecting information from gaming authorities to help the Company maintain and enhance its compliance with gaming laws and regulations.

Code of Business Conduct and Ethics

Upon the consummation of the Business Combination, the Company Board adopted a code of business conduct and ethics that applies to all of the employees, officers and directors of the Company. Among other matters, the code of business conduct and ethics requires the employees, officers and directors of the Company to adhere to the following principles:

• honesty and candor in the Company’s activities, including observance of the spirit, as well as the letter of the law;

• avoidance of conflicts between personal interests and the interests of the Company, or even the appearance of such conflicts;

• avoidance of payments to candidates running for government posts or other government officials;

• compliance with generally accepted accounting principles and controls;

• maintenance of the Company’s reputation and avoidance of activities which might reflect adversely on the Company; and

• integrity in dealing with the Company’s assets.

The code of business conduct and ethics codifies the business and ethical principles that govern all aspects of the Company’s business.

Compensation Committee Interlocks and Insider Participation

Since the consummation of the Business Combination on November 20, 2019, our Compensation Committee has been comprised of Eden Godsoe, Karl Peterson and Kathleen Philips. Other than Mr. Peterson, who served as President and Chief Executive Officer of Pace prior to the consummation of the Business Combination, none of the foregoing individuals has ever served as an officer or employee of the Company. For information required to be disclosed under Item 404(a) of Regulation S-K for Ms. Godsoe, Mr. Peterson and Ms. Philips, please see the section entitled “Certain Relationships and Related Transactions.”

None of our executive officers currently serves, or in the past year has served, as a member of the board or compensation committee of any other entity at which any of the executive officers of such other entity have served on the Company Board, or the Compensation Committee.

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EXECUTIVE COMPENSATION

Pace was, and immediately following the Business Combination Accel is, an emerging growth company. Accordingly, Accel has opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies” as such term is defined in rules promulgated under the Securities Act.

2019 and 2018 Summary Compensation Table

Accel’s “named executive officers” for the fiscal years ended December 31, 2019 and December 31, 2018, were Andrew Rubenstein, Chief Executive Officer, Brian Carroll, Chief Financial Officer, Derek Harmer, General Counsel, Chief Compliance Officer and Secretary and Karl Peterson, the former Chief Executive Officer (collectively, the “NEOs”).

The following table sets forth the annual base salary and other compensation paid to each of the NEOs for the fiscal years ended December 31, 2019 and December 31, 2018.

Name and Principal Position	Fiscal Year		Salary		Stock Awards($)(1)		Option Awards($)(2)		Nonequity Incentive Plan($)(3)		All Other Compensation(4)		Total ($)
Andrew Rubenstein		2019	$	637,981	$	1,094,220		—	$	750,000	$	10,346	$	2,492,547
Chief Executive Officer		2018	$	522,596	$	988		—	$	650,000	$	12,178	$	1,185,762
Brian Carroll		2019	$	268,826		—		—		—	$	12,521	$	281,347
Chief Financial Officer		2018	$	256,025		—	$	39,436	$	55,000	$	11,843	$	362,304
Derek Harmer		2019	$	308,751		—		—	$	155,000	$	12,951	$	476,702
General Counsel, Chief Compliance Officer and Secretary		2018	$	274,683		—	$	63,098	$	100,000	$	8,648	$	446,429
Karl Peterson		2019		—		—		—		—		—		—
Former Chief Executive Officer(5)		2018		—		—		—		—		—		—

(1) The amounts reported in the “Stock Awards” column represent grant date fair value of the restricted stock granted to the NEOs during the fiscal years ended December 31, 2019 and December 31, 2018 as computed in accordance with FASB Accounting Standards Codification Topic 718. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the NEOs from the restricted stock.

(2) The amounts reported in the “Option Awards” column represent the grant date fair value of the stock options granted to the NEOs during the fiscal years ended December 31, 2019 and December 31, 2018 as computed in accordance with FASB Accounting Standards Codification Topic 718. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the NEOs from the stock options.

(3) The amount reported in the “Nonequity Incentive Plan Compensation” column represents the annual cash discretionary bonuses, which were approved by the Accel Board (as defined in “Certain Relationships and Related Transactions”), earned by the NEOs pursuant to the achievement of certain Accel and individual performance objectives.

(4) “Other Compensation” consists of Accel’s matching contributions to the 401(k) Plan or other retirement plan, health insurance premiums, vehicle allowances and travel expenses.

(5) Karl Peterson ceased to be the Chief Executive Officer of Pace on November 20, 2019 in connection with the consummation of the Business Combination.

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Outstanding Equity Awards at Fiscal Year-End

The following table sets forth specified information concerning unexercised stock options for each of the NEOs outstanding as of December 31, 2019.

Name	Grant Date(1)			Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date
Andrew Rubenstein		5/9/2016	(2)(3)		—		343,770	$	2.33		8/30/2021
Brian Carroll		5/9/2016	(3)(4)		—		103,131	$	2.33		8/30/2021
		12/12/2017	(2)(3)		4,297		12,891	$	4.07		12/12/2023
		12/19/2018	(2)(3)		4,297		17,188	$	5.24		12/11/2024
Derek Harmer		5/9/2016	(3)(4)		—		103,131	$	2.33		8/30/2021
		12/12/2017	(2)(3)		6,875		20,626	$	4.07		12/12/2023
		12/19/2018	(2)(3)		6,875		27,502	$	5.24		12/11/2024

(1) This table does not include warrants or performance-based Shares that the NEOs have received in connection with the consummation of the Business Combination. For additional information, please see the section entitled “Principal and Selling Stockholders” beginning on page 114.

(2) Granted under Accel’s 2016 Plan (as defined in “—Equity Incentive Plans of Accel—Accel Entertainment, Inc.’s 2016 Equity Incentive Plan.”) The shares subject to the stock option vest over a four-year period, with 25% of the shares vesting on each annual anniversary of the vesting commencement date, subject to continued service with Accel through each vesting date. The options may be exercised for three months after the termination of the grantee’s employment with Accel.

(3) Vesting commenced on the date that is one year after the grant date.

(4) Granted under Accel’s 2011 Plan (as defined in “—Equity Incentive Plans of Accel—Accel Entertainment, Inc.’s 2016 Equity Incentive Plan”). The shares subject to the stock option vest over a five-year period, with 20% of the shares vesting on each annual anniversary of the vesting commencement date, subject to continued service with Accel through each vesting date. The options may be exercised for three months after the termination of the grantee’s employment with Accel.

Employment Agreements

Andrew Rubenstein

On July 15, 2020, Accel entered into an amended and restated employment agreement with Andrew Rubenstein. Under the terms of his amended and restated employment agreement, Mr. Rubenstein is employed as the Chief Executive Officer of Accel, reporting to the Accel Board (as defined in “Certain Relationships and Related Transactions”). Mr. Rubenstein is entitled to receive an annual base salary of $750,000 and he will be eligible to receive an annual bonus with a target level of 100% of his annual base salary. He will also be eligible to receive grants of equity-based incentive compensation awards on an annual basis in accordance with Accel’s annual grants to similarly situated senior executives, if any. Such grants, if any, will be made in the Accel Board’s sole discretion. Mr. Rubenstein’s target annual long-term incentive opportunity as of the date of his amended and restated employment agreement is 200% of his annual base salary.

In the event Mr. Rubenstein experiences a termination of his employment without “cause” or he resigns for “good reason” (each as defined in his amended and restated employment agreement), he will become entitled to (i) an amount equal to the sum of (A) the annual base salary paid to him during two-year period immediately preceding such termination plus (B) the two most recent annual bonus payments made to him immediately preceding such termination and (ii) two years of continued COBRA coverage. In addition to the foregoing, if

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Mr. Rubenstein’s termination of employment without cause or resignation for good reason occurs in connection with a change in control of Accel (within the meaning of his amended and restated employment agreement), then he will receive a pro-rated portion of his target annual bonus for the year of such termination and accelerated vesting of any unvested equity awards that were outstanding as of the date of such change in control. In each case, Mr. Rubenstein’s receipt of the foregoing severance payments and benefits is subject to his delivery of an effective release of claims against Accel and its affiliates. Mr. Rubenstein’s amended and restated employment agreement includes a three-year post-termination non-competition covenant and a three-year post-termination employee and customer non-solicitation covenant.

Brian Carroll

On July 16, 2020, Accel entered into an amended and restated employment agreement with Brian Carroll. Under the terms of his amended and restated employment agreement, Mr. Carroll is employed as the Chief Financial Officer of Accel, reporting to the Chief Executive Officer. Mr. Carroll is entitled to receive an annual base salary of $350,000 and he will be eligible to receive an annual bonus with a target value of 50% of his annual base salary. He will also be eligible to receive grants of equity-based incentive compensation awards on an annual basis in accordance with Accel’s annual grants to similarly situated senior executives, if any, with a target grant-date value of 100% of his annual base salary. Such grants, if any, will be made in the Accel Board’s sole discretion.

In the event Mr. Carroll experiences a termination of his employment without “cause” or he resigns for “good reason” (each as defined in his amended and restated employment agreement), he will become entitled to (i) an amount equal to the sum of (A) the annual base salary paid to him during twelve-month period immediately preceding such termination plus (B) the most recent annual bonus payment made to him immediately preceding such termination and (ii) twelve months of continued COBRA coverage. Mr. Carroll’s receipt of the foregoing severance payments and benefits is subject to his delivery of an effective release of claims against Accel and its affiliates. Mr. Carroll’s amended and restated employment agreement includes a one-year post-termination non-competition covenant and a one-year post-termination employee and customer non-solicitation covenant.

Derek Harmer

On July 16, 2020, Accel entered into an amended and restated employment agreement with Derek Harmer. Under the terms of his amended and restated employment agreement, Mr. Harmer is employed as the General Counsel, Chief Compliance Officer and Secretary of Accel, reporting to the Chief Executive Officer. Mr. Harmer is entitled to receive an annual base salary of $400,000 and he will be eligible to receive an annual bonus with a target value of 55% of his annual base salary. Mr. Harmer will also be eligible to receive grants of equity-based incentive compensation awards on an annual basis in accordance with Accel’s annual grants to similarly situated senior executives, if any, with a target value equal of 100% of his annual base salary.

In the event Mr. Harmer experiences a termination of his employment without “cause” or he resigns for “good reason” (each as defined in his amended and restated employment agreement), he will become entitled to (i) an amount equal to the sum of (A) the annual base salary paid to him during the twelve-month period immediately preceding such termination plus (B) the most recent annual bonus payment made to him immediately preceding such termination and (ii) twelve months of continued COBRA coverage. Mr. Harmer’s receipt of the foregoing severance payments and benefits is subject to his delivery of an effective release of claims against Accel and its affiliates. Mr. Harmer’s amended and restated employment agreement includes a one-year post-termination non-competition covenant and a one-year post-termination employee and customer non-solicitation covenant.

Equity Incentive Plans of Accel

Accel Entertainment, Inc. 2011 Equity Incentive Plan

On April 13, 2011, the Accel Board approved the Accel Entertainment, Inc. 2011 Equity Incentive Plan (the “2011 Plan”), which was subsequently approved by the Accel majority stockholders on December 2, 2011. The

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Accel Board, or a committee thereof appointed by the Accel Board, administered the 2011 Plan and the awards granted under it.

A total of 270,000 shares of Class A common stock, no par value, of Accel (the “Accel Class A Common Stock”) were initially reserved for issuance pursuant to future awards under the 2011 Plan. The 2011 Plan provided for the grant of incentive stock options, which qualify for favorable tax treatment to their recipients under Section 422 of the Code, nonqualified stock options, restricted stock awards, and stock appreciation rights. Such awards could be granted under the 2011 Plan to Accel’s employees, directors and consultants.

Accel Entertainment, Inc. 2016 Equity Incentive Plan

On June 20, 2016, the Accel Board approved the Accel Entertainment, Inc. 2016 Plan (“2016 Plan”), which was subsequently approved by Accel stockholders on December 13, 2016. The Accel Board, or a committee thereof appointed by the Accel Board, administered the 2016 Plan and the awards granted under it.

A total of 305,724 shares of Accel Class A Common Stock were initially reserved for issuance pursuant to future awards under the 2016 Plan.

The 2016 Plan provided for the grant of incentive stock options, which qualified for favorable tax treatment to their recipients under Section 422 of the Code, nonqualified stock options, restricted stock awards, and stock appreciation rights. Such awards could be granted under the 2016 Plan to Accel’s employees, directors and consultants.

In connection with the Business Combination, any vested and unexercised stock options outstanding under the 2011 Plan or the 2016 Plan were cancelled for no consideration and ceased to exist upon the consummation of the Business Combination. In addition, any unvested stock options outstanding under the 2011 Plan or the 2016 Plan were converted into a stock option that will be exercisable for a number of shares of Class A-1 common stock calculated as specified in the Transaction Agreement, in accordance with the vesting schedule as in effect prior to the Business Combination. The total number of stock options subject to such vesting following the Business Combination was 71,467.

Long Term Incentive Plan

On the closing date of the Business Combination, the Accel Entertainment, Inc. Long Term Incentive Plan (the “LTIP”) became effective. The purpose of the LTIP is to enhance the Company and its affiliates’ ability to attract, retain and motivate persons who make important contributions to the Company and its affiliates by providing those individuals with equity ownership opportunities. The LTIP provides for grants of a variety of awards, including, but not limited to: incentive stock options qualified as such under U.S. federal income tax laws, stock options that do not qualify as incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, cash incentive awards, and other stock-based awards. Officers or employees of the Company or any of its affiliates or any other person who provides services to the Company or any of its affiliates, including directors of the Company, will be eligible for grants under the LTIP. The Company has reserved a total of 6,000,000 shares of Class A-1 common stock for issuance pursuant to the LTIP, subject to certain adjustments set forth therein.

Retirement and Other Benefits

Accel maintains a tax-qualified defined contribution plan that meets the requirements of Section 401(k) of the Internal Revenue Code, commonly called a 401(k) plan, for substantially all of its employees. The 401(k) plan is available on the same basis to all employees, including the NEOs. Each participant in the 401(k) plan may elect to defer from 0% to 90% of compensation, subject to limitations under the Internal Revenue Code and Employee Retirement Income Security Act. Accel matches up to 50% of its employees’ contributions to the 401(k) plan, so

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long as the employee contributes at least 5% of their annual compensation (not including any bonus, severance or legal settlements). Accel does not provide any pension benefits. Accel maintains various other employee benefit plans, including medical, dental and life insurance.

Director Compensation

In fiscal year 2019, non-employee directors received no other form of remuneration, perquisites or benefits, but are reimbursed for their expenses in attending meetings, including travel, and lodging expenses. Accordingly, Accel did not pay fees to directors for attendance at meetings of its board of directors or its committees in fiscal year 2019.

Bankruptcies

Brian Carroll was the Chief Executive Officer of Calumet Holdings International and its principal U.S. operating subsidiary, Calumet Photographic Inc., until November 2013. In addition to Calumet Photographic Inc., Calumet Holdings International also consisted of an operating company in China and five operating companies in Europe. In March of 2014, Calumet Photographic Inc. filed for Chapter 13 Bankruptcy Protection.

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DESCRIPTION OF CAPITAL STOCK

The following summary of the material terms of our securities is not intended to be a complete summary of the rights and preferences of such securities. We urge you to read our Charter and Bylaws, which are included as exhibits to the registration statement of which this prospectus is a part in their entirety for a complete description of the rights and preferences of our securities.

Authorized and Outstanding Capital Stock

The Charter authorizes the issuance of (a) 280,000,000 shares of Common Stock, including three separate series of common stock consisting of (i) 250,000,000 shares of Class A-1 common stock, (ii) 10,000,000 shares of Class A-2 common stock and (iii) 20,000,000 shares of Class F common stock and (b) 1,000,000 shares of preferred stock with a par value of $0.0001 per share (the “Preferred Stock”).

As of September 18, 2020, the Company’s issued and outstanding share capital consists of (a) (i) 83,784,083 shares of Class A-1 common stock, (ii) 3,403,363 shares of Class A-2 common stock and (iii) no shares of Class F common stock; (b) no shares of Preferred Stock; (c) 1,452,867 Accel Warrants consisting of (i) 1,439,812 Pace Private Placement Warrants, and (ii) 13,055 Accel Public Warrants.

Common Stock

Class A-1 common stock

Upon the Pace Domestication, each Class A ordinary share, par value $0.0001 of Pace was converted into one Class A-1 Share.

Class A-2 common stock

In connection with the Business Combination, the Company, the Pace Sponsor Members and certain other persons, including certain Sellers that received shares of Class A-2 common stock in the Stock Purchase entered into that certain Restricted Stock Agreement (the “Restricted Stock Agreement”), which sets forth the terms upon which the Class A-2 common stock will be exchanged for an equal number of validly issued, fully paid and non-assessable shares of Class A-1 common stock. The exchange of shares of Class A-2 common stock for shares of Class A-1 common stock will be subject to the terms and conditions set forth in the Restricted Stock Agreement, with such exchanges occurring in three separate tranches upon the satisfaction of the following triggers:

• Tranche I, equal to 1,666,666 shares of Class A-2 common stock, will be exchanged for shares of Class A-1 common stock if either (i) the EBITDA for the last twelve months (“LTM EBITDA”) of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2021, March 31, 2022 or June 30, 2022 equals or exceeds $132 million or (ii) the closing sale price of Class A-1 common stock on the NYSE equals or exceeds $12.00 for at least twenty trading days in any consecutive thirty trading day period (which threshold was reached on January 14, 2020, resulting in the issuance of 1,596,636 shares of Class A-1 common stock upon exchange of shares of Class A-2 common stock);

• Tranche II, equal to 1,666,667 shares of Class A-2 common stock, will be exchanged for shares of Class A-1 common stock if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $152 million or (ii) the closing sale price of Class A-1 common stock on the NYSE equals or exceeds $14.00 for at least twenty trading days in any 30 trading day period; and

• Tranche III, equal to 1,666,667 shares of Class A-2 common stock, will be exchanged for shares of Class A-1 common stock if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $172 million or (ii) the closing sale price of Class A-1 common stock on the NYSE equals or

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exceeds $16.00 for at least twenty trading days in any 30 trading day period. The LTM EBITDA and LTM EBITDA thresholds will be reasonably adjusted by the independent directors of the Company Board from time to time to take into account the anticipated effect of any acquisitions or dispositions that exceed certain thresholds and are otherwise materially different from certain forecasts.

Notwithstanding the foregoing, Class A-2 common stock, if not previously exchanged pursuant to the triggers described above, will be exchanged for an equal number of shares of Class A-1 common stock immediately prior to the consummation of a transaction or series of related transactions that would result in a third party or group (as defined in or under Section 13 of the Exchange Act) becoming the beneficial owner of, directly or indirectly, more than fifty percent of the total voting power of the equity securities of the Company, or more than fifty percent of the consolidated net revenues, net income or total assets (including equity securities of its subsidiaries) of the Company, provided that the satisfaction of the conditions set forth in the aforementioned triggers cannot be determined at such time.

The Restricted Stock Agreement further provides that holders of shares of Class A-2 common stock are not required to exchange such shares for Class A-1 common stock if, (x) prior to giving effect to exchanges pursuant to the triggers described above, such holder beneficially owns less than 4.99% of the issued and outstanding Class A-1 common stock, and (y) after giving effect to the exchanges pursuant to the triggers described above, such holder would beneficially own in excess of 4.99% of the issued and outstanding Class A-1 common stock. However, notwithstanding the limitation described in the previous sentence, if and when a holder of shares of Class A-2 common stock has obtained all required gaming approvals from the applicable gaming authorities permitting such holder to beneficially own Class A-1 common stock in excess of 4.99%, then the shares of Class A-2 common stock held by such holder which are subject to exchange shall immediately be exchanged for Class A-1 common stock without regard to the limitation.

The shares of Class A-2 common stock may not be transferred, other than to certain permitted transferees as set forth in the Restricted Stock Agreement, and the rights and obligations under the Restricted Stock Agreement may not be assigned to any person or entity, other than to certain permitted transferees as set forth in the Restricted Stock Agreement.

Upon exchange of Class A-2 common stock to Class A-1 common stock, such shares of Class A-2 common stock will be cancelled and the number of authorized Class A-2 common stock will be reduced by a corresponding number.

The foregoing summary of the Charter and the Restricted Stock Agreement is not complete and is qualified in its entirety by reference to the complete text of the Charter and the Restricted Stock Agreement.

Voting Power

Except as otherwise required by law or the Charter (including any resolution or resolution adopted by the Company Board providing for the issuance of one or more series of Preferred Stock stating the voting rights, if any, designations, powers, preferences and relative, participating, optional, special and other rights, if any, of each such series and any qualifications, limitations and restrictions thereof and included in a certificate of designation (a “Preferred Stock Designation”), holders of Class A-1 common stock exclusively possess all voting power with respect to the Company, including with respect to the election of directors, and shall be entitled to one vote for each Class A-1 Share on each matter properly submitted to the stockholders on which holders of Class A-1 common stock are entitled to vote. However, except as otherwise required by law or the Charter (including any Preferred Stock Designation), holders of any series of Common Stock shall not be entitled to vote on any amendment to the Charter (including any amendment to any Preferred Stock Designation) that relates solely to the terms of one or more outstanding series of Preferred Stock or other series of Common Stock if the holders of such affected series of Preferred Stock or Common Stock, as applicable, are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the Charter (including any Preferred Stock Designation) or the DGCL.

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Dividends

Subject to applicable law and the rights, if any, of the holders of any outstanding series of the Preferred Stock and except as otherwise set forth herein, the holders of Class A-1 common stock shall be entitled to receive such dividends and other distributions (payable in cash, property or capital stock of the Company) when, as and if declared thereon by the Company Board from time to time out of any assets or funds of the Company legally available therefor and shall share equally on a per share basis in such dividends and distributions subject to such rights of the holders of Preferred Stock.

Liquidation, Dissolution and Winding Up

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, after payment or provision for payment of the debts and other liabilities of the Company, and subject to applicable law and to the rights, if any, of the holders of outstanding Preferred Stock in respect thereof, the holders of Class A-1 common stock shall be entitled to receive all the remaining assets of the Company available for distribution to its stockholders, ratably in proportion to the Class A-1 common stock held by them.

Preemptive or Other Rights

The holders of Common Stock do not have preemptive or other subscription rights and there is no sinking fund or redemption provisions applicable to the Common Stock.

Preferred Stock

The Charter provides that the Company Board is authorized to provide out of the unissued shares of the Preferred Stock for one or more series of Preferred Stock, establish the number of shares to be included in each such series and fix the voting rights, designations, powers, preferences and relative, participating, optional, special and other rights, of each such series and any qualifications, limitations and restrictions thereof, as stated in the resolution or resolutions adopted by the Company Board providing for the issuance of such series and included in a Preferred Stock Designation filed pursuant to the DGCL. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding or reserved for issuance) by the affirmative vote of the holders of a majority of the outstanding Class A-1 common stock, without a vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders of Preferred Stock is required pursuant to the Charter, including any Preferred Stock Designation. As of December 31, 2019, the Company had no shares of Preferred Stock outstanding. Although the Company does not currently intend to issue any Preferred Stock, it may do so in the future.

The Charter provides that the Company has the authority to create and issue rights, warrants and options entitling the holders thereof to acquire from the Company any shares of its capital stock of any class or classes, with such rights, warrants and options to be evidenced by or in instrument(s) approved by the Company Board. The Company Board is empowered to set the exercise price, duration, times for exercise and other terms and conditions of such rights, warrants or options; provided, however, that the consideration to be received for any shares of capital stock issuable upon exercise thereof may not be less than the par value thereof.

Warrants

For purposes of the following description of the Pace Warrants, (i) “Pace” shall refer to Pace prior to the Business Combination and shall refer to the Company following the Business Combination and (ii) “initial business combination” shall refer to the Business Combination, as applicable. From and after the Business Combination, the Pace Warrants became securities of the Company, and upon satisfaction of the applicable conditions described below, are exercisable for shares of Class A-1 common stock of the Company.

On July 16, 2020, the Company consummated the redemption of all of the Pace Public Warrants in accordance with their terms. The Company exchanged each Pace Public Warrant for 0.250 shares of the Company’s

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Class A-1 common stock and issued 3,784,416 shares of its Class A-1 common stock in exchange for the Pace Public Warrants at settlement of the redemption. On August 14, 2020, the Company consummated its exchange offer for the Pace Private Placement Warrants, Accel Public Warrants and Business Combination Private Placement Warrants, pursuant to which each holder had the right to receive 0.250 shares of Class A-1 common stock in exchange for each such warrant tendered by the holder and exchanged pursuant to the offer (the “Offer”). A total of 7,189,990 Pace Private Placement Warrants, Accel Public Warrants and Business Combination Private Placement Warrants, or approximately 99.93% of Accel’s warrants then outstanding, were validly tendered and not withdrawn in the Offer. The Company issued 1,797,474 shares of its Class A-1 common stock in exchange for Pace Private Placement Warrants, Accel Public Warrants and Business Combination Private Placement Warrants tendered in the Offer.

Pace Warrants

Prior to the Pace Domestication, each Pace Public Warrant entitled the registered holder to purchase one Pace Public Share at a price of $11.50 per share. Upon the Pace Domestication, each Pace Public Share converted to one Class A-1 Share, and each Pace Public Warrant entitles the holder to acquire a corresponding number of shares of Class A-1 common stock on the same terms as in effect immediately prior to the effective time of the Pace Domestication. Following the Business Combination, each Pace Public Warrant entitles the registered holder to purchase one Class A-1 Share at a price of $11.50 per share, subject to adjustment as discussed below, at any time 30 days after the completion of the Business Combination. Prior to the Pace Domestication, each Pace Private Placement Warrant entitled the registered holder to purchase one Pace Public Share at a price of $11.50 per share. Following the Pace Domestication, each Pace Private Placement Warrant entitles the holder to acquire a corresponding number of shares of Class A-1 common stock on the same terms as in effect immediately prior to the effective time of the Pace Domestication. Except as described below, the Pace Private Placement Warrants have terms and provisions that are identical to those of the Pace Public Warrants.

Each Pace Warrant must be exercised for a whole Class A-1 Share. The Pace Warrants will expire five years after the completion of an initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any shares of Class A-1 common stock pursuant to the exercise of a Pace Public Warrant and will have no obligation to settle such Pace Public Warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A-1 common stock underlying the Pace Public Warrant is then effective and a prospectus relating thereto is current, subject to Pace satisfying its obligations described below with respect to registration. No Pace Public Warrant will be exercisable for cash or on a cashless basis, and Pace will not be obligated to issue any shares of Class A-1 common stock to holders seeking to exercise their Pace Public Warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a Pace Public Warrant, the holder of such Pace Public Warrant will not be entitled to exercise such Pace Public Warrant and such Pace Public Warrant may have no value and expire worthless. In no event will Pace be required to net cash settle any Pace Public Warrant. In the event that a registration statement is not effective for the exercised Pace Public Warrants, a warrantholder that acquired such Pace Public Warrant through the purchase of a Pace Public Unit containing such Pace Public Warrant will have paid the full purchase price for the Pace Public Unit solely for the Pace Public Share (which converted into a Class A-1 Share upon the Pace Domestication) underlying such Pace Public Unit.

The Company has filed with the SEC a registration statement that is currently effective for the registration, under the Securities Act, of the shares of Class A-1 common stock issuable upon exercise of the Pace Warrants, and the Company will use its best efforts to maintain such effectiveness until the expiration of the Pace Warrants in accordance with the provisions of that certain Warrant Agreement, by and between Pace and Continental Stock Transfer & Trust Company, as warrant agent, dated as of June 27, 2017 (the “Continental Warrant Agreement”).

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Notwithstanding the above, if the shares of Class A-1 common stock are at the time of any exercise of a Pace Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Pace Public Warrants who exercise their Pace Public Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Redemption of Pace Warrants for Cash. Once the Pace Warrants become exercisable, the Company may redeem such Pace Warrants:

• in whole and not in part;

• at a price of $0.01 per Pace Warrant;

• upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to registered holders of the Pace Public Warrants; and

• if, and only if, the reported last sale price of the Class A-1 common stock equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends to the notice of redemption to the holders of the Pace Warrants.

If and when the Pace Warrants become redeemable by the Company, the Company may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

The last of the redemption criterion discussed above was established to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the Pace Warrants, each holder of a Pace Warrant will be entitled to exercise his, her or its Pace Public Warrant prior to the scheduled redemption date. However, the price of the Class A-1 common stock may fall below the $18.00 redemption trigger price as well as the $11.50 warrant exercise price after the redemption notice is issued.

Redemption of Pace Warrants for Class A-1 common stock. Ninety days after the Pace Warrants become exercisable, the Company may redeem the outstanding Pace Warrants (except as described herein with respect to the Pace Private Placement Warrants):

• in whole and not in part;

• at a price equal to a number of shares of Class A-1 common stock to be determined by reference to the table below, based on the redemption date and the “fair market value” of the Class A-1 common stock (as defined below) except as otherwise described below;

• upon a minimum of 30 days’ prior written notice of redemption; and

• if, and only if, the last sale price of the Class A-1 common stock equals or exceeds $10.00 per share (as adjusted per share splits, share dividends, reorganizations, reclassifications, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the holders of Pace Warrants.

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The numbers in the table below represent the “redemption prices,” or the number of shares of Class A-1 common stock that a holder of Pace Warrants will receive upon redemption by the Company pursuant to this redemption feature, based on the “fair market value” of the Class A-1 common stock on the corresponding redemption date, determined based on the average of the last reported sales price for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Pace Warrants, and the number of months that the corresponding redemption date precedes the expiration date of the Pace Warrants, each as set forth in the table below.

Redemption Date (period to expiration of warrants)	Fair Market Value of Class A-1 common stock
	$10.00		$11.00		$12.00		$13.00		$14.00		$15.00		$16.00		$17.00		$18.00
57 months		0.257		0.277		0.294		0.310		0.324		0.337		0.348		0.358		0.365
54 months		0.252		0.272		0.291		0.307		0.322		0.335		0.347		0.357		0.365
51 months		0.246		0.268		0.287		0.304		0.320		0.333		0.346		0.357		0.365
48 months		0.241		0.263		0.283		0.301		0.317		0.332		0.344		0.356		0.365
45 months		0.235		0.258		0.279		0.298		0.315		0.330		0.343		0.356		0.365
42 months		0.228		0.252		0.274		0.294		0.312		0.328		0.342		0.355		0.364
39 months		0.221		0.246		0.269		0.290		0.309		0.325		0.340		0.354		0.364
36 months		0.213		0.239		0.263		0.285		0.305		0.323		0.339		0.353		0.364
33 months		0.205		0.232		0.257		0.280		0.301		0.320		0.337		0.352		0.364
30 months		0.196		0.224		0.250		0.274		0.297		0.316		0.335		0.351		0.364
27 months		0.185		0.214		0.242		0.268		0.291		0.313		0.332		0.350		0.364
24 months		0.173		0.204		0.233		0.260		0.285		0.308		0.329		0.348		0.364
21 months		0.161		0.193		0.223		0.252		0.279		0.304		0.326		0.347		0.364
18 months		0.146		0.179		0.211		0.242		0.271		0.298		0.322		0.345		0.363
15 months		0.130		0.164		0.197		0.230		0.262		0.291		0.317		0.342		0.363
12 months		0.111		0.146		0.181		0.216		0.250		0.282		0.312		0.339		0.363
9 months		0.090		0.125		0.162		0.199		0.237		0.272		0.305		0.336		0.362
6 months		0.065		0.099		0.137		0.178		0.219		0.259		0.296		0.331		0.362
3 months		0.034		0.065		0.104		0.150		0.197		0.243		0.286		0.326		0.361
0 months		—		—		0.042		0.115		0.179		0.233		0.281		0.323		0.361

The “fair market value” of Class A-1 common stock shall mean the average reported last sale price of the Class A-1 common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Pace Warrants.

The exact fair market value and redemption date may not be set forth in the table above, in which case, if the fair market value is between two values in the table or the redemption date is between two redemption dates in the table, the number of Class A-1 common stock to be issued for each Pace Warrant redeemed will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower fair market values and the earlier and later redemption dates, as applicable, based on a 365-day year. For example, if the average reported last sale price of the Class A-1 common stock for the 10 trading days ending on the third trading date prior to the date on which the notice of redemption is sent to the holders of the Pace Warrants is $11 per share, and at such time there are 57 months until the expiration of the Pace Warrants, the Company may choose to, pursuant to this redemption feature, redeem the Pace Warrant at a “redemption price” of 0.277 shares of Class A-1 common stock for each whole Pace Warrant. For an example where the exact fair market value and redemption date are not as set forth in the table above, if the average reported last sale price of Class A-1 common stock for the 10 trading days ending on the third trading date prior to the date on which the notice of redemption is sent to the holders of the Pace Warrants is $13.50 per share, and at such time there are 38 months until the expiration of the Pace Warrants, the Company may choose to, pursuant to this redemption feature, redeem the warrants at a “redemption price” of 0.298 shares of Class A-1 common stock for each whole Pace Warrants. Finally, as reflected in the table above, the Company can redeem the Pace Warrants for no consideration in the event that the Pace Warrants are “out of the money” (i.e. the trading price of the Class A-1 common stock is below the exercise price of the Pace Warrants) and about to expire.

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Any Pace Public Warrants held by the Company’s officers or directors will be subject to this redemption feature, except that such officers and directors shall only receive “fair market value” for such Pace Public Warrants so redeemed (“fair market value” for such Pace Public Warrants held by the Company’s officers or directors being defined as the last sale price of the Pace Public Warrants on such redemption date).

This redemption feature differs from the typical warrant redemption features used in other blank check offerings, which typically only provide for a redemption of warrants for cash (other than Pace Private Placement Warrants) when the trading price for Class A ordinary shares exceeds $18.00 per share for a specified period of time. This redemption feature is structured to allow for all of the outstanding Pace Warrants (other than Pace Private Placement Warrants) to be redeemed when the shares of Class A-1 common stock are trading at or above $10.00 per share, which may be at a time when the trading price of the shares of Class A-1 common stock are below the exercise price of the Pace Warrants. This redemption feature has been established to provide the Pace Warrants with an additional liquidity feature, which provides the Company with the flexibility to redeem the Pace Warrants for Class A-1 stock, instead of cash, for “fair value” without the warrants having to reach the $18.00 per share threshold set forth above under “—Redemption of Pace Warrants for Cash.” Holders of the Pace Warrants will, in effect, receive a number of shares having a value reflecting a premium for their Pace Warrants, based on the “redemption price” as determined pursuant to the above table. The “redemption prices” as set forth in the table above have been calculated to reflect a premium in value as compared to the expected trading price that the Pace Warrants would be expected to trade. This redemption right provides the Company not only with an additional mechanism by which to redeem all of the outstanding Pace Warrants, in this case, for shares of Class A-1 common stock, and therefore have certainty as to (i) its capital structure as the Pace Warrants would no longer be outstanding and would have been exercised or redeemed and (ii) to the amount of cash provided by the exercise of the Pace Warrants and available to the Company, and also provides a ceiling to the theoretical value of the warrants as it locks in the “redemption prices” the Company would pay to holders of Pace Warrants if the Company chose to redeem Pace Warrants in this manner. While the Company will effectively be required to pay a “premium” to holders of Pace Warrants if the Company chooses to exercise this redemption right, it will allow the Company to quickly proceed with a redemption of the warrants for shares of Class A-1 common stock if the Company determines it is in its best interest to do so. As such, the Company would redeem the Pace Warrants in this manner when the Company believes it is in its best interest to update its capital structure to remove the Pace Warrants and pay the premium to the holders of Pace Warrants. In particular, it would allow the Company to quickly redeem the Pace Warrants for shares of Class A-1 common stock, without having to negotiate a redemption price with the holders of Pace Warrants, which in some situations, may allow the Company to more quickly and easily close an initial business combination. And for this right, the Company is effectively agreeing to pay a premium to the holders Pace Warrants. In addition, the holders of Pace Warrants will have the ability to exercise their Pace Warrants prior to redemption if they should choose to do so.

As stated above, the Company can redeem the Pace Warrants when the shares of Class A-1 common stock are trading at a price starting at $10.00, which is below the exercise price of $11.50, because it will provide certainty with respect to the Company’s capital structure and cash position while providing holders of Pace Warrants with a premium (in the form of shares of Class A-1 common stock). If the Company chooses to redeem the Pace Warrants when the shares of Class A-1 common stock are trading at a price below the exercise price of the Pace Warrants, this could result in the holders of Pace Warrants receiving fewer shares of Class A-1 common stock than they would have received if they had chosen to wait to exercise their Pace Warrants for shares of Class A-1 common stock if and when such shares of Class A-1 common stock were trading at a price higher than the exercise price of $11.50.

No fractional shares of Class A-1 common stock will be issued upon redemption. If, upon redemption, a holder would be entitled to receive a fractional interest in a share, the Company will round down to the nearest whole number of the number of shares of Class A-1 common stock to be issued to the holder.

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Pace Private Placement Warrants

The Pace Private Placement Warrants have terms and provisions that are identical to those of the Pace Public Warrants, except that:

• The Pace Private Placement Warrants (including the shares of Class A-1 common stock issuable upon exercise of the Pace Private Placement Warrants) were subject to lock-up provisions that provided that the Pace Private Placement Warrants would not be transferable, assignable or salable until 30 days after the completion of an initial business combination and will not be redeemable, as applicable, so long as they are held by Initial Pace Sponsor or its permitted transferees, except that the Pace Private Placement Warrants (including the shares of Class A-1 common stock issuable upon exercise of the Pace Private Placement Warrants) can be transferred by such holders (a) to Pace’s officers or directors, any affiliates or family members of any of Pace’s officers or directors, members of Initial Pace Sponsor (which at the consummation of the Business Combination consisted of the Pace Sponsor Members), or any affiliates of Initial Pace Sponsor, (b) in the case of an individual, by gift to a member of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family, an affiliate of such person or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of an initial business combination at prices no greater than the price at which the shares were originally purchased; (f) in the event of Pace’s liquidation prior to its completion of an initial business combination; (g) by virtue of the laws of the Cayman Islands or Initial Pace Sponsor’s limited liability company agreement upon dissolution of Initial Pace Sponsor; or (h) in the event of Pace’s liquidation, merger, share exchange, reorganization or other similar transaction which results in all of Pace’s stockholders having the right to exchange their Pace Public Shares for cash, securities or other property subsequent to Pace’s completion of an initial business combination; provided, however, that in the case of clauses (a) through (e) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions.

• If holders of the Pace Private Placement Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of Class A-1 common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A-1 common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Class A-1 common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent.

Business Combination Private Placement Warrants and Accel Public Warrants

In connection with the consummation of the Business Combination, the Company and the Sellers that have received Business Combination Private Placement Warrants and Accel Public Warrants entered into that certain New Accel Warrant Agreement, pursuant to which the Company has issued to each such Seller who made a cash election with respect to less than 70% of its shares of Accel Stock, its respective pro rata share of 2,444,444 newly issued warrants of the Company, with such pro rata share determined with reference to a number of shares equal to 70% of such Seller’s Accel Stock less the number of shares in respect of which the Seller elected to receive cash in exchange for such shares. Each Accel Public Warrant and Business Combination Private Placement Warrant entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding Accel Warrants, at any time 30 days after the consummation of the Business Combination. The Business Combination Private Placement

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Warrants and Accel Public Warrants have terms and provisions that are identical to those of the Pace Public Warrants, except:

• The Business Combination Private Placement Warrants and Accel Public Warrants will expire five years after the consummation of the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

• The Business Combination Private Placement Warrants and Accel Public Warrants (including the shares of Class A-1 common stock issuable upon exercise thereof) are subject to lock-up provisions that provide that so long as such warrants are held by a Seller receiving Business Combination Private Placement Warrants and/or Accel Public Warrants in connection with the Business Combination or its permitted transferees, such securities are not transferable, assignable or salable until 30 days after the consummation of the Business Combination and will not be redeemable, except that such warrants (including the shares of Class A-1 common stock issuable upon exercise thereof) may be transferred by such holders (a) to the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors, any members of the Accel holder, or any affiliates of the Accel holder, (b) in the case of an individual, by gift to a member of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family, an affiliate of such person or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) in the event of the Company’s liquidation, merger, share exchange, reorganization or other similar transaction which results in all of the Company’s stockholders having the right to exchange their Pace Public Shares for cash, securities or other property subsequent to the completion of the Business Combination; provided, however, that in the case of clauses (a) through (d) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions.

• If holders of the Business Combination Private Placement Warrants and/or Accel Public Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of Class A-1 common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A-1 common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the shares of Class A-1 common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent.

• The Business Combination Private Placement Warrants and Accel Public Warrants may not be exercised if (a) prior to giving effect to the exercise, the holder such warrant beneficially owns less than 4.99% of the total number of shares of Class A-1 common stock issued and outstanding at such time and (b) after giving effect to such exercise, the holder of such warrant would beneficially own in excess of 4.99% of the total Class A-1 common stock issued and outstanding at such time. However, notwithstanding the foregoing limitation, the Business Combination Private Placement Warrants and Accel Public Warrants held by a holder that has obtained all required gaming approvals from applicable gaming authorities permitting such holder to beneficially own shares of Class A-1 common stock in an amount in excess of 4.99% of the total number of shares of Class A-1 common stock issued and outstanding at such time shall immediately be exercisable without regard to such limitation.

The Business Combination Private Placement Warrants and Accel Public Warrants were issued under the Business Combination Warrant Agreement. You should review a copy of the Business Combination Warrant Agreement for a complete description of the terms and conditions applicable to the Business Combination Private Placement Warrants and Accel Public Warrants.

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Certain Anti-Takeover Provisions of Delaware Law, the Charter and Bylaws

The Company is subject to the provisions of Section 203 of the DGCL (“Section 203”) regulating corporate takeovers.

Section 203 prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination” with:

• a stockholder who owns fifteen percent or more of the Company’s outstanding voting stock (otherwise known as an “interested stockholder”);

• an affiliate of an interested stockholder; or

• an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.

A “business combination” includes a merger or sale of more than ten percent of the Company’s assets. However, the above provisions of Section 203 do not apply if:

• the Company Board approves the transaction that made the stockholder an interested stockholder, prior to the date of the transaction;

• after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of the Company’s voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or

• on or subsequent to the date of the transaction, the business combination is approved by the Company Board and authorized at a meeting of the Company’s stockholders, and not by written consent, by an affirmative vote of two-thirds of the outstanding voting stock not owned by the interested stockholder.

In addition, the Charter does not provide for cumulative voting in the election of directors. The Company Board will be empowered to elect a director to fill a vacancy created by the expansion of the Company Board or the resignation, death, or removal of a director in certain circumstances; and the advance notice provisions will require that stockholders must comply with certain procedures in order to nominate candidates to the Company Board or to propose matters to be acted upon at a stockholders’ meeting.

The Company’s authorized but unissued common stock and preferred stock will be available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved Common Stock and Preferred Stock could render more difficult or discourage an attempt to obtain control of the Company by means of a proxy contest, tender offer, merger or otherwise.

Forum Selection

Subject to certain limitations, the Charter provides that unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring: (i) any derivative action or proceeding brought on behalf of the Company; (ii) any action asserting a claim of breach of fiduciary duty owed by any director or officer of the Company to the Company or the Company’s stockholders, creditors or other constituents; (iii) any action asserting a claim arising pursuant to any provision of the DGCL or Charter or the Bylaws; or (iv) any action asserting a claim against the Company governed by the internal affairs doctrine. The Bylaws also provide that the federal district courts of the United States are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.

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Rule 144

Pursuant to Rule 144 of the Securities Act (“Rule 144”), a person who has beneficially owned restricted shares or warrants for at least six months would be entitled to sell their securities, provided that (i) such person is not deemed to have been one of the Company’s affiliates at the time of, or at any time during the three months preceding, a sale and (ii) the Company is subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as the Company was required to file reports) preceding the sale. Persons who have beneficially owned restricted shares or warrants for at least six months but who are affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:

• one percent (1%) of the total number of shares of Common Stock outstanding as shown on the most recent report or statement published by the Company; or

• the average weekly reported trading volume of trading in such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Sales by the Company’s affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about the Company.

Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies

Rule 144 is not available for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:

• the issuer of the securities that was formerly a shell company has ceased to be a shell company;

• the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;

• the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and

• at least one year has elapsed from the filing of our Current Report on Form 8-K, filed with the SEC on November 26, 2019, reflecting our status as an entity that is not a shell company.

As of September 18, 2020, the Company had 83,784,083 shares of Class A-1 common stock outstanding. 24,285,196 shares of Class A-1 common stock issued to Sellers in connection with the Business Combination Private Placement and 4,696,675 shares of Class A-1 common stock issued to the PIPE Investors in connection with the Investment Private Placement are restricted securities for purposes of Rule 144. 200,000 shares of Class A-1 common stock issued in connection with the Director Share Exchange and 7,800,000 shares of Class A-1 common stock issued in connection with the Sponsor Share Exchange are restricted securities under Rule 144, in that they were issued in private transactions not involving a public offering. All such restricted shares have been registered for resale under the Securities Act.

As of September 18, 2020, the Company had 3,403,363 shares of Class A-2 common stock outstanding.

As of September 18, 2020, the Company had 1,452,867 Accel Warrants outstanding, consisting of 1,439,812 Pace Private Placement Warrants, and 13,055 Accel Public Warrants. All such restricted warrants have been registered for resale under the Securities Act.

Listing of Securities

Our Class A-1 common stock is listed on the NYSE under the symbols “ACEL.”

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SHARES AVAILABLE FOR FUTURE SALE

Future sales of substantial amounts of our Class A-1 common stock in the public market could adversely affect prevailing market prices. Furthermore, since only a limited number of shares will be available for sale shortly after the offering because of contractual and legal restrictions on resale described below, sales of substantial amounts of shares of our Class A-1 common stock in the public market after the restrictions lapse could adversely affect the prevailing market price for shares of our Class A-1 common stock as well as our ability to raise equity capital in the future.

As of September 18, 2020, we had 83,784,083 shares of Class A-1 common stock outstanding. 56,669,265 of such shares are freely tradable without restriction or further registration under the Securities Act, except that any shares purchased by our affiliates may generally only be sold in compliance with Rule 144, which is described below.

In addition, we have reserved a total of 293,921 shares of Class A-1 common stock for issuance under our 2011 Plan, 603,253 shares of Class A-1 common stock for issuance under our 2016 Plan and 3,104,403 shares of Class A-1 common stock for issuance under our LTIP.

Based on the number of shares of Class A-1 common stock outstanding as of September 18, 2020, assuming we sell 8,000,000 shares in this offering and the underwriters do not exercise their option to purchase additional shares, then upon the closing of this offering, 91,784,083 shares of Class A-1 common stock will be outstanding. At the end of a 60-day contractual lock up period, pursuant to which our directors, officers and the selling stockholders will be restricted from selling, disposing of, or hedging any shares or any securities convertible into or exchangeable for shares of our Class A-1 common stock, up to 61,868,235 of our shares of Class A-1 common stock will be eligible for resale under the Registration Statement on Form S-1 (333-236501) or otherwise freely tradable, subject to contractual restrictions in our Registration Rights Agreement. On November 27, 2020, the one-year anniversary of the date on which we filed the information required by a Form 10 Registration Statement with the SEC, we expect that our Class A-1 common stock will become available for sale under Rule 144 (subject to volume, manner of sale limitations and other conditions applicable to affiliates as set forth under Rule 144 as described further below).

As of the date of this registration statement, there are approximately 1,452,867 warrants outstanding, consisting of (i) 1,439,812 Pace Private Placement Warrants, and (ii) 13,055 Accel Public Warrants. Each such warrant is exercisable for one share of our Class A-1 common stock at an exercise price of $11.50 per share.

Lock-Up Agreements

We, our executive officers and directors and the selling stockholders have entered into lock-up agreements with the underwriters of this offering, under which we and they have agreed, or will agree, that, subject to certain exceptions, we and they will not sell, dispose of, or hedge any shares or any securities convertible into or exchangeable for shares of our Class A-1 common stock until 60 days after the date of the final prospectus relating to this offering. The restrictions with the underwriters also apply to common stock owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition. At any time and without public notice, Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC may, in their sole discretion, release all or some of the securities from these lock-up agreements.

The transfer restrictions in the lock-up agreement with the underwriters include certain exclusions, including customary carve-outs. A transfer of shares pursuant to such carve-outs could result in additional shares becoming freely tradable prior to the expiration of the applicable lock-up period.

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Rule 144

Pursuant to Rule 144, a person who has beneficially owned restricted shares of our common stock or our warrants for at least six months would be entitled to sell their securities provided that (1) such person is not deemed to have been an affiliate of us at the time of, or at any time during the three months preceding, a sale and (2) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required to file reports) preceding the sale.

Persons who have beneficially owned restricted shares of our common stock or our warrants for at least six months but who are affiliates of us at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:

• 1% of the total number of shares of our common stock then outstanding; or

• the average weekly reported trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Sales by our affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about us.

Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies

Rule 144 is generally not available for the resale of securities initially issued by shell companies or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:

• the issuer of the securities that was formerly a shell company has ceased to be a shell company;

• the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;

• the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and

• at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.

While we were formed as a shell company, since the completion of the Business Combination we are no longer a shell company, and so, once the conditions set forth in the exceptions listed above are satisfied, Rule 144 will become available for the resale of the above noted restricted securities.

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information known to the Company regarding the beneficial ownership of Class A-1 common stock, that upon the consummation of this offering, will be owned by:

• each person known to the Company to be the beneficial owner of more than 5% of outstanding Company common stock;

• each of the Company’s executive officers and directors;

• all executive officers and directors of the Company as a group; and

• the selling stockholders.

For further information regarding material transactions between us and our selling stockholders, see “Certain Relationships and Related Transactions.”

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days. Company stock issuable upon exercise of options and warrants currently exercisable within 60 days are deemed outstanding solely for purposes of calculating the percentage of total voting power of the beneficial owner thereof.

The beneficial ownership of Company common stock is based on 83,784,083 shares of Class A-1 common stock outstanding as of September 18, 2020 before the offering, 91,784,083 shares of Class A-1 common stock to be outstanding after this offering, assuming no exercise of the underwriters’ option to purchase additional shares and 92,104,320 shares of Class A-1 common stock to be outstanding after this offering assuming full exercise of the underwriters’ option to purchase additional shares.

Unless otherwise indicated, the Company believes that each person named in the table below has sole voting and investment power with respect to all shares of Company common stock beneficially owned by them. Such beneficial ownership reflects security ownership known to the Company.

	Beneficial Ownership of Class A-1 Shares Before Offering					Class A-1 Shares to be Sold in the Offering		Beneficial Ownership of Class A-1 Shares After Offering (Assuming Exercise of Option to Purchase Additional Class A-1 Shares in Full)					Beneficial Ownership of Class A-1 Shares After Offering (Assuming No Exercise of Option to Purchase Additional Class A-1 Shares in Full)
Name and Address of Beneficial Owners(1)	Number of Shares		Percentage			Number of Shares		Number of Shares		Percentage			Number of Shares		Percentage
5% Stockholders:
The Rubenstein Family(2)(6)(8)		14,801,676		17.67	%		900,000		13,901,676		15.09	%		14,144,713		15.41	%
Entities affiliated with Clairvest(3)		16,898,868		20.17	%		3,379,774		13,519,094		14.68	%		14,431,773		15.72	%
Simcoe Capital Management, LLC(4)		4,037,009		4.82	%		—		4,037,009		4.38	%		4,037,009		4.40	%
Fairview Capital Management, LLC(5)		7,227,235		8.63	%		—		7,227,235		7.85	%		7,227,235		7.87	%
Named Executive Officers and Directors:
Andrew Rubenstein(6)		8,637,854		10.31	%		500,000		8,137,854		8.84	%		8,272,875		9.01	%
Karl Peterson(7)		3,155,512		3.77	%		250,036		2,905,476		3.15	%		2,991,717		3.26	%
Brian Carroll		387,812			*		100,000		287,812			*		314,816			*
Derek Harmer		253,274			*		40,000		213,274			*		224,076			*
Gordon Rubenstein(8)		3,045,088		3.63	%		100,000		2,945,088		3.20	%		2,972,092		3.24	%
Kathleen Philips(9)		40,000			*		—		40,000			*		40,000			*

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	Beneficial Ownership of Class A-1 Shares Before Offering					Class A-1 Shares to be Sold in the Offering		Beneficial Ownership of Class A-1 Shares After Offering (Assuming Exercise of Option to Purchase Additional Class A-1 Shares in Full)					Beneficial Ownership of Class A-1 Shares After Offering (Assuming No Exercise of Option to Purchase Additional Class A-1 Shares in Full)
Name and Address of Beneficial Owners(1)	Number of Shares		Percentage			Number of Shares		Number of Shares		Percentage			Number of Shares		Percentage
David W. Ruttenberg(10)		1,987,878		2.37	%		—		1,987,878		2.16	%		1,987,878		2.17	%
Ken Rotman(11)		—			*		—		—			*		—			*
Eden Godsoe(12)		—			*		—		—			*		—			*
Dee Robinson		—			*		—		—			*		—			*
All executive officers and directors as a group (13 persons)		17,590,811		21.00	%		990,036		16,600,775		18.02	%		16,886,847		18.40	%
Selling Stockholders:
Jeffrey C Rubenstein, Trustee or his successors in trust, of the Susan Rubenstein Family Trust		2,761,059		3.30	%		300,000		2,461,059		2.67	%		2,542,071		2.77	%
TPG Pace Governance, LLC(13)		4,585,737		5.47	%		809,953		3,775,784		4.10	%		3,975,784		4.33	%
Clairvest Equity Partners V Limited Partnership(14)		9,941,741		11.87	%		1,988,348		7,953,393		8.64	%		8,490,329		9.25	%
Clairvest Equity Partners V-A Limited Partnership(15)		1,887,457		2.25	%		377,492		1,509,965		1.64	%		1,611,904		1.76	%
CEP V Co-Invest Limited Partnership(16)		5,069,670		6.05	%		1,013,934		4,055,736		4.40	%		4,329,540		4.72	%

 * Less than 1 percent.

(1) Unless otherwise noted, the business address of each of the persons and entities listed above is 140 Tower Drive, Burr Ridge, IL 60527.

(2) Includes shares beneficially owned by Andrew Rubenstein, Gordon Rubenstein, Jeffrey C. Rubenstein and Jeffrey C. Rubenstein, as trustee, or his successors in trust, of the Susan Rubenstein Family Trust and reflects the shares being sold by each of them set forth separately in the table above.

(3) Includes shares beneficially owned by Clairvest Equity Partners V-A Limited Partnership, Clairvest Equity Partners V Limited Partnership and CEP V Co-Investment Limited Partnership and reflects the shares being sold by each of them set forth separately in the table above. Of the shares beneficially owned, each of the foregoing limited partnerships has the power to make voting and dispositive decisions with respect to such shares. Clairvest Group Inc. is the sole shareholder of (i) Clairvest GP (GPLP) Inc., which is the general partner of Clairvest General Partner V L.P., which is the general partner of (a) Clairvest Equity Partners V-A Limited Partnership and (b) CEP V Co-Investment Limited Partnership and (ii) Clairvest GP Manageco Inc., which is the general partner of Clairvest Equity Partners V Limited Partnership. Mr. Ken Rotman is a director of the Company and the Chief Executive Officer and Managing Director of Clairvest Group Inc. The address of each of the foregoing is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3.

(4) Based solely on information contained in a Schedule 13G filed with the SEC by Simcoe Capital Management, LLC on November 25, 2019. Of the shares beneficially owned, Simcoe Capital Management, LLC reported that it had sole voting and dispositive power with respect to 0 shares, and shared voting and dispositive power with respect to 4,037,009 shares. The address for Simcoe Capital Management, LLC is 509 Madison Avenue, Suite 2200, New York, New York 10022.

(5) Based solely on information contained in a Schedule 13G filed with the SEC by Fairview Capital Investment Management, LLC on December 23, 2019. Of the shares beneficially owned, Fairview Capital Investment Management, LLC reported that it had sole voting and dispositive power with respect to 0 shares, and shared voting and dispositive power with respect to 7,227,235 shares. The address for Fairview Capital Investment Management, LLC is 300 Drakes Landing Road, Suite 250, Greenbrae, CA 94904.

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(6) Includes shares beneficially owned by Mr. A. Rubenstein through Harry R, LLC, of which Mr. A. Rubenstein is the sole member and has shared voting and dispositive power thereto, and 21,885 shares of Class A-1 common stock issuable upon exercise of stock options within 60 days of September 18, 2020. The shares of Class A-1 common stock being sold in the offering are held by Andrew Rubenstein.

(7) Includes shares beneficially owned by Mr. Peterson through Peterson Capital Partners, L.P., of which Mr. Peterson is the President and has sole voting and dispositive power thereto, by Karter Peterson and by Kennedy Peterson. The shares of Class A-1 common stock being sold in the offering are held by Peterson Capital Partners, L.P. Peterson Capital Partners, L.P.’s address is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102.

(8) Includes shares beneficially owned by Mr. G. Rubenstein through Fund Indy LLC, of which Mr. G. Rubenstein is the sole member and has shared voting and dispositive power thereto, The PrivateBank &Trust Company, as Custodian of the Gordon Rubenstein SEP IRA, of which Mr. G. Rubenstein is the sole member and has shared voting and dispositive power thereto and Gordon S. Rubenstein and Krista M. Ramonas Joint Revocable Trust, of which Mr. G. Rubenstein is the trustee and has shared voting and dispositive power thereto. The shares of Class A-1 common stock being sold in the offering are held by the Gordon S. Rubenstein and Krista M. Ramonas Joint Revocable Trust.

(9) The address of Ms. Philips is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102.

(10) Includes shares beneficially owned by Mr. Ruttenberg, solely as trustee, or his successors in trust, of the David W. Ruttenberg Revocable Trust, as now or hereafter amended, of which Mr. Ruttenberg is the trustee and has sole voting and dispositive power thereto, and through Grant Place Fund LLC, of which Mr. Ruttenberg is a member and has shared voting and dispositive power thereto, Crilly Court Trust, of which Mr. Ruttenberg is the sole beneficiary and Lakewest Gaming G.P., of which Mr. Ruttenberg has sole voting and dispositive power.

(11) Mr. Ken Rotman is a director of the Company and the Chief Executive Officer and Managing Director of Clairvest Group Inc. The address of Mr. Rotman is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3.

(12) The address of Ms. Godsoe is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102.

(13) Includes 359,953 shares of Class A-1 common stock issuable upon the settlement of a warrant exchange within 60 days of September 18, 2020. The sole member of TPG Pace Governance, LLC is TPG Holdings III, L.P., a Delaware limited partnership, whose general partner is TPG Holdings III-A, L.P., a Cayman Islands limited partnership, whose general partner is TPG Holdings III-A, Inc., a Cayman Islands corporation, whose sole shareholder is TPG Group Holdings (SBS), L.P., a Delaware limited partnership, whose general partner is TPG Group Holdings (SBS) Advisors, LLC, a Delaware limited liability company, whose sole member is TPG Group Holdings (SBS) Advisors, Inc., a Delaware corporation. David Bonderman and James Coulter are sole shareholders of TPG Group Holdings (SBS) Advisors, Inc. and may therefore be deemed to be the beneficial owners of the securities held by TPG Pace Governance, LLC. Messrs. Bonderman and Coulter disclaim beneficial ownership of the securities held by TPG Pace Governance, LLC except to the extent of their pecuniary interest therein. The address of TPG Pace Governance, LLC is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102.

(14) The address of Clairvest Equity Partners V Limited Partnership is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3. See Note (3) above for more information.

(15) The address of Clairvest Equity Partners V-A Limited Partnership is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3. See Note (3) above for more information.

(16) The address of CEP V Co-Invest Limited Partnership is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3. See Note (3) above for more information.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Other than as described in “Executive Compensation,” the following is a summary of transactions since January 1, 2017 to which Pace or Accel, as applicable, has been a participant, in which:

• the amount involved exceeded or will exceed $120,000; and

• any of its directors, executive officers, or holders of more than 5% of its capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest, other than compensation and other arrangements that are described in the section titled “Executive Compensation” or that were approved by the board of directors of Accel prior to the Business Combination (the “Accel Board”) or the Company Board, as applicable.

Accel believes the terms obtained or consideration that it paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable in arm’s-length transactions.

Tender and Exchange Agreement

Each of the following (and/or an affiliate thereof) agreed to tender all of their outstanding Pace Private Placement Warrants, Accel Public Warrants and Business Combination Private Placement Warrants in exchange offer, pursuant to which each holder had the right to receive 0.250 shares of Accel’s Class A-1 common stock in exchange for each warrant tendered by the holder and exchanged pursuant to the offer, pursuant to a Tender and Exchange Agreement: (i) Andrew Rubenstein, our Chief Executive Officer, President and Director, (ii) Brian Carroll, our Chief Financial Officer, (iii) Derek Harmer, our General Counsel, Chief Compliance Officer and Secretary, (iv) Gordon S. Rubenstein, a member of our board of directors, (v) David W. Ruttenberg, a member of our board of directors, (vi) the Clairvest Investors, which are affiliated with Kenneth B. Rotman, a member of our board of directors and (vii) the Pace Sponsor Members. The Tender and Exchange Agreement related to approximately 94% of the then-outstanding Pace Private Placement Warrants, Accel Public Warrants and Business Combination Private Placement Warrants.

Investment Private Placement

In connection with the Business Combination, Pace entered into Subscription Agreements concurrently with the execution of the Transaction Agreement and an additional Subscription Agreement on August 13, 2019 (collectively, “Subscription Agreements”). Pursuant to the Subscription Agreements, the investors party thereto agreed to subscribe for and Pace agreed to issue and sell to such investors, 4,696,675 shares of Class A-1 common stock for a purchase price of $10.22 per share, or an aggregate of approximately $48 million (the “Investment Private Placement”). The proceeds from the Investment Private Placement were used to fund a portion of the cash consideration required to effect the Stock Purchase.

Founder Ordinary Shares

On February 22, 2017, Initial Pace Sponsor purchased 11,500,000 Founder Ordinary Shares for $25,000, or approximately $0.002 per share. On June 19, 2017, Initial Pace Sponsor transferred 40,000 Founder Ordinary Shares to each of Pace’s five independent directors at their original purchase price. On August 14, 2017, Initial Pace Sponsor forfeited 250,000 Founder Ordinary Shares on the expiration of the unexercised portion of the underwriters’ over-allotment option.

In connection with the Business Combination and immediately prior to the Stock Purchase, at the effective time of the Pace Domestication, each Founder Ordinary Share was converted into the right to receive one Class F Share. Following the Pace Domestication, Initial Pace Sponsor, pursuant to a letter agreement dated as of June 13, 2019 (as amended, the “Pace Sponsor Support Agreement”), by and among Initial Pace Sponsor, Pace

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and the Shareholder Representative, agreed to (i) surrender for cancellation 1,250,000 shares of Class F common stock, (ii) exchange 2,000,000 shares of Class F common stock for an equal number of shares of Class A-2 common stock, subject to the terms set forth in the Restricted Stock Agreement, (iii) exchange the remaining 7,800,000 shares of Class F common stock for an equal number of shares of Class A-1 common stock, pursuant to the Charter. See also “—Waiver Agreement” beginning on page 119.

Pace Private Placement Warrants

On the closing date of the Pace IPO, Initial Pace Sponsor purchased 7,333,333 Pace Private Placement Warrants at a price of $1.50 per Pace Private Placement Warrant, or $11,000,000 in the aggregate, in a private placement. Each Pace Private Placement Warrant entitled the holder to purchase one Pace Public Share at a price of $11.50 per share. Pace Private Placement Warrants may not be redeemed by Pace so long as they are held by Initial Pace Sponsor or its permitted transferees. If any Pace Private Placement Warrants are held by holders other than Initial Pace Sponsor or its permitted transferees, such Pace Private Placement Warrants will be redeemable by Pace and exercisable by the holders on the same basis as the Pace Public Warrants. Initial Pace Sponsor or its permitted transferees have the option to exercise the Pace Private Placement Warrants on a cashless basis.

In connection with the Business Combination and following the Pace Domestication, Initial Pace Sponsor surrendered for cancellation 2,444,444 Pace Private Placement Warrants, and distributed its remaining 4,888,889 Pace Private Placement Warrants to the Pace Sponsor Members. In connection with the Pace Domestication, each Pace Private Placement Warrant, originally exercisable for one Pace Public Share at $11.50 per Pace Public Share, now entitles its holder to acquire a corresponding number of shares of Class A-1 common stock on the same terms as in effect immediately prior to the Pace Domestication.

For more information on the Pace Private Placement Warrants, see the section entitled “Description of Capital Stock—Warrants” beginning on page 103.

Pace Registration Rights Agreement

Initial Pace Sponsor and the original independent directors of Pace, as holders of the Founder Ordinary Shares, and the resulting shares of Class A-1 common stock following the Business Combination, and Pace Private Placement Warrants were entitled to registration rights pursuant to a registration rights agreement (the “Pace Registration Rights Agreement”) entered into in connection with the Pace IPO. The holders of these securities were entitled to make up to three demands that Pace register the shares of Class A-1 common stock issued or issuable upon conversion of any Founder Ordinary Shares, the Pace Private Placement Warrants and the shares of Class A-1 common stock underlying the Pace Private Placement Warrants. In addition, the holders had certain “piggy-back” registration rights with respect to other registration statements filed by Pace subsequent to its completion of an initial business combination and rights to require Pace to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provided that Pace would not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock up period. Pace agreed to bear the expenses incurred in connection with the filing of any such registration statements.

At the consummation of the Business Combination, Accel entered into the Registration Rights Agreement with, among others, the holders of Founder Ordinary Shares and Pace Private Placement Warrants who were previously party to the Pace Registration Rights Agreement (the “Pace Registration Rights Holders”), which replaced the Pace Registration Rights Agreement. Pursuant to the Registration Rights Agreement, the Pace Registration Rights Holders are entitled to certain registration rights. See “—Registration Rights Agreement” beginning on page 122.

Related Party Notes

Between February 14, 2017 (inception) and June 30, 2017 (the closing date of the Pace IPO), Initial Pace Sponsor loaned Pace $300,000 in unsecured promissory notes. The funds were used to pay up front expenses

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associated with the Pace IPO. These notes were non-interest bearing and were repaid in full to Initial Pace Sponsor on June 30, 2017.

Initial Pace Sponsor, executive officers and directors, or any of their respective affiliates, were reimbursed for any out-of-pocket expenses incurred in connection with activities on Pace’s behalf, such as identifying potential target businesses and performing due diligence on suitable business combination opportunities. Pace’s audit committee reviewed on a quarterly basis all payments that were made to Initial Pace Sponsor, officers or directors of Pace or their respective affiliates and determined which expenses and the amount of expenses that would be reimbursed. There was no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on Pace’s behalf.

In addition, in order to finance transaction costs in connection with an initial business combination, Initial Pace Sponsor or an affiliate of Initial Pace Sponsor or certain of Pace’s officers and directors may have, but were not obligated to, loan Pace funds as may have been required. On September 25, 2019, Initial Pace Sponsor agreed to loan Pace unsecured promissory notes in an aggregate principal balance of up to $7,000,000, with advances and re-advances outstanding under the note to be updated from time to time. On September 25, 2019, Pace borrowed $3,000,000 against the unsecured promissory notes. The funds were used to finance transaction costs in connection with the Business Combination. Pace repaid amounts outstanding under such promissory notes at the consummation of the Business Combination. In the event that the Business Combination did not close, Pace was permitted to use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account were permitted to be used for such repayment.

Promoters of Pace

Initial Pace Sponsor and Pace’s executive officers and directors prior to the Business Combination (including Karl Peterson, Chad Leat, Robert Suss, Paul Walsh and Kathleen Philips) were deemed to be Pace’s “promoters” as such term is defined under the federal securities laws.

Waiver Agreement

Concurrently with the execution of the Transaction Agreement, Pace and holders of Founder Ordinary Shares entered into a Waiver Agreement (the “Waiver Agreement”), pursuant to which such holders agreed to waive any adjustment to the conversion ratio of Founder Ordinary Shares as set forth in Pace’s amended and restated memorandum and articles of association at the time of execution of such Waiver Agreement, resulting from the Investment Private Placement.

Private Aircraft Travel

Pace reimbursed affiliates for reasonable travel related expenses incurred while conducting business on behalf of Pace, including the use of private aircraft. During the period from February 14, 2017 (inception) to December 31, 2019, travel related reimbursements for private aircraft use were less than $65,000. Private aircraft services were provided by independent third parties, coordinated by an affiliate of Pace and billed to Pace at cost.

Indemnity

Initial Pace Sponsor agreed that it would be liable to Pace if and to the extent any claims by a vendor (other than Pace’s independent auditors) for services rendered or products sold to Pace, or a prospective target business with which Pace has discussed entering into a transaction agreement, reduced the amount of funds in the Trust Account to below (i) $10.00 per Pace Public Share or (ii) such lesser amount per Pace Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which was permitted to be withdrawn to fund Pace’s working capital requirements, subject to an annual limit of $750,000, and/or to pay taxes. Claims by a third party who executed a

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waiver of any and all rights to seek access to the Trust Account were also an exception to this agreement with Initial Pace Sponsor, as were any claims under Pace’s indemnity of the underwriters of the Pace IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver were deemed to be unenforceable against a third party, Initial Pace Sponsor would not be responsible to the extent of any liability for such third-party claims. Pace did not independently verify whether Initial Pace Sponsor had sufficient funds to satisfy its indemnity obligations and believed that Initial Pace Sponsor’s only assets were securities of Pace and, therefore, Initial Pace Sponsor would not be able to satisfy those obligations. Pace had not asked Initial Pace Sponsor to reserve for such eventuality as Pace believed the likelihood of Initial Pace Sponsor having to indemnify the Trust Account was limited because Pace would endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with Pace waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Administrative Services Agreement

On June 30, 2017, Pace entered into an agreement to pay monthly recurring expenses of $20,000 for office space, administrative and support services to an affiliate of Initial Pace Sponsor. The agreement terminated upon the completion of the Business Combination. For the three months ended December 31, 2019 and 2018, Pace incurred expenses of $20,000 and $60,000, respectively, under this agreement. For each of the nine months ended December 31, 2019 and 2018, Pace incurred expenses of $140,000 under this agreement.

Related Party Notes and Debts

On October 1, 2018, Brian Carroll, the Chief Financial Officer of Accel, entered into a promissory note with Accel Entertainment Gaming, LLC, a subsidiary of Accel, pursuant to which Mr. Carroll borrowed a principal amount of $172,200. The promissory note was satisfied in full prior to the consummation of the Business Combination.

On October 1, 2018, Derek Harmer, the General Counsel, Chief Compliance Officer and Secretary of Accel, entered into a promissory note with Accel Entertainment Gaming, LLC, a subsidiary of Accel, pursuant to which Mr. Harmer borrowed a principal amount of $154,397. The promissory note was satisfied in full prior to the consummation of the Business Combination.

On September 30, 2018, Andrew Rubenstein, the Chief Executive Officer and a director of Accel, entered into two promissory notes with Accel Entertainment Gaming, LLC, a subsidiary of Accel, pursuant to which Mr. A. Rubenstein borrowed principal amounts of $95,354 and $325,000. The promissory notes were satisfied in full prior to the consummation of the Business Combination.

As of December 31, 2018, Mr. A. Rubenstein owed Accel $502,894 in connection with a federal tax liability arising from a grant of restricted stock that Accel paid on Mr. A. Rubenstein’s behalf. The debt was satisfied in full prior to the consummation of the Business Combination.

Director Letter Agreements

Concurrently with the execution of the Transaction Agreement, Pace and the independent directors of Pace entered into letter agreements pursuant to which such directors agreed that, following the Pace Domestication but prior to the effectiveness of the Stock Purchase, 200,000 shares of Class F common stock held by such directors would be exchanged for an equal number of validly issued, fully paid and non-assessable shares of Class A-1 common stock.

Key Holder Support Agreement

Concurrently with the execution of the Transaction Agreement, Pace and certain Sellers who are members of management of Accel entered into that certain Key Holder Support Agreement (the “Key Holder Support

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Agreement”), pursuant to which such members agreed (i) to restrict the amount of Accel Stock they exchange to receive cash for to less than 20% of the number of shares of Accel Stock owned by such member and each of its affiliates on an aggregated basis (ii) not to transfer any of their Accel Stock (except to a permitted transferee or in furtherance of the transactions contemplated by the Transaction Agreement) and (iii) to enter into the Registration Rights Agreement.

Holder Support Agreement

Concurrently with the execution of the Transaction Agreement, Pace, NewCo and certain Sellers entered into a holder support agreement, pursuant to which such Sellers agreed (i) to make non-binding elections to receive cash in exchange for their shares of Accel Stock, (ii) not to transfer any of their Accel Stock and any security convertible or exchangeable into Accel Stock (except to a permitted transferee or in furtherance of the transactions contemplated by the Transaction Agreement), and (iii) to enter into the Registration Rights Agreement if such Seller was entitled to receive Business Combination Private Placement Warrants and shares of Class A-2 common stock in the Stock Purchase as consideration for such Seller’s Accel Stock.

Drag-Along Agreement

Concurrently with the execution of the Transaction Agreement, Pace and the Business Combination Private Placement Sellers entered into a Drag-Along Agreement, pursuant to which such Sellers agreed to exercise their drag-along rights pursuant to and in accordance with the articles of incorporation of Accel and the shareholders agreement of Accel, in a manner so as to facilitate the consummation of the transactions contemplated by the Transaction Agreement.

Nominating and Support Agreement and Mutual Support Agreement

On November 6, 2019, Pace, NewCo, Clairvest Equity Partners V Limited Partnership, an Ontario limited partnership (“CEP V”), Clairvest Equity Partners V-A Limited Partnership, an Ontario limited partnership (“CEP V-A”), and CEP V Co-Investment Limited Partnership, a Manitoba limited partnership (“CEP Co-Invest,” and together with CEP V and CEP V-A, the “Clairvest Investors”), entered into a Nominating and Support Agreement (the “Nominating Agreement”), whereby, in consideration for the Clairvest Investors delivering (a) a joinder agreement to the Transaction Agreement, and (b) a cash election form setting forth a cash election with respect to (i) the shares of Accel Stock that the Clairvest Investors owned, beneficially (as defined in Rule 13d-3 under the Exchange Act) or of record, (ii) any security convertible or exchangeable into Accel Stock and (iii) any additional such securities that the Clairvest Investors acquired after the execution of the Nominating Agreement, Pace agreed to (x) appoint Kenneth B. Rotman to the Company Board contemporaneously with the closing of the Business Combination as a Class III director with a term expiring at the 2022 annual meeting of the stockholders of the Company and (y) nominate Kenneth B. Rotman to the Company Board as set forth in the Nominating Agreement.

Pursuant to the Nominating Agreement, Pace also agreed, subject to the requirements of fiduciary duties under applicable laws, to include in its slate of nominees for election as directors at any meeting of stockholders or action by written consent at which directors are to be elected to the Company Board (each such meeting or action by written consent, an “Election Meeting”), one individual (an “8% Nominee”) nominated to the Company Board by the Clairvest Investors, provided that the Clairvest Investors hold (together with their affiliates) at least 8% of the outstanding shares of Class A-1 common stock until the earlier of (i) the date upon which the Clairvest Investors (together with its affiliates) do not own at least 8% of the outstanding shares of Class A-1 common stock, or (ii) November 20, 2026, the seven year anniversary of the consummation of the Business Combination; provided, that, certain requirements listed in the Nominating Agreement are met. Additionally, the Clairvest Investors agreed, until Kenneth B. Rotman or an 8% Nominee is no longer serving on the Company Board, to vote (or cause to be voted) all shares of Class A-1 common stock beneficially owned or owned of record by the

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Clairvest Investors at any meeting of the stockholders of the Company in favor of each director nominated by the Company Board (or its Nominating and Corporate Governance Committee), as provided in any notice of any meeting of the stockholder of the Company and the accompanying management information circular, including all schedules, appendices and exhibits to, and information incorporated by reference in, such management information circular, to be sent to the stockholders of the Company in connection with any such meeting of the stockholders of the Company.

On November 6, 2019, the Clairvest Investors, Mr. Andrew Rubenstein and Mr. Gordon Rubenstein (together with Mr. A. Rubenstein, the “Rubenstein Parties”), entered into a Mutual Support Agreement (the “Mutual Support Agreement”) whereby (i) the Rubenstein Parties agreed to vote in favor of any 8% Nominee, all in accordance with the Nominating Agreement and provided such nominee is included by the Company in its slate of nominees for election as directors of the Company at any Election Meeting and (ii) the Clairvest Investors agreed to vote in favor of any 8% Nominee to the Company Board nominated by the Rubenstein Parties in accordance with the Nominating Agreement and included by the Company in its slate of nominees for election as directors of the Company at any Election Meeting, in each case, with respect to the shares of Class A-1 common stock, beneficially owned (as defined in Rule 13d-3 under the Exchange Act) or owned of record by each such respective party.

Registration Rights Agreement

On November 20, 2019 and in connection with the closing of the Business Combination, Pace, the Pace Sponsor Members, and certain other persons, including certain members of management of Accel, certain Accel shareholders and certain other persons, including the CV Entities, entered into the Registration Rights Agreement (the “Registration Rights Agreement,” and such parties other than Pace, the “Registration Rights Holders”), entitling such holders to demand that Accel register for resale certain shares of Accel held by them at any time from and after the consummation of the Business Combination and subject to certain lock-up restrictions. In connection with the offering described herein, certain parties to the Registration Rights Agreement affiliated with the Company (Andrew H. Rubenstein, Harry R, LLC, Jeffrey C. Rubenstein, Jeffrey C. Rubenstein, as trustee, or his successors in trust, of the Susan Rubenstein Family Trust, Gordon S. Rubenstein, Gordon S. Rubenstein and Krista M. Ramonas Joint Revocable Trust, The PrivateBank & Trust Company, as Custodian of the Gordon Rubenstein SEP IRA and Fund Indy LLC) approved the transfer of, and waived certain transfer restrictions under the Registration Rights Agreement relating to, shares of Class A-1 common stock held by TPG Pace Governance, LLC and Peterson Capital Partners, L.P.

Sponsor Letter Agreement

In connection with the initial public offering of Pace, Pace, Initial Pace Sponsor and certain affiliates entered into that certain Letter Agreement (the “Sponsor Letter Agreement”). In connection with the offering described herein, the parties to the Sponsor Letter Agreement approved the transfer of, and waived certain transfer restrictions under the Sponsor Letter Agreement relating to, shares of Class A-1 common stock held by TPG Pace Governance, LLC and Peterson Capital Partners, L.P.

New Accel Warrant Agreement

In connection with the consummation of the Business Combination, the Company and the Sellers entitled to receive Accel Warrants in the Stock Purchase entered into that certain New Accel Warrant Agreement, pursuant to which the Company issued to each such Sellers their respective pro rata share of 2,444,444 Accel Warrants, with such pro rata share to be determined with reference to a number of shares equal to 70% of such Seller’s shares of Accel Stock, less the number of shares of Accel Stock in respect of which the Seller elected to receive cash. Each Accel Warrant entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the Pace Warrants, at any time 30 days after the consummation of the Business Combination.

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See the section entitled “Description of Capital Stock—Warrants—Business Combination Private Placement Warrants and Accel Public Warrants” beginning on page 108.

Restricted Stock Agreement

In connection with the consummation of the Business Combination, the Company, the Pace Sponsor Members and the Sellers entitled to receive shares of Class A-2 common stock in the Stock Purchase (including all of the Business Combination Private Placement Sellers) entered into the Restricted Stock Agreement (as defined in “Description of Capital Stock—Common Stock—Class A-2 common stock”), which set forth the terms upon which the Class A-2 common stock will be exchanged for an equal number of shares of Class A-1 common stock. The exchange of shares of Class A-2 common stock for shares of Class A-1 common stock will be subject to the terms and conditions set forth in the Restricted Stock Agreement, with such exchanges occurring in three separate tranches upon the satisfaction of certain triggers. On January 14, 2020, the trigger for the first such tranche was satisfied, and 1,596,636 Class A-1 were issued upon exchange of shares of Class A-2 common stock.

See the section entitled “Description of Capital Stock—Common Stock—Class A-2 common stock” beginning on page 101.

Expense Reimbursement Letter

On June 19, 2019, Accel entered into the KPMG Engagement Letter, pursuant to which Accel engaged KPMG to provide professional services to Accel. Pursuant to the KPMG Engagement Letter, any fee amounts to be paid for, and expenses reimbursed under, the Engagement Letter in excess of $750,000 in the aggregate will be paid solely by David W. Ruttenberg, a director and shareholder of Accel and a Shareholder Representative under the Transaction Agreement. In connection with the KPMG Engagement Letter, on June 19, 2019, Pace entered into a letter agreement with David W. Ruttenberg, pursuant to which Pace agreed to reimburse Mr. Ruttenberg for any and all fees and expenses paid by Mr. Ruttenberg in connection with the KPMG Engagement Letter. Since June 19, 2019, Mr. Ruttenberg has been reimbursed for approximately $2.9 million of expenses related to the KPMG Engagement Letter.

Share Repurchases

In connection with the Business Combination, Accel repurchased 36,157 shares of its stock from certain employees, directors and officers at a repurchase price of $177 per share in order to facilitate (x) the repayment of then-existing loans to Accel’s executive officers described in this section (y) the exercise of vested options (including by way of withholding additional shares in connection with the cashless exercise of vested options as permitted by the 2011 Plan (as defined in “Executive Compensation”) and the 2016 Plan (as defined in “Executive Compensation”) and (z) funding any resulting tax obligations from the exercise of such vested options (including by way of withholding additional shares in connection with the cashless exercise of vested options as permitted by the 2011 Plan and the 2016 Plan). In connection with the foregoing, Accel repurchased 30,924 shares from Andrew Rubenstein, 877 shares from Derek Harmer and 978 shares from Brian Carroll. See the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 64.

Engagement of Raine Securities LLC

Accel engaged Raine Securities LLC to provide investment banking services to Accel in connection with the Business Combination. Prior to engaging Raine Securities LLC, Accel acknowledged that Gordon Rubenstein, a director of Accel, is the Managing Partner of Raine Ventures, an affiliate of Raine Securities LLC, where he leads the firm’s venture capital platform. Gordon Rubenstein is also the brother of Accel’s Chief Executive Officer, Andrew Rubenstein. Since January 1, 2017, Accel has paid Raine Securities LLC approximately $11.04 million in fees and expenses in connection with the Business Combination. Raine Securities LLC is also an underwriter of this offering. See “Underwriting (Conflicts of Interest).”

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Engagement of Much Shelist, P.C.

From time to time, Accel engages Much Shelist, P.C. (“Much Shelist”), as its legal counsel for general legal and business matters. Much Shelist has provided limited counsel to Accel with respect to the Business Combination. Jeffrey Rubenstein, an attorney at Much Shelist, is the father of Accel’s Chief Executive Officer, Andrew Rubenstein. For the years ended December 31, 2019, 2018 and 2017, Accel paid Much Shelist $0.6 million, $0.3 million and $0.6 million, respectively.

Asset Acquisition of Fair Share Gaming, LLC and Fair Share Amusement Company

On June 30, 2017, Accel purchased the assets of Fair Share Gaming, LLC and Fair Share Amusement Company, a licensed terminal operator in the state of Illinois and an operator of amusement games and ATMs, respectively, from Michael Pappas, for approximately $60,000,000 (the “Fair Share Gaming Acquisition”). Prior to the Business Combination, Mr. Pappas was an officer and director of Accel.

Relationships with Certain Licensed Establishment Partners

Michael Pappas is the father of William Pappas, a current equityholder of two licensed establishment partners with which Accel has binding agreements to provide VGTs. For the period from January 1, 2017 to December 31, 2019, Accel’s total revenue with respect to these two licensed establishment partners, Pinewoods, LLC and CC of OP, LLC was approximately $10.1 million and $.5 million, respectively.

Indemnification Agreements

On November 20, 2019, Accel entered into indemnity agreements with Messrs. Andrew Rubenstein, Brian Carroll, Derek Harmer, Gordon Rubenstein, David W. Ruttenberg, Kenneth B. Rotman and Karl Peterson and Mses. Eden Godsoe and Kathleen Philips, each of whom is a director and/or officer of Accel. Accel also entered into an indemnity agreement with Ms. Robinson on June 25, 2020. Each indemnity agreement provides that, subject to limited exceptions, and among other things, Accel will indemnify the director or officer to the fullest extent not prohibited by the provisions of its bylaws and the DGCL for claims arising in his or her capacity as our director or officer.

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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a discussion of certain material U.S. federal income tax consequences of the acquisition, ownership and disposition of shares of our Class A-1 common stock. This discussion applies only to shares that are held as capital assets for U.S. federal income tax purposes (generally, property held for investment) and is applicable only to holders who are receiving our shares in this offering.

This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof, which are subject to change, possibly on a retroactive basis, and changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein. We have not sought, and will not seek, a ruling from the IRS as to any U.S. federal income tax consequence described herein. The IRS may disagree with the discussion herein, and its determination may be upheld by a court. This discussion does not address any aspect of state, local or non-U.S. taxation, any tax treaties or any U.S. federal taxes other than income taxes (such as gift and estate taxes).

This discussion is a summary only and does not describe all of the tax consequences that may be relevant to you in light of your particular circumstances, including but not limited to the alternative minimum tax, the Medicare tax on certain investment income and the different consequences that may apply if you are subject to special rules that apply to certain types of investors , including but not limited to:

• financial institutions or financial services entities;

• broker-dealers;

• governments or agencies or instrumentalities thereof;

• qualified foreign pension funds (or any entities all of the interests of which are held by a qualified foreign pension fund);

• regulated investment companies;

• real estate investment trusts;

• expatriates or former long-term residents of the U.S.;

• persons that actually or constructively own five percent or more of our voting shares;

• insurance companies;

• dealers in securities or foreign currencies;

• “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;

• dealers or traders subject to a mark-to-market method of accounting with respect to shares of Class A-1 common stock;

• persons holding shares of Class A-1 common stock as part of a “straddle,” hedge, integrated transaction or similar transaction;

• persons that receive shares of Class A-1 common stock upon the exercise of employee stock options or otherwise as compensation;

• U.S. holders (as defined below) whose functional currency is not the U.S. dollar;

• partnerships or other pass-through entities for U.S. federal income tax purposes and any beneficial owners of such entities; and

• tax-exempt entities.

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You are urged to consult your tax advisor with respect to the application of U.S. federal tax laws to your particular situation, as well as any tax consequences arising under the laws of any state, local or foreign jurisdiction.

This discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold shares of Class A-1 common stock through such entities. If a partnership (or other entity or arrangement classified as a partnership or other pass-through entity for U.S. federal income tax purposes) is the beneficial owner of shares of Class A-1 common stock, the U.S. federal income tax treatment of a partner or member in the partnership or other pass-through entity generally will depend on the status of the partner or member and the activities of the partnership or other pass-through entity. If you are a partner or member of a partnership or other pass-through entity holding our securities, we urge you to consult your own tax advisor.

THIS DISCUSSION IS ONLY A SUMMARY OF CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS ASSOCIATED WITH THE ACQUISITION, OWNERSHIP AND DISPOSITION OF SHARES OF CLASS A-1 COMMON STOCK. EACH PROSPECTIVE INVESTOR IN OUR SECURITIES IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF SHARES OF CLASS A-1 COMMON STOCK, INCLUDING THE APPLICABILITY AND EFFECT OF ANY UNITED STATES FEDERAL NON-INCOME, STATE, LOCAL, OR NON-U.S. TAX LAWS AND TAX TREATIES.

U.S. Holders

This section applies to you if you are a “U.S. holder.” A U.S. holder is a beneficial owner of our shares of Class A-1 common stock who or that is, for U.S. federal income tax purposes:

• an individual who is a citizen or resident of the United States;

• a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; or

• an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

• a trust, if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons (as defined in the Code) have authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under Treasury regulations to be treated as a U.S. person.

Taxation of Distributions. We do not expect to pay any distributions on our Class A-1 common stock in the foreseeable future. However, in the event we do make distributions in cash or other property on our Class A-1 common stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. holder’s adjusted tax basis in its shares of Class A-1 common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the shares of Class A-1 common stock and will be treated as described under “U.S. Holders—Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A-1 common stock” below.

Dividends we pay to a U.S. holder that is taxable as a corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied. With certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest deduction limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. holder may constitute “qualified dividends” that will be subject to tax at the maximum tax rate accorded to long-term capital gains. If the holding period requirements are not satisfied, then a corporation may not be able to qualify for the

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dividends received deduction and would have taxable income equal to the entire dividend amount, and non-corporate holders may be subject to tax on such dividend at regular ordinary income tax rates instead of the preferential rate that applies to qualified dividend income.

Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A-1 common stock. Upon a sale or other taxable disposition of shares of Class A-1 common stock, a U.S. holder generally will recognize capital gain or loss in an amount equal to the difference between (i) the amount of cash and the fair market value of any other property received by the holder and (ii) the U.S. holder’s adjusted tax basis in the shares of Class A-1 common stock disposed of. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. holder’s holding period for the shares so disposed of exceeds one year. Long-term capital gains recognized by non-corporate U.S. holders will generally be eligible to be taxed at reduced rates. If the holding period requirements are not satisfied, any gain on a sale or taxable disposition of the shares would be subject to short-term capital gain treatment and would be taxed at regular ordinary income tax rates. The deductibility of capital losses is subject to limitations.

Information Reporting and Backup Withholding. Certain U.S. holders will be subject to information reporting with respect to the payment of dividends on our Class A-1 common stock and the payment of proceeds on the sale or other disposition of our Class A-1 common stock, and backup withholding may apply unless the U.S. holder provides proof of an applicable exemption or a correct taxpayer identification number and otherwise complies with applicable requirements of the backup withholding rules.

Any amounts withheld under the backup withholding rules generally should be allowed as a refund or a credit against a U.S. holder’s U.S. federal income tax liability provided the required information is timely furnished to the IRS. U.S. holders are urged to consult their own tax advisers regarding the application of backup withholding in their particular circumstances and the availability of and procedure for obtaining an exemption from backup withholding under current Treasury regulations.

Non-U.S. Holders

This section applies to you if you are a “Non-U.S. holder.” As used herein, the term “Non-U.S. holder” means a beneficial owner of Class A-1 common stock who or that is for U.S. federal income tax purposes:

• a non-resident alien individual (other than certain former citizens and residents of the U.S. subject to U.S. tax as expatriates);

• a foreign corporation or

• an estate or trust that is not a U.S. holder;

but generally does not include an individual who is present in the U.S. for 183 days or more in the taxable year of disposition. If you are such an individual, you should consult your tax advisor regarding the U.S. federal income tax consequences of the acquisition, ownership or sale or other disposition of shares of Class A-1 common stock.

Taxation of Distributions. We do not expect to pay any distributions on our Class A-1 common stock in the foreseeable future. However, in the event we do make distributions of cash or other property on our Class A-1 common stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the Non-U.S. holder’s adjusted tax basis in its Class A-1 common stock. Any remaining excess will be treated as capital gain from the sale or exchange of such Class A-1 common stock (see “Non-U.S. Holders—Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A-1 common stock”). Subject to the withholding requirements under FATCA (as defined below) and with respect to effectively connected income, each of which is discussed below, any dividend made to a Non-U.S. holder on our Class A-1 common stock generally will be subject to U.S. withholding tax at a rate

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of 30% of the gross amount of the dividend unless an applicable income tax treaty provides for a lower rate. To receive the benefit of a reduced treaty rate, a Non-U.S. holder must provide the applicable withholding agent with an IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable or successor form) certifying qualification for the reduced rate.

Dividends paid to a Non-U.S. holder that are effectively connected with a trade or business conducted by the Non-U.S. holder in the United States (and, to the extent provided in an applicable income tax treaty, are treated as attributable to a permanent establishment maintained by the Non-U.S. holder in the United States) generally will be taxed on a net income basis at the rates and in the manner generally applicable to U.S. holders, unless an applicable income tax treaty provides otherwise. Such effectively connected dividends will not be subject to U.S. withholding tax if the Non-U.S. holder satisfies certain certification requirements by providing the applicable withholding agent with a properly executed IRS Form W-8ECI certifying eligibility for exemption. If the Non-U.S. holder is a corporation for U.S. federal income tax purposes, it may also be subject to a branch profits tax (at a 30% rate or such lower rate as specified by an applicable income tax treaty) on its effectively connected earnings and profits (as adjusted for certain items), which will include effectively connected dividends.

Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A-1 common stock. Subject to the discussion below under “Non-U.S. Holders—Information Reporting and Backup Withholding,” a Non-U.S. holder generally will not be subject to U.S. federal income or withholding tax on any gain realized upon the sale or other disposition of our Class A-1 common stock unless:

• the gain is effectively connected with the conduct of a trade or business by the Non-U.S. holder within the United States (and, to the extent provided in an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by the Non-U.S. holder in the United States); or

• our Class A-1 common stock constitutes a United States real property interest by reason of our status as a United States real property holding corporation (“USRPHC”) for U.S. federal income tax purposes and as a result such gain is treated as effectively connected with a trade or business conducted by the Non-U.S. holder in the United States.

A Non-U.S. holder whose gain is described in the first bullet point above or, subject to the exceptions described in the next paragraph, the second bullet point above, generally will be taxed on a net income basis at the rates and in the manner generally applicable to United States persons (as defined under the Code) unless an applicable income tax treaty provides otherwise. If the Non-U.S. holder is a corporation for U.S. federal income tax purposes whose gain is described in the first bullet point above, then such gain would also be included in its effectively connected earnings and profits (as adjusted for certain items), which may be subject to a branch profits tax (at a 30% rate or such lower rate as specified by an applicable income tax treaty).

With respect to the second bullet point above, generally, a corporation is a USRPHC if the fair market value of its “United States real property interests” equals 50% or more of the sum of the fair market value of (a) its worldwide real property interests and (b) its other assets used or held for use in a trade or business. The tax relating to dispositions of stock in a USRPHC does not apply to a non-U.S. holder whose holdings, actual and constructive, amount to 5% or less of our Class A-1 common stock at all times during the shorter of the five-year period ending on the date of disposition of our common stock and the non-U.S. holder’s holding period for our Class A-1 common stock, provided that our Class A-1 common stock is regularly traded on an established securities market. No assurance can be provided that our Class A-1 common stock will be regularly traded on an established securities market at all times for purposes of the rules described above. We believe we have not been and currently are not, and do not anticipate becoming, a USRPHC. Because the determination of whether we are a USRPHC depends, however, on the fair market value of our U.S. real property interests relative to the fair market value of our non-U.S. real property interests and our other business assets, there can be no assurance we have not been or currently are not a U.S. real property holding corporation or will not become one in the future.

Non-U.S. holders should consult their tax advisors with respect to the application of the foregoing rules to their ownership and disposition of our Class A-1 common stock.

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Information Reporting and Backup Withholding. Any dividends paid to a Non-U.S. holder must be reported annually to the IRS and to the Non-U.S. holder. Copies of these information returns may be made available to the tax authorities in the country in which the Non-U.S. holder resides or is established. Payments of dividends to a Non-U.S. holder generally will not be subject to backup withholding if the Non-U.S. holder establishes an exemption by properly certifying its non-U.S. status on an IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable or successor form).

Payments of the proceeds from a sale or other disposition by a Non-U.S. holder of our Class A-1 common stock effected by or through a U.S. office of a broker generally will be subject to information reporting and backup withholding (at the applicable rate) unless the Non-U.S. holder establishes an exemption by properly certifying its non-U.S. status on an IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable or successor form) and certain other conditions are met. Information reporting and backup withholding generally will not apply to any payment of the proceeds from a sale or other disposition of our Class A-1 common stock effected outside the United States by a non-U.S. office of a broker. However, unless such broker has documentary evidence in its records that the Non-U.S. holder is not a United States person and certain other conditions are met, or the Non-U.S. holder otherwise establishes an exemption, information reporting will generally apply to a payment of the proceeds of the disposition of our Class A-1 common stock effected outside the United States by such a broker if it has certain relationships within the United States.

Backup withholding is not an additional tax. Rather, the U.S. federal income tax liability (if any) of persons subject to backup withholding may be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained, provided that the required information is timely furnished to the IRS.

FATCA Withholding Taxes. Sections 1471 through 1474 of the Code, and Treasury regulations and administrative guidance issued thereunder (“FATCA”), impose a 30% withholding tax on any dividends paid on our Class A-1 common stock if paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code) (including, in some cases, when such foreign financial institution or non-financial foreign entity is acting as an intermediary), unless (i) in the case of a foreign financial institution, such institution enters into a qualifying agreement with the U.S. government to withhold on certain payments, and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are non-U.S. entities with U.S. owners), (ii) in the case of a non-financial foreign entity, such entity properly certifies that it does not have any “substantial United States owners” (as defined in the Code) or provides the applicable withholding agent with a proper certification identifying the direct and indirect substantial United States owners of the entity (in either case, generally on an IRS Form W-8BEN-E), or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules and provides appropriate documentation (such as an IRS Form W-8BEN-E). Accordingly, the entity through which our Class A-1 common stock is held will affect the determination of whether such withholding is required. Withholding imposed by FATCA may also apply to gross proceeds from the sale or other disposition of U.S. corporate stock (including our stock); although, under proposed Treasury regulations, no withholding would apply to such gross proceeds. Taxpayers may rely generally on these proposed Treasury regulations until they are revoked or final Treasury regulations are issued. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing these rules may be subject to different rules. Under certain circumstances, a holder might be eligible for refunds or credits of such taxes. Non-U.S. holders are encouraged to consult their own tax advisors regarding the effects of FATCA on an investment in our Class A-1 common stock.

HOLDERS OF OUR CLASS A-1 COMMON STOCK ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE APPLICABILITY AND EFFECT OF U.S. FEDERAL ESTATE AND GIFT TAX LAWS AND ANY STATE, LOCAL OR NON-U.S. TAX LAWS AND TAX TREATIES.

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UNDERWRITING (CONFLICTS OF INTEREST)

We, the selling stockholders and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are acting as the representatives of the underwriters.

Underwriters	Number of Shares
Goldman Sachs & Co. LLC
J.P. Morgan Securities LLC
Credit Suisse Securities (USA) LLC
Deutsche Bank Securities Inc.
TPG Capital BD, LLC
Raine Securities LLC
Total		12,000,000

The underwriters are committed to take and pay for all of the shares of Class A-1 common stock being offered by us and the selling stockholders, if any are taken, other than the shares of Class A-1 common stock covered by the option described below unless and until this option is exercised.

The underwriters have an option to buy up to an additional 320,237 shares of Class A-1 common stock from us and an option to buy up to an additional 1,479,763 shares of Class A-1 common stock from the selling stockholders to cover sales by the underwriters of a greater number of shares of Class A-1 common stock than the total number set forth in the table above. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares of Class A-1 common stock in approximately the same proportion as set forth in the table above.

The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by us and the selling stockholders. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase 1,800,000 additional shares of Class A-1 common stock.

Paid by us

	No Exercise	Full Exercise
Per share	$	$
Total	$	$

Paid by the selling stockholders

	No Exercise	Full Exercise
Per Share	$	$
Total	$	$

Shares sold by the underwriters to the public will initially be offered at the public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $                 per share from the public offering price. After the initial offering of the shares, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

We and our officers, directors, and certain of our stockholders, including the selling stockholders, have agreed or will agree with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their shares of Class A-1 common stock or securities convertible into or exchangeable for shares of Class A-1 common stock during the period from the date of this prospectus continuing through 60 days after the date of the final prospectus relating to this offering, except with the prior written consent of Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as the representatives of the underwriters. This agreement does not apply to any existing employee benefit plans. See “Shares Available for Future Sale” for a discussion of certain transfer restrictions.

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Our Class A-1 common stock is listed on the NYSE under the symbol “ACEL.”

In connection with the offering, the underwriters may purchase and sell shares of Class A-1 common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A “covered short position” is a short position that is not greater than the amount of additional shares for which the underwriters’ option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market.

In determining the source of shares to cover the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option described above. “Naked” short sales are any short sales that create a short position greater than the amount of additional shares for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our common stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on the NYSE, in the over-the-counter market or otherwise.

We estimate that the total expenses of the offering, excluding underwriting discounts and commissions, payable by us and the selling stockholders will be approximately $1,000,000. We have agreed to reimburse the underwriter for expenses relating to the clearance of this offering with the Financial Industry Regulatory Authority, Inc. in an amount up to $25,000.

We and the selling stockholders have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to us and to persons and entities with relationships with us, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate

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to assets, securities and/or instruments of us (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with us. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

Conflicts of Interest

An affiliate of TPG Capital BD, LLC, an underwriter in this offering, is a selling stockholder in this offering. As a result of the foregoing relationship, TPG Capital BD, LLC is deemed to have a “conflict of interest” within the meaning of FINRA Rule 5121. In addition, Gordon Rubenstein, one of our directors and a selling stockholder, is an employee of The Raine Group LLC. Raine Securities LLC, an underwriter in this offering, is a controlled affiliate of The Raine Group LLC. As a result of the foregoing relationship, Raine Securities LLC is also deemed to have a “conflict of interest” within the meaning of FINRA Rule 5121. Accordingly, this offering will be made in compliance with the applicable provisions of FINRA Rule 5121. Pursuant to that rule, the appointment of a qualified independent underwriter is not necessary in connection with this offering. In accordance with FINRA Rule 5121(c), no sales of the shares will be made to any discretionary account over which TPG Capital BD, LLC or Raine Securities LLC exercises discretion without the prior specific written approval of the account holder.

Selling Restrictions

European Economic Area and the United Kingdom

In relation to each Member State of the European Economic Area and the United Kingdom (each a “Relevant State”), no shares of common stock (the “Shares”) have been offered or will be offered pursuant to the offering to the public in that Relevant State prior to the publication of a prospectus in relation to the Shares which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation), except that offers of Shares may be made to the public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:

(a) to any legal entity which is a qualified investor as defined under the Prospectus Regulation;

(b) to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the Representatives for any such offer; or

(c) in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of Shares shall require the Company or any Representative to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.

For the purposes of this provision, the expression an “offer to the public” in relation to any Shares in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to purchase or subscribe for any Shares, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.

133

United Kingdom

Each Underwriter has represented and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (as amended, the “FSMA”)) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to the company or the selling stockholders; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

Canada

The shares of common stock may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations. Any resale of the shares of common stock must be made in accordance with an exemption form, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Hong Kong

The shares of common stock may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) (“Companies (Winding Up and Miscellaneous Provisions) Ordinance”) or which do not constitute an invitation to the public within the meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“Securities and Futures Ordinance”), or (ii) to “professional investors” as defined in the Securities and Futures Ordinance and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance, and no advertisement, invitation or document relating to the shares of common stock may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of common stock which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” in Hong Kong as defined in the Securities and Futures Ordinance and any rules made thereunder.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined under Section 4A of the Securities and Futures

134

Act, Chapter 289 of Singapore (the “SFA”)) under Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to conditions set forth in the SFA.

Where the shares of common stock are subscribed or purchased under Section 275 of the SFA by a relevant person that is a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor, the securities (as defined in Section 239(1) of the SFA) of that corporation shall not be transferable for 6 months after that corporation has acquired the shares under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer in that corporation’s securities pursuant to Section 275(1A) of the SFA, (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore (“Regulation 32”).

Where the shares of common stock are subscribed or purchased under Section 275 of the SFA by a relevant person that is a trust (where the trustee is not an accredited investor (as defined in Section 4A of the SFA)) whose sole purpose is to hold investments and each beneficiary of the trust is an accredited investor, the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferable for 6 months after that trust has acquired the shares under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer that is made on terms that such rights or interest are acquired at a consideration of not less than $200,000 (or its equivalent in a foreign currency) for each transaction (whether such amount is to be paid for in cash or by exchange of securities or other assets), (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32.

Singapore Securities and Futures Act Product Classification — Solely for the purposes of its obligations pursuant to Sections 309B(1)(a) and 309B(1)(c) of the SFA, the Company has determined, and hereby notifies all relevant persons (as defined in Section 309A of the SFA) that the common shares are “prescribed capital markets products” (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice of the Sale of Investment products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

Japan

The securities have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended), or the FIEA. The securities may not be offered or sold, directly or indirectly, in Japan or to or for the benefit of any resident of Japan (including any person resident in Japan or any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale, directly or indirectly, in Japan or to or for the benefit of any resident of Japan, except pursuant to an exemption from the registration requirements of the FIEA and otherwise in compliance with any relevant laws and regulations of Japan.

Switzerland

This prospectus is not intended to constitute an offer or solicitation to purchase or invest in the shares. The shares may not be publicly offered, directly or indirectly, in Switzerland within the meaning of the Swiss Financial Services Act (“FinSA”) and no application has or will be made to admit the shares to trading on any trading venue (exchange or multilateral trading facility) in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the shares constitutes a prospectus pursuant to the FinSA, and neither this prospectus nor any other offering or marketing material relating to the shares may be publicly distributed or otherwise made publicly available in Switzerland.

135

LEGAL MATTERS

Fenwick & West LLP has passed upon the validity of the Class A-1 common stock offered by this prospectus and certain other legal matters related to this prospectus. Certain legal matters in connection with this offering will be passed upon for the underwriters by Weil, Gotshal & Manges LLP.

EXPERTS

The consolidated financial statements of Accel Entertainment, Inc. and subsidiaries as of December 31, 2019 and 2018, and for each of the years in the three-year period ended December 31, 2019, have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. The audit report of KPMG LLP covering the consolidated financial statements of Accel Entertainment, Inc. and subsidiaries contains explanatory paragraphs that state (1) the Company has changed its method of accounting for revenue from contracts with customers and related costs as of January 1, 2019 due to the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, and (2) the Company consummated a merger on November 20, 2019, which has been accounted for as a reverse recapitalization.

The consolidated financial statements of Grand River Jackpot, LLC and Subsidiary as of and for the year ended December 31, 2018 have been audited by RSM US LLP, independent auditors, as stated in their report thereon which report expresses an unqualified opinion, included herein. Such consolidated financial statements have been included herein in reliance upon such report and upon the authority of such firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. This prospectus is part of a registration statement that we have filed on Form S-1, including exhibits, under the Securities Act of 1933, as amended, with respect to the common stock offered by this prospectus. This prospectus is part of a registration statement, but does not contain all of the information included in the registration statement or the exhibits. Our SEC filings are available to the public on the internet at a website maintained by the SEC located at http://www.sec.gov.

We will provide, without charge, upon written request or oral request, a copy of any or all of the documents that are exhibits to the registration statement. You may request a copy of these documents by writing or telephoning us at:

Accel Entertainment, Inc.

140 Tower Drive

Burr Ridge, Illinois 60527

(630) 972 -2235

136

INDEX TO CONSOLIDATED FINANCIAL INFORMATION

	Page
Accel Entertainment, Inc.—Audited Financial Statements
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Statements of Operations for the years ended December 31, 2019, December 31, 2018 and December 31, 2017		F-3
Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018		F-4
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, December 31, 2018 and December 31, 2017		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2019, December 31, 2018 and December 31, 2017		F-6
Notes to Consolidated Financial Statements		F-8
Grand River Jackpot, LLC—Unaudited Financial Statements
Consolidated Balance Sheets as of June 30, 2019 (Unaudited) and December 31, 2018		F-43
Consolidated Statements of Operations for the six months ended June 30, 2019 (Unaudited) and June 30, 2018		F-44
Consolidated Statements of Members’ Deficit for the six months ended June 30, 2019 (Unaudited) and June 30, 2018		F-45
Consolidated Statements of Cash Flows for the six months ended June 30, 2019 (Unaudited) and June 30, 2018		F-46
Notes to Consolidated Financial Statements		F-47
Grand River Jackpot, LLC—Audited Financial Statements
Report of Independent Registered Public Accounting Firm		F-52
Consolidated Balance Sheet as of December 31, 2018		F-53
Consolidated Statement of Operations for the fiscal year ended December 31, 2018		F-54
Consolidated Statements of Members’ Deficit for the fiscal year ended December 31, 2018		F-55
Consolidated Statements of Cash Flows for the fiscal year ended December 31, 2018		F-56
Notes to Consolidated Financial Statements		F-57
Accel Entertainment, Inc.—Unaudited Pro Forma Condensed Combined Financial Information
Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2019		F-64
Unaudited Pro Forma Condensed Combined Statement of Operations for the six months ended June 30, 2019		F-65
Notes to the Unaudited Pro Forma Condensed Combined Financial Information		F-76
Accel Entertainment, Inc.—Unaudited Financial Statements
Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, 2020 and 2019		F-80
Condensed Consolidated Balance Sheets at June 30, 2020 (Unaudited) and December 31, 2019		F-81
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three and six months ended June 30, 2020 and 2019		F-82
Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2020 and 2019		F-83
Notes to the Condensed Consolidated Financial Statements (Unaudited)		F-84

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

Accel Entertainment, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Accel Entertainment, Inc. and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for revenue from contracts with customers and related costs as of January 1, 2019 due to the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers.

Reverse Recapitalization

As discussed in Note 3 to the consolidated financial statements, the Company consummated a merger on November 20, 2019, which has been accounted for as a reverse recapitalization. The Company’s common stock was adjusted retroactively to give effect for the exchange ratio.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 2019.

Chicago, Illinois

March 13, 2020

F-2

PART I – FINANCIAL INFORMATION

ACCEL ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)	Years ended December 31,
	2019			2018		2017
Revenues:
Net video gaming	$	410,636		$	321,711	$	240,235
Amusement		5,912			4,199		3,422
ATM fees and other revenue		7,837			6,083		4,778
Total net revenues		424,385			331,993		248,435
Operating expenses:
Video gaming expenses		271,999			210,507		157,010
General and administrative		75,028			58,157		45,364
Depreciation and amortization of property and equipment		26,398			20,782		16,768
Amortization of route and customer acquisition costs and location contracts acquired		17,975			14,681		9,792
Other expenses, net		19,649			2,997		1,331
Total operating expenses		411,049			307,124		230,265
Operating income		13,336			24,869		18,170
Interest expense		12,860			9,644		8,105
Loss on debt extinguishment		1,141			—		—
(Loss) income before income tax expense		(665	)		15,225		10,065
Income tax expense		5,199			4,422		1,754
Net (loss) income	$	(5,864	)	$	10,803	$	8,311
Net (loss) income per common share:
Basic (1)	$	(0.09	)	$	0.19	$	0.15
Diluted (1)		(0.09	)		0.17		0.14
Weighted average number of shares outstanding:
Basic (1)		61,850			57,621		56,321
Diluted (1)		61,850			62,182		59,408

(1) Per share and share amounts have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 3.

The accompanying notes are an integral part of these consolidated financial statements

F-3

ACCEL ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)	December 31,
	2019			2018
Assets
Current assets:
Cash	$	125,403		$	92,229
Prepaid expenses		4,151			2,538
Income taxes receivable		3,907			2,102
Investment in convertible notes (current)		11,000			—
Other current assets		7,034			5,142
Total current assets		151,495			102,011
Property and equipment, net		119,201			92,442
Other assets:
Route and customer acquisition costs, net		17,399			13,994
Location contracts acquired, net		166,783			126,038
Goodwill		34,511			—
Investment in convertible note, less current portion		19,000			—
Other assets		928			689
		238,621			140,721
Total assets	$	509,317		$	335,174
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of debt	$	15,000		$	62,500
Current maturities of capital lease		—			531
Current portion of route and customer acquisition costs payable		1,700			1,821
Accrued location gaming expense		1,323			1,132
Accrued state gaming expense		7,119			4,929
Accounts payable and other accrued expenses		19,511			12,413
Current portion of consideration payable		10,293			2,556
Total current liabilities		54,946			85,882
Long-term liabilities:
Debt, net of current maturities		334,692			168,895
Route and customer acquisition costs payable, less current portion		4,752			5,364
Consideration payable, less current portion		16,426			9,020
Deferred income tax liability		12,976			8,895
Total long-term liabilities		368,846			192,174
Stockholders’ equity (1):
Preferred Stock, par value of $0.0001; 1,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2019 and December 31, 2018		—			—
Class A-1 Common Stock, par value $0.0001; 250,000,000 shares authorized; 76,637,470 shares issued and outstanding at December 31, 2019; 58,491,280 shares issued and outstanding at December 31, 2018		8			6
Class A-2 Common Stock, par value $0.0001; 10,000,000 shares authorized; 4,999,999 shares issued and outstanding at December 31, 2019; no shares issued and outstanding at December 31, 2018		1			—
Treasury stock, at cost		—			(5,832	)
Additional paid-in capital		105,986			80,146
Accumulated deficit		(20,470	)		(17,202	)
Total stockholders’ equity		85,525			57,118
Total liabilities and equity	$	509,317		$	335,174

(1) Equity amounts have been retroactively restated to give effect to the reverse capitalization that is discussed in Note 3.

The accompanying notes are an integral part of these consolidated financial statements

F-4

ACCEL ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except shares)	Class A-1 Common Stock (1)				Class A-2 Common Stock				Additional Paid-In Capital (1)			Treasury Stock						Note Receivable, Stockholder			Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount					Shares			Amount
Balance, January 1, 2017		54,133,885	$	5		—	$	—	$	60,667			(96,273	)	$	(217	)	$	—		$	(36,316	)	$	24,139
Repurchase of common stock		—		—		—		—		—			(32,658	)		(124	)		—			—			(124	)
Exercise of common stock options		1,122,256		—		—		—		1,351			17,206			29			—			—			1,380
Exercise of warrants		118,601		—		—		—		16			79,067			189			—			—			205
Issuance of common stock pursuant to acquisition of business		2,521,815		1		—		—		10,670			32,658			123			—			—			10,794
Issuance of note receivable and shares		562,838		—		—		—		2,293			—			—			(3,268	)		—			(975	)
Stock option compensation		—		—		—		—		804			—			—			—			—			804
Net income		—		—		—		—		—			—			—			—			8,311			8,311
Balance, December 31, 2017		58,459,396	$	6		—	$	—	$	75,801			—		$	—		$	(3,268	)	$	(28,005	)	$	44,534
Repurchase of common and preferred stock		—		—		—		—		—			(694,726	)		(3,343	)		—			—			(3,343	)
Exercise of common stock options		31,885		—		—		—		(782	)		252,981			1,178			—			—			396
Receipt of stock previously issued pursuant to acquisition into treasury		—		—		—		—		—			(67,998	)		(399	)		—			—			(399	)
Reclassification of contingent stock consideration		—		—		—		—		4,674						—			—			—			4,674
Settlement of note receivable issued		—		—		—		—		—			(802,137	)		(3,268	)		3,268			—			—
Stock option compensation		—		—		—		—		453						—			—			—			453
Net income		—		—		—		—		—						—			—			10,803			10,803
Balance, December 31, 2018		58,491,281	$	6		—	$	—	$	80,146			(1,311,880	)	$	(5,832	)	$	—		$	(17,202	)	$	57,118
Exercise of common stock options		342,139		—		—		—		(4,299	)		1,244,725			7,524			—			—			3,225
Exercise of warrants		3,229,295		—		—		—		3,165			46,409			227			—			—			3,392
Employee stock option compensation		—		—		—		—		2,236						—			—			—			2,236
Contributed capital, professional service fees paid by shareholder		—		—		—		—		2,891						—			—			—			2,891
Effect of reverse recapitalization:
Shares exchanged for withholding on stock options and shares repurchased		—		—		—		—		—			(906,128	)		(9,331	)		—			—			(9,331	)
Net equity infusion from reverse recapitalization		14,574,755		2		4,999,999		1		21,847			926,874			7,412			—			—			29,262
Cumulative transition adjustment for adoption of Topic 606, net of taxes		—		—		—		—		—						—			—			2,596			2,596
Net loss		—		—		—		—		—						—			—			(5,864	)		(5,864	)
Balance, December 31, 2019		76,637,470	$	8		4,999,999	$	1	$	105,986			—		$	—		$	—		$	(20,470	)	$	85,525

(1) See Note 3 for reverse recapitalization effects herein.

The accompanying notes are an integral part of these consolidated financial statements

F-5

ACCEL ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
	Year Ended 31,
(In thousands)	2019			2018			2017
Cash flows from operating activities:
Net (loss) income	$	(5,864	)	$	10,803		$	8,311
Non-cash items included in net (loss) income:
Depreciation and amortization of property and equipment		26,398			20,782			16,768
Amortization of route and customer acquisition costs and location contracts acquired		17,975			14,681			9,792
Amortization of debt issuance costs		655			394			284
Contributed capital, professional service fees paid by shareholder		2,891			—			—
Stock option compensation		2,236			453			804
Loss (gain) on disposal of property and equipment		100			61			338
Loss on write-off of route and customer acquisition costs and route and customer acquisition costs payable		342			516			395
Loss on debt extinguishment		1,141			—			—
Remeasurement of contingent consideration		6,723			852			—
Accretion of interest on route and customer acquisition costs payable, contingent consideration, and contingent stock consideration		1,623			912			695
Deferred income taxes		4,081			4,300			1,519
Changes in operating assets and liabilities, net of acquisition of businesses:
Prepaid expenses and other current assets		(3,507	)		(491	)		(3,825	)
Income taxes receivable		(1,804	)		(1,436	)		(667	)
Route and customer acquisition costs		(5,438	)		(3,719	)		(2,778	)
Route and customer acquisition costs payable		(1,342	)		(956	)		(1,354	)
Accounts payable and accrued expenses		(405	)		(2,649	)		3,222
Consideration payable		—			(196	)		—
Other assets		(240	)		36			(407	)
Net cash provided by operating activities		45,565			44,343			33,097
Cash flows from investing activities:
Purchases of property and equipment		(20,796	)		(23,246	)		(23,626	)
Proceeds from the sale of property and equipment		121			1,173			259
Payments for location contracts acquired		—			(80	)		(2,374	)
Purchase of investment in convertible notes		(30,000	)		—			—
Business and asset acquisitions, net of cash acquired		(100,857	)		(51,394	)		(45,129	)
Net cash used in investing activities		(151,532	)		(73,547	)		(70,870	)
Cash flows from financing activities:
Proceeds from term loan		240,000			46,250			—
Payments on term loan		(115,625	)		(11,625	)		(9,000	)
Proceeds from delayed draw term loans		169,000			75,000			60,000
Payments on delayed draw term loans		(159,000	)		(59,000	)		(9,000	)
Net proceeds from line of credit		(8,500	)		3,000			18,500
Payments for debt issuance costs		(9,374	)		(533	)		—
Payments for repurchase of common shares		—			(3,343	)		(123	)
Proceeds from exercise of stock options and warrants		3,583			396			1,584
Payments on consideration payable		(2,321	)		(814	)		(351	)
Payments on capital lease obligation		(531	)		(3,276	)		(2,729	)
Net increase in outstanding checks in excess of bank balance		—			67			200
Proceeds from capital infusion in reverse recapitalization		27,030			—			—
Tax withholding on share-based payments		(5,121	)		—			—
Net cash provided by financing activities		139,141			46,122			59,081
Net increase in cash		33,174			16,918			21,308
Cash:
Beginning of year		92,229			75,311			54,003
End of year	$	125,403		$	92,229		$	75,311

F-6

ACCEL ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)	2019			2018			2017
Supplemental disclosures of cash flow information:
Cash payments for:
Interest, net of amount of capitalized	$	12,024		$	8,719		$	6,224
Income taxes paid	$	1,759		$	1,594		$	—
Supplemental schedules of noncash investing and financing activities:
Purchases of property and equipment in accounts payable and accrued liabilities	$	11,501		$	2,243		$	1,050
Reclassification of contingent stock consideration from liabilities to equity	$	—		$	2,575		$	890
Acquisition of businesses and assets:
Total identifiable net assets acquired	$	119,178		$	63,745		$	65,119
Less cash acquired		(8,861	)		(3,633	)		(4,926	)
Less contingent consideration		(7,216	)		(5,350	)		(595	)
Less promissory note		(2,244	)		(3,368	)		—
Less common stock consideration		—			—			(10,794	)
Less contingent stock consideration		—			—			(3,675	)
Cash purchase price	$	100,857		$	51,394		$	45,129

The accompanying notes are an integral part of these consolidated financial statements

F-7

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1. Description of Business

Accel Entertainment, Inc. and its subsidiaries (“the Company”) wholly owned subsidiary, Accel Entertainment Gaming LLC, is a terminal operator licensed by the State of Illinois Gaming Board since March 15, 2012. Its terminal operator license allows the Company to install and operate video gaming terminals in licensed video gaming locations throughout the State of Illinois as approved by individual municipalities. The Company also operates redemption terminals, which also function as automated teller machines (“ATMs”) at its licensed video gaming locations, and amusement equipment at certain locations. The Company is subject to various federal, state and local laws and regulations in addition to gaming regulations. The terminal operator license, which is not transferable or assignable, requires compliance with applicable regulations and the license is renewable annually unless sooner cancelled or terminated.

The Company operates 10,499 and 7,649 video gaming terminals across 2,312 and 1,686 locations in the State of Illinois as of December 31, 2019 and 2018, respectively.

On November 20, 2019, TPG Pace Holdings Corp., (“TPG Holdings”) entered into a Transaction Agreement with each of the shareholders of Accel Entertainment, Inc. (“Accel”). Pursuant to the Transaction Agreement and in connection therewith, TPG Holdings acquired, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock from the Accel shareholders. In connection with the closing of the transaction, TPG Holdings changed its name to Accel Entertainment, Inc. For more information on this transaction, see Note 3.

The Company is an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) following the consummation of the merger of TPG Pace Holding Corp. and Accel Entertainment, Inc. The Company has elected to use this extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act and as a result of this election, its financial statements may not be comparable to companies that comply with public company effective dates. The Company will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following June 30, 2022, (b) in which Accel has total annual gross revenue of at least $1.0 billion or (c) in which Accel is deemed to be a large accelerated filer, which means the market value of Class A-1 Shares that is held by non-affiliates exceeds $700 million as of the last business day of the prior second fiscal quarter, and (ii) the date on which Accel has issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Note 2. Summary of Significant Accounting Policies

Basis of presentation and preparation: The consolidated financial statements and accompanying notes were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Adopted accounting pronouncements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the existing revenue recognition and creates a new topic for Revenue from Contracts with Customers. The guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance also substantially revises required interim and annual disclosures. The Company, as an Emerging Growth Company (“EGC”), elected to use the non-public

F-8

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

effective date and adopted the standard in the fourth quarter of 2019 for the annual period ended December 31, 2019. The Company also elected the modified retrospective adoption approach and applied the standard to all contracts open as of January 1, 2019. The Company’s quarterly financial statement disclosure for the first nine months of 2019 reflect the previous accounting standard of FASB ASC 605, Revenue Recognition, and will not be restated for the adoption of Topic 606. The cumulative impact of the new revenue standard for fiscal year 2019 was recorded in the fourth quarter and reflects the adjustment as if the Company adopted the standard as of January 1, 2019. The timing and amount of revenue recognized by the Company did not change upon the adoption of the new standard, however the Company’s accounting for route acquisition costs was impacted. ASC 340-40, Other Assets and Deferred Costs—Contracts With Customers (“ASC 340-40”), issued in conjunction with ASU 2014-09, provides updated guidance around accounting for the incremental costs of obtaining a contract with a customer and for the costs incurred to fulfill a contract with a customer. ASC 340-40 states that an entity should amortize contract cost assets “on a systemic basis that is consistent with the transfer to the customer of the good or services to which the asset relates,” which typically corresponds to the period in which revenue will be recognized. The Company chose straight-line amortization of the contracts as it felt that best depicted when revenue would be recognized and when customers are visiting the gaming establishments. When determining the appropriate amortization period under ASC 340-40, the Company evaluated the impact of any renewal clauses that are likely to be exercised. The Company focused on whether commissions paid for renewals were commensurate with commissions paid on the original contract. The Company determined the renewal commissions were not commensurate and the amortization period should include expected renewals. As such, the period over which route and customer acquisition costs are amortized was extended to include expected renewals which resulted in an increase to the average life to 12.4 years. The Company recorded a cumulative effect adjustment, net of taxes, to accumulated deficit of $2.6 million relating to the decreased in accumulated amortization of route acquisition costs. In addition, the Company’s current year amortization expense decreased by $1.1 million.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU No. 2017-01 requires entities to use a screen test to determine when an integrated set of assets and activities is not a business or if the integrated set of assets and activities needs to be further evaluated against the framework. The Company adopted ASU No. 2017-01 on January 1, 2019.

Use of estimates: The preparation of consolidated financial statements requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the consolidated financial statements and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates used by the Company include, among other things, the useful lives for depreciable and amortizable assets, income tax provisions, the evaluation of the future realization of deferred tax assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with business acquisitions, the initial selection of useful lives for depreciable and amortizable assets in conjunction with business acquisitions, contingencies, and the expected term of share-based compensation awards, stock price volatility and estimated stock prices prior to the reverse recapitalization discussed in Note 3 when computing share-based compensation expense. Actual results may differ from those estimates.

Segment information: The Company operates as a single operating segment. The Company’s chief operating decision maker (“CODM”) is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM assesses the Company’s performance

F-9

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

and allocates resources based on consolidated results, and this is the only discrete financial information that is regularly reviewed by the CODM.

Cash: Cash includes bank deposit accounts; uncollected cash in the Company’s video gaming terminals, ATMs, and redemption terminals; and cash in Company vaults.

The Company’s policy is to limit the amount of credit exposure to any one financial institution. The Company maintains its cash in accounts which may at times exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. The Company has not experienced any losses in such accounts.

Convertible notes: At acquisition, an entity shall classify debt securities as trading, available-for-sale, or held-to-maturity. While the Company has no the intention of selling the notes, it cannot classify them as held-to-maturity due to the conversion feature. Therefore, the Company has classified its investment in convertible notes as available for sale.

Property and equipment: Property and equipment are stated at cost or fair value at the date of acquisition. Maintenance and repairs are charged to expense as incurred. Major additions, replacements and improvements are capitalized. Spare parts are included in other current assets when acquired and are expensed when used to repair equipment. Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video game terminals and equipment	7
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3 - 5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15 - 29

Leasehold improvements are amortized over the shorter of the useful life or the lease.

Development costs directly associated with the acquisition, development and construction of a project are capitalized as a cost of the project during the periods in which activities necessary to prepare the property for its intended use are in progress. Interest costs associated with major construction projects are capitalized as part of the cost of the constructed assets. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using the weighted-average cost of borrowing. Capitalization of interest ceases when the project (or discernible portions of the project) is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

Concentration of credit risk: The Company’s operations are centralized primarily in the State of Illinois. Should there be favorable or unfavorable changes to the Illinois Gaming Act there may be an impact on the Company’s results of operations. The Company has high concentrations of locations within certain municipalities in Illinois which could impact the Company if these municipalities change their gaming laws.

Fair value of financial instruments: The Company’s financial instruments consist principally of cash, convertibles notes, accounts payable, contingent consideration, and bank indebtedness.

F-10

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

The carrying amount of cash, accounts payable and short-term borrowings approximates fair value because of the short-term maturity of these instruments. The Company estimates the fair value of its convertible notes using a binomial lattice model in which a convertible instrument is split into two separate components: a cash-only (debt) component and an equity component. The Company estimates the fair value of its debt using level two and level three inputs by discounting the future cash flows using current interest rates at which it could obtain similar borrowings in consideration of the estimated enterprise value of the Company.

Contingent consideration, which is recorded within consideration payable on the accompanying consolidated balance sheets, is measured at fair value on a recurring basis based on Level 3 inputs. The fair value recorded at December 31, 2019 and 2018 was determined using a discounted cash flow analysis. Refer to consideration payable below for disclosure of unobservable Level 3 inputs used.

Revenue recognition: The Company generates revenues in the State of Illinois from the following types of services: Video gaming terminals, Amusements and ATMs. Revenue is disaggregated by type of revenue and is presented on the face of the consolidated statements of operations.

Video gaming terminal revenue is the net cash from gaming activities, which is the difference between gaming wins and losses. Video gaming terminal revenue includes the amounts earned by the licensed video gaming locations and is recognized at the time of gaming play. Additionally, taxes and administrative expenses due to the State of Illinois are recorded as video gaming terminal revenue and video gaming expenses.

Amusement revenue represents amounts collected from machines (e.g. dart boards, digital jukeboxes, pool tables, etc.) operated at various locations and is recognized at the time the machine is used.

ATM fees and other revenue represents fees charged for the withdrawal of funds from the Company’s redemption terminals and stand-alone ATM machines and is recognized at the time of the transaction.

The Company determined that in a gaming environment, whenever a customer’s money has been accepted by a machine, the Company has an obligation (an implied contract) to provide the customer access to the game and honor the outcome of the game (in the case of video gaming terminals). The Company determined that the implied contract is entered into between the Company and customers satisfies the requirements of a contract under the new revenue standard, as (i) the contract is a legally enforceable contract with the customer, (ii) the arrangement identifies the rights of the parties, (iii) the contract has commercial substance, and (iv) the cash is received upfront from the customer so its collectability is probable. The gaming service is a single performance obligation in each implied contract with the customer. The Company applies the portfolio approach of all wins and losses by Video Gaming Terminals (“VGTs”) daily to determine the total transaction price of the portfolio of implied contracts. The Company recognizes revenue when the single performance obligation is satisfied, which is at the completion of each game.

Route and customer acquisition costs: The Company’s route and customer acquisition costs consist of fees paid at the inception of contracts entered into with third parties and licensed video gaming establishments throughout the State of Illinois which allow the Company to install and operate video gaming terminals. The route and customer acquisition costs and route and customer acquisition costs payable are recorded at the net present value of the future payments using a discount rate equal to the Company’s incremental borrowing rate associated with its long-term debt. Route and customer acquisition costs are amortized on a straight-line basis beginning on the date the location goes live and amortized over the life of the contract, which upon adoption of Topic 606, includes expected renewals. The Company records the accretion of interest on route and customer acquisitions

F-11

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

costs payable in the consolidated statements of operations as a component of interest expense. For locations that close prior to the end of the contractual term, the Company writes-off the net book value of the route and customer acquisition cost and route and customer acquisition cost payable and records a gain or loss in the consolidated statements of operations as a component of other expenses, net. The Company’s route and customer acquisition costs also consists of prepaid commission costs to our internal sales force of employees. The commissions paid to internal sales employees are subsequently expensed once the respective licensed video gaming location goes live and the commission is earned by the employee.

Business acquisitions: The Company evaluates the inputs, processes and outputs of each business acquisition to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and amortized over the useful life of the acquired assets. The Company accounts for acquisitions using the acquisition method and records the cost of the businesses acquired among tangible and recognized intangible assets and liabilities based upon their estimated fair values as of the acquisition date. Recognized intangibles primarily include the value of location contracts. The Company estimates the fair value of the business acquired using a combination of the cost and income approaches, depending on the specific assets or liabilities acquired. The Company estimates the value of property and equipment and other current assets and liabilities acquired based on their cost, which approximates fair value at acquisition.

Location contracts acquired: Location contracts acquired are accounted for as intangible assets and consist of expected cash flows to be generated from location contracts acquired through business and asset acquisitions. Location contracts acquired are amortized on a straight-line basis over the expected useful life of 10 years.

Goodwill: Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets acquired when accounted for using the purchase method of accounting. Goodwill is not amortized, but reviewed for impairment annually, as of October 1st, and whenever events or changes in circumstances indicate that the carrying value of the goodwill may not be recoverable. The Company compares the fair value of the reporting unit to its carrying value. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, the Company would record an impairment loss equal to the difference.

Consideration payable: Consideration payable consists of amounts payable related to certain business acquisitions as well as contingent consideration for future location performance related to certain business acquisitions (see Note 10). Consideration payable, exclusive of contingent consideration, is discounted using the Company’s incremental borrowing rate associated with its long-term debt. The contingent consideration is measured at fair value on a recurring basis. The changes in the fair value of contingent consideration are recognized within the Company’s consolidated statements of operations as other expenses, net.

Impairment of long-lived assets: Long-lived assets, which includes property and equipment, net and other assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. Impairment of the assets is measured by a comparison of the carrying amount of the asset to future undiscounted cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount of which the carrying amount of the asset exceeds the fair value of the asset. There were no indicators of impairment of long-lived assets in 2019, 2018, or 2017.

Contingent stock consideration: Contingent stock, which is provided as consideration in business acquisitions, is valued based on the fair value of stock issued. The contingent stock consideration is discounted using the

F-12

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

Company’s weighted average cost of capital and the accretion of interest is recorded in the consolidated statements of operations as a component of interest expense.

Stock-based compensation: The Company grants common stock options to certain employees and officers. Stock option compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as general and administrative expense over the employee’s requisite service period.

Income taxes: The Company is organized as a C-corporation and is taxable at the federal and state level. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the book basis of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of the deferred tax asset, will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in the tax laws and rates as of the date of enactment.

The Company follows ASC Topic 740, Income Taxes, for accounting for uncertainty in income taxes. The consolidated financial statements reflect expected future tax consequences of uncertain tax positions presuming the taxing authorities’ full knowledge of the position and all relevant facts. The Company files tax returns in all appropriate jurisdictions, which includes a federal tax return and three state returns. Open tax years for the federal and state returns are 2016 to 2018, which statutes expire in 2020 to 2022, respectively. When and if applicable, potential interest and penalty costs are accrued as incurred with expenses recognized in general and administrative expenses in the consolidated statements of operations.

Comprehensive income (loss): Comprehensive income (loss) is a measure of net income (loss) and all other changes in equity that result from transactions other than transactions with stockholders. Management has determined that net income (loss) is the Company’s only component of comprehensive income (loss). Accordingly, there is no difference between net income (loss) and comprehensive income (loss).

Earnings (loss) per share: The Company determines earnings per share in accordance with the authoritative guidance in ASC Topic 260, Earnings Per Share. The Company computes basic earnings per share by dividing net income (loss) by the weighted average number of shares outstanding for the applicable period. Diluted earnings per share are computed in the same manner as basic earnings per share, except that the number of shares is increased to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase would be anti-dilutive. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that the Company has not yet recognized are assumed to be used to repurchase shares.

Debt issuance costs: Debt issuance costs are capitalized and amortized on a straight-line basis, which approximates the effective interest method, over the contractual terms of the related loans and are presented as an offset to the related loans.

Reverse recapitalization expenses. Legal fees and other costs that were determined to be direct and incremental to the reverse recapitalization were recorded to equity as additional paid-in capital. Other fees associated with the reverse recapitalization that were not direct and incremental were recorded to other expenses, net on the consolidated statements of operations.

F-13

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

Advertising costs: Advertising costs are primarily comprised of marketing expenses, which are recorded within general and administrative expense within the accompanying consolidated statements of operations. Advertising costs were $4.7 million, $3.0 million, and $2.8 million for the years ended December 31, 2019, 2018, and 2017, respectively.

Recent accounting pronouncements: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. In July 2018, the FASB also issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method allowing the standard to be applied at the adoption date. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for the Company’s fiscal year beginning after December 15, 2020, including interim periods within that fiscal year, unless the Company disqualifies as an emerging growth company, in which case earlier adoption may be required. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is assessing impact of the standard on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which intends to simplify the guidance by removing certain exceptions to the general principles and clarifying or amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Although the Company is currently evaluating the impact of the adoption of ASU 2019-12, the Company does not expect it to have a material impact on its consolidated financial statements.

Note 3. Reverse Recapitalization

As discussed in Note 1, on November 20, 2019, Accel Entertainment, Inc., consummated a business combination pursuant to the Transaction Agreement, which has been accounted for as a reverse recapitalization. Pursuant to the Transaction Agreement, TPG Holdings Corp. acquired, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock of Accel Entertainment, Inc. In connection with reverse recapitalization, TPG Pace Holdings Corp. changed its name to Accel Entertainment, Inc.

The consideration paid to holders of Accel stock in connection with the reverse recapitalization and subject to the terms and conditions of the Transaction Agreement, consisted of a mix of consideration comprised of cash consideration equal to the number of shares of Accel stock for which such holder of Accel stock made a cash election multiplied by $177 per share (the “Purchase Price”) and share consideration comprised of a number of Class A-1 Shares equal to the number of shares of Accel Stock for which such holder of Accel Stock did not make a cash election multiplied by an exchange ratio calculated by dividing the Purchase Price by $10.30, which was the closing price of the common stock of TPG Pace Holdings Corp. on November 20, 2019. In addition, each holder of Accel stock that made a cash election with respect to less than 70% of its shares of Accel stock received its pro rata share, with such pro rata share determined with reference to a number of shares equal to 70% of such holder’s shares of Accel Stock less the number of shares of Accel stock with respect to which such holder made a cash election, of 2,444,444 2019 Warrants, subject to the conditions set forth in a warrant agreement and 3,000,000 Class A-2 Shares, subject to the conditions set forth in a restricted stock agreement.

F-14

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 3. Reverse Recapitalization (Continued)

In connection with the reverse recapitalization, TPG Pace Holdings and its affiliates converted 7,500,000 of Class A-1 Shares, 4,888,889 2019 Warrants subject to the conditions set forth in the New Pace Warrant Agreement and 2,000,000 Class A-2 Shares, subject to the conditions set forth in a restricted stock agreement.

As part of an Investment Private Placement, certain accredited investors (as defined by Rule 501 of Regulation D) agreed to subscribe for and purchase and Pace agreed to issue and sell to such investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million. The proceeds from the Investment Private Placement was used to fund a portion of the cash consideration required in the reverse recapitalization.

In connection with the reverse recapitalization, Accel repurchased approximately 36,157 shares of its stock from certain employees, directors and officers at a repurchase price of $177 per share in order to facilitate (i) the repayment of existing loans to Accel’s executive officers, (ii) the exercise of vested options and (iii) funding any resulting tax obligations from the exercise of such vested options.

In accounting for the reverse recapitalization, the net equity infusion from the reverse recapitalization was $29.3 million as shown in the table below (in thousands):

	Amount
TPG Holdings Corp cash balance, November 19, 2019	$	429,952
Less redemption of Accel shares prior to reverse recapitalization		(413,733	)
Cash balance prior to backstop equity financing		16,219
Plus funds from Investment Private Placement		48,038
Cash balance prior to consummation of the reverse recapitalization		64,257
Less adjustments to equity infusion:
Payment for sponsor loan		(4,000	)
Transaction costs related to the reverse recapitalization, net of tax		(31,005	)
Net equity infusion prior to stock issuance		29,252
Impact of stock issued in reverse recapitalization		10
Net equity infusion from reverse recapitalization		29,262
Less impact from conversion of treasury stock and issuance of warrants		(7,415	)
Net impact to additional paid-in-capital from reverse recapitalization	$	21,847

F-15

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 3. Reverse Recapitalization (Continued)

Capitalization Adjustments

The table below summarizes the number of shares of Accel issued upon consummation of the reverse recapitalization consisting of (i) the number of shares of Accel stock outstanding immediately before the reverse recapitalization along with the impact of the exchange ratio.

Accel Capital Stock—pre reverse recapitalization	Number of Shares
Class A Common Stock		472,773
Class B Common Stock		662,228
Class C Preferred Stock		1,530,779
Class D Preferred Stock		944,925
Total Shares of Accel Stock on November 20, 2019		3,610,705
Exchange ratio		17.188531
Effect of exchange ratio to convert Accel stock to A-1 Common Stock		62,062,715
Shares issued in reverse recapitalization		14,574,755
Total A-1 Common Stock		76,637,470

Immediately after the reverse recapitalization, there were 76,637,470 Class A-1 Shares, 4,999,999 Class A-2 Shares, and 22,333,308 warrants to purchase Class A-1 Share issued and outstanding. Upon the closing, the Company’s Class A-1 Shares and warrants began trading on the New York Stock Exchange.

Note 4. Investment in Convertible Note

On July 19, 2019, the Company entered into an agreement to purchase up to $30.0 million in convertible promissory notes that bear interest at 3% per annum from another terminal operator. The Company has the option of converting the notes to common stock of the terminal operator prior to the maturity date. At closing, the Company purchased a $5.0 million note which is subordinated to the terminal operator’s credit facility and matures six months following the satisfaction of administrative conditions.

On October 11, 2019, the Company purchased an additional $25.0 million note which is also subordinated to the terminal operator’s credit facility and, beginning on July 1, 2020, the balance of this note, if not previously converted, will be payable in equal $1,000,000 monthly installments until all principal has been repaid in full.

The carrying amount of the investment in the convertible notes approximates the fair value, in all material respects, as of December 31, 2019. For more information on how the Company determined the fair value of the convertible note, see Note 11.

F-16

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 5. Property and Equipment

Property and equipment consists of the following at December 31 (in thousands):

	2019			2018
Video game terminals and equipment	$	166,850		$	126,043
Amusement and other equipment		16,417			12,539
Office equipment and furniture		1,540			1,827
Computer equipment and software		8,715			5,092
Leasehold improvements		44			44
Vehicles		9,304			7,174
Buildings and improvements		12,075			9,365
Land		911			883
Construction in progress		768			1,339
Total property and equipment		216,624			164,306
Less accumulated depreciation and amortization		(97,423	)		(71,864	)
Property and equipment, net	$	119,201		$	92,442

Depreciation and amortization of property and equipment amounted to $26.4 million, $20.8 million and $16.8 million during the years ended December 31, 2019, 2018 and 2017, respectively.

Note 6. 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 due monthly. Gross payments due, based on the number of live locations, are approximately $7.4 million and $8.2 million as of December 31, 2019 and 2018, 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 $6.5 million and $7.2 million as of December 31, 2019 and 2018, respectively, of which approximately $1.7 million and $1.8 million is included in current liabilities in the accompanying consolidated balance sheets as of December 31, 2019 and 2018, respectively. The route and customer acquisition cost asset is comprised of payments made on the contracts of $18.7 million and $18.8 million as of December 31, 2019 and 2018, 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 $2.2 million and $2.6 million as of December 31, 2019 and 2018, respectively.

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

	2019			2018
Cost	$	28,501		$	27,726
Accumulated amortization		(11,102	)		(13,732	)
Route and customer acquisition costs, net	$	17,399		$	13,994

Amortization expense of route and customer acquisition costs was $1.7 million, $3.9 million and $3.3 million for the years ended December 31, 2019, 2018 and 2017, respectively. As previously mentioned, the Company’s current year amortization expense decreased by $1.1 million due to the adoption of ASC Topic 606 as the amortization period over which route and customer acquisition costs was extended to include expected renewals.

F-17

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7. Location Contracts Acquired

Location contract assets acquired in business acquisitions are recorded at acquisition at fair value based on an income approach. Location contracts acquired consist of the following at December 31, 2019 and 2018 (in thousands):

	2019			2018
Cost	$	204,353		$	147,341
Accumulated amortization		(37,570	)		(21,302	)
Location contracts acquired, net	$	166,783		$	126,038

Each asset is amortized over the expected useful life of 10 years. Estimated amortization expense related to location contracts acquired for the next five years and thereafter is as follows:

Year ending December 31:
2020	$	20,475
2021		20,475
2022		20,475
2023		20,475
2024		20,267
Thereafter		64,615
Total	$	166,783

Amortization expense of location contracts acquired was $16.2 million, $10.8 million and $6.5 million, during the years ended December 31, 2019, 2018 and 2017, respectively.

Note 8. Goodwill

On September 16, 2019, the Company acquired Grand River Jackpot which was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill of $34.5 million as of December 31, 2019, of which $27.3 million is deductible for tax purposes. See Note 10 for more information on how the amount of goodwill was calculated.

The Company had no goodwill prior to the Grand River Jackpot acquisition.

Given the very short timeframe between the initial recording of the goodwill and the Company’s annual impairment test on October 1, 2019, the Company did not perform a full valuation by a third party to determine the fair value of its goodwill. Instead the Company assessed qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of its goodwill is less than its carrying amount. In performing this assessment, the Company considered such factors as its historical performance, its growth opportunities in existing markets; new markets and new products in determining whether the goodwill was impaired. The Company also referenced its forecasts of revenue, operating income, and capital expenditures and concluded the carrying value of its goodwill was not impaired as of October 1, 2019.

F-18

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9. Debt

The Company’s debt as of December 31, consisted of the following (in thousands):

	2019			2018
New Credit Facility:
Revolving credit facility	$	58,500		$	—
Term Loan		240,000			—
Delayed Draw Term Loan (DDTL)		60,000			—
Prior Credit Facility:
Line of credit		—			50,000
Contract draw loan		—			67,000
Term loans		—			115,625
Total debt		358,500			232,625
Less: Debt issuance costs		(8,808	)		(1,230	)
Total debt, net of debt issuance costs		349,692			231,395
Less: Current maturities		(15,000	)		(62,500	)
Total debt, net of current maturities	$	334,692		$	168,895

New Senior Secured Credit Facility

On November 13, 2019, in order to refinance its prior credit facility, for working capital and other general purposes from time to time, the Company entered into a credit agreement (the “Credit Agreement”) as borrower, the Company and its wholly-owned domestic subsidiaries, as a guarantor, the banks, financial institutions and other lending institutions from time to time party thereto, as lenders, the other parties from time to time party thereto and Capital One, National Association, as administrative agent (in such capacity, the “Agent”), collateral agent, issuing bank and swingline lender, providing for a:

• $100.0 million revolving credit facility, including a letter of credit facility with a $10.0 million sublimit and a swing line facility with a $10.0 million sublimit,

• $240.0 million initial term loan facility and

• $125.0 million additional term loan facility.

As of December 31, 2019, there remained approximately $106.5 million of availability under the Credit Agreement.

The obligations under the Credit Agreement are guaranteed by the Company and its wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”). The obligations under the Credit Agreement are secured by substantially all of assets of the Guarantors, subject to certain exceptions. Certain future-formed or acquired wholly owned domestic subsidiaries of the Company will also be required to guarantee the Credit Agreement and grant a security interest in substantially all of its assets (subject to certain exceptions) to secure the obligations under the Credit Agreement.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at a rate per annum equal to either (a) the adjusted LIBOR rate (“LIBOR”) (which cannot be less than zero) for interest periods of 1, 2, 3 or 6 months (or if consented to by (i) each applicable Lender, 12 months or any period shorter than 1 month or (ii) the Agent, a shorter period necessary to ensure that the end of the relevant interest period would coincide with any

F-19

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9. Debt (Continued)

required amortization payment ) plus the applicable LIBOR margin or (b) the alternative base rate (“ABR”) plus the applicable ABR margin. ABR is a fluctuating rate per annum equal to the highest of (i) the Federal Funds Effective Rate plus 1/2 of 1.0%, (ii) the prime rate announced from time to time by Capital One, National Association and (iii) LIBOR for a 1-month Interest Period on such day plus 1.0%. The Credit Agreement also includes provisions for determining a replacement rate when LIBOR is no longer available. As of December 31, 2019, the weighted-average interest rate was approximately 4.45%.

Interest is payable quarterly in arrears for ABR loans, at the end of the applicable interest period for LIBOR loans (but not less frequently than quarterly) and upon the prepayment or maturity of the underlying loans. The Company is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the revolving credit facility and the additional term loan facility. Additionally, the Company is required to pay an upfront fee with respect to any funded additional term loans.

The applicable LIBOR and ABR margins and the commitment fee rate are calculated based upon the first lien net leverage ratio of the Company and its restricted subsidiaries on a consolidated basis, as defined in the Credit Agreement. Until the delivery of the initial financial statements under the Credit Agreement, the revolving loans and term loans bear interest, at the option of the Company, at either (a) ABR plus a margin of 1.25% or (b) LIBOR plus a margin of 2.25%.

The additional term loan facility is available for borrowings until November 13, 2020. Each of the revolving loans and the term loans mature on November 13, 2024.

The term loans and, once drawn, the additional term loans will amortize at an annual rate equal to approximately 5.00% per annum. Upon the consummation of certain non-ordinary course asset sales, the Company may be required to apply the net cash proceeds thereof to prepay outstanding term loans and additional term loans. The loans under the Credit Agreement may be prepaid without premium or penalty, subject to customary LIBOR “breakage” costs.

The Credit Agreement contains certain customary affirmative and negative covenants and events of default, and requires the Company and certain of its affiliates obligated under the Credit Agreement to make customary representations and warranties in connection with credit extensions thereunder.

In addition, the Credit Agreement requires the Company to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of consolidated EBITDA to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after the Closing Date and determined on the basis of the four most recently ended fiscal quarters of the Company for which financial statements have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights.

If an event of default (as such term is defined in the Credit Agreement) occurs, the lenders would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto.

The Company was in compliance with all debt covenants as of December 31, 2019.

The Company incurred $8.8 million of debt issuance costs related to the New Senior Secured Credit Facility, which will be amortized over the life of the Facility.

F-20

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9. Debt (Continued)

Prior Credit Facility

On December 8, 2015, the Company entered into an Amended and Restated Loan and Security Agreement with a syndicated group of banks. Under this agreement term loan availability was a $50,000,000, contract draw loan availability was $40,000,000, and revolving line of credit availability was $35,000,000. Interest applicable on the term loan, contract draw loan, and revolving line of credit was payable on unpaid balance at the variable per annum LIBOR plus an applicable margin, as defined, ranging from 2.00% to 3.25% depending on the ratio of the Company’s Secured Debt to EBITDA, as defined. On November 15, 2016, the Company entered into a Second Amended and Restated Loan and Security Agreement (“Second Amendment”) with most of the same syndicated group of banks which provided for a total loan facility of $210,000,000 and includes term loan availability, contract draw availability, and line of credit availability. On April 10, 2018, the Company entered into a Third Amended and Restated Loan and Security Agreement (“Third Amendment”) with most of the same syndicated group of banks in prior loan agreements, and increased the loan facility from $210,000,000 to $300,000,000. The Third Amendment extended the agreement maturity date from November 2021 to April 2023.

Under the Second Amendment, interest applicable on all facilities was payable monthly on unpaid balances at the variable per annum LIBOR rate plus an applicable margin, as defined, ranging from 1.95% to 3.00% depending on the ratio of the Company’s Secured Debt to EBITDA, as defined. An unused line fee of 0.30% was payable monthly on the difference between the total availability and the average daily balance of the revolving line of credit and the contract loan draw outstanding.

Under the Third Amendment, interest on all credit facilities was payable monthly on unpaid balances at the variable per annum LIBOR rate (2.51% at December 31, 2018) plus an applicable margin, as defined, ranging from 1.70% to 2.50% depending on the ratio of the Company’s Secured Debt to EBITDA, as defined. As of December 31, 2018, the average interest rate was approximately 4.60%. An unused line fee of 0.25% was payable monthly on the difference between the total availability and the average daily balance of the line of credit and the contract draw loan outstanding.

The Third Amendment increased the term loan availability from $90,000,000 to $125,000,000 and required quarterly principal payments of $3,125,000 through March 31, 2020, $3,906,250 through March 31, 2022, $4,687,500 through March 31, 2023, and the remaining balance due upon maturity in April 2023.

The Third Amendment increased the contract draw availability from $65,000,000 to $90,000,000 and changed from a borrowing draw loan to a revolving facility whereby the Company could borrow and repay throughout the term of the agreement with no required loan repayments until maturity in April 2023.

The Third Amendment increased the maximum line of credit borrowings from $55,000,000 to $85,000,000 subject to a borrowing base which was defined as the sum of 90% of the Company’s vault cash outstanding, as defined; less payables owed to establishment owners, the State of Illinois and the Illinois Gaming Board. Payments could be made on demand at the Company’s election, and were only required if the balance exceeds the lesser of the total line of credit commitment of $85,000,000 or the revolving loan availability.

Additionally, the Company had the ability to utilize letters of credit.

The credit facilities were collateralized by substantially all assets of the Company and included defined financial covenants related to leverage, fixed charge and minimum EBITDA.

The Prior Credit Facility was paid off with the proceeds from the New Senior Secured Credit Facility. In connection with the extinguishment of the Prior Credit Facility, the Company recorded a loss from debt extinguishment of $1.1 million.

F-21

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9. Debt (Continued)

The principal maturities of long-term debt as of December 31, 2019 are as follows (in thousands):

Year ending December 31:
2020	$	15,000
2021		15,000
2022		15,000
2023		15,000
2024		298,500
Total debt	$	358,500

The estimated fair value of the Company’s debt at December 31, 2019 approximated its carrying value as the debt facilities as of such date bore interest based on prevailing variable market rates and as such were categorized as a Level 2 in the fair value hierarchy as defined in Note 11.

The fair value of the Company’s debt at December 31, 2018 was estimated based on observable inputs such as the change in yield on comparable indices and unobservable inputs such as the enterprise value. The inputs used to determine the fair value were classified as Level 2 and Level 3 in the fair value hierarchy.

The carrying value and estimated fair value of our debt at December 31, was as follows (in thousands):

	2019		2018
Carrying value	$	349,692	$	231,395
Estimated Fair value		349,692		229,763

Note 10. Business and Asset Acquisitions

2019 Business Acquisitions

Grand River Jackpot

On August 26, 2019, the Company entered into an agreement to acquire all issued and outstanding membership interests in Grand River Jackpot, LLC and subsidiaries (“Grand River”), a terminal operator licensed by the State of Illinois Gaming Board. On September 16, 2019, the Company completed its acquisition of Grand River. Grand River had 2,009 VGTs in over 450 licensed establishments. The Company completed this transaction in order to expand its presence within the State of Illinois.

The acquisition aggregate purchase consideration transferred totaled $113.7 million, which included: i) a cash payment made at closing of $100.0 million; ii) a subsequent cash payment of approximately $6.6 million for a working capital adjustment and; iii) contingent purchase consideration with an estimated fair value of $7.1 million. The contingent consideration represents two installment payments that are to be paid, up to a maximum amount, as follows: i) $2.5 million within 30 days following the one-year anniversary of the acquisition closing date and; ii) $7.0 million within 30 days following the three-year anniversary of the acquisition closing date. These payments are subject to adjustment based on certain performance measures included within the purchase agreement. The estimated fair value was determined based on the Company’s expected probability of future payment, discounted using Grand River’s weighted average cost of capital. The cash payment made at closing and subsequent working capital adjustment payment were both funded with the Company’s existing credit facilities.

F-22

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10. Business and Asset Acquisitions (Continued)

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase price has been preliminarily allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values. The areas of the purchase price that are not yet finalized are primarily related to the valuation of location contracts, property and equipment, contingent consideration, and a final adjustment to working capital. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The Grand River acquisition resulted in recorded goodwill as a result of a higher consideration multiple paid relative to prior similar acquisitions driven by maturity and quality of the operations and industry, including workforce and corresponding synergies, and is amortizable for income tax purposes. Management plans to integrate the Grand River acquisition into its existing business structure, which is comprised of a single reporting unit.

The following table summarizes the fair value of consideration transferred and the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash paid	$	106,578
Contingent consideration		7,136
Total consideration	$	113,714
Cash	$	8,861
Location contracts acquired		53,200
Property and equipment:
Video game terminals and equipment		18,000
Land		28
Buildings		548
Vehicles		600
Goodwill		34,511
Total assets acquired		115,748
Accounts payable assumed		(532	)
Accrued expenses assumed		(1,502	)
Net assets acquired	$	113,714

The Company incurred $0.2 million in acquisition related costs that are included in other operating expenses within the consolidated statement of operations for the period ended December 31, 2019.

The results of operations for Grand River are included in the consolidated financial statements of the Company from the date of acquisition. Grand River’s acquired assets generated revenues and net income of $16.6 million and $1.2 million for the period from the acquisition date of September 16, 2019, through December 31, 2019.

2019 Asset Acquisition

On September 23, 2019, pursuant to the terms of an asset purchase agreement, the Company purchased from Illinois Gaming Systems, LLC (“IGS”) terminal use agreements and equipment representing the operations of 139 video game terminals in 29 licensed establishments. The Company has accounted for this transaction as an asset acquisition. The purchase consideration consisted of: i) cash payment of $2.4 million paid at closing and; ii) note payable of $2.3 million issued at closing which is recorded in consideration payables. The asset acquisition

F-23

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10. Business and Asset Acquisitions (Continued)

costs were allocated to the following assets: i) video game terminals and equipment totaling $1.7 million and; ii) location contracts totaling $3.0 million. The note payable bears interest of 5% and is due in full on March 23, 2020.

2018 Business Acquisitions

The following table summarizes the consideration paid and the fair values of the tangible and intangible assets acquired at the acquisition dates for the Company’s 2018 business acquisitions (in thousands):

	Quad B		Skyhigh		G3		Mike’s Amusement		Family Amusement		Total
Cash paid at closing	$	610	$	9,268	$	36,500	$	3,500	$	1,512	$	51,390
Contingent consideration payable		—		4,324		1,026		—		—		5,350
Promissory note		—		—		—		—		3,368		3,368
Due to seller		—		618		3,019		—		—		3,637
Total Consideration	$	610	$	14,210	$	40,545	$	3,500	$	4,880	$	63,745
Cash	$	—	$	1,126	$	2,507	$	—	$	—	$	3,633
Video game terminals and equipment		—		506		3,009		—		—		3,515
Amusement and other equipment		472		59		204		420		300		1,455
Location contracts acquired		138		12,519		34,825		3,080		4,580		55,142
Total fair value of net assets acquired		610		14,210		40,545		3,500		4,880		63,745

Quad B

On September 1, 2018, the Company acquired certain assets of B.B.B.B., Inc. (“Quad B”), an Illinois amusement operator. The Company acquired 61 locations that are or are expected to become operational. Quad B’s acquired assets generated revenues and net income of $0.1 million and $0.1 million, respectively, for the period from the acquisition date of September 1, 2018, through December 31, 2018. Quad B’s acquired assets generated revenues and net income of $0.3 million and $0.1 million, respectively, for the year ended December 31, 2019.

Skyhigh Gaming

On August 1, 2018, the Company acquired certain assets of Skyhigh Gaming, LLC (“Skyhigh”), an Illinois licensed terminal operator. The Company initially acquired 23 locations that are or are expected to become operational.

The Company has a contingent consideration payable related to certain locations, as defined, in the acquisition agreement placed in operation during five years after the acquisition date (“the installment period”). The Company will pay Skyhigh 18.44% of the adjusted net terminal income, related to locations in operation during five years after the acquisition date. Payments will be made on a monthly basis for the first two years and every three months for the latter three years, through July 2023. The agreement also provides for a final payment upon the expiration of the installment period equal to 1.75 times the adjusted and defined net terminal income generated by the locations in the twelve-month period ending on the final payment date. The fair value of contingent consideration due as of December 31, 2019 and 2018 were $4.7 million and $4.5 million, respectively. The fair value of contingent consideration is included in the consideration payable on the consolidated balance sheets at December 31, 2019 and 2018. The contingent consideration accrued is measured at fair value on a recurring basis. The maximum amount is determined based on the net terminal income for the related locations.

F-24

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10. Business and Asset Acquisitions (Continued)

Skyhigh’s acquired assets generated revenues and net income of $3.9 million and $1.1 million, respectively, for the period from the acquisition date of August 1, 2018, through December 31, 2018. Skyhigh’s acquired assets generated revenues and net income of $9.3 million and $2.2 million, respectively, for the year ended December 31, 2019.

G3 Gaming

On October 16, 2018, the Company acquired certain assets of G3 Gaming, LLC (“G3”), an Illinois licensed terminal operator. The Company initially acquired 87 locations that are or are expected to become operational.

The Company has contingent consideration payable related to locations placed in operation during the three years after the acquisition date whereby the Company will pay G3 a specified percent of the monthly terminal operator revenue less video gaming terminal fees for pending locations, recently added locations, and for a specified group of target establishments through 2022. The fair value of contingent consideration due as of December 31, 2019 and 2018 were $3.1 million and $1.0 million, respectively. The maximum amount is determined based on the net terminal income for the related locations.

G3’s acquired assets generated revenues and net income of $4.3 million and $0.8 million, respectively, for the period from the acquisition date of October 16, 2018, through December 31, 2018. G3’s acquired assets generated revenues and net income of $21.8 million and $3.3 million, respectively, for the year ended December 31, 2019.

Mike’s Amusements

On October 16, 2018, the Company acquired certain assets of Mike’s Amusements, Inc. (“Mike’s Amusements”), an Illinois amusement operator. The Company initially acquired 73 locations that are or are expected to become operational.

Mike’s Amusement’s acquired assets generated revenues and net income of $0.2 million and $0.1 million, respectively, for the period from the acquisition date of October 16, 2018, through December 31, 2018. Mike’s Amusement’s acquired assets generated revenues and net income of $1.0 million and $0.4 million, respectively, for the year ended December 31, 2019.

Family Amusement

On October 31, 2018, the Company entered into an agreement to acquire certain assets of Family Amusement, Inc. (“Family Amusement”), an Illinois amusement operator. The Company initially acquired 139 locations that are or are expected to become operational. Family Amusement’s acquired assets generated revenues and net income of $0.1 million and $0.1 million, respectively, for the period from the acquisition date of October 31, 2018, ending on December 31, 2018. Family Amusement’s acquired assets generated revenues and net income of $0.4 million and $0.2 million, respectively, for the year ended December 31, 2019.

The Company entered into a promissory note in connection with the acquisition. The promissory note provides for three annual installments of $0.4 million from 2019 through 2021, one installment of $0.7 million in 2022, and one installment of $2.1 million in 2023. The first installment was paid upon signing of the promissory note and each subsequent installment shall be paid on or before the anniversary date of the signing of the promissory note. The fair value of the consideration due as of December 31, 2019 and 2018 was $3.1 million and

F-25

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10. Business and Asset Acquisitions (Continued)

$3.4 million, respectively. The consideration is included in the consideration payable on the consolidated balance sheets at December 31, 2019 and 2018. The Company and Family Amusement had a pre-existing relationship prior to the business acquisition. Under that pre-existing relationship the Company had route and customer acquisition costs payable to Family Amusement. As a result of the business acquisition, the pre-existing route and customer acquisition payables to Family Amusement were settled and cost and accumulated amortization of the existing Family Amusement route and customer acquisition cost assets was disposed, and a $0.1 million reduction in amortization of route and customer acquisition costs and location contracts acquired was recorded.

2017 and prior Business Acquisitions

Fair Share Gaming

On July 1, 2017, the Company acquired certain assets and assumed certain liabilities of Fair Share Gaming, LLC (“Fair Share”), an Illinois licensed terminal operator. The Company initially acquired 125 locations that are or will become operational.

The following table summarizes the consideration paid and the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash paid at closing	$	48,000
Issuance of common stock to seller		10,794
Contingent stock consideration		3,675
Due to seller		2,055
Contingent consideration		595
Total consideration	$	65,119
Cash	$	4,926
Video game terminals and equipment		6,363
Vehicles		126
Amusement and other equipment		1,148
Location contracts acquired		52,716
Total assets acquired		65,279
Accrued expenses assumed		(160	)
Net assets acquired	$	65,119

The Company has a contingent consideration payable related to certain locations, as defined in the acquisition agreement, in operation one year after the acquisition date. The Company will pay Fair Share half of the Company’s share of revenue after the state taxes based on the number of locations expected to be in operation one year after the acquisition date. On the one-year anniversary of the date the location goes live, monthly payments commence for a period of two years. The fair value of contingent consideration due as of December 31, 2019 and December 31, 2018 was $2.0 million and $1.0 million, respectively. The remaining contingent consideration is included in the consideration payable on the consolidated balance sheets. The contingent consideration accrued is measured at fair value on a recurring basis. The maximum amount is determined based on the net terminal income for the related locations.

The purchase agreement provided for $15 million of the purchase price to be paid through the issuance of Class A Common Stock in the Company. The purchase agreement allowed for an adjustment to the $15 million

F-26

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10. Business and Asset Acquisitions (Continued)

issuance of common stock to the seller fifteen months after the date of acquisition predicated on the estimated value of the Company at September 30, 2018. The fair value of the common stock issued on the acquisition date was $10.8 million. The difference between the $15 million provided for in the purchase agreement and the fair value of the common stock issued was discounted and $3.7 million was recorded as contingent stock consideration at the acquisition date. The adjustment was determined based on the difference between estimated Accel Value, as defined, at the acquisition date and actual Accel Value, as defined, as of September 30, 2018. As a result of this adjustment, 3,956 shares of Common Stock A were received back from Fair Share and placed into treasury during the year ended December 31, 2018.

Fair Share’s acquired assets generated revenues and net income of $19.0 million and $3.3 million, respectively, for the period from the acquisition date of July 1, 2017, through December 31, 2017. Fair Share’s acquired assets generated revenues and net income of $40.8 million and $7.0 million, respectively, for the year ended December 31, 2018. Fair Share’s acquired assets generated revenues and net income of $42.8 million and $7.8 million, respectively, for the year ended December 31, 2019.

Abraham

On June 1, 2016, the Company acquired certain assets and assumed certain liabilities of Abraham Gaming, LLC (“Abraham”), an Illinois licensed terminal operator. The Company initially acquired 138 locations that are or are expected to become operational.

The Company has a contingent consideration payable related to certain locations in operation two years after these locations go live. The Company will make one payment to Abraham for half of the Company’s share of revenue after the state taxes related to locations in operation within 10 business days after determining the amount owed related to the two years of operations. The fair value of contingent consideration due as of December 31, 2019 and 2018, was $0.1 million and $0.2 million, respectively. The remaining contingent consideration is included in the consideration payable on the consolidated balance sheets. The contingent consideration accrued is measured at fair value on a recurring basis. The maximum amount is determined based on the net terminal income for the related locations.

TAV Gaming

On December 30, 2014, the Company acquired certain assets and assumed certain liabilities of TAV Gaming, Inc. (“TAV”), an Illinois licensed terminal operator.

The total purchase consideration payable to TAV is subject to earnouts based on actual locations placed in operation and the performance thereof. The Company initially acquired 32 locations that were or would become operational. Consideration payable due to TAV in relation to the acquisition was $4.0 million and $1.4 million at December 31, 2019 and 2018, respectively, which is included in consideration payable in the accompanying consolidated balance sheets. The Company makes monthly payments of principal and interest due through December 30, 2024.

Pro Forma Results

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the years ended December 31, 2019, 2018 and 2017 as if the acquisitions of Grand River, Quad B, Skyhigh, G3, Mike’s Amusements, Family Amusement and Fair Share Gaming, had occurred as of the beginning

F-27

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10. Business and Asset Acquisitions (Continued)

of the fiscal year prior to the fiscal year of acquisition, after giving effect to certain purchase accounting adjustments. These amounts are based on available financial information of the acquirees prior to the acquisition dates and are not necessarily indicative of what Company’s operating results would have been had the acquisitions actually taken place at the beginning of the fiscal year prior to the fiscal year of acquisition. This unaudited pro forma information for the years ended December 31, does not project revenues and income before income tax expense post acquisition (in thousands).

	2019			2018		2017
Revenues	$	466,466		$	409,142	$	467,676
Net (loss) income		(2,598	)		16,098		26,535

Consideration Payable

The Company has a contingent consideration payable related to certain locations, as defined, in the respective acquisition agreement which are placed into operation during a specified period after the acquisition date. The fair value of contingent consideration is included in the consideration payable on the consolidated balance sheets as of December 31, 2019 and 2018. The contingent consideration accrued is measured at fair value on a recurring basis.

Current and long-term portions of consideration payable consist of the following at December 31 (in thousands) :

	2019				2018
	Current		Long- Term		Current		Long- Term
TAV	$	490	$	3,497	$	194	$	1,232
Abraham		55		—		207		—
Fair Share Gaming		1,057		899		1,027		—
Family Amusement		293		2,815		357		3,011
Skyhigh		763		3,948		550		3,971
G3		2,952		154		221		806
Grand River		2,304		5,113		—		—
IGS		2,379		—		—		—
Total	$	10,293	$	16,426	$	2,556	$	9,020

Note 11. Fair Value Measurements

ASC Topic 820, “Fair Value Measurements and Disclosures,” establishes a framework for measuring fair value and the corresponding disclosure requirements around fair value measurements. This topic applies to all financial instruments that are being measured and reported on a fair value basis.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the various methods including market, income and cost approaches are used. Based on these approaches, certain assumptions are utilized that the market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. Valuation techniques are utilized that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in

F-28

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 11. Fair Value Measurements (Continued)

the valuation techniques, it is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3: Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

Convertible promissory notes

In valuing it’s convertible promissory notes, the Company utilized a binomial lattice model in which a convertible instrument is split into two separate components: a cash-only (debt) component and an equity component. The binomial lattice trees are constructed using a methodology that assigns up and downward movement factors and probabilities based on rates of return, volatility, and time. It allows for the optional conversion features of the convertible promissory notes to be captured by determining whether conversion or continuing to hold is the most economically advantageous to the holder. Upon conversion, future values in the equity component are subject to only the risk-free rate, while the cash-only component associated with continuing to hold the debt instrument is subject to the selected risk-adjusted discount rate. Solving backwards through the trees associated with the equity component and the trees associated with the debt component yields an aggregate discounted value for each. The sum of these values yields the indicated fair value of the convertible promissory notes.

The discount rate is the risk-adjusted discount rate that is implied by the rate that allows the discounted cash flows with all terms and conditions modeled to equal the total cash consideration. As such, after modeling the features of convertible promissory notes as of the issuance date using the lattice model framework outlined above, the Company solved for the discount rate that resulted in a value for the note equal to the total cash consideration. The valuation of the Company’s convertible promissory notes is considered to be a Level 3 fair value measurement as the significant inputs are unobservable and require significant judgment or estimation.

Contingent consideration

The following tables summarize the Company’s liabilities that are measured at fair value on a recurring basis (in thousands):

			Fair Value Measurement at Reporting Date Using
	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	17,327	$	—	$	—	$	17,327

F-29

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 11. Fair Value Measurements (Continued)

			Fair Value Measurement at Reporting Date Using
	December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	6,782	$	—	$	—	$	6,782

The Company uses a discounted cash flow analysis to determine the value of contingent consideration upon acquisition and updates this estimate on a recurring basis. The significant assumptions in the Company’s cash flow analysis includes the probability adjusted projected revenues after state taxes, a discount rate as applicable to each acquisition, and the estimated number of locations that “go live” with the Company during the contingent consideration period. A hypothetical 1% increase in the applicable discount rate would decrease other expenses, net by approximately $0.2 million while a hypothetical 1% decrease in the applicable discount rate would increase other expenses, net by approximately $0.2 million.

The following table provides a roll-forward of the fair value of recurring Level 3 fair value measurements for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019			2018			2017
Liabilities:
Contingent consideration:
Beginning of year balance	$	6,782		$	785		$	190
Issuance of contingent consideration in connection with acquisitions		7,216			5,350			595
Payment of contingent consideration		(1,658	)		(387	)		—
Additional accruals included in earnings		4,987			1,034			—
Ending balance	$	17,327		$	6,782		$	785

Changes in the fair value of contingent consideration liabilities are classified within other expenses, net on the accompanying consolidated statements of operations.

Note 12. Stockholders’ Equity

As discussed in Notes 1 and 3, on November 20, 2019, the Company, consummated a reverse recapitalization pursuant to the Transaction Agreement, which has been accounted for as a reverse recapitalization. Pursuant to the Certificate of Incorporation as amended on November 20, 2019 and as a result of the reverse recapitalization, the Company has retrospectively adjusted the shares issued and outstanding prior to November 20, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted. Pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, the Company authorized and has available for issuance the following shares and classes of capital stock, each with a par value of $0.0001 per share: i) 1,000,000 shares of preferred stock; ii) 250,000,000 shares of Class A-1 Common Stock, ii) 10,000,000 shares of Class A-2 Common Stock.

Class A-1 Common Stock

The holders of the Class A-1 Common Stock are entitled to one vote for each share. The holders of Class A-1 Common Stock are entitled to receive dividends or other distributions when and if declared from time to time and share equally on a per share basis in such dividends and distributions subject to such rights of the holders of preferred stock.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 12. Stockholders’ Equity (Continued)

Class A-2 Common Stock

The holders of the Class A-2 Common Stock do not have voting rights and are not entitled to receive or participate in any dividends or distributions when and if declared from time to time.

As discussed in Note 3, 5,000,000 shares of Class A-2 Common Stock were issued with other consideration prior to the reverse recapitalization, subject to the conditions set forth in a restricted stock agreement, which sets forth the terms upon which the Class A-2 Shares will be exchanged for an equal number of validly issued, fully paid and non-assessable Class A-1 Shares. The exchange of Class A-2 Shares for Class A-1 Shares will be subject to the terms and conditions set forth in the Restricted Stock Agreement, with such exchanges occurring in three separate tranches upon the satisfaction of the following triggers:

• Tranche I, equal to 1,666,666 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the EBITDA for the last twelve months (“LTM EBITDA”) of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2021, March 31, 2022 or June 30, 2022 equals or exceeds $132 million or (ii) the closing sale price of Class A-1 Shares on the New York Stock Exchange (“NYSE”) equals or exceeds $12.00 for at least twenty trading days in any consecutive thirty trading day period;

• Tranche II, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $152 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $14.00 for at least twenty trading days in any consecutive thirty trading day period; and

• Tranche III, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $172 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $16.00 for at least twenty trading days in any consecutive thirty trading day period.

The LTM EBITDA thresholds will be reasonably adjusted by the independent directors of the board of the Company (the “Board”) from time to time to take into account the anticipated effect of any acquisitions or dispositions that exceed certain thresholds and are otherwise materially different from certain forecasts.

Notwithstanding the foregoing, Class A-2 Shares, if not previously exchanged for Class A-1 Shares pursuant to the triggers described above, will be exchanged for an equal number of Class A-1 Shares immediately prior to the consummation of a transaction or series of related transactions that would result in a third party or group (as defined in or under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becoming the beneficial owner of, directly or indirectly, more than fifty percent of the total voting power of the equity securities of the Company, or more than fifty percent of the consolidated net revenues, net income or total assets (including equity securities of its subsidiaries) of the Company, provided that the satisfaction of the conditions set forth in the aforementioned triggers cannot be determined at such time.

The Restricted Stock Agreement further provides that holders of Class A-2 Shares are not required to exchange such shares for Class A-1 Shares if, (x) prior to giving effect to exchanges pursuant to the triggers described above, such holder beneficially owns less than 4.99% of the issued and outstanding Class A-1 Shares, and (y) after giving effect to the exchanges pursuant to the triggers described above, such holder would beneficially own in excess of 4.99% of the issued and outstanding Class A-1 Shares. However, notwithstanding the limitation

F-31

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 12. Stockholders’ Equity (Continued)

described in the previous sentence, if and when a holder of Class A-2 Shares has obtained all required gaming approvals from the applicable gaming authorities permitting such holder to beneficially own Class A-1 Shares in excess of 4.99%, then the Class A-2 Shares held by such holder which are subject to exchange shall immediately be exchanged for Class A-1 Shares without regard to the limitation.

On January 14, 2020, the market condition for the conversion of Tranche I was satisfied. Accordingly, 1,666,666 Class A-2 shares were converted into Class A-1 shares.

Warrants

On January 31, 2013, the Company issued 253,575 warrants to certain individual shareholders as compensation for providing a personal guaranty for a revolving loan agreement. The warrants granted their holders the right to purchase the Company’s Class A-1 Common Shares at the price of $17.80 per share anytime from January 31, 2013 through January 30, 2020. The warrants were classified as an equity instrument. As of December 31, 2019, and 2018, there were 0 and 190,575 shares of warrants outstanding. During the year ended December 31, 2019, 190,575 warrants were exercised prior to the reverse recapitalization for proceeds of $3,392,235. During the year ended December 31, 2017, 11,500 warrants were exercised for proceeds of $204,700.

As discussed in Note 3, 7,333,326 warrants to purchase shares of Class A-1 Common Stock were issued with other consideration prior to the reverse recapitalization (the “2019 Warrants”). As a part of the reverse recapitalization, 2,444,437 2019 warrants were canceled and reissued under the same terms and conditions to Accel legacy shareholders. Each warrant expires five years from issuance and entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding warrants, at any time 30 days after the consummation of the reverse recapitalization.

The 2019 Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the 2019 Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the 2019 Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the 2019 Warrant Agreement.

In 2017, 15,000,000 warrants to purchase shares of Class A-1 Common Stock were issued in connection with the formation of TPG Pace Holdings (“Public Warrants”). Each warrant expires five years from issuance and entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding warrants, at any time 30 days after the consummation of the reverse recapitalization.

The Public Warrants may be redeemed for cash at the option of the Company, at any time while they are exercisable and prior to their expiration, at the price of $0.01 per Public Warrant, provided that the last sales price of the Class A-1 Stock reported has been at least $18.00 per share, on each of twenty (20) trading days within the thirty (30) trading-day period ending on the third Business Day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

F-32

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 12. Stockholders’ Equity (Continued)

The Public Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the Public Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the Public Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

Redemption Date	Fair Market Value of Class A-1 shares
(period to expiration of the New Accel Warrants)	$10		$11		$12		$13		$14		$15		$16		$17		$18
57 months		0.257		0.277		0.294		0.310		0.324		0.337		0.348		0.358		0.365
54 months		0.252		0.272		0.291		0.307		0.322		0.335		0.347		0.357		0.365
51 months		0.246		0.268		0.287		0.304		0.320		0.333		0.346		0.357		0.365
48 months		0.241		0.263		0.283		0.301		0.317		0.332		0.344		0.356		0.365
45 months		0.235		0.258		0.279		0.298		0.315		0.330		0.343		0.356		0.365
42 months		0.228		0.252		0.274		0.294		0.312		0.328		0.342		0.355		0.364
39 months		0.221		0.246		0.269		0.290		0.309		0.325		0.340		0.354		0.364
36 months		0.213		0.239		0.263		0.285		0.305		0.323		0.339		0.353		0.364
33 months		0.205		0.232		0.257		0.280		0.301		0.320		0.337		0.352		0.364
30 months		0.196		0.224		0.250		0.274		0.297		0.316		0.335		0.351		0.364
27 months		0.185		0.214		0.242		0.268		0.291		0.313		0.332		0.350		0.364
24 months		0.173		0.204		0.233		0.260		0.285		0.308		0.329		0.348		0.364
21 months		0.161		0.193		0.223		0.252		0.279		0.304		0.326		0.347		0.364
18 months		0.146		0.179		0.211		0.242		0.271		0.298		0.322		0.345		0.363
15 months		0.130		0.164		0.197		0.230		0.262		0.291		0.317		0.342		0.363
12 months		0.111		0.146		0.181		0.216		0.250		0.282		0.312		0.339		0.363
9 months		0.090		0.125		0.162		0.199		0.237		0.272		0.305		0.336		0.362
6 months		0.065		0.099		0.137		0.178		0.219		0.259		0.296		0.331		0.362
3 months		0.034		0.065		0.104		0.150		0.197		0.243		0.286		0.326		0.361
0 months		—		—		0.042		0.115		0.179		0.233		0.281		0.323		0.361

The exact Fair Market Value and Redemption Date (as defined) may not be set forth in the table above, in which case, if the Fair Market Value is between two values in the table or the Redemption Date is between two redemption dates in the table, the number of Class A-1 Stock to be issued for each 2019 Warrant redeemed will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower Fair Market Values and the earlier and later redemption dates, as applicable, based on a 365-day year.

At December 31, 2019 and 2018, the Company has reserved Class A-1 Common Stock for future issuance in relation to the following:

	2019		2018
Class A-1 Common Stock warrants issued and outstanding		22,333,308		3,275,704
Class A-1 Common Stock options issued and outstanding		2,376,700		5,622,557
Conversion of Class A-2 Common Stock		4,999,999		—
Class A-1 Common Stock reserved for issuance		29,710,007		8,898,261

F-33

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 13. Video Gaming Terminal Fees

In accordance with the Illinois Video Gaming Act, a 33% tax on net terminal income, as defined, is payable to the State of Illinois Gaming Board. Effective July 2019, the Illinois tax on net terminal income increased to 33% from 30%. Through July 2018, a 0.7275% administrative fee was payable to a third-party at the direction of the State of Illinois Gaming Board (the “Administrative Fee”). Effective July 2018, the administrative fee increased to 0.8513%. Video gaming terminal fees, which consist of the tax and administrative fee, amounted to $133.2 million, $99.1 million and $73.8 million for the years ended December 31, 2019, 2018 and 2017, respectively. The net terminal income remaining is split “50/50” between the Company and the licensed video gaming location and amounted to $138.8 million, $111.4 million and $83.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. The video gaming terminal fee, administrative fee and the licensed video game location net terminal income share are recorded in video gaming expenses in the accompanying consolidated statements of operations.

Note 14. Employee Benefit Plans

401(k) Plan

The Company maintains a 401(k)-benefit plan for all employees with at least three months of service and 21 years of age. The Company may elect to make a discretionary matching contribution to the Plan. Participants vest 20% a year after the first 2 years of employment and are fully vested after 6 years of employment according to the discretionary plan. During February 2017, the Company added an employer match of 50% of the participants’ contribution up to 5% of their compensation. Participants are fully vested after one year of employment. The Company incurred 401(k)-benefit plan expense of approximately $0.6 million, $0.5 million and $0.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Incentive Compensation Plan

Included in certain employee agreements are provisions for bonuses, which are determined at the discretion of management. Bonus expense amounted to $2.1 million, $1.8 million and $1.6 million for the years ended December 31, 2019, 2018 and 2017, respectively. Accrued bonuses amounted to $1.7 million at December 31, 2019 and 2018.

Note 15. Stock-based Compensation

The Company grants various types of stock-based awards including stock options. Stock compensation awards granted are valued on the date of grant and are expensed over the required service period.

Grant of Options

The Company previously adopted the 2011 Equity Incentive Plan of Accel Entertainment, Inc., and in 2016 the Company adopted the 2016 Equity Incentive Plan of Accel Entertainment, Inc., (collectively, “the Plans”). Under the Plans, the aggregate number of shares of common stock that may be issued or transferred pursuant to options or restricted stock awards under the Plans will not exceed ten percent of the outstanding shares of the Company. Options generally vest over a three to five-year period. The exercise price of stock options shall not be less than 100% of the fair market value per share of common stock on the grant date. The term of the options are a maximum of 10 years from the grant date.

The Company uses the Black-Scholes formula to estimate the fair value of its share-based payments. The volatility assumption used in the Black-Scholes formula is based on the volatility of comparable public companies. The Company determined the share price at grant date used in the Black-Scholes formula based on an internal valuation model.

F-34

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 15. Stock-based Compensation (Continued)

The fair value assigned to each option is estimated on the date of grant using a Black-Scholes-based option valuation model. The expected term of each option granted represents the period of time that each option granted is expected to be outstanding. The risk-free rate for periods within the contractual life of the unit is based on U.S. Treasury yields in effect at the time of grant.

The following assumptions were used in the option valuation model for options granted during the years ended December 31,:

	2019*	2018	2017
Expected approximate volatility	None%	35%	35%
Expected dividends	None	None	None
Expected term (in years)	None	3-5	5
Risk-free rate	None%	2.41% - 2.62%	1.81% - 2.18%
Stock price	None	$4 - $5	$3 - $4

* there were no options granted in 2019

A summary of the options granted and the range in vesting periods based on specific provisions within the option agreements during the years ended December 31, are as follows:

	2019		2018		2017
Options granted		—		108,288		612,771
Vesting period (in years)		—		3 - 5		5

The following table sets forth of the activities of the Company’s vested stock options for the years ended December 31, 2019, 2018 and 2017, as restated to give effect for the reverse recapitalization discussed in Note 3.

Outstanding options	Shares			Weighted Average Grant Date Fair Value		Weighted Average Exercise Price
Outstanding at January 1, 2017		4,512,952		$	0.60	$	1.75
Granted		612,771			1.27		3.72
Exercised		(867,024	)		0.59		1.62
Forfeited/expired		(135,789	)		0.96		2.73
Outstanding at December 31, 2017		4,122,910			0.69		2.03
Granted		108,288			1.73		5.10
Exercised		(284,642	)		0.40		1.15
Forfeited/expired		(114,132	)		1.03		2.96
Outstanding at December 31, 2018		3,832,424			0.73		2.16
Granted		—			—		—
Exercised		(2,590,274	)		0.62		1.84
Forfeited/expired		(13,751	)		0.77		2.33
Outstanding at December 31, 2019		1,228,399			0.96		2.91

F-35

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 15. Stock-based Compensation (Continued)

A summary of the status of the activities of the Company’s nonvested stock options for the years ended December 31, 2019, 2018 and 2017, as restated to give effect for the reverse recapitalization discussed in Note 3.

Nonvested options	Shares			Weighted Average Grant Date Fair Value
Nonvested at January 1, 2017		3,639,156		$	0.60
Granted		612,771			1.27
Vested		(1,380,566	)		0.60
Forfeited		(135,789	)		0.96
Nonvested at December 31, 2017		2,735,572			0.73
Granted		108,288			1.73
Vested		(1,032,910	)		0.62
Forfeited		(101,361	)		1.07
Nonvested at December 31, 2018		1,709,589			0.82
Granted		—			—
Vested		(547,537	)		0.85
Forfeited		(13,751	)		0.77
Nonvested at December 31, 2019		1,148,301			0.95

Total stock compensation expense recognized during the years ended December 31, 2019, 2018 and 2017, was $2.2 million, $0.5 million and $0.8 million, respectively. As of December 31, 2019, and 2018, a total of 80,098 and 1,137,176 options with a weighted-average remaining contractual term of 1.9 and 3.2 years, respectively, granted to key employees were vested. The fair value of options that vested through 2019, 2018 and 2017 was $1.2 million, $0.6 million, and $0.8 million, respectively. As of December 31, 2019, and 2018, there was approximately $0.9 million and $0.9 million, respectively, of unrecognized compensation expense related to time-vesting awards, which is expected to be recognized through 2021. As of December 31, 2019, and 2018, the weighted-average exercise price of the non-vested awards was $2.86 and $2.52, respectively. As of December 31, 2019, and 2018, the weighted-average remaining contractual term of the vested awards was 1.9 and 3.2 years, respectively. As of December 31, 2019, and 2018, the weighted-average remaining contractual term of the outstanding awards was 2.7 and 2.8 years, respectively. The total intrinsic value of options that were exercised during the years ended December 31, 2019, 2018 and 2017 was approximately $20.7 million, $4.4 million and $1.7 million, respectively.

During the years ended December 31, 2019, 2018 and 2017, the Company recognized excess tax (expense) benefits from stock-based compensation of $(0.1) million, $1.0 million, and $0.1 million, respectively, within income tax expense in the consolidated statements of operations and within cash flows from operating activities on the consolidated statements of cash flows. Excess tax benefits reflect the total realized value of the Company’s tax deductions from individual stock option exercise transactions and the vesting of restricted stock awards in excess of the deferred tax assets that were previously recorded.

Note 16. Income Taxes

Prior to the consummation of the reverse recapitalization, TPG Pace Holding Corp. was registered in the Cayman Islands. On November 20, 2019 TPG Pace Holding Corp. effected a deregistration as an exempted company in the Cayman Islands under the Cayman Islands Companies Law (2018 Revision), and a domestication as a

F-36

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16. Income Taxes (Continued)

corporation incorporated under the laws of the State of Delaware under Section 388 of the DGCL, pursuant to which the Company’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. This domestication was analyzed under the applicable tax laws and it was determined that there were no significant tax implications associated with the domestication.

The Company recognized income tax expense of $5.2 million, $4.4 million and $1.8 million during the years ended December 31, 2019, 2018 and 2017, respectively, which consists of the following (in thousands):

	2019			2018			2017
Current provision
Federal	$	(85	)	$	(100	)	$	173
State		43			222			62
Total current provision		(42	)		122			235
Deferred provision
Federal		3,740			3,256			955
State		1,501			1,044			564
Total deferred provision		5,241			4,300			1,519
Total income tax expense	$	5,199		$	4,422		$	1,754

A reconciliation of the “expected” income taxes computed by applying the federal statutory income tax rate to the total expense is as follows (in thousands):

	2019			2018			2017
Computed “expected” tax (benefit) expense	$	(139	)	$	3,197		$	3,422
Increase (decrease) in income taxes resulting from:
State income taxes		1,535			1,219			2
Return-to-provision		49			—			—
Permanent items		4,054			(264	)		190
Enacted rate change		—			—			(1,755	)
Other		(300	)		270			(105	)
Total income tax expense	$	5,199		$	4,422		$	1,754

F-37

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16. Income Taxes (Continued)

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act tax reform legislation. This legislation makes significant changes in U.S. tax law including reduction in the corporate tax rates, changes to net operating loss carryforwards and carrybacks, and a repeal of the corporate alternative minimum tax. The legislation reduced the U.S. corporate tax rate from 35% to 21%. As a result of the enacted law, the Company revalued deferred tax assets and liabilities at the new rate. This revaluation resulted in a benefit of $1.8 million to 2017 income tax expense in continuing operations and a corresponding reduction in the deferred tax liability. The other provisions of the Tax Cuts and Jobs Act did not have a material impact on the consolidated financial statements. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows at December 31, 2019 and 2018 (in thousands):

	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	6,633		$	4,192
Location contracts acquired		4,699			1,887
Other		260			1,032
		11,592			7,111
Deferred tax liabilities:
Property and equipment		24,568			16,006
	$	(12,976	)	$	(8,895	)

The Company assesses the realizability of the deferred tax assets at each balance sheet date based on actual and forecasted operating results in order to determine the proper amount, if any, required for a valuation allowance. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. As of December 31, 2019, the Company is in a net deferred tax liability position and is in a three-year cumulative income position. As such, it is the Company’s belief that it is more likely than not that its deferred tax assets will be realized.

As of December 31, 2019, and 2018, the Company has not recorded a liability for unrecognized tax benefits.

The following table summarizes carryforwards of net operating losses as of December 31, 2019 and 2018 (in thousands):

	2019				2018
	Amount		Expiration		Amount		Expiration
Federal net operating losses	$	27,873		2033 - 2039	$	17,942		2031 - 2038
State net operating losses		14,454		2024 - 2031		5,655		2023 - 2030

The Company also has credit carryforwards of approximately $0.5 million and $0.3 million for the years ended December 31, 2019 and 2018, which are expected to be fully utilized in 2021.

Note 17. Commitments and Contingencies

The Company leases office space under agreements expiring at various dates from May 2019 through December 2021. Total rent expense under these leases approximated $0.3 million, $0.3 million and $0.4 million for the

F-38

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 17. Commitments and Contingencies (Continued)

years ended December 31, 2019, 2018 and 2017, respectively. The Company recognizes rent expense on a straight-line basis over the life of the leases. Rent expense is recorded in general and administrative expense in the accompanying consolidated statements of operations.

Future minimum payments under these leases are as follows (in thousands):

Years ending December 31:
2020	$	273
2021		142
2022		104
2023		65
2024		—
Total	$	584

The Company has certain earnouts in periods for future location performance related to certain business acquisitions (see discussion in Note 10).

The Company has certain employment agreements that call for salaries and potential severance upon termination.

Lawsuits and claims are filed against the Company from time to time in the ordinary course of business, including related to employment of professional and non-compete clauses and agreements. Other than settled matters explained as follows, these actions are in various stages, and no judgments or decisions have been rendered. Management, after reviewing matters with legal counsel, believes that the outcome of such matters will not have a material adverse effect on the Company’s financial position or results of operations.

Accel has been involved in a series of related litigated matters stemming from claims that Accel wrongly contracted with 10 different licensed establishments (the “Defendant Establishments”) in 2012 in violation of the contractual rights held by J&J Ventures Gaming, LLC (“J&J”), as further described below.

On August 21, 2012, one of the Company’s operating subsidiaries entered into certain agreements with Jason Rowell (“Rowell”), a member of Action Gaming LLC (“Action Gaming”), which was an unlicensed terminal operator that had exclusive rights to place and operate VGTs within a number of establishments, including the Defendant Establishments. Under agreements with Rowell, the Company agreed to pay him for each licensed establishment which decided to enter into exclusive location agreements with the Company. In late August and early September 2012, each of the Defendant Establishments signed separate location agreements with the Company, purporting to grant it the exclusive right to operate VGTs in those establishments. Separately, on August 24, 2012, Action Gaming sold and assigned its rights to all its location agreements to J&J, including its exclusive rights with the Defendant Establishments (the “J&J Assigned Agreements”). At the time of the assignment of such rights to J&J, the Defendant Establishments were not yet licensed by the Illinois Gaming Board (“IGB”).

Action Gaming, J&J, and other parties, collectively, the Plaintiffs, filed a complaint against the Company, Rowell, and other parties in the Circuit Court of Cook County (the “Circuit Court”), on August 31, 2012, as amended on November 1, 2012, December 19, 2012, and October 3, 2013, alleging, among other things, that the Company aided and abetted Rowell in breaches of his fiduciary duties and contractual obligations with Action Gaming and tortiously interfered with Action Gaming’s contracts with Rowell and agreements assigned to J&J. The complaint seeks damages and injunctive and equitable relief. On January 24, 2018, the Company filed a

F-39

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 17. Commitments and Contingencies (Continued)

motion to dismiss for lack of subject matter jurisdiction, as further described below. On May 14, 2018, the Circuit Court denied the Company’s motion to dismiss and granted a stay to the case, pending a ruling from the IGB on the validity of the J&J Assigned Agreements.

From 2013 to 2015, the Plaintiffs filed additional claims, including J&J Ventures Gaming, LLC et al. v. Wild, Inc. (“Wild”), in various circuit courts seeking declaratory judgements with a number of establishments, including each of the Defendant Establishments, requesting declarations that, among other things, J&J held the exclusive right to operate VGTs at each of the Defendant Establishments as a result of the J&J Assigned Agreements. The Company was granted leave to intervene in all of the declaratory judgments. The circuit courts found that the J&J Assigned Agreements were valid because each of the underlying location agreements were between an unlicensed establishment and an unlicensed terminal operator, and therefore did not constitute use agreements that were otherwise precluded from assignment under the IGB’s regulations. Upon the Company’s appeal, the Illinois Appellate Court, Fifth District (the “District Court”), vacated the circuit courts’ judgments and dismissed the appeals, holding that the IGB had exclusive jurisdiction over the matter that formed the basis of the parties’ claims, and declined to consider the merits of the parties’ disputes. On September 22, 2016, and after the IGB intervened, the Supreme Court of Illinois issued a judgment in Wild, affirming the District Court’s decision vacating the circuit courts’ judgments for lack of subject matter jurisdiction and dismissing the appeals, determining that the IGB has exclusive jurisdiction to decide the validity and enforceability of VGT use agreements.

Between May 2017 and September 2017, both the Company and J&J filed petitions with the IGB seeking adjudication of the rights of the parties and the validity of the use agreements. Those petitions have been fully briefed and remain pending. There is no indication as to when the IGB will rule on the petitions. The Company does not have a present estimate regarding the potential damages, if any, that could potentially be awarded in this litigation and, accordingly, have established no reserves relating to such matters. There are also petitions pending with the IGB which could lead to the Company obtaining new locations.

On October 7, 2019, the Company filed a lawsuit in the Circuit Court of Cook County against Jason Rowell and other parties related to Mr. Rowell’s breaches of his non-compete agreement with the Company. The Company alleged that Mr. Rowell and a competitor were working together to interfere with the Company’s customer relationships. That lawsuit, which seeks equitable relief and legal damages, has not yet been served. On November 7, 2019, Mr. Rowell filed a lawsuit in the Circuit Court of Cook County against the Company alleging that he had not received certain equity interests in the Company to which he was allegedly entitled under his agreement. The Company intends to defend itself against the allegations. The Company does not have a present estimate regarding the potential damages, nor does it believe any payment of damages is probable, and, accordingly, has established no reserves relating to these matters.

During 2017, the Company entered into a settlement agreement with Illinois Gold Rush, Inc. (“Illinois Gold Rush”), related to a 2013 business acquisition completed by the Company with Illinois Gold Rush. As a result of the settlement, the Company paid $3.5 million, issued 32,745 additional shares of Class A Common Stock, acquired 4 locations and the Company issued a stockholder note receivable of $3.3 million based on the value of the underlying collateral. During the year ended December 31, 2018 the note receivable matured, and was settled and 46,667 shares of Class A Common Stock were placed into treasury. As a result of the settlement agreement the Company decreased its location contract asset and Class A Common Stock $1.0 million during 2017 for the fair value of the shares outstanding prior to the settlement agreement.

F-40

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 17. Commitments and Contingencies (Continued)

During the year ended December 31, 2018, the Company entered into a settlement agreement regarding breach of contract with Family Amusements (see discussion in Note 10). Additionally, during the year ended December 31, 2018, the Company entered into settlement agreements related to breach of contract and employment matters for a total of $0.4 million, which was recorded within general and administrative expenses on the consolidated income statement.

On July 2, 2019, Illinois Gaming Investors, LLC filed a lawsuit against the Company. The lawsuit alleges that a current employee of the Company violated his non-competition agreement with Illinois Gaming Investors, LLC, and together with the Company, wrongfully solicited prohibited licensed video gaming locations. The lawsuit on its face seeks damages of $10,000,000. The parties are engaging in discovery. The Company is in the process of defending this lawsuit, and has not accrued any amounts as losses related to this suit are not probable or reasonably estimable.

On July 16, 2019, Clairvest commenced litigation with respect to the June 13, 2019 transaction agreement between TPG Pace Holdings Corp. and the Company. On August 20, 2019, Clairvest filed a request for voluntary dismissal related to such litigation.

Note 18. Related-Party Transactions

From time to time the Company entered into stock buy-back and cashless option conversion transactions in exchange for non-recourse stockholder notes for certain officers and employees of the Company. As of December 31, 2018, stockholder notes receivable balance was $1,462,779. Prior to the reverse recapitalization described in Note 3, these balances were paid in full to the Company.

As of December 31, 2018, an officer and shareholder owed the Company $0.5 million for federal taxes paid by the Company on the shareholder’s behalf. This balance was recorded within other current assets on the consolidated balance sheets. In October 2019, this balance was paid in full to the Company.

Subsequent to the Company’s acquisition of Fair Share and G3, the sellers became employees of the Company. Consideration payable to the Fair Share seller was $2.0 million and $1.0 million as of December 31, 2019 and 2018. Payments to the Fair Share seller under the acquisition agreement were $0.9 million and $0 during the years ended December 31, 2019 and 2018. Consideration payable to the G3 sellers was $3.1 million and $1.0 million as of December 31, 2019 and 2018. Payments to the G3 seller under the acquisition agreement were $0.4 million and $0 during the years ended December 31, 2019 and 2018. Subsequent to the Fair Share acquisition, the seller of Fair Share joined the Company’s Board of Directors.

The Company engaged Much Shelist, P.C. (“Much Shelist”), as its legal counsel for general legal and business matters. An attorney at Much Shelist is a related party to management of the Company. For the years ending December 31, 2019, 2018, and 2017, Accel paid Much Shelist $0.6 million, $0.3 million, and $0.6 million, respectively. These payments were included in general and administrative expenses within the consolidated statements of operations, however, $0.2 million of the amounts paid in the fourth quarter of 2019 were recorded to additional paid-in capital as these costs were determined to be direct and incremental for the reverse recapitalization discussed in Note 3.

The Raine Group, which employs a Director of the Company, Gordon Rubenstein, provided investment banking services and assisted the Company in the negotiations and consummation of the reverse recapitalization. The Company paid $11 million to the Raine Group in 2019.

F-41

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 18. Related-Party Transactions (Continued)

Throughout the third quarter of 2019, one of the Company’s Class A Common Stockholders made payments on behalf of the Company directly to the Company’s independent registered public accounting firm for services rendered to the Company during the same period totaling $2.9 million. Such amounts are included as a component of other expenses, net in the Company’s consolidated statements of operations and contributed capital in the consolidated statement of stockholders’ equity.

Note 19. Earnings Per Share

Pursuant to the Certificate of Incorporation as amended on November 20, 2019 and as a result of the reverse recapitalization, the Company has retrospectively adjusted the weighted average shares outstanding prior to November 20, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted.

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of Class A-1 shares outstanding during the period. Diluted EPS is computed based on the weighted average number of shares plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options, stockholder notes receivable, warrants and Class A-2 common stock for Class A-1 common stock.

The components of basic and diluted EPS were as follows (in thousands, except per share amounts):

	2019			2018		2017
Net (loss) income	$	(5,864	)	$	10,803	$	8,311
Basic weighted average outstanding shares of common stock		61,850			57,621		56,321
Dilutive effect of stock-based awards for common stock		—			1,605		666
Dilutive effect of stockholder notes receivable for common stock		—			407		53
Dilutive effect of warrants for common stock		—			2,549		2,368
Diluted weighted average outstanding shares of common stock		61,850			62,182		59,408
Earnings (loss) per share:
Basic	$	(0.09	)	$	0.19	$	0.15
Diluted	$	(0.09	)	$	0.17	$	0.14

Since the Company was in a net loss position for the year ended December 31, 2019, there is no difference between basic and dilutive weighted average common stock outstanding.

Anti-dilutive stock-based awards, Class A-2 shares, and warrants excluded from the calculations of diluted EPS were 28,561,724, 439,167, and 629,960 for the years ended December 31, 2019, 2018 and 2017, respectively.

Note 20. Subsequent Events

On January 14, 2020, the market condition for the conversion of Tranche I of the Class A-2 shares was satisfied. Accordingly, 1,666,666 Class A-2 shares were converted into Class A-1 shares.

F-42

Grand River Jackpot, LLC and Subsidiary

Consolidated Balance Sheets

June 30, 2019 and December 31 2018

	(Unaudited) June 30, 2019			December 31, 2018
Assets
Current assets:
Cash	$	10,634,920		$	9,830,118
Receivables		79,693			185,843
Inventories		326,961			271,928
Prepaid expenses and other assets		380,837			458,989
Total current assets		11,422,411			10,746,878
Property and equipment:
Land and land improvements		74,737			86,237
Building and building improvements		901,774			1,005,274
Furniture and equipment		45,754,866			42,994,883
Vehicles		1,583,539			1,458,235
		48,314,916			45,544,629
Less accumulated depreciation		37,671,249			35,498,475
Net property and equipment		10,643,667			10,046,154
Intangible contract rights and noncompete agreements, net of accumulated amortization		2,612,417			3,245,037
	$	24,678,495		$	24,038,069
Liabilities and Members’ (Deficit)
Current liabilities:
Current maturities of long-term debt	$	548,480		$	1,500,000
Current maturities of long-term debt for intangible contract rights		46,168			112,822
Accounts payable		1,964,097			1,152,674
Related party accounts payable		608,961			509,313
Accrued expenses		2,970,166			2,537,855
Total current liabilities		6,137,872			5,812,664
Long-term debt, less current maturities, net		48,603,418			48,042,818
Long-term debt for intangible contract rights, less current maturities		108,825			108,825
Other long-term related party payable		4,980,362			4,594,768
		53,692,605			52,746,411
Commitments and contingencies (Note 6)
Members’ (deficit)		(35,151,982	)		(34,521,006	)
	$	24,678,495		$	24,038,069

See notes to consolidated financial statements.

F-43

Grand River Jackpot, LLC and Subsidiary

Consolidated Statements of Operations (Unaudited)

Six-Months Ended June 30, 2019 and 2018

	2019			2018
Net revenue:
Gaming—video gaming terminals	$	29,458,013		$	27,898,382
Amusement		357,809			348,476
ATM fee income		436,637			382,971
		30,252,459			28,629,829
Expenses:
Salaries and wages		2,235,919			2,019,813
Payroll taxes		183,400			163,612
Employee benefits		218,082			253,429
Personnel costs		2,637,401			2,436,854
Earnout commissions		725,973			909,063
Gaming taxes		8,837,492			8,369,603
Video gaming terminal fees		10,482,079			9,909,649
Amusement		33,322			26,121
Supplies		115,667			110,152
Advertising		171,882			108,821
Contractual services		201,382			224,372
Taxes and license fees		64,037			65,953
Auto fuel and licenses		116,468			121,122
Travel		47,465			35,158
Repairs and maintenance		413,928			300,787
Rent		10,818			6,818
Insurance		156,234			134,421
Utilities and telephone		324,916			317,115
Legal and professional fees		293,895			179,135
Related party management service fee		99,648			99,648
Amortization of intangible assets		916,566			1,246,615
Depreciation		2,297,421			3,664,724
Gain on sale of property and equipment		(62,335	)		(731	)
Other		52,236			52,468
Other operating expenses		25,299,094			25,881,014
Operating income		2,315,964			311,961
Other (expense):
Amortization of debt issuance costs		(60,600	)		(60,600	)
Interest		(2,886,340	)		(2,777,516	)
		(2,946,940	)		(2,838,116	)
Net (loss)	$	(630,976	)	$	(2,526,155	)

See notes to consolidated financial statements.

F-44 

Grand River Jackpot, LLC and Subsidiary

Consolidated Statements of Members’ (Deficit) (Unaudited)

Six-Months Ended June 30, 2019 and 2018

Balance, December 31, 2017	$	(30,128,790	)
Net (loss)		(2,526,155	)
Balance, June 30, 2018	$	(32,654,945	)
Balance, December 31, 2018	$	(34,521,006	)
Net (loss)		(630,976	)
Balance, June 30, 2019	$	(35,151,982	)

See notes to consolidated financial statements.

F-45 

Grand River Jackpot, LLC and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)

Six-Months Ended June 30, 2019 and 2018

	2019			2018
Cash flows from operating activities:
Net loss	$	(630,976	)	$	(2,526,155	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		2,297,421			3,664,724
Amortization		977,166			1,307,215
(Gain) on sale of property and equipment		(62,335	)		(731	)
Changes in working capital components:
Receivables		106,150			15,056
Inventories and prepaid expenses		23,119			124,077
Accounts and related party payables and accrued expenses		583,932			(82,665	)
Long-term payable for related party earnout		385,594			563,852
Net cash provided by operating activities		3,680,071			3,065,373
Cash flows from investing activities:
Purchase of property and equipment		(2,107,792	)		(1,279,273	)
Proceeds from sales of property and equipment		34,643			21,409
Purchase of intangible contract rights		(283,946	)		(203,613	)
Net cash used in investing activities		(2,357,095	)		(1,461,477	)
Cash flows from financing activities:
Proceeds from borrowings on long-term debt		500,000			500,000
Principal payments on long-term debt		(1,018,174	)		(1,326,070	)
Net cash used in financing activities		(518,174	)		(826,070	)
Net increase in cash		804,802			777,826
Cash:
Beginning		9,830,118			9,372,403
Ending	$	10,634,920		$	10,150,229
Supplemental disclosure of cash flow information, cash paid for interest	$	2,951,033		$	2,777,216
Supplemental disclosure of noncash investing and financing activities, accounts payable incurred for purchases of property and equipment	$	1,425,586		$	3,945

See notes to consolidated financial statements.

F-46 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Nature of Business and Significant Accounting Policies

Nature of business: Grand River Jackpot, LLC (Company) is a limited liability company formed under the laws of the state of Illinois. The purpose of the Company is to operate and invest in entities that operate video gaming terminals (VGTs) within the state of Illinois. The state of Illinois legalized the use of video gaming terminals at licensed locations including bars, restaurants, truck stops and fraternal and veterans’ organizations in July 2009.

Grand River Jackpot, LLC owns 100% of the membership interest in Grand River Amusements, LLC. The purpose of Grand River Amusements, LLC is to operate an amusement company in Illinois.

GRE-Illinois, LLC (GRE-IL) was formed in March 2010 and owns an 80% interest in the Company with the minority interest of 20% owned by Grand Enterprises, LLC.

GRE Funding Company, LLC (Fund Co.) was formed in 2016 and owns 100% of the membership interest in GRE-IL. Great River Entertainment, LLC (GRE) owns 100% of the membership interest in Fund Co.

Significant accounting policies:

Principles of consolidation: The Company’s consolidated financial statements include its subsidiary, Grand River Amusements, LLC. All material intercompany accounts and transactions have been eliminated.

Basis of presentation: The consolidated interim financial statements for June 30, 2019 and 2018, are unaudited, and in the opinion of management, contain all adjustments necessary for a fair presentation of the consolidated interim financial statements. Such adjustments consist solely of normal recurring items. Interim results are not necessarily indicative of results for a full year or any subsequent interim period. The consolidated interim financial statements and notes are prepared in accordance with accounting principles generally accepted in U.S. GAAP and do not contain certain information included in the annual consolidated financial statements and accompanying notes of the Company. These consolidated interim financial statements should be read in conjunction with the annual financial statements and accompanying notes for the year ended December 31, 2018.

Accounting estimates: The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the estimated useful lives of property and equipment and intangible contract rights.

Concentration of credit risk: The Company maintains cash deposit accounts at financial institutions, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Property and equipment: Property and equipment is stated at cost. Depreciation is computed using straight-line methods based on estimated useful lives which range from 3 to 40 years.

Intangible contract rights and noncompete agreements: Intangible contract rights allow the Company exclusive rights to place video gaming machines (VGTs) in licensed establishments. Contract rights are being amortized using the straight-line method over the terms of the contracts. Contract terms currently range from 1 to 10 years. The majority of noncompete agreements are being amortized using the same method and terms as the intangible contract rights.

F-47 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Nature of Business and Significant Accounting Policies (Continued)

The Company evaluates its intangible contract rights and noncompete agreements for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. This analysis is performed by comparing carrying values of these assets to the current and expected future undiscounted cash flows expected to be generated by these assets. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance, and may differ from actual cash flows. If such analysis indicates the carrying value of these assets is not recoverable and the fair value of the assets is less than their carrying value, the assets will be written down to their estimated fair value in the period in which this determination is made. The Company completed an evaluation of these assets for the six months ended June 30, 2019 and 2018 and determined there was no impairment of their carrying value.

Minority member earnout commissions: Under the Amended and Restated Operating Agreement dated October 31, 2016 the minority member is entitled to earnout commissions ranging from 1 to 10.5% of the gross revenue from video gaming terminals operated by the Company related to locations contributed by the minority member up to a maximum of $162,500 per quarter with any excess carried forward to quarters for which actual calculations do not exceed the maximum. The total earnout commissions expense under this agreement was $325,000 for both of the six months ended June 30, 2019 and 2018.

Deferred financing fees: Deferred financing fees represent the Company’s share of lender fees, professional fees and closing costs incurred by Fund Co. when Fund Co. refinanced their Senior Debt in October 2016. The Company’s share of these costs was determined based on the percent of proceeds from Senior Debt they received from Fund Co. to pay off the Company’s first and second lien credit agreements. These costs are netted with long-term debt and are being amortized over the terms of that agreement using the straight-line method.

Long-term related party payable: As part of the Amended and Restated Operating Agreement, the majority member (GRE-Illinois, LLC) is entitled to earnout commissions of 10.5% of gross revenue from video gaming terminals operated by the Company related to locations obtained through one asset purchase agreement. Total earnout commissions accrued as of June 30, 2019 and December 31, 2018 were $4,505,875 and $4,205,181, respectively, plus accrued interest at a rate of 4% of $474,487 and $389,587, respectively. Total earnout commissions expense under this agreement for the six months ended June 30, 2019 and 2018 was $300,694 and $494,899, respectively, and related interest expense was $84,900 and $68,953, respectively. As the Company’s former and current credit agreements have restrictions for payments to the majority member, the entire balance is shown as other long term related party payable on the consolidated balance sheet as of June 30, 2019 and December 31, 2018.

Revenue recognition: In accordance with gaming industry practice, gaming revenue from video gaming terminals is recognized as the net win from gaming activities, which is the difference between gaming wins and losses. Revenue from amusement and vending business are recognized at the time the related sale is made.

Advertising costs: Advertising costs are expensed as incurred. Total advertising costs expensed for the six months ended June 30, 2019 and 2018 were approximately $172,000 and $109,000, respectively.

Sales and W2G taxes: Taxes collected from customers and remitted to government agencies for specific revenue-producing transactions are recorded net with no effect on the consolidated statement of operations.

Income taxes: The Company has elected to be taxed as a limited liability company, which provides in lieu of corporation income taxes, the members separately account for their proportionate share of the Company’s income, deductions, losses and credits. Therefore, no provision or liability for income taxes has been included in the consolidated financial statements.

F-48 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Nature of Business and Significant Accounting Policies (Continued)

Management evaluated the Company’s tax positions and concluded the Company had taken no uncertain tax positions that require adjustment to the financial statements. With few exceptions, the Company is no longer subject to income tax examinations by the U.S. federal or state tax authorities for years before 2015.

Recent accounting guidance: In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of adoption of the new standard on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance, including industry specific guidance, when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. In August 2015, the FASB issued ASU 2015-14 which defers the effective date of ASU 2014-09 one year making it effective for annual reporting periods beginning after December 15, 2018 and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company will adopt the new guidance using the retrospective with cumulative effect transition method and apply the adjustment to the opening balance of retained earnings. The Company does not expect this adjustment to be material to the financial statements as a whole and is currently evaluating the impact of the new guidance on its financial statement disclosures.

Note 2. Intangibles

Intangible assets consist of the following:

	June 30, 2019			December 31, 2018
Contract rights and noncompete agreements	$	18,824,564		$	18,540,618
Less accumulated amortization		(16,212,147	)		(15,295,581	)
Balance	$	2,612,417		$	3,245,037

The amortization expense for the six-months ended June 30, 2019 and 2018 were $916,566 and $1,246,615, respectively.

Estimated future amortization expense is as follows:

Six months ending December 31, 2019	$	965,655
Years ending December 31:
2020		855,784
2021		253,301
2022		118,564
2023		104,330
Thereafter		314,783
	$	2,612,417

F-49 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 3. Long-Term Borrowings and Pledged Assets

Long-term debt as of December 31, 2018 and June 30, 2019 consists of the following:

	June 30, 2019			December 31, 2018
Related party financing agreement (A)	$	49,434,700		$	49,886,220
Less deferred financing fees		(282,802	)		(343,402	)
Less current maturities		(548,480	)		(1,500,000	)
	$	48,603,418		$	48,042,818

(A) The Company entered into a loan and security agreement with Fund Co. on October 31, 2016 under which they received proceeds of approximately $53,680,000. The principal and interest payments due on this agreement total $7,500,000 per year provided that such amount will be increased so that the minimum principal paid is not less than $1,500,000. Interest on the outstanding balance is variable and is at one-month LIBOR plus an applicable margin based on the current rates being charged on the Senior Debt. The actual rates as of June 30, 2019 and December 31, 2018 were 11.15% and 11.27%, respectively. Total interest paid on related party debt was approximately $2,798,000 and $2,700,000 for the six months ended of June 30, 2019 and June 30, 2018, respectively. The remaining outstanding balance plus any accrued interest is due on October 31, 2021.

The Company’s assets are pledged on the Senior Debt of Fund Co. and the Company is also listed as a guarantor along with Fund Co. and Fund Co.’s other subsidiaries. The outstanding balance of the Senior Debt of Fund Co. was $87,050,000 and $90,550,000 as of June 30, 2019 and December 31, 2018, respectively.

The scheduled maturities of long-term debt are as follows:

Six months ending December 31, 2019	$	548,480
Years ending December 31:
2020		1,500,000
2021		47,386,220
	$	49,434,700

Note 4. State Gaming Taxes and Video Gaming Terminal Fees

In accordance with the Illinois Video Gaming Act, the Company pays state gaming taxes equal to 30% on net terminal income and an administrative fee, which was 0.7275% and increased to 0.8513% in July 2018, to a third-party. The net remaining terminal income is split 50/50 between the Licensed Terminal Operator (the Company) and the Licensed Video Gaming Location. The total state gaming taxes incurred by the Company were approximately $8,837,000 and $8,370,000 for the six months ended June 30, 2019 and 2018, respectively. Total administrative fees were approximately $125,000 and $101,000 and total amounts paid to Licensed Locations were approximately $10,310,000 and $9,764,000 for the six months ended June 30, 2019 and 2018, respectively. These fees are included with video gaming terminal fees on the statements of operations for the six months ended June 30, 2019 and 2018.

F-50 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 5. Employee Benefits

Retirement plan: GRE sponsors a qualified 401(k) profit sharing plan covering eligible employees of GRE and its subsidiaries. The Plan allows employee deferral contributions and also provides discretionary matching contributions equal to a percentage of employee deferral contributions and a discretionary nonelective contribution. The Company’s matching contributions totaled approximately $57,000 and $50,000 for the six months ended June 30, 2019 and 2018, respectively. There were no discretionary nonelective contributions for the six months ended June 30, 2019 and 2018.

Health insurance: As of January 1, 2018, GRE adopted a qualified employee health insurance plan covering all eligible employees of GRE and its subsidiaries. The plan, which is self-funded, requires contributions from the Company and its eligible employees and their dependents. Any unpaid claims or incurred but not reported claims are liabilities of GRE. Total contributions paid to GRE by the Company for the six months ended June 30, 2019 and 2018 were approximately $155,000 and $200,000, respectively.

The Company remits monthly contributions for health insurance to GRE and GRE pays the insurance claims.

Note 6. Contingencies

The Company is involved in certain claims and legal actions arising in the ordinary course of business. In the opinion of management, in consultation with its legal counsel, the ultimate disposition of these matters will fall within the limits of insurance and/or will not have a material effect on the Company’s future financial position or results of operations.

Note 7. Subsequent Events

On July 1, 2019 the Company borrowed $1,000,000 from Fund Co. In addition, effective July 1, 2019, the Illinois Gaming Board imposed an additional tax of 3% on net terminal income.

On August 26, 2019, GRE, GRE-IL and the Company entered into a purchase agreement with an unrelated third party to sell their membership interests in the Company for $109,500,000. GRE-IL received proceeds of approximately $100,000,000 upon the closing of the sale on September 16, 2019.

On August 26, 2019, GRE-IL and Grand Enterprises, LLC entered into an agreement whereby GRE-IL would purchase Grand Enterprises, LLC’s 20% membership interest in the Company contingent upon the sale of the Company to an unrelated third party.

The Company has evaluated all subsequent events through September 26, 2019, the date on which the financial statements were available to be issued.

F-51 

Independent Auditor’s Report

Board of Directors and Members

Grand River Jackpot, LLC

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of Grand River Jackpot, LLC and Subsidiary, which comprise the consolidated balance sheet as of December 31, 2018, the related consolidated statements of operations, members’ (deficit) and cash flows for the year then ended, and the related notes to consolidated financial statements (collectively, the financial statements).

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Grand River Jackpot, LLC and Subsidiary as of December 31, 2018, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ RSM US LLP

Davenport, Iowa

March 28, 2019

F-52 

Grand River Jackpot, LLC and Subsidiary

Consolidated Balance Sheet

December 31, 2018

Assets
Current assets:
Cash	$	9,830,118
Receivables		185,843
Inventories		271,928
Prepaid expenses and other assets		458,989
Total current assets		10,746,878
Property and equipment:
Land and land improvements		86,237
Building and building improvements		1,005,274
Furniture and equipment		42,994,883
Vehicles		1,458,235
		45,544,629
Less accumulated depreciation		35,498,475
Net property and equipment		10,046,154
Intangible contract rights and noncompete agreements, net of accumulated amortization		3,245,037
	$	24,038,069

Liabilities and Members’ Deficit
Current liabilities:
Current maturities of long-term debt	$	1,500,000
Current maturities of long-term debt for intangible contract rights		112,822
Accounts payable		1,152,674
Related party accounts payable		509,313
Accrued expenses		2,537,855
Total current liabilities		5,812,664
Long-term debt, less current maturities		48,042,818
Long-term debt for intangible contract rights, less current maturities		108,825
Other long-term related party payable		4,594,768
		52,746,411
Commitments and contingencies (Note 6)
Members’ deficit		(34,521,006	)
	$	24,038,069

See notes to consolidated financial statements.

F-53 

Grand River Jackpot, LLC and Subsidiary

Consolidated Statement of Operations

Year Ended December 31, 2018

Net revenue:
Gaming—video gaming terminals	$	54,754,771
Amusement		665,139
ATM fee income		769,753
		56,189,663
Expenses:
Salaries and wages		4,205,769
Payroll taxes		327,267
Employee benefits		451,764
Personnel costs		4,984,800
Earnout commissions		1,762,901
Gaming taxes		16,426,612
Video gaming terminal fees		19,478,481
Amusement		46,630
Supplies		211,498
Advertising		247,317
Contractual services		439,867
Taxes and license fees		100,869
Auto fuel and licenses		254,180
Travel		70,922
Repairs and maintenance		713,075
Rent		15,636
Insurance		269,791
Utilities and telephone		636,284
Legal and professional fees		559,367
Related party management service fee		199,296
Amortization of intangible assets		2,102,017
Depreciation		6,354,531
Gain on sale of property and equipment		(63,478	)
Other		102,794
Other operating expenses		49,928,590
Operating income		1,276,273
Other (expense):
Amortization of debt issuance costs		(121,200	)
Interest		(5,547,289	)
		(5,668,489	)
Net loss	$	(4,392,216	)

See notes to consolidated financial statements.

F-54 

Grand River Jackpot, LLC and Subsidiary

Consolidated Statement of Members’ Deficit

Year Ended December 31, 2018

Balance, December 31, 2017	$	(30,128,790	)
Net loss		(4,392,216	)
Balance, December 31, 2018	$	(34,521,006	)

See notes to consolidated financial statements.

F-55 

Grand River Jackpot, LLC and Subsidiary

Consolidated Statement of Cash Flows

Year Ended December 31, 2018

Cash flows from operating activities:
Net loss	$	(4,392,216	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		6,354,531
Amortization		2,223,217
Gain on sale of property and equipment		(63,478	)
Changes in working capital components:
Receivables		(110,342	)
Inventories and prepaid expenses		9,584
Accounts and related party payables and accrued expenses		562,374
Long-term payable for related party earnout		1,083,803
Net cash provided by operating activities		5,667,473
Cash flows from investing activities:
Purchase of property and equipment		(2,647,926	)
Proceeds from sales of property and equipment		95,286
Purchase of intangible contract rights		(672,980	)
Net cash used in investing activities		(3,225,620	)
Cash flows from financing activities:
Proceeds from borrowings on long-term debt		500,000
Principal payments on long-term debt		(2,484,138	)
Net cash used in financing activities		(1,984,138	)
Net increase in cash		457,715
Cash:
Beginning		9,372,403
Ending	$	9,830,118
Supplemental disclosure of cash flow information, cash paid for interest	$	5,620,410
Supplemental disclosures of noncash investing and financing activities:
Accounts payable incurred for purchases of property and equipment	$	666,136
Writeoff of intangible asset and related debt	$	392,000

See notes to consolidated financial statements.

F-56 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements

Note 1. Nature of Business and Significant Accounting Policies

Nature of business: Grand River Jackpot, LLC (Company) is a limited liability company formed under the laws of the state of Illinois. The purpose of the Company is to operate and invest in entities that operate video gaming terminals (VGTs) within the state of Illinois. The state of Illinois legalized the use of video gaming terminals at licensed locations including bars, restaurants, truck stops and fraternal and veterans’ organizations in July 2009.

Grand River Jackpot, LLC owns 100% of the membership interest in Grand River Amusements, LLC. The purpose of Grand River Amusements, LLC is to operate an amusement company in Illinois.

GRE-Illinois, LLC (GRE-IL) was formed in March 2010 and owns an 80% interest in the Company with the minority interest of 20% owned by Grand Enterprises, LLC.

GRE Funding Company, LLC (Fund Co.) was formed in 2016 and owns 100% of the membership interest in GRE-IL. Great River Entertainment, LLC (GRE) owns 100% of the membership interest in Fund Co.

Significant accounting policies:

Principles of consolidation: The Company’s consolidated financial statements include its subsidiary, Grand River Amusements, LLC. All material intercompany accounts and transactions have been eliminated.

Accounting estimates: The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the estimated useful lives of property and equipment and intangible contract rights.

Concentration of credit risk: The Company maintains cash deposit accounts at financial institutions, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Property and equipment: Property and equipment is stated at cost. Depreciation is computed using straight-line methods based on estimated useful lives which range from 3 to 40 years.

Intangible contract rights and noncompete agreements: Intangible contract rights allow the Company exclusive rights to place video gaming machines (VGTs) in licensed establishments. Contract rights are being amortized using the straight-line method over the terms of the contracts. Contract terms currently range from 1 to 10 years. The majority of noncompete agreements are being amortized using the same method and terms as the intangible contract rights.

The Company evaluates its intangible contract rights and noncompete agreements for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. This analysis is performed by comparing carrying values of these assets to the current and expected future undiscounted cash flows expected to be generated by these assets. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance, and may differ from actual cash flows. If such analysis indicates the carrying value of these assets is not recoverable and the fair value of the assets is less than their carrying value, the assets will be written down to their estimated fair value in the period in which this determination is made. The Company completed an evaluation of these assets for the year ended December 31, 2018 and determined there was no impairment of their carrying value.

F-57

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements

Note 1. Nature of Business and Significant Accounting Policies (Continued)

Minority member earnout commissions: Under the Amended and Restated Operating Agreement dated October 31, 2016 the minority member is entitled to earnout commissions ranging from 1 to 10.5% of the gross revenue from video gaming terminals operated by the Company related to locations contributed by the minority member up to a maximum of $162,500 per quarter with any excess carried forward to quarters for which actual calculations do not exceed the maximum. The total earnout commissions expense under this agreement was $650,000 for the year ended December 31, 2018.

Deferred financing fees: Deferred financing fees represent the Company’s share of lender fees, professional fees and closing costs incurred by Fund Co. when Fund Co. refinanced their Senior Debt in October 2016. The Company’s share of these costs was determined based on the percent of proceeds from Senior Debt they received from Fund Co. to pay off the Company’s first and second lien credit agreements. These costs are netted with long-term debt and are being amortized over the terms of that agreement using the straight-line method.

Long-term related party payable: As part of the Amended and Restated Operating Agreement, the majority member (GRE-Illinois, LLC) is entitled to earnout commissions of 10.5% of gross revenue from video gaming terminals operated by the Company related to locations obtained through one asset purchase agreement. Total earnout commissions accrued as of December 31, 2018 was $4,205,181, plus accrued interest at a rate of 4% of $389,587. Total earnout commissions expense under this agreement for the year ended December 31, 2018 was $935,233, and related interest expense was $148,570. As the Company’s former and current credit agreements have restrictions for payments to the majority member, the entire balance is shown as other long term related party payable on the consolidated balance sheet as of December 31, 2018.

Revenue recognition: In accordance with gaming industry practice, gaming revenue from video gaming terminals is recognized as the net win from gaming activities, which is the difference between gaming wins and losses. Revenue from amusement and vending business are recognized at the time the related sale is made.

Advertising costs: Advertising costs are expensed as incurred. Total advertising costs expensed for the year ended December 31, 2018 was approximately $247,000.

Sales and W2G taxes: Taxes collected from customers and remitted to government agencies for specific revenue-producing transactions are recorded net with no effect on the consolidated statement of operations.

Income taxes: The Company has elected to be taxed as a limited liability company, which provides in lieu of corporation income taxes, the members separately account for their proportionate share of the Company’s income, deductions, losses and credits. Therefore, no provision or liability for income taxes has been included in the consolidated financial statements.

Management evaluated the Company’s tax positions and concluded the Company had taken no uncertain tax positions that require adjustment to the financial statements. With few exceptions, the Company is no longer subject to income tax examinations by the U.S. federal or state tax authorities for years before 2015.

Recent accounting guidance: In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of adoption of the new standard on its consolidated financial statements.

F-58

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements

Note 1. Nature of Business and Significant Accounting Policies (Continued)

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance, including industry specific guidance, when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. In August 2015, the FASB issued ASU 2015-14 which defers the effective date of ASU 2014-09 one year making it effective for annual reporting periods beginning after December 15, 2018. The Company will adopt the new guidance using the retrospective with cumulative effect transition method and apply the adjustment to the opening balance of retained earnings as of January 1, 2019. The Company does not expect this adjustment to be material to the financial statements as a whole and is currently evaluating the impact of the new guidance on its financial statement disclosures.

Note 2. Intangibles

Intangible assets are summarized as follows:

	Contract Rights and Noncompete Agreements
Balance, December 31, 2017	$	5,066,074
Additions		672,980
Write-off		(392,000	)
Amortization		(2,102,017	)
Balance, December 31, 2018	$	3,245,037

Estimated future amortization expense is as follows:

Years ending December 31:
2019	$	1,713,860
2020		793,498
2021		235,535
2022		100,797
2023		86,563
Thereafter		314,784
	$	3,245,037

Note 3. Long-Term Borrowings and Pledged Assets

Long-term debt as of December 31, 2018 consists of the following:

Related party financing agreement (A)	$	49,886,220
Less deferred financing fees		343,402
Less current maturities		1,500,000
	$	48,042,818

(A) The Company entered into a loan and security agreement with Fund Co. on October 31, 2016 under which they received proceeds of approximately $53,680,000. The principal and interest payments due on this

F-59 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements

Note 3. Long-Term Borrowings and Pledged Assets (Continued)

agreement total $7,500,000 per year provided that such amount will be increased so that the minimum principal paid is not less than $1,500,000. Interest on the outstanding balance is variable and is at one-month LIBOR plus an applicable margin based on the current rates being charged on the Senior Debt. The actual rates as of December 31, 2018 were 11.27%. Total interest paid on related party debt was approximately $5,460,000 for the year ended December 31, 2018. The remaining outstanding balance plus any accrued interest is due on October 31, 2021.

The Company’s assets are pledged on the Senior Debt of Fund Co. and the Company is also listed as a guarantor along with Fund Co. and Fund Co.’s other subsidiaries. The outstanding balance of the Senior Debt of Fund Co. was $90,550,000 as of December 31, 2018.

The scheduled maturities of long-term debt are as follows:

Years ending December 31:
2019	$	1,500,000
2020		1,500,000
2021		46,886,220
	$	49,886,220

Long-term debt related to intangible contract rights as of December 31, 2018 is as follows:

Location contracts and noncompete agreement (1)	$	17,750
Location contracts (2)		8,750
Location contracts (3)		59,450
Location contracts (4)		28,186
Location contracts (5)		4,870
Location contracts (6)		102,641
		221,647
Less current maturities		112,822
	$	108,825

(1) Location contracts and noncompete: The Company entered into an agreement in the amount of $698,000 for the purchase of 18 VGT location contracts ($26,000 to $51,000 per contract). As part of the agreement they paid $25,000 upon closing. The remaining balance is being incurred at the designated rate per location contract included in the agreement as each location is activated and payments are being made in quarterly installments equal to 1/20th of the contract price. There were eight locations activated under this contract as of December 31, 2018. There is also an option to purchase up to five additional location contracts at prices ranging from $26,000 to $36,000 per contract. There was also a separate noncompete agreement included in this purchase whereby the Company must pay consideration of $20,000 per year in 20 equal quarterly installments. The balances owed on location contracts and the noncompete agreement was $17,750 as of December 31, 2018.

(2) Location contracts: The Company entered into an agreement in the amount of $1,080,000 for the purchase of 24 VGT location contracts ($40,000 or $45,000 per contract). As part of the agreement they paid $50,000 upon closing. The remaining balance is being incurred at the designated rate per location contract included in the agreement as each location is activated and payments are being made in either 12 or 20 equal quarterly installments of principal and interest at a rate of 8%. There were six locations activated under this agreement as of December 31, 2018.

F-60 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements

Note 3. Long-Term Borrowings and Pledged Assets (Continued)

(3) Location contracts: The Company entered into an agreement to purchase VGT location contracts from an individual at a price of $30,000 each. In order to qualify as a legitimate contract, the contract term must be at least three years. The Company is required to pay $1,000 per executed contract when delivered and then pay the remaining $29,000 per contract in 20 equal quarterly installments of $1,450. There were eight active locations under this agreement as of December 31, 2018.

(4) Location contracts: The Company entered into an agreement in the amount of $1,325,000 for the purchase of up to 50 VGT location contracts ($25,000 or $30,000 per contract). As part of the agreement they paid $120,000 upon closing. The remaining balance is being incurred at the designated rate per location contract included in the agreement as each location is activated and payments are made in 60 equal quarterly installments. There were ten locations activated under this agreement as of December 31, 2018. There is also an option for the seller to provide up to 50 additional location contracts at a price of $25,000 per contract if all locations are delivered within the time frame noted in the agreement.

(5) Location contracts: The Company entered into an agreement in the amount of $200,000 for the purchase of up to four VGT location contracts ($50,000 per contract). As part of the agreement they paid $5,000 upon closing. The remaining balance is being incurred at the designated rate per location contract as each location is activated and payments are made in 20 equal quarterly installments of $2,438. There was one location activated under this agreement as of December 31, 2018. There is also an option for the seller to provide up to five additional location contracts at a price of $30,000 per contract if all locations are delivered within the time frame noted in the agreement.

(6) Location contracts: The Company entered into an amended purchase agreement in May 2013 in the amount of $200,000 for the purchase of nine VGT location contracts. The agreement requires monthly payments of $2,209 including principal and interest at a rate of 6% and matures in May 2023. There were six locations activated under this agreement as of December 31, 2018. There is also an option for the seller to deliver additional contracts at a price of $25,000 per contract.

Other than as specifically noted above, the location contracts do not bear interest on the amounts owed after locations are activated.

The scheduled maturities of long-term debt related to intangible contract rights are as follows:

Years ending December 31:
2019	$	112,822
2020		47,871
2021		25,034
2022		25,038
2023		10,882
	$	221,647

Note 4. State Gaming Taxes and Video Gaming Terminal Fees

In accordance with the Illinois Video Gaming Act, the Company pays state gaming taxes equal to 30% on net terminal income and an administrative fee, which was 0.7275% and increased to 0.8513% in July 2018, to a third-party. The net remaining terminal income is split 50/50 between the Licensed Terminal Operator (the Company) and the Licensed Video Gaming Location. The total state gaming taxes incurred by the Company were approximately $16,427,000 for the year ended December 31, 2018. Total administrative fees were

F-61 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements

Note 4. State Gaming Taxes and Video Gaming Terminal Fees (Continued)

approximately $213,000 and total amounts paid to Licensed Locations were approximately $19,170,000 for the year ended December 31, 2018. These fees are included with video gaming terminal fees on the statement of operations for the year ended December 31, 2018.

Note 5. Employee Benefits

Retirement plan: GRE sponsors a qualified 401(k) profit sharing plan covering eligible employees of GRE and its subsidiaries. The Plan allows employee deferral contributions and also provides discretionary matching contributions equal to a percentage of employee deferral contributions and a discretionary nonelective contribution. The Company’s matching contributions totaled approximately $96,000 for the year ended December 31, 2018. There were no discretionary nonelective contributions for the year ended December 31, 2018.

Health insurance: As of January 1, 2018, GRE adopted a qualified employee health insurance plan covering all eligible employees of GRE and its subsidiaries. The plan, which is self-funded, requires contributions from the Company and its eligible employees and their dependents. Any unpaid claims or incurred but not reported claims are liabilities of GRE. Total contributions paid to GRE by the Company for the year ended December 31, 2018 were approximately $351,000. The Company remits monthly contributions for health insurance to GRE and GRE pays the insurance claims.

Note 6. Contingencies

The Company is involved in certain claims and legal actions arising in the ordinary course of business. In the opinion of management, in consultation with its legal counsel, the ultimate disposition of these matters will fall within the limits of insurance and/or will not have a material effect on the Company’s future financial position or results of operations.

Note 7. Subsequent Events

The Company has evaluated all subsequent events through March 28, 2019, the date on which the financial statements were available to be issued.

F-62 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On November 20, 2019, Accel Entertainment, Inc., consummated a business combination pursuant to the Transaction Agreement, which has been accounted for as a reverse recapitalization. Prior to the reverse recapitalization, the Accel completed its acquisition of Grand River Jackpot on September 16, 2019. The following unaudited pro forma condensed combined financial information has been prepared in accordance with SEC Regulation S-X Article 11 for the year ended December 31, 2019. The unaudited pro forma condensed combined statements of operation for the year ended December 31, 2019 give pro forma effect to the reverse recapitalization as if it was completed on January 1, 2018.

The unaudited pro forma consolidated financial information does not include an unaudited pro forma consolidated balance sheet as of December 31, 2019 as the reverse recapitalization is already reflected in our historical audited consolidated balance sheet as of December 31, 2019 included elsewhere in this prospectus.

The unaudited pro forma consolidated statement of operations for the year ended December 31, 2019 was derived from and should be read in conjunction the historical audited consolidated financial statements of Accel Entertainment, Inc. as of and for the year ended December 31, 2019 and the accompanying notes included elsewhere in this prospectus. The foregoing historical financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information should be read together with the accompanying notes to the unaudited pro forma condensed combined statement of operations, the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information included elsewhere in this filing.

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the reverse recapitalization on November 20, 2019. It has been prepared for informational purposes only and is subject to a number of uncertainties and assumptions as described in the accompanying notes. The unaudited pro forma financial information does not purport to represent, and is not necessarily indicative of, what the actual financial condition of the combined company would have been had the reverse recapitalization taken place at an earlier date, nor is it indicative of the financial condition of the combined company as of any future date. The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give effect to pro forma events that are (1) directly attributable to the reverse recapitalization, (2) factually supportable and (3) with respect to the statement of operations, expected to have a continuing impact on the results of the combined company.

F-63

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2019

	Historical Accel Entertainment, Inc.			Pro Forma Adjustments				Pro Forma
Revenues:
Net video gaming	$	410,636		$	40,980		(3a)	$	451,616
Amusement		5,912			481		(3a)		6,393
ATM fees and other revenue		7,837			601		(3a)		8,438
Total net revenues		424,385			42,062				466,447
Operating expenses:
Video gaming expenses		271,999			27,870		(3a)		299,869
General and administrative		75,028			7,056		(3a)		82,084
Depreciation and amortization of property and equipment		26,398			3,244		(3a)		28,333
					(1,309	)	(3b)
Amortization of route and customer acquisition costs and location contracts acquired		17,975			1,253		(3a)		21,773
					2,545		(3c)
Other expenses, net		19,649			(115	)	(3a)		9,444
					462		(3d)
					(10,552	)	(3e)
Total operating expenses		411,049			30,454				441,503
Operating income		13,336			11,608				24,944
Interest expense		12,860			4,427		(3a)		17,965
					(4,427	)	(3f)
					5,105		(3g)
Loss on debt extinguishment		1,141			—				1,141
Loss before income tax expense		(665	)		6,503				5,838
Income tax expense		5,199			1,985		(3h)		7,184
Net loss	$	(5,864	)	$	4,518			$	(1,346	)
Net loss per common share—basic and diluted	($	0.09	)					$	(0.02	)
Weighted average number of shares outstanding—basic and diluted		61,850			14,787		(3i)		76,637

See accompanying notes to the unaudited pro forma condensed combined financial information.

F-64

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Six Months Ended June 30, 2019

									Assuming No Additional Redemptions					Assuming Maximum Redemptions
	Accel (Historical)		Pace (Historical)			Grand River (Note 2)			Pro Forma Adjustments			Pro Forma		Redemption Adjustments			Pro Forma
Revenues:
Net video gaming	$	195,168,399	$	—		$	29,458,013		$	—		$	224,626,412	$	—		$	224,626,412
Amusement		2,785,981		—			357,809			—			3,143,790		—			3,143,790
ATM fees and other revenue		3,737,275		—			436,637			—			4,173,912		—			4,173,912
Total net revenues		201,691,655		—			30,252,459			—			231,944,114		—			231,944,114
Operating expenses:
Video gaming expenses		127,703,073		—			20,045,544			—			147,748,617		—			147,748,617
General and administrative		33,600,191		—			4,687,063			—			38,287,254		—			38,287,254
Depreciation and amortization of property and equipment		12,141,013		—			2,297,421			(818,164	)(4aa)		13,620,270		—			13,620,270
Amortization of route and customer acquisition costs and location contracts acquired		8,926,713		—			916,566			1,287,601	(4bb)		11,130,880		—			11,130,880
Professional fees, formation costs and other expenses		—		4,575,958			—			—			4,575,958		—			4,575,958
Other operating expenses		1,345,716		—			(10,099	)		—			1,335,617		—			1,335,617
Total operating expenses		183,716,706		4,575,958			27,936,495			469,437			216,698,596		—			216,698,596
Operating income (loss)		17,974,949		(4,575,958	)		2,315,964			(469,437	)		15,245,518		—			15,245,518
Interest expense (income)		6,202,560		(5,105,671	)		2,946,940			5,105,671	(4cc)		8,289,789		628,658	(4gg)		8,918,447
										(859,711	)(4dd)
Income (loss) before income tax expense		11,772,389		529,713			(630,976	)		(5,575,108	)		6,955,729		(628,658	)		6,327,072
Income tax expense		3,449,599		—			—			(72,211	)(4ee)		3,377,388		188,597	(4hh)		3,565,986
Net income (loss)	$	8,322,790	$	529,713		$	(630,976	)	$	(5,502,897	)	$	3,578,341	$	(817,255	)	$	2,761,086
Net income per share of stock — basic	$	2.47	$	0.01								$	0.04				$	0.04
Net income per share of stock — diluted	$	2.32	$	0.01								$	0.04				$	0.04
Weighted average shares of stock outstanding — basic		3,368,298		56,250,000						24,217,044	(4ff)		83,835,342		13,217,044	(4ff)		72,835,342
Weighted average shares of stock outstanding — diluted		3,592,061		56,250,000						23,993,281	(4ff)		83,835,342		12,993,281	(4ff)		72,835,342

See accompanying notes to the unaudited pro forma condensed combined financial information.

F-65

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

Note 1. Basis of Pro Forma Presentation

Overview

The unaudited pro forma condensed combined financial statements have been prepared assuming the Business Combination is accounted for as reverse recapitalization in accordance with GAAP. Under this method of accounting, Pace will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Accel issuing stock for the net assets of Pace, accompanied by a recapitalization. The net assets of Pace will be stated at historical cost, with no goodwill or other intangible assets recorded. All direct costs of the Business Combination will be recorded as an offset to additional-paid-in-capital, consistent with the accounting for a reverse recapitalization.

On September 17, 2019, Accel completed the acquisition of 100% of the outstanding membership interests of Grand River. The acquisition of Grand River by Accel was accounted for as a business combination under ASC Topic 805, Business Combinations (“ASC 805”) and Accel, as the accounting acquirer, recorded the assets acquired and liabilities assumed at fair value on a preliminary basis.

The acquisition method of accounting uses the fair value concepts defined in ASC Topic 820, Fair Value Measurements (“ASC 820”). In general, ASC 805 requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date by Accel.

ASC 820 defines fair value, establishes a framework for measuring fair value, and sets forth a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to develop the fair value measurements. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for a non-financial asset assume the highest and best use by these market participants. Many of these fair value measurements can be highly subjective, and it is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

Under ASC 805, acquisition-related transaction costs are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred, or if related to the issuance of debt, capitalized as debt issuance costs. Acquisition-related transaction costs expected to be incurred as part of the business combination and the other related transactions include estimated fees related to advisory, legal and accounting fees.

The pro forma adjustments represent management’s estimates based on information available as of the date of the condensed combined financial statements and do not reflect possible adjustments related to restructuring or integration activities that have yet to be determined or transaction or other costs following the business combination that are not expected to have a continuing impact. Further, one-time transaction-related expenses anticipated to be incurred prior to, or concurrently with the consummation of the business combination are not included in the unaudited pro forma condensed combined statements of operations.

Description of Business Combination

Pursuant to and in connection with the Transaction Agreement, the following transactions will occur:

• the Stock Purchase, including the Business Combination Private Placement;

• the Merger;

• the Pace Domestication;

F-66

• the Sponsor Transactions;

• the distribution by Pace Sponsor to Pace Sponsor Members of all of Pace Sponsor’s Class A-1 Shares, Class A-2 Shares and remaining Private Placement Warrants;

• the Director Class F Share Exchange; and

• the Investment Private Placement.

The combined pro forma financial information was prepared assuming the aggregate consideration for the Business Combination will be approximately $651.2 million, amounts payable in the form of $350.0 million in cash, and newly issued Class A-1 Shares valued at $10.25 per share, for presentation purposes.

The following presents the aggregate consideration assuming no additional redemptions and assuming maximum redemptions:

	Pro Forma Assuming No Additional Redemptions		Pro Forma Assuming Maximum Redemptions
Shares transferred at closing		29,385,934		29,385,934
Value per share(1)	$	10.25	$	10.25
Total share consideration	$	301,222,294	$	301,222,294
Plus: Cash consideration(2)		350,000,000		350,000,000
Total consideration at closing	$	651,222,294	$	651,222,294

(1) For illustrative purposes, based on the balance of the Trust Account of approximately $427,988,915 as of June 30, 2019 after September 20, 2019 redemptions, the estimated per share redemption price would have been approximately $10.25.

(2) The voting and economic interest of Pace shareholders set forth in this proxy statement/prospectus assume the Sellers make aggregate Cash Elections of $350,000,000.

Note 2. Reclassifications

As described in Note 1, Accel completed its acquisition of Grand River on September 17, 2019. These unaudited pro forma condensed combined financial statements incorporate the financial statements of Grand River as of and for the six months ended June 30, 2019 and for the year ended December 31, 2018. As part of preparing these unaudited pro forma condensed combined financial statements, certain reclassifications of Grand River’s historical financial statements were made to align to Accel’s financial statement presentation as detailed below.

F-67

Grand River Jackpot, LLC and Subsidiary

Unaudited Consolidated Balance Sheet

As of June 30, 2019

	Grand River			Presentation Adjustments			Grand River (as adjusted)
Current assets:
Cash	$	10,634,920		$	—		$	10,634,920
Receivables		79,693			(79,693	)(2a)		—
Inventories		326,961			(326,961	)(2a)		—
Prepaid expenses		—			380,837	(2b)		380,837
Prepaid expenses and other assets		380,837			(380,837	)(2b)		—
Other current assets		—			406,654	(2a)		406,654
Total current assets		11,422,411			—			11,422,411
Property and equipment:
Land and land improvements		74,737			(74,737	)(2c)		—
Building and building improvements		901,774			(901,774	)(2c)		—
Furniture and equipment		45,754,866			(45,754,866	)(2c)		—
Vehicles		1,583,539			(1,583,539	)(2c)		—
		48,314,916			(48,314,916	)		—
Less accumulated depreciation		(37,671,249	)		37,671,249	(2c)		—
Net property and equipment		10,643,667			(10,643,667	)		—
Property and equipment, net		—			10,643,667	(2c)		10,643,667
Location contracts acquired, net		—			2,612,417	(2d)		2,612,417
Intangible contract rights and noncompete agreements, net of accumulated amortization		2,612,417			(2,612,417	)(2d)		—
		24,678,495			—			24,678,495
Liabilities and Members’ (Deficit)
Current liabilities:
Current maturities of long-term debt		548,480						548,480
Current portion of consideration payable		—			46,168	(2e)		46,168
Current maturities of long-term debt for intangible contract rights		46,168			(46,168	)(2e)		—
Accounts payable		1,964,097						1,964,097
Related party accounts payable		608,961						608,961
Accrued expenses		2,970,166						2,970,166
Total current liabilities		6,137,872			—			6,137,872
Long-term debt, less current maturities, net		48,603,418						48,603,418
Consideration payable, less current portion		—			108,825	(2f)		108,825
Long-term debt for intangible contract rights, less current maturities		108,825			(108,825	)(2f)		—
Other long-term related party payable		4,980,362						4,980,362
		53,692,605			—			53,692,605
Members’ (deficit)		(35,151,982	)		—			(35,151,982	)
		24,678,495			—			24,678,495

F-68

Grand River Jackpot, LLC and Subsidiary

Unaudited Consolidated Statement of Operations

For the Six Months Ended June 30, 2019

	Grand River			Presentation Adjustments			Grand River (as adjusted)
Net revenue:
Gaming — video gaming terminals	$	29,458,013		$	—		$	29,458,013
Amusement		357,809			—			357,809
ATM fee income		436,637			—			436,637
		30,252,459			—			30,252,459
Expenses:
Salaries and wages		2,235,919			(2,235,919	)(2g)		—
Payroll taxes		183,400			(183,400	)(2g)		—
Employee benefits		218,082			(218,082	)(2g)		—
Personnel costs		2,637,401			(2,637,401	)(2g)		—
Video gaming expenses		—			20,045,544	(2h)		20,045,544
General and administrative		—			4,687,063	(2g)		4,687,063
Earnout commissions		725,973			(725,973	)(2h)		—
Gaming taxes		8,837,492			(8,837,492	)(2h)		—
Video gaming terminals fees		10,482,079			(10,482,079	)(2h)		—
Amusement		33,322			(33,322	)(2g)		—
Supplies		115,667			(115,667	)(2g)		—
Advertising		171,882			(171,882	)(2g)		—
Contractual services		201,382			(201,382	)(2g)		—
Taxes and license fees		64,037			(64,037	)(2g)		—
Auto fuel and licenses		116,468			(116,468	)(2g)		—
Travel		47,465			(47,465	)(2g)		—
Repair and maintenance		413,928			(413,928	)(2g)		—
Rent		10,818			(10,818	)(2g)		—
Insurance		156,234			(156,234	)(2g)		—
Utilities and telephone		324,916			(324,916	)(2g)		—
Legal and professional fees		293,895			(293,895	)(2g)		—
Related party management service fee		99,648			(99,648	)(2g)		—
Amortization of intangible assets		916,566			(916,566	)(2i)		—
Amortization of route and customer acquisition costs and location contracts acquired		—			916,566	(2i)		916,566
Depreciation		2,297,421			(2,297,421	)(2j)		—
Depreciation and amortization of property and equipment		—			2,297,421	(2j)		2,297,421
Gain on sale of property and equipment		(62,335	)		62,335	(2k)		—
Other		52,236			(62,335	)(2k)		(10,099	)
Other operating expenses		25,299,094			2,637,401			27,936,495
Operating income		2,315,964			—			2,315,964
Other:
Amortization of debt issuance costs		60,600			(60,600	)(2I)		—
Interest		2,886,340			60,600	(2I)		2,946,940
		2,946,940			—			2,946,940
Net (loss)	$	(630,976	)	$	—		$	(630,976	)

F-69

Grand River Jackpot, LLC and Subsidiary

Unaudited Consolidated Statement of Operations

For the Year Ended December 31, 2018

	Grand River			Presentation Adjustments			Grand River (as adjusted)
Net revenue:
Gaming — video gaming terminals	$	54,754,771		$	—		$	54,754,771
Amusement		665,139			—			665,139
ATM fee income		769,753			—			769,753
		56,189,663			—			56,189,663
Expenses:
Salaries and wages		4,205,769			(4,205,769	)(2g)		—
Payroll taxes		327,267			(327,267	)(2g)		—
Employee benefits		451,764			(451,764	)(2g)		—
Personnel costs		4,984,800			(4,984,800	)(2g)		—
Video gaming expenses		—			37,667,994	(2h)		37,667,994
General and administrative		—			8,749,532	(2g)		8,749,532
Earnout commissions		1,762,901			(1,762,901	)(2h)		—
Gaming taxes		16,426,612			(16,426,612	)(2h)		—
Video gaming terminals fees		19,478,481			(19,478,481	)(2h)		—
Amusement		46,630			(46,630	)(2g)		—
Supplies		211,498			(211,498	)(2g)		—
Advertising		247,317			(247,317	)(2g)		—
Contractual services		439,867			(439,867	)(2g)		—
Taxes and license fees		100,869			(100,869	)(2g)		—
Auto fuel and licenses		254,180			(254,180	)(2g)		—
Travel		70,922			(70,922	)(2g)		—
Repair and maintenance		713,075			(713,075	)(2g)		—
Rent		15,636			(15,636	)(2g)		—
Insurance		269,791			(269,791	)(2g)		—
Utilities and telephone		636,284			(636,284	)(2g)		—
Legal and professional fees		559,367			(559,367	)(2g)		—
Related party management service fee		199,296			(199,296	)(2g)		—
Amortization of intangible assets		2,102,017			(2,102,017	)(2i)		—
Amortization of route and customer acquisition costs and location contracts acquired		—			2,102,017	(2i)		2,102,017
Depreciation		6,354,531			(6,354,531	)(2j)		—
Depreciation and amortization of property and equipment		—			6,354,531	(2j)		6,354,531
Gain on sale of property and equipment		(63,478	)		63,478	(2k)		—
Other		102,794			(63,478	)(2k)		39,316
Other operating expenses		49,928,590			4,984,800			54,913,390
Operating income		1,276,273			—			1,276,273
Other:
Amortization of debt issuance costs		121,200			(121,200	)(2l)		—
Interest		5,547,289			121,200	(2l)		5,668,489
		5,668,489			—			5,668,489
Net (loss)	$	(4,392,216	)	$	—		$	(4,392,216	)

F-70

Reclassification of Grand River’s Consolidated Balance Sheet

(a) Other current assets — $79,693 in receivables and $326,961 in inventories were reclassified to “Other current assets.”

(b) Prepaid expenses — $380,837 in prepaid expenses and other assets was reclassified to “Prepaid expenses.”

(c) Property and equipment, net — Net property and equipment, consisting of $74,737 in land and land improvements, $901,774 in building and building improvements, $45,754,866 in furniture and equipment, $1,583,539 in vehicles, and $37,671,249 in accumulated depreciation were reclassified to “Property and equipment, net.”

(d) Location contracts acquired, net — $2,612,417 in intangible contract rights and noncompete agreements, net of accumulated amortization was reclassified to “Location contracts acquired, net.”

(e) Current portion of consideration payable — $46,168 in current maturities of long-term debt for intangible contract rights was reclassified to “Current portion of consideration payable.”

(f) Consideration payable, less current portion — $108,825 in long-term debt for intangible contract rights, less current maturities was reclassified to “Consideration payable, less current portion.”

Reclassification of Grand River’s Consolidated Statements of Operations

(g) General and administrative — For the six months ended June 30, 2019, $4,687,063 was reclassified to “General and administrative” from salaries and wages, payroll taxes, employee benefits, amusement, supplies, advertising, contractual services, taxes and license fees, auto fuel and licenses, travel, repair and maintenance, rent, insurance, utilities and telephone, legal and professional fees, and related party management service fees. For the year ended December 31, 2018, $8,749,532 was reclassified to “General and administrative” from salaries and wages, payroll taxes, employee benefits, amusement, supplies, advertising, contractual services, taxes and license fees, auto fuel and licenses, travel, repair and maintenance, rent, insurance, utilities and telephone, legal and professional fees, and related party management service fees.

(h) Video gaming expenses — For the six months ended June 30, 2019, $20,045,544 was reclassified to “Video gaming expenses” from earnout commissions, gaming taxes, and video gaming terminals fees. For the year ended December 31, 2018, $37,667,994 was reclassified to “Video gaming expenses” from earnout commissions, gaming taxes, and video gaming terminals fees.

(i) Amortization of route and customer acquisition costs and location contracts acquired — For the six months ended June 30, 2019, $916,566 in amortization of intangible assets was reclassified to “Amortization of route and customer acquisition costs and location contracts acquired.” For the year ended December 31, 2018, $2,102,017 in amortization of intangible assets was reclassified to “Amortization of route and customer acquisition costs and location contracts acquired.”

(j) Depreciation and amortization of property and equipment — For the six months ended June 30, 2019, $2,297,421 in depreciation was reclassified to “Depreciation and amortization of property and equipment.” For the year ended December 31, 2018, $6,354,531 in depreciation was reclassified to “Depreciation and amortization of property and equipment.”

(k) Other operating expenses — For the six months ended June 30, 2019, $62,335 in gain on sale of property and equipment was reclassified to “Other operating expenses.” For the year ended December 31, 2018, $63,478 in gain on sale of property and equipment was reclassified to “Other operating expenses.”

(l) Interest — For the six months ended June 30, 2019, $60,600 in amortization of debt issuance costs was reclassified to “Interest.” For the year ended December 31, 2018, $121,200 in amortization of debt issuance costs was reclassified to “Interest.”

F-71

Note 3. Preliminary Allocation of Purchase Price

On September 17, 2019, Accel announced that it had completed its acquisition of 100% of the outstanding membership interests of Grand River for approximately $100 million in cash. Grand River is a terminal operator in Illinois with over 1,800 VGTs in over 450 licensed establishments.

The total consideration transferred, $108.6 million, includes the amount paid to Grand River’s members plus additional working capital and contingent consideration. The total purchase consideration for the business combination has been allocated to the assets acquired and liabilities assumed for purposes of the unaudited pro forma condensed combined financial information based on their estimated fair values with the excess recorded as goodwill.

The purchase consideration was preliminarily allocated as follows:

Purchase Price
Cash consideration	$	100,000,000
Working capital adjustment		1,337,111
Contingent consideration		7,292,000
	$	108,629,111
Purchase Price Allocation
Cash and cash equivalents	$	10,634,920
Prepaid expenses		380,837
Other current assets		406,654
Goodwill		46,465,931
Property and equipment, net		21,176,000
Location contracts acquired		52,900,000
Total assets	$	131,964,342
Accounts payable		1,964,097
Other accrued expenses		2,970,166
Consideration payable		154,993
Deferred tax liability		18,245,975
Total liabilities	$	23,335,231
Total Preliminary Fair Value of Net Assets Acquired	$	108,629,111

Any increase or decrease in the fair value of the assets acquired and liabilities assumed, as compared to the information shown herein, could also change the portion of the purchase consideration allocable to goodwill and could impact the operating results of Grand River following the business combination due to differences in the allocation of the purchase consideration, depreciation and amortization related to some of these assets and liabilities.

Note 4. Unaudited Pro Forma Adjustments

The pro forma adjustments to the unaudited pro forma condensed combined balance sheet as of June 30, 2019 consist of the following:

(a) Represents release of cash held in the Trust Account that becomes available to fund the Business Combination.

(b) Close out of the equity of Accel, which is replaced by Class A-1 shares, Class A-2 shares, and estimated cash consideration of $350.0 million in connection with the Business Combination.

F-72

(c) To record payment of deferred underwriters’ fees from the Pace IPO, payable at the consummation of the Business Combination.

(d) Represents an adjustment to record the payment of estimated costs related to the Business Combination, which are nonrecurring.

(e) Issuance and sale of 4,696,675 Class A-1 Shares at a purchase price of $10.22 per share, or an aggregate of approximately $48 million, in the Investment Private Placement.

(f) Represents actual redemption of 3,247,267 Public Shares on September 20, 2019 at the estimated per share redemption of $10.25 as of June 30, 2019, which is equal to $33.3 million. Actual shares were redeemed at a per share price of $10.29 resulting in a redemption payment of $33.4 million.

(g) Represents the preliminary net adjustment to cash in connection with the acquisition of Grand River.

Cash consideration transferred	$	(100,000,000	)
Proceeds of new borrowings, net of issuance fees		99,400,000
Estimated working capital adjustment		(1,337,111	)
Unaudited pro forma adjustment	$	(1,937,111	)

(h) Represents the elimination of historical property and equipment, net of $10.6 million and recognition of new property and equipment of $21.2 million resulting from the Grand River acquisition.

(i) Represents the elimination of historical location contracts acquired, net of $2.6 million and recognition of new location contracts acquired of $52.9 million resulting from the Grand River acquisition.

(j) Represents the recognition of goodwill as a result of the Grand River acquisition.

(k) Represents the extinguishment of Grand River’s existing debt of $49.2 million, which includes a current portion of $0.5 million and unamortized debt issuance costs of $0.3 million.

(l) Represents contingent consideration payable to Grand River members based on the preliminary purchase price allocation.

(m) Represents the extinguishment of Grand River’s related party payable of $5.6 million, which includes a current portion of $0.6 million.

(n) Represents the estimated adjustment for deferred tax taxes as result of tax impact from changes in assets and liabilities due to the acquisition of Grand River.

(o) Represents the reclassification of the redeemable portion of the Public Shares to permanent equity and conversion of Public Shares to Class A-1 Shares in connection with the Pace Domestication.

(p) Represents the conversion of Founder Shares to Class F Shares in connection with the Pace Domestication.

(q) Surrender of 1,250,000 Class F Shares and exchange of 10,000,000 Class F Shares for 8,000,000 Class A-1 Shares and 2,000,000 Class A-2 Shares in the Class F Share Exchange.

(r) Elimination of historical retained earnings of Pace.

(s) Elimination of historical equity of Grand River.

(t) Represents the maximum redemption of 11,000,000 Public Shares at the estimated per share redemption of $10.25, which is equal to $112.8 million, being the balance of the Trust Account as of June 30, 2019, divided by 41,752,733 Public Shares held by Pace public shareholders after September 20, 2019 redemption.

(u) Represents additional net debt of $30.0 million cash proceeds from the issuance of the new financing to fund the maximum redemptions as part of the Business Combination.

F-73

The pro forma adjustments to the unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2019 and for the year ended December 31, 2018 consist of the following:

(aa) Represents the elimination of historical depreciation expense of Grand River, and recognition of depreciation expense in connection with fair value of property and equipment. The adjustment in depreciation is based on the estimated fair value and Accel’s historical useful lives of 7 years to 35 years and is calculated using the straight-line method. Grand River’s historic useful lives ranged between 3 to 40 years.

	Six Months Ended June 30, 2019			Year Ended December 31, 2018
Estimated preliminary depreciation expense on property and equipment	$	1,479,257		$	2,958,514
Less: historical depreciation expense		(2,297,421	)		(6,354,531	)
Unaudited pro forma adjustment	$	(818,164	)	$	(3,396,017	)

(bb) Represents the elimination of historical amortization expense of Grand River, and recognition of amortization expense in connection with fair value of intangibles related to location contracts acquired. The fair value of identifiable intangible asset is determined using the “income approach”. Amortization expense of fair value intangibles is calculated using the straight-line method over the estimated remaining useful lives of 12 years.

	Six Months Ended June 30, 2019			Year Ended December 31, 2018
Estimated preliminary amortization expense on intangible assets	$	2,204,167		$	4,408,333
Less: historical amortization expense		(916,566	)		(2,102,017	)
Unaudited pro forma adjustment	$	1,287,601		$	2,306,316

(cc) Elimination of interest income on the Trust Account. There is no related tax impact.

(dd) Interest expense on the proceeds from the credit facilities drawn used to finance the acquisition of Grand River and the reversal of interest expense on historical Grand River debt.

	Six Months Ended June 30, 2019			Year Ended December 31, 2018
Estimated preliminary interest expense on additional borrowings, including amortization of debt issuance costs	$	2,087,229		$	4,192,257
Less: historical interest expense and amortization of debt issuance costs		(2,946,940	)		(5,668,489	)
Unaudited pro forma adjustment	$	(859,711	)	$	(1,476,232	)

(ee) Represents the net impact on income taxes resulting from an income tax benefit attributable to application of the statutory tax rate of 30% for the periods presented. The tax impacts of the Business Combination were estimated on the applicable law in effect on June 30, 2019, inclusive of the effects of the Tax Act.

(ff) As the Business Combination is being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the Pace Shares issuable relating to the Business Combination have been outstanding for the entire period presented.

F-74

Weighted average Pace Shares outstanding — basic and diluted is calculated as follows:

	Assuming No Additional Redemptions		Assuming Maximum Redemptions
Pace Public Shareholders		41,752,733		30,752,733
Pace Initial Shareholders		7,500,000		7,500,000
Private Placement Investors		4,696,675		4,696,675
Donor-Advised Fund		500,000		500,000
Accel Shareholders		29,385,934		29,385,934
Pro Forma Shares Outstanding — Basic & Diluted		83,835,342		72,835,342

(gg) Represents additional interest and amortization of debt issuance costs of $0.6 million and $1.3 million for the six months ended June 30, 2019 and year ended December 31, 2018, respectively, associated with the additional debt drawn to fund maximum redemptions in connection with the Business Combination as described in note 4(u) above as if the debt had been issued as of the earliest period presented.

(hh) Represents tax provision adjustment for additional debt as described in note 4(u) at a statutory rate of 30.0% related to the operating adjustments for the for the periods presented. The tax impacts of the Business Combination were estimated on the applicable laws in effect for the periods presented, inclusive of the effects of the Tax Act.

F-75

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

Note 1. Basis of Pro Forma Presentation

Overview

The business combination was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, TPG Pace Holdings Corp. was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the business combination was treated as the equivalent of Accel Entertainment Inc. issuing stock for the net assets of TPG Pace Holdings Corp., accompanied by a recapitalization.

On September 17, 2019, Accel completed the acquisition of 100% of the outstanding membership interests of Grand River. The acquisition of Grand River by Accel was accounted for as a business combination under ASC Topic 805, Business Combinations (“ASC 805”) and Accel, as the accounting acquirer, recorded the assets acquired and liabilities assumed at fair value on a preliminary basis.

The acquisition method of accounting uses the fair value concepts defined in ASC Topic 820, Fair Value Measurements (“ASC 820”). In general, ASC 805 requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date by Accel.

ASC 820 defines fair value, establishes a framework for measuring fair value, and sets forth a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to develop the fair value measurements. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for a non-financial asset assume the highest and best use by these market participants. Many of these fair value measurements can be highly subjective, and it is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

Under ASC 805, acquisition-related transaction costs are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred, or if related to the issuance of debt, capitalized as debt issuance costs. Acquisition-related transaction costs expected to be incurred as part of the business combination and the other related transactions include estimated fees related to advisory, legal and accounting fees.

The pro forma adjustments represent management’s estimates based on information available as of the date of the condensed combined financial statements and do not reflect possible adjustments related to restructuring or integration activities that have yet to be determined or transaction or other costs following the reverse recapitalization that are not expected to have a continuing impact. Further, one-time transaction-related expenses anticipated to be incurred prior to, or concurrently with the consummation of the reverse recapitalization are not included in the unaudited pro forma condensed combined statements of operations.

Description of Reverse Recapitalization

Pursuant to the Transaction Agreement, TPG Holdings Corp. acquired, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock of Accel Entertainment, Inc. In connection with reverse recapitalization, TPG Pace Holdings Corp. changed its name to Accel Entertainment, Inc.

The consideration paid to holders of Accel stock in connection with the reverse recapitalization and subject to the terms and conditions of the Transaction Agreement, consisted of a mix of consideration comprised of cash consideration equal to the number of shares of Accel stock for which such holder of Accel stock made a cash

F-76

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

Note 1. Basis of Pro Forma Presentation (Continued)

election multiplied by $177 per share (the “Purchase Price”) and share consideration comprised of a number of Class A-1 Shares equal to the number of shares of Accel Stock for which such holder of Accel Stock did not make a cash election multiplied by an exchange ratio calculated by dividing the Purchase Price by $10.30, which was the closing price of the common stock of TPG Pace Holdings Corp. on November 20, 2019. In addition, each holder of Accel stock that made a cash election with respect to less than 70% of its shares of Accel stock received its pro rata share, with such pro rata share determined with reference to a number of shares equal to 70% of such holder’s shares of Accel Stock less the number of shares of Accel stock with respect to which such holder made a cash election, of 2,444,444 2019 Warrants, subject to the conditions set forth in a warrant agreement and 3,000,000 Class A-2 Shares, subject to the conditions set forth in a restricted stock agreement.

In connection with the reverse recapitalization, TPG Pace Holdings and its affiliates converted 7,500,000 of Class A-1 Shares, 4,888,889 2019 Warrants subject to the conditions set forth in the New Pace Warrant Agreement and 2,000,000 Class A-2 Shares, subject to the conditions set forth in a restricted stock agreement.

As part of an Investment Private Placement, certain accredited investors (as defined by Rule 501 of Regulation D) agreed to subscribe for and purchase and Pace agreed to issue and sell to such investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million. The proceeds from the Investment Private Placement was used to fund a portion of the cash consideration required in the reverse recapitalization.

In connection with the reverse recapitalization, Accel repurchased approximately 36,157 shares of its stock from certain employees, directors and officers at a repurchase price of $177 per share in order to facilitate (i) the repayment of existing loans to Accel’s executive officers, (ii) the exercise of vested options and (iii) funding any resulting tax obligations from the exercise of such vested options.

Note 2. Preliminary Allocation of Purchase Price

On September 16, 2019, Accel Entertainment Inc. completed its acquisition of 100% of the outstanding membership interests of Grand River for approximately $100 million in cash. Grand River is a terminal operator in Illinois with over 2,009 VGTs in over 450 licensed establishments.

The acquisition aggregate purchase consideration transferred totaled $113.7 million, which included: i) a cash payment made at closing of $100.0 million; ii) a subsequent cash payment of approximately $6.6 million for a working capital adjustment and; iii) contingent purchase consideration with an estimated fair value of $7.1 million. The total purchase consideration for the business combination has been allocated to the assets acquired and liabilities assumed based on their estimated fair values with the excess recorded as goodwill. Refer to the preliminary purchase price within Accel Entertainment Inc.’s December 31, 2019 financial statements included elsewhere in this filing.

Note 3. Unaudited Pro Forma Adjustments

The pro forma adjustments to the unaudited pro forma condensed combined statements of operation for the year ended December 31, 2019 consist of the following:

(a) Reflects the recognition of pre-combination activities of Grand River.

(b) Represents the elimination of historical depreciation expense of Grand River, and recognition of depreciation expense in connection with fair value of property and equipment through September 16, 2019. The adjustment in depreciation is based on the estimated fair value and Accel Entertainment Inc.’s historical

F-77

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

Note 3. Unaudited Pro Forma Adjustments (Continued)

useful lives of 3 years to 29 years and is calculated using the straight-line method. Grand River’s historic useful lives ranged between 3 to 40 years.

	Year Ended December 31, 2019
Depreciation expense on property and equipment	$	1,935
Less: historical depreciation expense		(3,244	)
Unaudited pro forma adjustment	$	(1,309	)

(c) Represents the elimination of historical amortization expense of Grand River, and recognition of amortization expense in connection with fair value of intangibles related to location contracts acquired through September 16, 2019. The fair value of identifiable intangible asset is determined using the “income approach.” Amortization expense of fair value intangibles is calculated using the straight-line method over the estimated remaining useful lives of 10 years.

	Year Ended December 31, 2019
Amortization expense on intangible assets	$	3,798
Less: historical amortization expense		(1,253	)
Unaudited pro forma adjustment	$	2,545

(d) Represents the increase in operating expenses recorded in the Pace historical unaudited consolidated statement of operations prior to the reverser recapitalization.

(e) Represents the elimination of non-recurring transaction costs.

(f) Represents the reversal of historical interest expense incurred prior to September 16, 2019 on extinguished Grand River debt.

(g) In conjunction with the closing of the reverse recapitalization, Accel entered into a credit agreement on November 13, 2019 to refinance Accel’s existing financing arrangement. The new financing arrangement includes draw at close amounts, net of issuance costs, of $48.7 million in the revolving credit facility, $234.0 million in the initial term loan facility, and $58.5 million in the additional term loan facility, with total outstanding borrowings totalling $341.2 million, net of issuance costs of $8.8 million. The revolving loans and term loans bear interest at LIBOR plus a margin of 2.25%. The following represents the adjustment to record the interest expense on the refinanced debt as if the debt was borrowed on January 1, 2018, including amortization of debt issuance costs, and the subsequent removal of Accel’s interest expense related to the old debt instruments.

	Year Ended December 31, 2019
Interest expense on refinancing arrangement, including amortization of debt issuance costs	$	17,965
Less: Accel interest expense on historic financing arrangements		(12,860	)
Unaudited net pro forma adjustment	$	5,105

F-78 

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

Note 3. Unaudited Pro Forma Adjustments (Continued)

(h) Represents the net impact on income taxes resulting from an income tax benefit attributable to application of the effective tax rate of 28.51% for December 31, 2019. The pro forma adjustment tax impacts were estimated on the applicable law in effect on December 31, 2019, inclusive of the effects of the Tax Act.

	Year Ended December 31, 2019
Tax impact on Grand River acquisition	$	433
Tax impact on removal of Accel interest expense on refinanced loans and non-reoccurring transaction costs	$	6,674
Tax impact on addition of interest expense on refinanced loans		(5,122	)
Unaudited pro forma adjustment	$	1,985

(i) As the reverse recapitalization is being reflected as if it had occurred at January 1, 2019, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the TPG Pace Holding Inc. shares issued relating to the reverse recapitalization have been outstanding for the entire period presented.

Weighted average Pace Shares outstanding—basic and diluted is calculated as follows:

	Number of shares
Pace Public Shareholders		18,813
Pace Initial Shareholders		7,500
Private Placement Investors		4,696
Donor-Advised Fund		500
Accel Shareholders		45,128
Pro Forma Shares Outstanding—Basic & Diluted		76,637

F-79 

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Revenues:
Net video gaming	$	—		$	100,994	$	101,575		$	195,169
Amusement		260			1,348		1,952			2,786
ATM fees and other revenue		119			1,925		2,080			3,737
Total net revenues		379			104,267		105,607			201,692
Operating expenses:
Video gaming expenses		—			66,082		67,980			127,703
General and administrative		10,451			17,476		33,919			33,600
Depreciation and amortization of property and equipment		5,071			6,100		9,938			12,141
Amortization of route and customer acquisition costs and location contracts acquired		5,565			4,624		11,130			8,927
Other expenses, net		3,132			730		4,336			1,346
Total operating expenses		24,219			95,012		127,303			183,717
Operating (loss) income		(23,840	)		9,255		(21,696	)		17,975
Interest expense, net		2,489			3,156		6,738			6,203
(Loss) income before income tax (benefit) expense		(26,329	)		6,099		(28,434	)		11,772
Income tax (benefit) expense		(5,055	)		1,771		(5,194	)		3,449
Net (loss) income	$	(21,274	)	$	4,328	$	(23,240	)	$	8,323
Net (loss) income per common share:
Basic (1)	$	(0.27	)	$	0.07	$	(0.30	)	$	0.14
Diluted (1)		(0.27	)		0.07		(0.30	)		0.13
Weighted average number of shares outstanding:
Basic (1)		78,317			58,605		78,161			57,896
Diluted (1)		78,317			61,904		78,161			61,742

(1) Per share and share amounts for 2019 have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 1.

The accompanying notes are an integral part of these condensed consolidated financial statements

F-80

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)	June 30, 2020			December 31, 2019
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	148,834		$	125,403
Prepaid expenses		3,443			4,151
Income taxes receivable		3,907			3,907
Investment in convertible notes (current)		17,000			11,000
Other current assets		6,637			7,034
Total current assets		179,821			151,495
Property and equipment, net		123,759			119,201
Other assets:
Route and customer acquisition costs, net		16,460			17,399
Location contracts acquired, net		156,624			166,783
Goodwill		34,511			34,511
Investment in convertible notes, less current portion		13,000			19,000
Other assets		1,101			928
		221,696			238,621
Total assets	$	525,276		$	509,317
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of debt	$	18,250		$	15,000
Current portion of route and customer acquisition costs payable		1,675			1,700
Accrued location gaming expense		—			1,323
Accrued state gaming expense		—			7,119
Accounts payable and other accrued expenses		27,278			19,511
Current portion of consideration payable		3,272			10,293
Total current liabilities		50,475			54,946
Long-term liabilities:
Debt, net of current maturities		380,740			334,692
Route and customer acquisition costs payable, less current portion		4,708			4,752
Consideration payable, less current portion		16,541			16,426
Deferred income tax liability		7,781			12,976
Total long-term liabilities		409,770			368,846
Stockholders’ equity :
Preferred Stock, par value of $0.0001; 1,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2020 and December 31, 2019		—			—
Class A-1 Common Stock, par value $0.0001; 250,000,000 shares authorized; 78,382,405 shares issued and outstanding at June 30, 2020; 76,637,470 shares issued and outstanding at December 31, 2019		8			8
Class A-2 Common Stock, par value $0.0001; 10,000,000 shares authorized; 3,403,363 shares issued and outstanding at June 30, 2020; 4,999,999 shares issued and outstanding at December 31, 2019		1			1
Additional paid-in capital		108,732			105,986
Accumulated deficit		(43,710	)		(20,470	)
Total stockholders’ equity		65,031			85,525
Total liabilities and equity	$	525,276		$	509,317

The accompanying notes are an integral part of these condensed consolidated financial statements

F-81

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except shares)	Class A-1 Common Stock				Class A-2 Common Stock					Additional Paid-In Capital		Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount		Shares			Amount
Balance, January 1, 2020		76,637,470	$	8		4,999,999		$	1	$	105,986	$	(20,470	)	$	85,525
Conversion of Class A-2 Common Stock to Class A-1 Common Stock		1,596,636		—		(1,596,636	)		—		—		—			—
Stock-based compensation		—		—		—			—		1,060		—			1,060
Net loss		—		—		—			—		—		(1,966	)		(1,966	)
Balance, March 31, 2020		78,234,106		8		3,403,363			1		107,046		(22,436	)		84,619
Exercise of common stock options		148,299		—		—			—		359		—			359
Stock-based compensation		—		—		—			—		1,327		—			1,327
Net loss		—		—		—			—		—		(21,274	)		(21,274	)
Balance, June 30, 2020		78,382,405	$	8		3,403,363		$	1	$	108,732	$	(43,710	)	$	65,031

(In thousands, except shares)	Class A-1 Common Stock (1)				Additional Paid-In Capital (1)		Treasury Stock (1)						Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount				Shares			Amount
Balance, January 1, 2019		58,491,281	$	6	$	80,146		(1,311,880	)	$	(5,832	)	$	(17,202	)	$	57,118
Exercise of warrants		495,030		—		334		46,409			227			—			561
Employee stock option compensation		—		—		128		—			—			—			128
Net income		—		—		—		—			—			3,995			3,995
March 31, 2019		58,986,311		6		80,608		(1,265,471	)		(5,605	)		(13,207	)		61,802
Exercise of common stock options		—		—		—		284,608			84			—			84
Exercise of warrants		1,164,093		—		1,205		—			—			—			1,205
Employee stock option compensation		—		—		128		—			—			—			128
Net income		—		—		—		—			—			4,328			4,328
Balance, June 30, 2019		60,150,404	$	6	$	81,941		(980,863	)	$	(5,521	)	$	(8,879	)	$	67,547

(1) Share amounts for 2019 have been retroactively restated to give effect to the reverse capitalization that is discussed in Note 1.

The accompanying notes are an integral part of these condensed consolidated financial statements

F-82

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In thousands)	2020			2019
Cash flows from operating activities:
Net (loss) income	$	(23,240	)	$	8,323
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization of property and equipment		9,938			12,141
Amortization of route and customer acquisition costs and location contracts acquired		11,130			8,927
Amortization of debt issuance costs		936			333
Stock-based compensation		2,387			256
Loss (gain) on disposal of property and equipment		93			(47	)
Net loss on write-off of route and customer acquisition costs and route and customer acquisition costs payable		611			171
Remeasurement of contingent consideration		(2,432	)		227
Payments on consideration payable		(1,548	)		—
Accretion of interest on route and customer acquisition costs payable, contingent consideration, and contingent stock consideration		1,078			255
Deferred income taxes		(5,195	)		—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		1,105			(3,360	)
Income taxes receivable		—			(1,050	)
Route and customer acquisition costs		(585	)		(1,271	)
Route and customer acquisition costs payable		(69	)		(714	)
Accounts payable and accrued expenses		(11,319	)		1,973
Other assets		(174	)		(81	)
Net cash (used in) provided by operating activities		(17,284	)		26,083
Cash flows from investing activities:
Purchases of property and equipment		(4,123	)		(10,600	)
Proceeds from the sale of property and equipment		121			52
Net cash used in investing activities		(4,002	)		(10,548	)
Cash flows from financing activities:
Payments on term loan		(6,000	)		(3,125	)
Proceeds from delayed draw term loans		65,000			10,750
Payments on delayed draw term loans		(2,313	)		(4,750	)
Net payments on line of credit		(8,000	)		(12,000	)
Payments for debt issuance costs		(325	)		—
Proceeds from exercise of stock options and warrants		359			1,851
Payments on consideration payable		(4,004	)		(452	)
Payments on capital lease obligation		—			(531	)
Net cash provided by (used in) financing activities		44,717			(8,257	)
Net increase in cash and cash equivalents		23,431			7,278
Cash and cash equivalents:
Beginning of period		125,403			92,229
End of period	$	148,834		$	99,507
Supplemental disclosures of cash flow information:
Cash payments for:
Interest, net of amount of capitalized	$	6,678		$	5,263
Income taxes	$	—		$	1,759
Supplemental schedules of noncash investing and financing activities:
Purchases of property and equipment in accounts payable and accrued liabilities	$	10,586		$	2,186

The accompanying notes are an integral part of these condensed consolidated financial statements

F-83

ACCEL ENTERTAINMENT, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Description of Business

Accel Entertainment, Inc.’s (and together with its subsidiaries, the “Company”) wholly owned subsidiary, Accel Entertainment Gaming LLC, is a terminal operator licensed by the State of Illinois Gaming Board since March 15, 2012. Its terminal operator license allows the Company to install and operate video gaming terminals in licensed video gaming locations throughout the State of Illinois as approved by individual municipalities. The Company also operates redemption terminals, which also function as automated teller machines (“ATMs”) at its licensed video gaming locations, and amusement equipment at certain locations. The Company is subject to various federal, state and local laws and regulations in addition to gaming regulations. The terminal operator license, which is not transferable or assignable, requires compliance with applicable regulations and the license is renewable annually unless sooner cancelled or terminated.

The Company operates 11,108 and 8,082 video gaming terminals across 2,335 and 1,762 locations in the State of Illinois as of June 30, 2020 and 2019, respectively.

On November 20, 2019, the Company consummated a business combination which was accounted for as a reverse recapitalization. For more details on the reverse recapitalization, see Note 3 to the Company’s Consolidated Financial Statements as presented in its Annual Report on Form 10-K for the year ended December 31, 2019. As a result of the reverse recapitalization, all references to numbers of common shares and per common share data for 2019 in these condensed consolidated financial statements and related notes have been retroactively adjusted to account for the effect of the reverse recapitalization.

The Company is an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) following the consummation of the reverse recapitalization. The Company has elected to use this extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act and as a result of this election, its financial statements may not be comparable to companies that comply with public company effective dates. The Company will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following June 30, 2022, (b) in which Accel has total annual gross revenue of at least $1.0 billion or (c) in which Accel is deemed to be a large accelerated filer, which means the market value of Class A-1 Shares that is held by non-affiliates exceeds $700 million as of the last business day of the prior second fiscal quarter, and (ii) the date on which Accel has issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Impact of COVID-19 on the Condensed Consolidated Financial Statements

In response to the COVID-19 outbreak, the Illinois Gaming Board (“IGB”) made the decision to shut down all video gaming terminals (“VGTs”) across the State of Illinois starting at 9:00 p.m. on March 16, 2020 and ultimately extended the shutdown through June 30, 2020. The temporary shutdown of Illinois video gaming impacted all of the gaming days during the three months ended June 30, 2020 and 106 of the 182 gaming days (or 58% of gaming days) during the six months ended June 30, 2020. In light of these events and their effect on the Company’s employees and licensed establishment partners, the Company took action to position the Company to help mitigate the effects of the temporary cessation of operations by, among other things, furloughing approximately 90% of its employees and deferring certain payments to major vendors. Additionally, members of the Company’s senior management decided to voluntarily forgo their base salaries until the resumption of video gaming operations. Beginning in early June, the Company started reinstating employees from furlough in anticipation of resuming operations on July 1, 2020.

As a result of these developments, the Company’s revenues, results of operations and cash flows have been materially affected, and the Company expects it to continue for at least as long as COVID-19 is a threat to the

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

public health. The situation is rapidly changing and additional impacts to the business may arise that the Company is not aware of currently.

The Company incurred non-recurring, one-time expenses of $1.3 million and $1.9 million for the three and six months ended June 30, 2020, respectively, for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown. These costs are included within other expenses, net. The Company also spent $1.4 million in capital costs related to the purchase of IGB-mandated spacers for its VGTs to promote social distancing requirements within the gaming area and incurred operating expenses of $0.3 million related to cleaning, disinfecting and sanitizing supplies.

As part of the Company’s analysis of the financial reporting impacts of the COVID-19 outbreak, and corollary response in the State of Illinois, including the temporary shutdown of our gaming operations, the Company evaluated its goodwill and long-lived assets for potential impairment triggers as of June 30, 2020. As a result of this analysis, no impairment losses were recorded. The Company will continue to monitor its assets for potential impairment losses in future periods. While the IGB has announced the resumption of all video gaming activities effective July 1, 2020, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events. If this were to occur, the Company could recognize impairment losses which could be material.

The Company also engaged a 3rd party valuation firm to assist in determining the fair value of its investment in convertible notes as of June 30, 2020. The valuation concluded that the carrying amount of the investment in the convertible notes approximates the fair value in all material respects, as of June 30, 2020.

Note 2. Summary of Significant Accounting Policies

Basis of presentation and preparation: The condensed consolidated financial statements and accompanying notes were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements include the accounts of the Company and of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the dates and periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. In preparing our condensed consolidated financial statements, we applied the same significant accounting policies as described in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Any significant changes to those accounting policies are discussed below. Interim results are not necessarily indicative of results for a full year.

Adopted accounting pronouncements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-19”), Revenue from Contracts with Customers (Topic 606), which amends the existing revenue recognition guidance and creates a new topic for Revenue from Contracts with Customers. The guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance also substantially revises required interim and annual disclosures. The Company, as an emerging growth company, elected to use

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

the non-public effective date and adopted the standard in the fourth quarter of 2019 for the annual period ended December 31, 2019. The Company also elected the modified retrospective adoption approach and applied the standard to all contracts open as of January 1, 2019. The Company’s quarterly financial statements and disclosure for the first six months of 2019 reflect the previous accounting standard of FASB Accounting Standards Codification (“ASC”) 605, Revenue Recognition, and will not be restated for the adoption of Topic 606. The cumulative impact of the new revenue standard for fiscal year 2019 was recorded in the fourth quarter of 2019 and reflects the adjustment as if the Company adopted the standard as of January 1, 2019. The timing and amount of revenue recognized by the Company did not change upon the adoption of the new standard, however the Company’s accounting for route acquisition costs was impacted. ASC 340-40, Other Assets and Deferred Costs—Contracts With Customers (“ASC 340-40”), issued in conjunction with ASU 2014-09, provides updated guidance around accounting for the incremental costs of obtaining a contract with a customer and for the costs incurred to fulfill a contract with a customer. ASC 340-40 states that an entity should amortize contract cost assets “on a systemic basis that is consistent with the transfer to the customer of the good or services to which the asset relates,” which typically corresponds to the period in which revenue will be recognized. The Company chose straight-line amortization of the contracts as it felt that best depicted when revenue would be recognized and when customers are visiting the gaming establishments. When determining the appropriate amortization period under ASC 340-40, the Company evaluated the impact of any renewal clauses that are likely to be exercised. The Company focused on whether commissions paid for renewals were commensurate with commissions paid on the original contract. The Company determined the renewal commissions were not commensurate and the amortization period should include expected renewals. As such, the period over which route and customer acquisition costs are amortized was extended to include expected renewals which resulted in an increase to the average life to 12.4 years.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which intends to simplify the guidance by removing certain exceptions to the general principles and clarifying or amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company early adopted the new standard in Q2 2020 (effective January 1, 2020) on a prospective basis. The adoption of the new standard will not have a material impact on the Company’s full year effective tax rate.

Use of estimates: The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates used by the Company include, among other things, the useful lives for depreciable and amortizable assets, income tax provisions, the evaluation of the future realization of deferred tax assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with business acquisitions, the selection of useful lives for depreciable and amortizable assets in conjunction with business acquisitions, the valuation of level 3 investments, contingencies, and the expected term of share-based compensation awards and stock price volatility when computing share-based compensation expense. The Company also estimated stock prices prior to the reverse recapitalization discussed in Note 1 when computing share-based compensation expense. Actual results may differ from those estimates.

Change in estimate: During the first quarter of 2020, the Company conducted a review of its estimate of depreciable lives for its video gaming terminals and equipment. As a result of this review, the Company extended the useful lives of its video gaming terminals and equipment from 7 to 10 years as the equipment is lasting longer than originally estimated. The Company has many video gaming terminals and equipment that were purchased

F-86

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

when the Company started operations that are still being used today. The impact of this change in estimate for the three and six months ended June 30, 2020, was as follows (in thousands):

	Three months ended June 30, 2020		Six months ended June 30, 2020
Decrease to depreciation expense	$	1,898	$	4,511
Decrease to net loss	$	1,533	$	3,687
Decrease to loss per share	$	0.02	$	0.05

Segment information: The Company operates as a single operating segment. The Company’s chief operating decision maker (“CODM”) is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM assesses the Company’s performance and allocates resources based on consolidated results, and this is the only discrete financial information that is regularly reviewed by the CODM.

Cash and cash equivalents: Cash and cash equivalents include bank deposit accounts; term bank deposit accounts; uncollected cash in the Company’s video gaming terminals, ATMs, and redemption terminals; and cash in Company vaults.

The Company’s policy is to limit the amount of credit exposure to any one financial institution. The Company maintains its cash in accounts which may at times exceed Federal Deposit Insurance Corporation insured limits. The Company has not experienced any losses in such accounts.

Property and equipment: Property and equipment are stated at cost or fair value at the date of acquisition. Maintenance and repairs are charged to expense as incurred. Major additions, replacements and improvements are capitalized. Spare parts are included in other current assets when acquired and are expensed when used to repair equipment. Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video gaming terminals and equipment	10
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3-5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15-29

Leasehold improvements are amortized over the shorter of the useful life or the lease.

Development costs directly associated with the acquisition, development and construction of a project are capitalized as a cost of the project during the periods in which activities necessary to prepare the property for its intended use are in progress. Interest costs associated with major construction projects are capitalized as part of the cost of the constructed assets. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using the weighted-average cost of borrowing. Capitalization of interest ceases when the project (or discernible portions of the project) is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Stock-based compensation: The Company grants common stock options and/or restricted stock units to certain employees and officers. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as general and administrative expense over the employee’s requisite service period.

Recent accounting pronouncements: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. In July 2018, the FASB also issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method allowing the standard to be applied at the adoption date. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for the Company’s fiscal year beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, unless the Company disqualifies as an emerging growth company, in which case earlier adoption may be required. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is assessing impact of the standard on its condensed consolidated financial statements.

Note 3. Investment in Convertible Notes

On July 19, 2019, the Company entered into an agreement to purchase up to $30.0 million in convertible promissory notes from another terminal operator that bear interest at 3% per annum. The Company has the option of converting the notes to common stock of the terminal operator prior to the maturity date. At closing, the Company purchased a $5.0 million note which is subordinated to the terminal operator’s credit facility and matures six months following the satisfaction of administrative conditions.

On October 11, 2019, the Company purchased an additional $25.0 million note which is also subordinated to the terminal operator’s credit facility and, beginning on July 1, 2020, the balance of this note, if not previously converted, will be payable in equal $1,000,000 monthly installments until all principal has been repaid in full.

On July 30, 2020, the Company and the terminal operator entered into an amendment to the original note agreement. See Note 17 for further information.

The carrying amount of the investment in the convertible notes approximates the fair value, in all material respects, as of June 30, 2020. For more information on how the Company determined the fair value of the convertible notes, see Note 10.

F-88

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Note 4. Property and Equipment

Property and equipment consists of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Video game terminals and equipment	$	176,453		$	166,850
Amusement and other equipment		19,115			16,417
Office equipment and furniture		1,590			1,540
Computer equipment and software		9,405			8,715
Leasehold improvements		1,507			44
Vehicles		10,254			9,304
Buildings and improvements		10,757			12,075
Land		911			911
Construction in progress		1,025			768
Total property and equipment		231,017			216,624
Less accumulated depreciation and amortization		(107,258	)		(97,423	)
Property and equipment, net	$	123,759		$	119,201

Depreciation and amortization of property and equipment amounted to $5.1 million and $9.9 million for the three and six months ended June 30, 2020, respectively. In comparison, depreciation and amortization of property and equipment amounted to $6.1 million and $12.1 million for the three and six months ended June 30, 2019, respectively

Note 5. 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 due monthly. Gross payments due, based on the number of live locations, are approximately $6.8 million and $7.4 million as of June 30, 2020 and December 31, 2019, 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 $6.4 million and $6.5 million as of June 30, 2020 and December 31, 2019, respectively, of which approximately $1.7 million and $1.7 million is included in current liabilities in the accompanying condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively. The route and customer acquisition cost asset is comprised of payments made on the contracts of $18.6 million and $18.7 million as of June 30, 2020 and December 31, 2019, 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 $2.1 million and $2.2 million as of June 30, 2020 and December 31, 2019, respectively.

Route and customer acquisition costs consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Cost	$	28,167		$	28,501
Accumulated amortization		(11,707	)		(11,102	)
Route and customer acquisition costs, net	$	16,460		$	17,399

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Amortization expense of route and customer acquisition costs was $0.5 million and $0.9 million for the three and six months ended June 30, 2020, respectively. In comparison, amortization expense of route and customer acquisition costs was $0.6 million and $1.3 million for the three and six months ended June 30, 2019, respectively. As previously mentioned, the Company’s current year amortization expense is lower due to the adoption of ASC Topic 606 as the amortization period over which route and customer acquisition costs was extended to include expected renewals.

Note 6. Location Contracts Acquired

Location contract assets acquired in business acquisitions are recorded at acquisition at fair value based on an income approach. Location contracts acquired consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Cost	$	204,353		$	204,353
Accumulated amortization		(47,729	)		(37,570	)
Location contracts acquired, net	$	156,624		$	166,783

Amortization expense of location contracts acquired was $5.1 million and $10.2 million, during the three and six months ended June 30, 2020, respectively. In comparison, amortization expense of location contracts acquired was $4.0 million and $7.6 million, during the three and six months ended June 30, 2019, respectively.

Note 7. Goodwill

On September 16, 2019, the Company acquired Grand River Jackpot which was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill of $34.5 million as of June 30, 2020 and December 31, 2019, of which $28.7 million is deductible for tax purposes.

As previously discussed in Note 1, the Company evaluated its goodwill for potential impairment triggers as of June 30, 2020. As a result of this analysis, no impairment losses were recorded.

Note 8. Debt

The Company’s debt as of June 30, 2020 and December 31, 2019, consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
2019 Senior Secured Credit Facility:
Revolving credit facility	$	50,500		$	58,500
Term Loan		234,000			240,000
Delayed Draw Term Loan (DDTL)		122,688			60,000
Total debt		407,188			358,500
Less: Debt issuance costs		(8,198	)		(8,808	)
Total debt, net of debt issuance costs		398,990			349,692
Less: Current maturities		(18,250	)		(15,000	)
Total debt, net of current maturities	$	380,740		$	334,692

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

2019 Senior Secured Credit Facility

On November 13, 2019, in order to refinance its prior credit facility, for working capital and other general purposes from time to time, the Company entered into a credit agreement (the “Credit Agreement”) as borrower, the Company and its wholly-owned domestic subsidiaries, as a guarantor, the banks, financial institutions and other lending institutions from time to time party thereto, as lenders, the other parties from time to time party thereto and Capital One, National Association, as administrative agent (in such capacity, the “Agent”), collateral agent, issuing bank and swingline lender, providing for a:

• $100.0 million revolving credit facility, including a letter of credit facility with a $10.0 million sublimit and a swing line facility with a $10.0 million sublimit,

• $240.0 million initial term loan facility and

• $125.0 million additional term loan facility.

As a result of the COVID-19 pandemic and the temporary shutdown of its operations by the IGB, the Company borrowed $65 million on its delayed draw term loan in March 2020 to increase its cash position and help preserve its financial flexibility.

As of June 30, 2020, there remained approximately $49.5 million of availability under the Credit Agreement.

The obligations under the Credit Agreement are guaranteed by the Company and its wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”). The obligations under the Credit Agreement are secured by substantially all of assets of the Guarantors, subject to certain exceptions. Certain future-formed or acquired wholly-owned domestic subsidiaries of the Company will also be required to guarantee the Credit Agreement and grant a security interest in substantially all of its assets (subject to certain exceptions) to secure the obligations under the Credit Agreement.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at a rate per annum equal to either (a) the adjusted LIBOR rate (“LIBOR”) (which cannot be less than zero) for interest periods of 1, 2, 3 or 6 months (or if consented to by (i) each applicable Lender, 12 months or any period shorter than 1 month or (ii) the Agent, a shorter period necessary to ensure that the end of the relevant interest period would coincide with any required amortization payment ) plus the applicable LIBOR margin or (b) the alternative base rate (“ABR”) plus the applicable ABR margin. ABR is a fluctuating rate per annum equal to the highest of (i) the Federal Funds Effective Rate plus 1/2 of 1.0%, (ii) the prime rate announced from time to time by Capital One, National Association and (iii) LIBOR for a 1-month Interest Period on such day plus 1.0%. The Credit Agreement also includes provisions for determining a replacement rate when LIBOR is no longer available. As of June 30, 2020, the weighted-average interest rate was approximately 3.3%.

Interest is payable quarterly in arrears for ABR loans, at the end of the applicable interest period for LIBOR loans (but not less frequently than quarterly) and upon the prepayment or maturity of the underlying loans. The Company is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the revolving credit facility and the additional term loan facility. Additionally, the Company is required to pay an upfront fee with respect to any funded additional term loans.

The applicable LIBOR and ABR margins and the commitment fee rate are calculated based upon the first lien net leverage ratio of the Company and its restricted subsidiaries on a consolidated basis, as defined in the Credit Agreement. Until the delivery of the initial financial statements under the Credit Agreement, the revolving loans and term loans bear interest, at the option of the Company, at either (a) ABR plus a margin of 1.25% or (b) LIBOR plus a margin of 2.25%.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

The additional term loan facility is available for borrowings until November 13, 2020. Each of the revolving loans and the term loans mature on November 13, 2024.

The term loans and, once drawn, the additional term loans will amortize at an annual rate equal to approximately 5.00% per annum. Upon the consummation of certain non-ordinary course asset sales, the Company may be required to apply the net cash proceeds thereof to prepay outstanding term loans and additional term loans. The loans under the Credit Agreement may be prepaid without premium or penalty, subject to customary LIBOR “breakage” costs.

The Credit Agreement contains certain customary affirmative and negative covenants and events of default, and requires the Company and certain of its affiliates obligated under the Credit Agreement to make customary representations and warranties in connection with credit extensions thereunder.

In addition, the Credit Agreement requires the Company to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of consolidated EBITDA to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after the Closing Date and determined on the basis of the four most recently ended fiscal quarters of the Company for which financial statements have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights.

If an event of default (as such term is defined in the Credit Agreement) occurs, the lenders would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto.

The Company was in compliance with all debt covenants as of June 30, 2020. Given the Company’s assumptions about the future impact of COVID-19 on the gaming industry, which could be materially different due to the inherent uncertainties of future restrictions on the industry, the Company expects to remain in compliance with all debt covenants for the next 12 months. However, given the uncertainty of COVID-19 and the resulting potential impact to the gaming industry and our future assumptions, as well as to provide additional financial flexibility, the Company and the other parties thereto amended the Credit Agreement on August 4, 2020 to provide a waiver of financial covenant breach for the periods ended September 30, 2020 through March 31, 2021 of the First Lien Net Leverage Ratio and Fixed Charge Coverage Ratio (each as defined under the Credit Agreement).

Prior Credit Facility

The Company’s Prior Credit Facility was a senior secured first lien credit facility, as amended, that consisted of a $125.0 million term loan, a contract draw loan facility of $170.0 million and a revolving credit facility of $85.0 million. The Company’s prior credit facility was with a syndicated group of banks with CIBC Bank USA, as administrative agent for the lenders. Included in the revolving credit facility and contract draw loan were swing line sub-facilities of $5.0 million each.

The Prior Credit Facility was paid off with the proceeds from the 2019 Senior Secured Credit Facility.

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Note 9. Business and Asset Acquisitions

2019 Business Acquisition

Grand River Jackpot

On August 26, 2019, the Company entered into an agreement to acquire all issued and outstanding membership interests in Grand River Jackpot, LLC and subsidiaries (“Grand River”), a terminal operator licensed by the State of Illinois Gaming Board. On September 16, 2019, the Company completed its acquisition of Grand River. Grand River had 2,009 VGTs in over 450 licensed establishments. The Company completed this transaction in order to expand its presence within the State of Illinois.

The acquisition aggregate purchase consideration transferred totaled $113.7 million, which included: i) a cash payment made at closing of $100.0 million; ii) a subsequent cash payment of approximately $6.6 million for a working capital adjustment and; iii) contingent purchase consideration with an estimated fair value of $7.1 million. The contingent consideration represents two installment payments that are to be paid, up to a maximum amount, as follows: i) $2.5 million within 30 days following the one-year anniversary of the acquisition closing date and; ii) $7.0 million within 30 days following the three-year anniversary of the acquisition closing date. These payments are subject to adjustment based on certain performance measures included within the purchase agreement. The estimated fair value was determined based on the Company’s expected probability of future payment, discounted using Grand River’s weighted average cost of capital. The cash payment made at closing and subsequent working capital adjustment payment were both funded by the Company’s credit facilities. In light of the temporary suspension of gaming by the IGB due to the COVID-19 pandemic, the Company reversed its contingent liability for the previously mentioned $2.5 million installment payment due 30 days following the one-year anniversary of the acquisition closing date in the first quarter of 2020 as it is unlikely the performance measures for the period will be reached.

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase price has been allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The Company’s purchase price allocation was finalized in the first quarter of 2020 and the Grand River acquisition resulted in goodwill of $34.5 million as a result of a higher consideration multiple paid relative to prior similar acquisitions driven by maturity and quality of the operations and industry, including workforce and corresponding synergies, and is amortizable for income tax purposes.

The condensed consolidated statements of operations include $12.3 million of revenue and $0.8 million of net income attributable to operations of Grand River for the six months ended June 30, 2020.

2019 Asset Acquisition

On September 23, 2019, pursuant to the terms of an asset purchase agreement, the Company purchased from Illinois Gaming Systems, LLC (“IGS”) terminal use agreements and equipment representing the operations of 139 video game terminals in 29 licensed establishments. The Company has accounted for this transaction as an asset acquisition. The purchase consideration consisted of: i) cash payment of $2.4 million paid at closing and; ii) note payable of $2.3 million issued at closing which was recorded in consideration payable. The asset acquisition costs were allocated to the following assets: i) video game terminals and equipment totaling $1.7 million and; ii) location contracts totaling $3.0 million. The note payable bore interest at 5% and was paid in full in March 2020.

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Pro Forma Results

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three and six months ended June 30, 2019 as if the acquisition of Grand River had occurred as of January 1, 2018, after giving effect to certain purchase accounting adjustments. These amounts are based on available financial information of the acquiree prior to the acquisition date and are not necessarily indicative of what Company’s operating results would have been had the acquisition actually taken place as of January 1, 2019. This unaudited pro forma information does not project revenues and net income post acquisition (in thousands).

	Three months ended June 30, 2019		Six months ended June 30, 2019
Revenues	$	119,427	$	231,902
Net income		5,542		10,711

Consideration Payable

The Company has a contingent consideration payable related to certain locations, as defined, in the respective acquisition agreement which are placed into operation during a specified period after the acquisition date. The fair value of contingent consideration is included in the consideration payable on the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019. The contingent consideration accrued is measured at fair value on a recurring basis.

Current and long-term portions of consideration payable consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020				December 31, 2019
	Current		Long-Term		Current		Long-Term
TAV	$	494	$	3,546	$	490	$	3,497
Abraham		26		—		55		—
Fair Share Gaming		1,221		474		1,057		899
Family Amusement		395		2,787		293		2,815
Skyhigh		762		4,212		763		3,948
G3		294		99		2,952		154
Grand River		—		5,423		2,304		5,113
IGS		80		—		2,379		—
Total	$	3,272	$	16,541	$	10,293	$	16,426

Note 10. Fair Value Measurements

ASC Topic 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and the corresponding disclosure requirements around fair value measurements. This topic applies to all financial instruments that are being measured and reported on a fair value basis.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the various methods including market, income and cost approaches are used. Based on these approaches, certain assumptions are utilized that the market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market

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corroborated, or generally unobservable inputs. Valuation techniques are utilized that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, it is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3: Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

Convertible promissory notes

In valuing it’s convertible promissory notes at June 30, 2020 and December 31, 2019, the Company utilized a binomial lattice model in which a convertible instrument is split into two separate components: a cash-only (debt) component and an equity component. The binomial lattice trees are constructed using a methodology that assigns up and downward movement factors and probabilities based on rates of return, volatility, and time. It allows for the optional conversion features of the convertible promissory notes to be captured by determining whether conversion or continuing to hold is the most economically advantageous to the holder. Upon conversion, future values in the equity component are subject to only the risk-free rate, while the cash-only component associated with continuing to hold the debt instrument is subject to the selected risk-adjusted discount rate. Solving backwards through the trees associated with the equity component and the trees associated with the debt component yields an aggregate discounted value for each. The sum of these values yields the indicated fair value of the convertible promissory notes.

The discount rate is the risk-adjusted discount rate that is implied by the rate that allows the discounted cash flows with all terms and conditions modeled to equal the total cash consideration. As such, after modeling the features of convertible promissory notes as of the issuance date using the lattice model framework outlined above, the Company solved for the discount rate that resulted in a value for the note equal to the total cash consideration. The valuation of the Company’s convertible promissory notes is considered to be a Level 3 fair value measurement as the significant inputs are unobservable and require significant judgment or estimation.

For interim periods, the Company evaluates the underlying assumptions used in the latest valuation and determines whether there have been any significant changes to those assumptions based on current events to determine if a revaluation is necessary. Based on the economic impacts of COVID-19, the Company engaged a 3rd party valuation firm to assist in determining the fair value of its investment in convertible notes as of June 30, 2020. The valuation concluded that the carrying amount of the investment in the convertible notes approximates the fair value in all material respects, as of June 30, 2020.

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Contingent consideration

The following tables summarize the Company’s liabilities that are measured at fair value on a recurring basis (in thousands):

			Fair Value Measurement at Reporting Date Using
	June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	12,591	$	—	$	—	$	12,591

			Fair Value Measurement at Reporting Date Using
	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	17,327	$	—	$	—	$	17,327

The Company uses a discounted cash flow analysis to determine the value of contingent consideration upon acquisition and updates this estimate on a recurring basis. The significant assumptions in the Company’s cash flow analysis includes the probability adjusted projected revenues after state taxes, a discount rate as applicable to each acquisition, and the estimated number of locations that “go live” with the Company during the contingent consideration period. A hypothetical 1% increase in the applicable discount rate would decrease other expenses, net by approximately $0.2 million while a hypothetical 1% decrease in the applicable discount rate would increase other expenses, net by approximately $0.2 million.

Changes in the fair value of contingent consideration liabilities are classified within other expenses, net on the accompanying condensed consolidated statements of operations.

Note 11. Stockholders’ Equity

As discussed in Note 1, on November 20, 2019, the Company, consummated a reverse recapitalization. Pursuant to the Certificate of Incorporation as amended on November 20, 2019 and as a result of the reverse recapitalization, the Company has retrospectively adjusted the shares issued and outstanding prior to November 20, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted. Pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, the Company authorized and has available for issuance the following shares and classes of capital stock, each with a par value of $0.0001 per share: i) 1,000,000 shares of preferred stock; ii) 250,000,000 shares of Class A-1 Common Stock, ii) 10,000,000 shares of Class A-2 Common Stock.

Class A-1 Common Stock

The holders of the Class A-1 Common Stock are entitled to one vote for each share. The holders of Class A-1 Common Stock are entitled to receive dividends or other distributions when and if declared from time to time and share equally on a per share basis in such dividends and distributions subject to such rights of the holders of preferred stock.

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Class A-2 Common Stock

The holders of the Class A-2 Common Stock do not have voting rights and are not entitled to receive or participate in any dividends or distributions when and if declared from time to time.

5,000,000 shares of Class A-2 Common Stock were issued with other consideration in conjunction with the reverse recapitalization, subject to the conditions set forth in a restricted stock agreement, which sets forth the terms upon which the Class A-2 Shares will be exchanged for an equal number of validly issued, fully paid and non-assessable Class A-1 Shares. The exchange of Class A-2 Shares for Class A-1 Shares will be subject to the terms and conditions set forth in the Restricted Stock Agreement, with such exchanges occurring in three separate tranches upon the satisfaction of the following triggers:

• Tranche I, equal to 1,666,666 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the EBITDA for the last twelve months (“LTM EBITDA”) of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2021, March 31, 2022 or June 30, 2022 equals or exceeds $132 million or (ii) the closing sale price of Class A-1 Shares on the New York Stock Exchange (“NYSE”) equals or exceeds $12.00 for at least twenty trading days in any consecutive thirty trading day period;

• Tranche II, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $152 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $14.00 for at least twenty trading days in any consecutive thirty trading day period; and

• Tranche III, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $172 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $16.00 for at least twenty trading days in any consecutive thirty trading day period.

The Restricted Stock Agreement further provides that holders of Class A-2 Shares are not required to exchange such shares for Class A-1 Shares if, (x) prior to giving effect to exchanges pursuant to the triggers described above, such holder beneficially owns less than 4.99% of the issued and outstanding Class A-1 Shares, and (y) after giving effect to the exchanges pursuant to the triggers described above, such holder would beneficially own in excess of 4.99% of the issued and outstanding Class A-1 Shares. However, notwithstanding the limitation described in the previous sentence, if and when a holder of Class A-2 Shares has obtained all required gaming approvals from the applicable gaming authorities permitting such holder to beneficially own Class A-1 Shares in excess of 4.99%, then the Class A-2 Shares held by such holder which are subject to exchange shall immediately be exchanged for Class A-1 Shares without regard to the limitation.

On January 14, 2020, the market condition for the conversion of Tranche I was satisfied. However, as discussed above, no shareholder is permitted to own more than 4.99% of the issued and outstanding Class A-1 Shares after the conversion unless obtaining required gaming approvals from the applicable gaming authorities. In connection with the conversion, no gaming approvals were obtained. As a result, only 1,596,636 of the 1,666,667 Class A-2 shares were converted into Class A-1 shares.

Warrants

On January 31, 2013, the Company issued 253,575 warrants to certain individual shareholders as compensation for providing a personal guaranty for a revolving loan agreement. The warrants granted their

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holders the right to purchase the Company’s Class A-1 Common Shares at the price of $17.80 per share anytime from January 31, 2013 through January 30, 2020. The warrants were classified as an equity instrument. As of June 30, 2020 and 2019, there were 0 and 91,350 warrants outstanding. All warrants were exercised prior to the reverse recapitalization.

7,333,326 warrants to purchase shares of Class A-1 Common Stock were issued with other consideration prior to the reverse recapitalization (the “2019 Warrants”). As a part of the reverse recapitalization, 2,444,437 2019 Warrants were canceled and reissued under the same terms and conditions to Accel legacy shareholders. Each warrant expires five years from issuance and entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding warrants, at any time 30 days after the consummation of the reverse recapitalization.

The 2019 Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the 2019 Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the 2019 Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the 2019 Warrant Agreement.

In 2017, 15,000,000 warrants to purchase shares of Class A-1 Common Stock were issued (“Public Warrants”). Each warrant expires five years from issuance and entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding warrants, at any time 30 days after the consummation of the reverse recapitalization.

The Public Warrants may be redeemed for cash at the option of the Company, at any time while they are exercisable and prior to their expiration, at the price of $0.01 per Public Warrant, provided that the last sales price of the Class A-1 Stock reported has been at least $18.00 per share, on each of twenty (20) trading days within the thirty (30) trading-day period ending on the third Business Day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

The Public Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the Public Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the Public Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has

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been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

Redemption Date	Fair Market Value of Class A-1 shares
(period to expiration of the New Accel Warrants)	$10		$11		$12		$13		$14		$15		$16		$17		$18
57 months		0.257		0.277		0.294		0.310		0.324		0.337		0.348		0.358		0.365
54 months		0.252		0.272		0.291		0.307		0.322		0.335		0.347		0.357		0.365
51 months		0.246		0.268		0.287		0.304		0.320		0.333		0.346		0.357		0.365
48 months		0.241		0.263		0.283		0.301		0.317		0.332		0.344		0.356		0.365
45 months		0.235		0.258		0.279		0.298		0.315		0.330		0.343		0.356		0.365
42 months		0.228		0.252		0.274		0.294		0.312		0.328		0.342		0.355		0.364
39 months		0.221		0.246		0.269		0.290		0.309		0.325		0.340		0.354		0.364
36 months		0.213		0.239		0.263		0.285		0.305		0.323		0.339		0.353		0.364
33 months		0.205		0.232		0.257		0.280		0.301		0.320		0.337		0.352		0.364
30 months		0.196		0.224		0.250		0.274		0.297		0.316		0.335		0.351		0.364
27 months		0.185		0.214		0.242		0.268		0.291		0.313		0.332		0.350		0.364
24 months		0.173		0.204		0.233		0.260		0.285		0.308		0.329		0.348		0.364
21 months		0.161		0.193		0.223		0.252		0.279		0.304		0.326		0.347		0.364
18 months		0.146		0.179		0.211		0.242		0.271		0.298		0.322		0.345		0.363
15 months		0.130		0.164		0.197		0.230		0.262		0.291		0.317		0.342		0.363
12 months		0.111		0.146		0.181		0.216		0.250		0.282		0.312		0.339		0.363
9 months		0.090		0.125		0.162		0.199		0.237		0.272		0.305		0.336		0.362
6 months		0.065		0.099		0.137		0.178		0.219		0.259		0.296		0.331		0.362
3 months		0.034		0.065		0.104		0.150		0.197		0.243		0.286		0.326		0.361
0 months		—		—		0.042		0.115		0.179		0.233		0.281		0.323		0.361

The exact Fair Market Value and Redemption Date (as defined) may not be set forth in the table above, in which case, if the Fair Market Value is between two values in the table or the Redemption Date is between two redemption dates in the table, the number of Class A-1 Stock to be issued for each Public Warrant redeemed will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower Fair Market Values and the earlier and later redemption dates, as applicable, based on a 365-day year.

On June 16, 2020, the Company announced that it would redeem all of the outstanding Public Warrants to purchase shares of the Company’s Class A-1 common stock, that were originally issued under the Warrant Agreement, at a redemption exchange rate equal to 0.250 shares of Class A-1 Common Stock per Public Warrant that remain outstanding at 5:00 p.m. New York City time on July 16, 2020. The 2019 Warrants to purchase Class A-1 Common Stock are not subject to this redemption. See Note 17 for further information on the redemption.

Note 12. Stock-based Compensation

The Company grants various types of stock-based awards. Stock compensation awards granted are valued on the date of grant and are expensed over the required service period. The Company previously adopted the 2011 Equity Incentive Plan of Accel Entertainment, Inc., and the 2016 Equity Incentive Plan of Accel Entertainment, Inc.

In conjunction with the closing of the reverse recapitalization, the Accel Entertainment, Inc. Long Term Incentive Plan (the “LTIP”) was adopted. The LTIP provides for grants of a variety of awards to employees and

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non-employees for providing services to the Company, including, but not limited to: incentive stock options qualified as such under U.S. federal income tax laws, stock options that do not qualify as incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, cash incentive awards, and other stock-based awards. The Company has reserved, and in January 2020 registered, a total of 6,000,000 shares of Class A-1 common stock for issuance pursuant to the LTIP, subject to certain adjustments set forth therein. The term of any options to be granted are for a maximum of 10 years from the grant date. The exercise price of stock options shall not be less than 100% of the fair market value per share of common stock on the grant date.

Under the LTIP, the Company granted 1.2 million options to eligible officers and employees of the Company during the first quarter of 2020, which shall vest over a period of 5 years. No additional options were granted during the second quarter of 2020. During the six months ended June 30, 2020, the Company also issued 1.3 million restricted stock units (“RSUs”) to board of directors and certain employees, which shall vest over a period of 5 years for employees and a period of 6 months to 1 year for board of directors. The estimated grant date fair value of the options and RSUs granted during six months ended June 30, 2020 totaled $20.2 million.

Stock-based compensation expense, which pertains to the Company’s stock options and other equity awards, was $1.3 million and $2.4 million for the three and six months ended June 30, 2020, respectively. In comparison, stock-based compensation expense was $0.1 million and $0.3 million for the three and six months ended June 30, 2019, respectively. Stock-based compensation expense is included within general and administrative expenses in the condensed consolidated statements of operations.

Note 13. Income Taxes

The Company recognized an income tax benefit of $5.1 million and $5.2 million during the three and six months ended June 30, 2020, respectively. In comparison, the Company recognized income tax expense of $1.8 million and $3.4 million during the three and six months ended June 30, 2019, respectively.

The Company calculates its (benefit from) provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate to its year-to-date pretax book income or loss. The effective tax rate (income taxes as a percentage of income before income taxes) was 19.2% and 18.3% for the three and six months ended June 30, 2020, respectively. In comparison, the effective tax rate was 29.0% and 29.3% for the three and six months ended June 30, 2019, respectively. The Company’s effective income tax rate can vary from period to period depending on, among other factors, the business mix of our earnings; the amount of permanent tax adjustments and discrete items. The tax rate in 2020 is also impacted by the forecast of a net loss for the year, but has unfavorable permanent tax adjustments which are causing the expected tax rate to decrease, year over year for the three and six months ended June 30, 2020.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law and authorizes more than $2 trillion to battle COVID-19 and its economic effects, including immediate cash relief for individual citizens, loan programs for small business, support for hospitals and other medical providers, and various types of economic relief for impacted businesses and industries. The Company believes it is eligible for certain credits of the relief programs under the CARES Act and is in the process of gathering the required information. The Company will continue to monitor the situation and evaluate any additional future legislation.

Note 14. Commitments and Contingencies

Lawsuits and claims are filed against the Company from time to time in the ordinary course of business, including related to, employee matters, employment of professional and non-compete clauses and agreements.

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Other than settled matters explained as follows, these actions are in various stages, and no judgments or decisions have been rendered. Management, after reviewing matters with legal counsel, believes that the outcome of such matters will not have a material adverse effect on the Company’s financial position or results of operations.

Accel has been involved in a series of related litigated matters stemming from claims that Accel wrongly contracted with 10 different licensed establishments (the “Defendant Establishments”) in 2012 in violation of the contractual rights held by J&J Ventures Gaming, LLC (“J&J”), as further described below.

On August 21, 2012, one of the Company’s operating subsidiaries entered into certain agreements with Jason Rowell (“Rowell”), a member of Action Gaming LLC (“Action Gaming”), which was an unlicensed terminal operator that had exclusive rights to place and operate VGTs within a number of establishments, including the Defendant Establishments. Under agreements with Rowell, the Company agreed to pay him for each licensed establishment which decided to enter into exclusive location agreements with the Company. In late August and early September 2012, each of the Defendant Establishments signed separate location agreements with the Company, purporting to grant it the exclusive right to operate VGTs in those establishments. Separately, on August 24, 2012, Action Gaming sold and assigned its rights to all its location agreements to J&J, including its exclusive rights with the Defendant Establishments (the “J&J Assigned Agreements”). At the time of the assignment of such rights to J&J, the Defendant Establishments were not yet licensed by the Illinois Gaming Board (“IGB”).

Action Gaming, J&J, and other parties, collectively, the Plaintiffs, filed a complaint against the Company, Rowell, and other parties in the Circuit Court of Cook County (the “Circuit Court”), on August 31, 2012, as amended on November 1, 2012, December 19, 2012, and October 3, 2013, alleging, among other things, that the Company aided and abetted Rowell in breaches of his fiduciary duties and contractual obligations with Action Gaming and tortiously interfered with Action Gaming’s contracts with Rowell and agreements assigned to J&J. The complaint seeks damages and injunctive and equitable relief. On January 24, 2018, the Company filed a motion to dismiss for lack of subject matter jurisdiction, as further described below. On May 14, 2018, the Circuit Court denied the Company’s motion to dismiss and granted a stay to the case, pending a ruling from the IGB on the validity of the J&J Assigned Agreements.

From 2013 to 2015, the Plaintiffs filed additional claims, including J&J Ventures Gaming, LLC et al. v. Wild, Inc. (“Wild”), in various circuit courts seeking declaratory judgements with a number of establishments, including each of the Defendant Establishments, requesting declarations that, among other things, J&J held the exclusive right to operate VGTs at each of the Defendant Establishments as a result of the J&J Assigned Agreements. The Company was granted leave to intervene in all of the declaratory judgments. The circuit courts found that the J&J Assigned Agreements were valid because each of the underlying location agreements were between an unlicensed establishment and an unlicensed terminal operator, and therefore did not constitute use agreements that were otherwise precluded from assignment under the IGB’s regulations. Upon the Company’s appeal, the Illinois Appellate Court, Fifth District (the “District Court”), vacated the circuit courts’ judgments and dismissed the appeals, holding that the IGB had exclusive jurisdiction over the matter that formed the basis of the parties’ claims, and declined to consider the merits of the parties’ disputes. On September 22, 2016, and after the IGB intervened, the Supreme Court of Illinois issued a judgment in Wild, affirming the District Court’s decision vacating the circuit courts’ judgments for lack of subject matter jurisdiction and dismissing the appeals, determining that the IGB has exclusive jurisdiction to decide the validity and enforceability of VGT use agreements.

Between May 2017 and September 2017, both the Company and J&J filed petitions with the IGB seeking adjudication of the rights of the parties and the validity of the use agreements. Those petitions have been fully

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Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

briefed and remain pending. There is no indication as to when the IGB will rule on the petitions. The Company does not have a present estimate regarding the potential damages, if any, that could potentially be awarded in this litigation and, accordingly, have established no reserves relating to such matters. There are also petitions pending with the IGB which could lead to the Company obtaining new locations.

On October 7, 2019, the Company filed a lawsuit in the Circuit Court of Cook County against Jason Rowell and other parties related to Mr. Rowell’s breaches of his non-compete agreement with the Company. The Company alleged that Mr. Rowell and a competitor were working together to interfere with the Company’s customer relationships. That lawsuit, which seeks equitable relief and legal damages, has not yet been served. On November 7, 2019, Mr. Rowell filed a lawsuit in the Circuit Court of Cook County against the Company alleging that he had not received certain equity interests in the Company to which he was allegedly entitled under his agreement. The Company intends to defend itself against the allegations. The Company does not have a present estimate regarding the potential damages, nor does it believe any payment of damages is probable, and, accordingly, has established no reserves relating to these matters.

On July 2, 2019, Illinois Gaming Investors, LLC filed a lawsuit against the Company. The lawsuit alleges that a current employee of the Company violated his non-competition agreement with Illinois Gaming Investors, LLC, and together with the Company, wrongfully solicited prohibited licensed video gaming locations. The lawsuit on its face seeks damages of $10,000,000. The parties are engaging in discovery. The Company is in the process of defending this lawsuit, and has not accrued any amounts as losses related to this suit are not probable or reasonably estimable.

Note 15. Related-Party Transactions

Subsequent to the Company’s acquisition of certain assets of Fair Share Gaming, LLC (“Fair Share”) and G3 Gaming, LLC (“G3”), the sellers became employees of the Company. Consideration payable to the Fair Share seller was $1.7 million and $2.0 million as of June 30, 2020 and December 31, 2019, respectively. Payments to the Fair Share seller under the acquisition agreement were $0.2 million and $0.4 million during the six months ended June 30, 2020 and 2019, respectively. Consideration payable to the G3 sellers was $0.4 million and $3.1 million as of June 30, 2020 and December 31, 2019, respectively. Payments to the G3 seller under the acquisition agreement were $2.5 million during the six months ended June 30, 2020. There were no payments to the G3 seller during the six months ended June 30, 2019. Subsequent to the Fair Share acquisition, the seller of Fair Share joined the Company’s Board of Directors.

The Company engaged Much Shelist, P.C. (“Much Shelist”), as its legal counsel for general legal and business matters. An attorney at Much Shelist is a related party to management of the Company. For the six months ended June 30, 2020 and 2019, Accel paid Much Shelist $0.1 million, and $0.2 million, respectively. These payments were included in general and administrative expenses within the condensed consolidated statements of operations.

Note 16. Earnings Per Share

As a result of the previously mentioned reverse recapitalization in Note 1, the Company has retrospectively adjusted the weighted average shares outstanding for the three and six months ended June 30, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted.

F-102

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

The components of basic and diluted earning per share (“EPS”) were as follows for the three and six months ended June 30 (in thousands, except per share amounts):

	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Net (loss) income	$	(21,274	)	$	4,328	$	(23,240	)	$	8,323
Basic weighted average outstanding shares of common stock		78,317			58,605		78,161			57,896
Dilutive effect of stock-based awards for common stock		—			1,120		—			1,117
Dilutive effect of stockholder notes receivable for common stock		—			917		—			948
Dilutive effect of warrants for common stock		—			1,263		—			1,781
Diluted weighted average outstanding shares of common stock		78,317			61,904		78,161			61,742
Earnings (loss) per share:
Basic	$	(0.27	)	$	0.07	$	(0.30	)	$	0.14
Diluted	$	(0.27	)	$	0.07	$	(0.30	)	$	0.13

Since the Company was in a net loss position for the three and six months ended June 30, 2020, there is no difference between basic and dilutive weighted average common stock outstanding.

Anti-dilutive stock-based awards, Class A-2 shares, and warrants excluded from the calculations of diluted EPS were 5,401,791, and 5,715,823 for the three and six months ended June 30, 2020, respectively.

Note 17. Subsequent Events

On July 14, 2020, the Company announced that it had commenced an exchange offer (the “Offer”) to all holders of its outstanding warrants to receive 0.250 shares of Class A-1 Common Stock in exchange for each warrant tendered pursuant to the Offer. The Offer will be open until 11:59 p.m., Eastern Standard Time, on August 11, 2020, or such later time and date to which the Company may extend. On July 16, 2020, the Company consummated the redemption of its Public Warrants. The Company exchanged each Public Warrant for 0.250 shares of the Company’s Class A-1 Common Stock and issued 3,784,416 shares of its Class A-1 Common Stock in exchange for the Public Warrants at settlement of the redemption.

On July 22, 2020, the Company received written notice from the New York Stock Exchange (the “NYSE”) that the NYSE suspended trading in, and has determined to commence proceedings to delist, the Company’s Public Warrants to purchase shares of the Company’s Class A-1 Common Stock (ticker symbol ACEL.WS) from the NYSE. The delisting is a result of the failure to of the Public Warrants to comply with the continued listing standard set forth in Section 802.01D of the NYSE Listed Company Manual which requires the Company to maintain at least 100 public holders of a listed security.

On July, 22, 2020 (the “Closing Date”), the Company completed its previously announced acquisition of Tom’s Amusement Company, Inc., a southeastern U.S. amusement operator and Master Licensee in the state of Georgia. The total purchase price was approximately $3.6 million, of which the Company paid $2.1 million in cash at closing. The remaining $1.5 million of contingent consideration payables are to be paid in cash on the 18-month and 24-month anniversaries of the Closing Date. The amount of each payment is $750,000 multiplied by a performance ratio. In addition, the Georgia Lottery Corporation approved Accel’s operating subsidiary, Bulldog Gaming, LLC, as a Master Licensee.

On July 30, 2020, the Company and the terminal operator entered into the Omnibus Amendment (the “Amendment”) to the original agreement to purchase convertible promissory notes from another terminal

F-103

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

operator. The Amendment, among other things, extends the maturity date of the $5.0 million convertible note and the beginning of the payback period for the $25.0 million convertible note until December 31, 2020.

On August 4, 2020, the Company and the other parties thereto entered into Amendment No. 1 to its Credit Agreement. The amendment, among other things, provides a waiver of financial covenant breach for the periods ended September 30, 2020 through March 31, 2021 of the First Lien Net Leverage Ratio and Fixed Charge Coverage Ratio (each as defined under the Credit Agreement).

F-104

8,000,000 Shares of Class A-1 Common Stock

4,000,000 Shares of Class A-1 Common Stock

Offered by the Selling Stockholders

PROSPECTUS

                , 2020

Joint Book-Running Managers

Goldman Sachs & Co. LLC	J.P. Morgan
Credit Suisse	Deutsche Bank Securities

Co-Managers

TPG Capital BD, LLC The Raine Group

You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. You should not assume that the information contained or incorporated by reference in this prospectus is accurate as of any date other than the date of this prospectus. We are not making an offer of these securities in any state where the offer is not permitted.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth the estimated expenses to be borne by the registrant in connection with the issuance and distribution of the shares of common stock being registered hereby.

Securities and Exchange Commission registration fee	$	14,093.57
FINRA filing fee		27,513.50
Accounting fees and expenses		475,000.00
Legal fees and expenses		400,000.00
Transfer agent and registrar fees and expenses		25,000.00
Financial printing and miscellaneous expenses		75,000.00
Total	$	1,016,607.07

Item 14. Indemnification of Directors and Officers.

Section 145 of the DGCL, as amended, authorizes us to indemnify any director or officer under certain prescribed circumstances and subject to certain limitations against certain costs and expenses, including attorney’s fees actually and reasonably incurred in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative, to which a person is a party by reason of being one of our directors or officers if it is determined that such person acted in accordance with the applicable standard of conduct set forth in such statutory provisions.

Our Amended and Restated Certificate of Incorporation provides that our officers and directors are indemnified by us to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended. In addition, our Amended and Restated Certificate of Incorporation provides that our directors will not be personally liable for monetary damages to us or our stockholders for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from their actions as directors.

Our Bylaws permit us to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification. We have purchased a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors. In addition, we have entered into indemnification agreements with each of our officers and directors, a form of which is filed as an exhibit in this registration statement. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

II-1

Item 15. Recent Sales of Unregistered Securities.

The following list sets forth information as to all securities of Pace and the Company sold in the last three years which were not registered under the Securities Act. The descriptions of issuances of Pace and the Company are historical and have not been adjusted to give effect to the Business Combination.

Since January 2017, Pace and the Company have issued the following unregistered securities.

Founder Ordinary Shares

On February 22, 2017, Initial Pace Sponsor purchased an aggregate of 11,500,000 Founder Ordinary Shares from Pace for an aggregate purchase price of $25,000, or approximately $0.002 per share. On June 19, 2017, Initial Pace Sponsor transferred 40,000 Founder Ordinary Shares to the Initial Pace Holders at their original purchase price. On August 14, 2017, Initial Pace Sponsor forfeited 250,000 Founder Ordinary Shares on the expiration of the underwriters’ over-allotment option.

In connection with the Business Combination, the Initial Pace Sponsor received 7,800,000 shares of Class A-1 common stock and 2,000,000 shares of Class A-2 common stock pursuant to the Sponsor Share Exchange.

Pace Private Placement Warrants

Simultaneously with the closing of the Pace IPO, Pace completed the private sale of an aggregate of 7,333,333 Pace Private Placement Warrants, each exercisable to purchase one Pace Public Share for $11.50 per share, to Initial Pace Sponsor, at a price of $1.50 per Pace Private Placement Warrant, generating proceeds, before expenses, of $11,000,000. For a description of the Pace Private Placement Warrants, see the section entitled “Description of Capital Stock—Warrants—Pace Private Placement Warrants” beginning on page 108.

Investment Private Placement

On the date of the consummation of the Business Combination, Pace consummated the issuance and sale of 4,696,675 shares of Class A-1 common stock for aggregate consideration of approximately $48 million in connection with the Investment Private Placement pursuant to Subscription Agreements with the PIPE Investors. TPG Holdings III, L.P. assigned a portion of its rights to purchase shares of Class A-1 common stock in the Investment Private Placement to certain employees of Pace. The proceeds from the Investment Private Placement were used to fund a portion of the cash consideration required to effect the Business Combination. A description of the rights, preferences and privileges of the Class A-1 common stock is included in the section entitled “Description of Capital Stock —Common Stock—Class A-1 common stock” beginning on page 101.

Business Combination Private Placement

On the closing date of the Business Combination, the Business Combination Private Placement Sellers received, in exchange for their shares of Accel Stock, shares of Class A-1 common stock, Business Combination Private Placement Warrants and shares of Class A-2 common stock issued pursuant to a private placement and not registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act, in each case, in an amount calculated pursuant to the Transaction Agreement. A description of the rights, preferences and privileges of the Class A-1 common stock, the Business Combination Private Placement Warrants and Class A-2 common stock is included in the section entitled “Description of Capital Stock” beginning on page 101.

The sales of the above securities by the Company were deemed to be exempt from registration under the Securities Act, in reliance on Section 4(a)(2) of the Securities Act, in transactions by an issuer not involving a public offering

II-2

Item 16. Exhibits and Financial Statements.

Exhibit Number	Description
1.1*	Form of Underwriting Agreement
2.1**	Transaction Agreement, dated as of June 13, 2019, by and among TPG Pace Holdings Corp., the Sellers, David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein) as Shareholder Representatives (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K dated June 13, 2019).
2.2**	Amendment No. 1 to Transaction Agreement, dated as of July 22, 2019, by and among TPG Pace Holdings Corp., the Sellers, David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein) as Shareholder Representatives (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K dated November 26, 2019).
2.3**	Amendment No. 2 to Transaction Agreement, dated as of October 3, 2019, by and among TPG Pace Holdings Corp., the Sellers, David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein) as Shareholder Representatives (incorporated by reference to Exhibit 2.3 to the Current Report on Form 8-K dated November 26, 2019).
3.1**	Amended and Restated Certificate of Incorporation of Accel Entertainment, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K dated November 26, 2019).
3.2**	Amended and Restated Bylaws of Accel Entertainment, Inc. (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K dated November 26, 2019).
3.3**	Amendment No. 1 to the Bylaws of Accel Entertainment, Inc (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K dated May 6, 2020).
4.1**	Warrant Agreement, dated as of June 27, 2017, between TPG Pace Holdings Corp. and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K filed with the SEC on June 30, 2017).
4.2**	Form of Pace Warrant Certificate (incorporated by reference to Exhibit 4.3 to the registration statement on Form S-1 filed with the SEC on June 30, 2017.
4.3**	Warrant Agreement, dated as of November 20, 2019 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K dated November 26, 2019).
4.4**	Form of Subscription Agreement with General Investors (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated June 13, 2019).
4.5**	Form of Subscription Agreement with Pace Affiliate (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated June 13, 2019).
5.1*	Opinion of Fenwick & West LLP.
10.1+**	Membership Interest Purchase Agreement, by and among GRE-Illinois, LLC, Great River Entertainment, LLC, Grand River Jackpot, LLC and Accel Entertainment Gaming, LLC, dated as of August 26, 2019 (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K dated November 26, 2019).
10.2**	Credit Agreement, by and among New Pace LLC, the Company, Capital One, National Association and the other parties thereto, dated as of November 13, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 13, 2019).

II-3

Exhibit Number	Description
10.2(A)**	Amendment No.1 to the Credit Agreement, by and among the Registrant, Capital One, National Association and the other parties thereto, dated November 13, 2019 (incorporated by reference to Exhibit 10.9(A) to the Company’s Current Report on Form 8-K dated August 6, 2020).
10.3**	Form of Indemnity Agreement (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed with the SEC on November 20, 2019).
10.4**	Form of Director Letter Agreements (incorporated by reference to Annex H to the proxy statement/prospectus on Form S-4/A filed with the SEC on October 24, 2019).
10.5**	Pace Sponsor Support Agreement, dated as of June 13, 2019, by and among TPG Pace II Sponsor, LLC, TPG Pace Holdings Corp. and the Shareholder Representatives (incorporated by reference to Annex E to the proxy statement/prospectus on Form S-4/A filed with the SEC on October 24, 2019).
10.6**	Amendment No. 1 to Pace Sponsor Support Agreement, dated as of July 22, 2019, by and among TPG Pace II Sponsor, LLC, TPG Pace Holdings Corp. and the Shareholder Representatives (incorporated by reference to Annex E-1 to the proxy statement/prospectus on Form S-4/A filed with the SEC on October 24, 2019).
10.7†**	Amended and Restated Executive Employment Agreement, dated July 15, 2020, by and between Accel Entertainment, Inc., and Andrew Rubenstein (incorporated by reference to Exhibit 10.10(A) to the Current Report on Form 8-K filed with the SEC on July 20, 2020).
10.8†**	Amended and Restated Executive Employment Agreement, dated July 16, 2020, by and between Accel Entertainment, Inc., and Brian Carroll (incorporated by reference to Exhibit 10.12(A) to the Current Report on Form 8-K filed with the SEC on July 20, 2020).
10.9†**	Amended and Restated Executive Employment Agreement, dated July 16, 2020, by and between Accel Entertainment, Inc., and Derek Harmer (incorporated by reference to Exhibit 10.11(A) to the Current Report on Form 8-K filed with the SEC on July 20, 2020).
10.10**	Form of Support Agreement (incorporated by reference to Annex P to the proxy statement/prospectus on Form S-4/A filed with the SEC on October 24, 2019).
10.11**	Letter Agreement among TPG Pace Holdings Corp. and its officers, directors and TPG Pace II Sponsor, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on June 30, 2017)
10.12†**	Form of Company Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.13 to the Current Report on Form 8-K filed with the SEC on March 4, 2020).
10.13†**	Form of Company Stock Option Award Agreement (incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K filed with the SEC on March 4, 2020).
10.14†**	Advisor Agreement, dated February 28, 2020, by and between Gordon Rubenstein and the Company (incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K filed with the SEC on March 4, 2020).
10.15†**	Employment Agreement by and between Accel Entertainment Gaming, LLC and Mark Phelan, dated as of May 1, 2017 (Incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019).
10.16†**	Executive Employment Agreement by and between Accel Entertainment, Inc. and Michael Marino, dated as of March 8, 2020 (Incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019).

II-4

Exhibit Number	Description
10.17†**	Executive Employment Agreement by and between Accel Entertainment, Inc. and Ryan Hammer, dated as of March 6, 2020 (Incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019).
10.18†**	Accel Entertainment, Inc. Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated November 26, 2019).
10.19†**	Accel Entertainment, Inc. 2011 Equity Incentive Plan (incorporated by reference to Exhibit 4.4 to the registration statement on Form S-8 filed with the SEC on January 24, 2020).
10.20†**	Accel Entertainment, Inc. 2016 Equity Incentive Plan (incorporated by reference to Exhibit 4.5 to the registration statement on Form S-8 filed with the SEC on January 24, 2020).
10.21**	Restricted Stock Agreement, dated as of November 20, 2019 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated November 26, 2019).
10.22**	Registration Rights Agreement, dated as of November 20, 2019 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K dated November 26, 2019).
10.23**	Nominating and Support Agreement, dated November 6, 2019 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on November 6, 2019).
10.24**	Mutual Support Agreement, dated November 6, 2019 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed with the SEC on November 6, 2019).
10.25**	Tender and Exchange Agreement, dated June 18, 2020, by and among the Company and the holders of Private Placement Warrants party thereto (incorporated by reference to Exhibit 10.19 to the Quarterly Report on Form 10-Q filed with the SEC on August 6, 2020).
21.1*	Subsidiaries of the Company.
23.1*	Consent of KPMG LLP, independent registered public accounting firm for Accel Entertainment, Inc.
23.2*	Consent of RSM US LLP, independent auditor for Grand River Jackpot, LLC.
23.3*	Consent of Fenwick & West LLP (included in Exhibit 5.1).
24.1**	Power of Attorney (incorporated by reference to Exhibit 24.1 of the Company’s Registration Statement Form S-1 filed with the SEC on February 19, 2020)
24.2*	Power of Attorney
101.INS	Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Previously filed.

† Indicates management contract or compensation plan or agreement.

+ Certain information has been excluded from this exhibit because it is not material and would likely cause competitive harm to the registrant if publicly disclosed.

II-5

Item 17. Undertakings.

The undersigned registrant, hereby undertakes:

(a) To provide to the underwriter at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions referenced in Item 14 of this registration statement, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Burr Ridge, State of Illinois, on this 21st day of September, 2020.

Accel Entertainment, Inc.
By:	/s/ Derek Harmer
	Name:	Derek Harmer
	Title:	General Counsel, Chief Compliance Officer and Secretary

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons on behalf of the Registrant, Accel Entertainment, Inc., in the capacities and on the date indicated.

Name	Title	Date
*  Andrew Rubenstein	Chief Executive Officer, President and Director (Principal Executive Officer)	September 21, 2020
*  Brian Carroll	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	September 21, 2020
*  Karl Peterson	Director	September 21, 2020
*  Gordon Rubenstein	Director	September 21, 2020
*  Kathleen Philips	Director	September 21, 2020
*  David W. Ruttenberg	Director	September 21, 2020
*  Eden Godsoe	Director	September 21, 2020
*  Kenneth B. Rotman	Director	September 21, 2020
/s/ Dee Robinson  Dee Robinson	Director	September 21, 2020

By:	/s/ Derek Harmer
	Attorney-in-Fact

II-7

EX-1.1

Exhibit 1.1

Accel Entertainment, Inc.

Class A-1 Common Stock, par value $0.0001 per share

Underwriting Agreement

September [•], 2020

Goldman Sachs & Co. LLC

J.P. Morgan Securities LLC,

As representatives (the "Representatives") of the several Underwriters named in Schedule I hereto,

c/o Goldman Sachs & Co. LLC 200 West Street

New York, New York 10282

c/o J.P. Morgan Securities LLC 383 Madison Avenue

New York, New York 10179

Ladies and Gentlemen:

Accel Entertainment, Inc., a Delaware corporation (the "Company"), proposes, subject to the terms and conditions stated in this agreement (this "Agreement"), to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of [•] shares of Class A-1 common stock, par value $0.0001 per share ("Stock"), of the Company and, at the election of the Underwriters, up to an additional [•] shares of Stock and the stockholders of the Company named in Schedule II hereto (the "Selling Stockholders") propose, subject to the terms and conditions stated in this Agreement, to sell to the Underwriters an aggregate of [•] shares of Stock and, at the election of the Underwriters, up to [•] additional shares of Stock. The aggregate of [•] shares to be sold by the Company and the Selling Stockholders is herein called the "Firm Shares" and the aggregate of [•] additional shares to be sold by the Company and the Selling Stockholders is herein called the "Optional Shares". The Firm Shares and the Optional Shares that the Underwriters elect to purchase pursuant to Section 2 hereof are herein collectively called the "Shares".

1.(a) The Company represents and warrants to, and agrees with, each of the Underwriters that:

(i)A registration statement on Form S-1 (File No. 333-236501) originally filed with the Securities and Exchange Commission (the "SEC") on February 19, 2020 and which was declared effective on March 16, 2020 (the "Resale Registration Statement") and a Registration Statement on Form S-1 (No. 333-[•]) originally filed with the SEC on September 21, 2020 and which was declared effective on September [•], 2020 (the "Primary and Resale Registration

Statement" and, together with the Resale Registration Statement, the "Initial Registration Statements") in respect of the Shares have been filed with the Securities and Exchange Commission (the "Commission"); the Initial Registration Statements and any post-effective amendment thereto, each in the form heretofore delivered to the Representatives, have been declared effective by the Commission in such form; other than a registration statement, if any, increasing the size of the offering (a "Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the "Act"), which became effective upon filing, no other document with respect to the Initial Registration Statements has been filed with the Commission; and no stop order suspending the effectiveness of the Initial Registration Statements, any post-effective amendments thereto or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose has been initiated or threatened by the Commission (any preliminary prospectus included in the Primary and Resale Registration Statement or filed with the Commission pursuant to Rule 424(a) under the Act is hereinafter called a "Preliminary Prospectus"; the various parts of the Initial Registration Statements and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and including the information contained in the form of final prospectus filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the Initial Registration Statements at the time each were declared effective, each as amended at the time such part of the Initial Registration Statements became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective, are hereinafter collectively called the "Registration Statement"; the Preliminary Prospectus relating to the Shares that was included in the Primary and Resale Registration Statement immediately prior to the Applicable Time (as defined in Section 1(a)(iii) hereof) is hereinafter called the "Pricing Prospectus"; such final prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is hereinafter called the "Prospectus"; any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Act or Rule 163B under the Act is hereinafter called a "Testing-the-Waters Communication"; and any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Act is hereinafter called a "Written Testing-the-Waters Communication"; and any "free writing prospectus" as defined in Rule 433 under the Act relating to the Shares is hereinafter called an "Free Writing Prospectus");

(ii)(A) No order preventing or suspending the use of any Preliminary Prospectus or any Free Writing Prospectus has been issued by the Commission, and (B) each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with the Underwriter Information (as defined in Section 9(c) of this Agreement);

(iii)For the purposes of this Agreement, the "Applicable Time" is ___:___ __m (Eastern time) on the date of this Agreement; the Pricing Prospectus, as supplemented by the information listed on Schedule III(c) hereto, taken together (collectively, the "Pricing Disclosure Package"), as of the Applicable Time, did not, and as of each Time of Delivery (as defined in Section 4(a) of this Agreement) will not, include any untrue statement of a material fact or omit

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to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Free Writing Prospectus and each Written Testing-the-Waters Communication does not conflict with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus, and each Free Writing Prospectus and each Written Testing-the-Waters Communication, as supplemented by and taken together with the Pricing Disclosure Package, as of the Applicable Time, did not, and as of each Time of Delivery, will not, include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in reliance upon and in conformity with the Underwriter Information;

(iv)No documents were filed with the Commission since the Commission's close of business on the business day immediately prior to the date of this Agreement and prior to the execution of this Agreement, except as set forth on Schedule III(b) hereto;

(v)The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to each part of the Registration Statement, as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, and as of each Time of Delivery, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with the Underwriter Information;

(vi)Neither the Company nor any of its subsidiaries has, since the date of the latest audited financial statements included in the Pricing Prospectus, (i) sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree or (ii) entered into any transaction or agreement (whether or not in the ordinary course of business) that is material to the Company and its subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that is material to the Company and its subsidiaries taken as a whole, in each case otherwise than as set forth or contemplated in the Pricing Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, there has not been (x) any change in the capital stock (other than as a result of (i) the exercise or settlement (including any "net" or "cashless" exercise or settlement, if any, of stock options or other equity incentive or the award, if any, of stock options or other equity incentives in the ordinary course of business pursuant to the Company's equity plans that are described in the Pricing Prospectus and the Prospectus or (ii) the issuance, if any, of stock upon the exercise or conversion of Company securities as described in the Pricing Prospectus and the Prospectus) or long-term debt of the Company or any of its subsidiaries or (y) any Material Adverse Effect (as defined below); as used in this Agreement, "Material Adverse Effect" shall mean any material adverse change or effect, or any development involving a prospective material adverse change or effect, in or affecting (i) the business, properties, general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, taken as a

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whole, except as set forth or contemplated in the Pricing Prospectus, or (ii) the ability of the Company to perform its obligations under this Agreement, including the issuance and sale of the Shares, or to consummate the transactions contemplated in the Pricing Prospectus and the Prospectus;

(vii)The Company and its subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Pricing Prospectus or such as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases (subject to the effects of (A) bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other similar laws relating to or affecting rights or remedies of creditors generally; (B) the application of general principles of equity (including without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether enforcement is considered in proceedings at law or in equity) with such exceptions as are not material and do not materially interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries;

(viii)Each of the Company and each of its subsidiaries has been (i) duly organized and is validly existing and in good standing under the laws of its jurisdiction of organization, with power and authority (corporate and other) to own its properties and conduct its business as described in the Pricing Prospectus, and (ii) duly qualified as a foreign corporation for the transaction of business and is in good standing (where such concept exists) under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except, in the case of this clause (ii), where the failure to be so qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect; and each subsidiary of the Company has been listed in the Registration Statement other than subsidiaries, which, if considered in the aggregate as a single subsidiary, would not constitute a "significant subsidiary" of the Company (as such term is defined in Rule 1-02(w) of Regulation S-X promulgated by the Commission;

(ix)The Company has an authorized capitalization as set forth in the Pricing Prospectus as of the date set forth therein and all of the issued shares of capital stock of the Company, including the Shares to be sold by the Selling Stockholders, have been duly and validly authorized and issued and are fully paid and non-assessable and conform in all material respects to the description of the Stock contained in the Pricing Disclosure Package and the Prospectus; and all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non- assessable and (except, in the case of any foreign subsidiary, for directors' qualifying shares) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except for such liens or encumbrances described in the Pricing Prospectus and the Prospectus;

(x)The Shares to be issued and sold by the Company have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued and fully paid and non-assessable and will conform in all material

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respects to the description of the Stock contained in the Pricing Disclosure Package and the Prospectus; and the issuance of the Shares is not subject to any preemptive or similar rights;

(xi)The issue and sale of the Shares to be sold by the Company and the compliance by the Company with this Agreement and the consummation of the transactions contemplated in this Agreement and the Pricing Prospectus will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (A) any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (B) the certificate of incorporation or by-laws (or other applicable organizational document) of the Company or any of its subsidiaries, or (C) any statute or any judgment, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties except, in the case of these clauses (A) and (C) for such defaults, breaches, or violations that would not, individually or in the aggregate, have a Material Adverse Effect; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issuance of the Shares to be sold by the Company and the sale of the Shares or the consummation by the Company of the transactions contemplated by this Agreement, except such as have been obtained under the Act, the approval by the Financial Industry Regulatory Authority ("FINRA") of the underwriting terms and arrangements, the approval of supplemental listing of the Shares on the New York Stock Exchange (the "Exchange"), such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters and filings with, notices to or approvals from the applicable gaming authorities, if any, which have been obtained;

(xii)Neither the Company nor any of its subsidiaries is (i) in violation of its certificate of incorporation or by-laws (or other applicable organizational document), (ii) in violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, or (iii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except, in the case of the foregoing clauses (ii) and (iii), for such defaults as would not, individually or in the aggregate, have a Material Adverse Effect;

(xiii)The statements set forth in the Pricing Prospectus and the Prospectus under the caption "Description of Capital Stock", insofar as they purport to constitute a summary of the terms of the Stock, under the caption "United States Federal Income Tax Considerations" and under the caption "Underwriting (Conflicts of Interest)", insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair in all material respects;

(xiv)Other than as set forth in the Pricing Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries or, to the Company's knowledge, any officer or director of the Company is a party or of which any property or assets of the Company or any of its subsidiaries or, to the Company's knowledge, any officer or director of the Company is the subject which, if determined adversely to the

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Company or any of its subsidiaries (or such officer or director), would individually or in the aggregate reasonably be expected to have a Material Adverse Effect; and, to the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or others;

(xv)The Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof, will not be an "investment company", as such term is defined in the Investment Company Act of 1940, as amended (the "Investment Company Act");

(xvi)KPMG LLP, who have certified certain financial statements of the Company and its subsidiaries, and RSM US LLP, who have certified certain financial statements of the Grand River Jackpot, LLC and its subsidiary are each independent public accountants as required by the Act and the rules and regulations of the Commission thereunder;

(xvii)The Company and its subsidiaries possess all licenses, sub-licenses, certificates, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in each of the Pricing Prospectus and the Prospectus, except where the failure to possess or make the same would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received notice of any revocation or modification of any such license, sub-license, certificate, permit or authorization or has any reason to believe that any such license, sub-license, certificate, permit or authorization will not be renewed in the ordinary course, which, in each case, individually or in the aggregate, if the subject of an unfavorable ruling or decision as to the Company or a subsidiary, would reasonably be expected to have a Material Adverse Effect;

(xviii)The Company and its subsidiaries (i) are, and, to the knowledge of the Company, have been, in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances, wastes, or materials, pollutants or contaminants (collectively, "Environmental Laws"), (ii) have received all permits, licenses, or other approvals required of them under applicable Environmental Laws to conduct their respective businesses, and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such non-compliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

(xix)The Company maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that (i) complies with the requirements of the Exchange Act,

(ii)has been designed by the Company's principal executive officer and principal financial officer, or under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and (iii) is sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management's

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general or specific authorization, (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets, (C) access to assets is permitted only in accordance with management's general or specific authorization and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and except as disclosed in the Pricing Prospectus, the Company's internal control over financial reporting is effective and the Company is not aware of any material weaknesses in its internal control over financial reporting;

(xx)Since the date of the latest audited financial statements included in the Pricing Prospectus, there has been no change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting;

(xxi)The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that material information relating to the Company and its subsidiaries is made known to the Company's principal executive officer and principal financial officer by others within those entities; and such disclosure controls and procedures are effective;

(xxii)The Company and its subsidiaries taken as a whole are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are, commercially reasonable and customary for the conduct of their collective business; and the Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business;

(xxiii)This Agreement has been duly authorized, executed and delivered by the

Company;

(xxiv)None of the Company or any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee, affiliate or other person associated with or acting on behalf of the Company or any of its subsidiaries has (i) made, offered, promised or authorized any unlawful contribution, gift, entertainment or other unlawful expense (or taken any act in furtherance thereof); (ii) made, offered, promised or authorized any direct or indirect unlawful payment; or (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, the Bribery Act 2010 of the United Kingdom or any other applicable anti- bribery or anti-corruption law;

(xxv)The operations of the Company and its subsidiaries are and have been conducted at all times in compliance with the requirements of applicable anti-money laundering laws, including, but not limited to, the Bank Secrecy Act of 1970, as amended by the USA PATRIOT ACT of 2001, and the rules and regulations promulgated thereunder, and the applicable anti- money laundering laws of the various jurisdictions in which the Company and its subsidiaries conduct business (collectively, the "Money Laundering Laws") and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened;

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(xxvi)None of the Company or any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently the subject or the target of any sanctions administered or enforced by the U.S. Government, including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury ("OFAC"), or the U.S. Department of State and including, without limitation, the designation as a "specially designated national" or "blocked person," the European Union, Her Majesty's Treasury, the United Nations Security Council, or other relevant sanctions authority (collectively, "Sanctions"), nor is the Company or any of its subsidiaries located, organized, or resident in a country or territory that is the subject or target of Sanctions, and the Company will not directly or indirectly use the proceeds of the offering of the Shares hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any activities of or business with any person, or in any country or territory, that, at the time of such funding, is the subject or the target of Sanctions or (ii) in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions;

(xxvii)The financial statements included in the Registration Statement, the Pricing Prospectus and the Prospectus, together with the related schedules and notes, present fairly in all material respects the financial position of the Company and its subsidiaries at the dates indicated and the statement of operations, stockholders' equity and cash flows of the Company and its subsidiaries for the periods specified; said financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved. The supporting schedules, if any, present fairly in accordance with GAAP the information required to be stated therein. The selected financial data and the summary financial information included in the Registration Statement, the Pricing Prospectus and the Prospectus present fairly in all material respects the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included therein. Except as included therein, no historical or pro forma financial statements or supporting schedules are required to be included in the Registration Statement, the Pricing Prospectus or the Prospectus under the Act or the rules and regulations promulgated thereunder. All disclosures contained in the Registration Statement, the Pricing Prospectus and the Prospectus regarding "non-GAAP financial measures" (as such term is defined by the rules and regulations of the Commission) comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Act, to the extent applicable;

(xxviii)From the time of initial confidential submission of a registration statement relating to the Shares with the Commission through the date hereof, the Company has been and is an "emerging growth company" as defined in Section 2(a)(19) of the Act (an "Emerging Growth Company");

(xxix)Nothing has come to the attention of the Company that has caused the Company to believe that the industry statistical and market-related data included in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus is not based on or derived from sources that the Company believes to be reliable and accurate in all material respects;

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(xxx)The Company and its officers and directors (in their capacity as such) are in compliance in all material respects with the provisions of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated in connection therewith that are effective and are currently applicable to the Company and to such officers and directors, respectively;

(xxxi)The Company has not taken, directly or indirectly, without giving effect to activities by the Underwriters (or any affiliate or agent of any Underwriters) or as contemplated by this Agreement, any action designed to or that would reasonably be expected to cause or result in any stabilization or manipulation of the price of the Shares;

(xxxii)Nothing has come to the attention of the Company that has caused it to believe that the forward-looking statements (within the meaning of Section 27A of the Act and Section 21E of the Exchange Act) contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus have been made or reaffirmed without a reasonable basis or other than in good faith;

(xxxiii)Except as described in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus, (A) there has been no security breach, unauthorized access or disclosure, or other compromise of the information technology and computer systems, networks, hardware, software, or other information technology equipment owned or used by the Company or its subsidiaries, or the data and databases (including the data and information of their respective customers, employees, suppliers, vendors and any third party data maintained, processed or stored by the Company and its subsidiaries, and any such data processed or stored by third parties on behalf of the Company and its subsidiaries) (collectively, "IT Systems and Data"); and (B) neither the Company nor its subsidiaries have been notified of, and each of them have no knowledge of any event or condition that would reasonably be expected to result in, any security breach, unauthorized access or disclosure or other compromise of the IT Systems and Data, in the case of clause (A), except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and its subsidiaries have implemented commercially reasonable controls, policies, procedures, and technological safeguards to maintain and protect the integrity, continuous operation, redundancy and security of their IT Systems and Data reasonably consistent with applicable industry standards and practices, or as required by applicable regulatory standards, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company and its subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority, internal policies, external privacy policies and contractual obligations, in each case, relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification, in each case, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

(xxxiv)(A) The Company has operated its business in a manner compliant in all material respects with all applicable privacy, data security and data protection laws, rules and regulations ("Privacy Rules"), all contractual obligations and all Company policies, including external privacy policies, in each case, applicable to the Company's collection, handling, usage, disclosure, transfer, storage, and other processing of all data or information that identifies a specific person or when combined with other information held by the Company can

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be reasonably linked to a specific person or that constitutes personal data, personal information or personally identifiable information, and other data relating to identified or identifiable individuals or devices, including IP addresses and device identifiers under applicable Privacy Rules ("Personal Data"); and (B) the Company has implemented, maintains and materially complies with commercially reasonable administrative, technical and physical safeguards, as well as policies and procedures, designed to ensure the integrity, security and confidentiality of all Personal Data collected, handled, used, disclosed, transferred, stored or otherwise processed in connection with the Company's operation of its business. The Company complies in all material respects with, has policies and procedures in place designed to ensure compliance with applicable Privacy Rules, including a publicly available privacy policy, and takes appropriate steps to ensure compliance with such policies and procedures. Such policies and procedures comply in all material respects with all applicable Privacy Rules as well as all contractual obligations applicable to the Company. The Company has required and does require all third parties to which it provides any Personal Data to maintain the privacy and security of such Personal Data, including by contractually requiring such third parties to protect such Personal Data from unauthorized access by and/or disclosure to any unauthorized third parties. Except as disclosed in the Pricing Disclosure Package: (A) the Company has not experienced any unauthorized access to, or unauthorized disclosure of, Personal Data maintained by the Company that has compromised the privacy and/or security of such Personal Data and (B) the Company has not received any complaints, claims, audits, investigations, lawsuits, enforcement actions, consent orders or allegations related to violations of Privacy Rules by the Company or otherwise related to the collection, handling, usage, disclosure, transfer, storage or other processing of Personal Data;

(xxxv)The Company and its subsidiaries own, or otherwise have the right to use (including pursuant to license, sublicense, agreement or permission), the material patents, trademarks, service marks, patent applications, trade names, copyrights, trade secrets, domain names, information, know-how, proprietary rights and processes (collectively, "Intellectual Property") necessary to conduct the business of the Company and its subsidiaries as described in the Registration Statement, Pricing Disclosure Package and the Prospectus. Except as set forth in the Registration Statement, Pricing Disclosure Package and the Prospectus and except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, to the Company's knowledge, there has not been any infringement by any third party of any Intellectual Property of the Company or any of its subsidiaries. To the knowledge of the Company, none of the technology employed by the Company has been obtained or is being used by the Company or its subsidiaries in violation of any contractual obligation binding on the Company or any of its subsidiaries or any of its directors or executive officers or any of its employees or otherwise in violation of the rights of any persons. Except as disclosed in the Registration Statement, Pricing Disclosure Package and the Prospectus, neither the Company nor any of its subsidiaries has received any written communications alleging that the Company or any of its subsidiaries has violated, infringed or misappropriated any of the Intellectual Property of any other person or entity. The Company and its subsidiaries have taken and will maintain commercially reasonable measures to prevent the unauthorized dissemination or publication of their trade secrets or other confidential information and, to the extent contractually required to do so, the trade secrets or other confidential information of third parties in their possession; and

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(xxxvi)(i) Each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), for which the Company or any member of its "Controlled Group" (defined as any entity, whether or not incorporated, that is under common control with the Company within the meaning of Section 4001(a)(14) of ERISA or any entity that would be regarded as a single employer with the Company under Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended (the "Code")) would have any liability (each, a "Plan") has been maintained in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations, including but not limited to ERISA and the Code except for non-compliance that would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect; (ii) no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any Plan, excluding transactions effected pursuant to a statutory or administrative exemption; (iii) no Plan is subject to Section 412 of the Code or Section 302 or Title IV of ERISA; (iv) neither the Company nor any member of the Controlled Group has incurred, nor reasonably expects to incur, any material liability under Title IV of ERISA in respect of a Plan (including a "multiemployer plan", within the meaning of Section 4001(a)(3) of ERISA; (v) each Plan that is intended to be qualified under Section 401(a) of the Code is so qualified, and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification; and (vi) to the Company's knowledge, there is no pending audit or investigation by the U.S. Internal Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other governmental agency or any non-U.S. regulatory agency with respect to any Plan, except in each case with respect to the events or conditions set forth in (i) through (vi) hereof, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as would not, individually or in the aggregate, have, or reasonably be expected to have, a Material Adverse Effect, there has not occurred nor is reasonably likely to occur a material increase in the aggregate amount of contributions required to be made to all Plans by the Company or its Controlled Group affiliates in the current fiscal year of the Company and its Controlled Group affiliates compared to the amount of such contributions made in the Company's and its Controlled Group affiliates' most recently completed fiscal year. Neither the Company nor any of its subsidiaries has or has had any "accumulated post-retirement benefit obligations" (within the meaning of Statement of Financial Accounting Standards 106) with respect to any Plan.

(b)Each of the Selling Stockholders severally and not jointly represents and warrants to, and agrees with, each of the Underwriters and the Company that:

(i)All consents, approvals, authorizations and orders necessary for the execution and delivery by such Selling Stockholder of this Agreement and, to the extent applicable to such Selling Stockholder, the Power of Attorney and the Custody Agreement referred to below, and for the sale and delivery of the Shares to be sold by such Selling Stockholder hereunder, have been obtained, except for such consents, approvals, authorizations and orders as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters, the approval of the underwriting terms and arrangements by FINRA and except where the failure to obtain any such consent, approval, authorization or order would not reasonably be expected, individually or in the aggregate, to have a material adverse effect on the ability of such Selling Stockholder to consummate the transactions contemplated by this Agreement; and such Selling Stockholder has full right,

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power and authority to enter into this Agreement, and, to the extent applicable to such Selling Stockholder, the Power-of-Attorney and the Custody Agreement, and to sell, assign, transfer and deliver the Shares to be sold by such Selling Stockholder hereunder;

(ii)The sale of the Shares to be sold by such Selling Stockholder hereunder and the compliance by such Selling Stockholder with this Agreement, and, to the extent applicable to such Selling Stockholder, the Power of Attorney and the Custody Agreement, and the consummation of the transactions herein and therein contemplated will not (A) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any statute, indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which such Selling Stockholder is a party or by which such Selling Stockholder is bound or to which any of the property or assets of such Selling Stockholder is subject, (B) result in any violation of the provisions of the organizational documents, limited liability company agreement, limited partnership agreement or trust agreement or other similar interest, as applicable, to such Selling Stockholder or (C) conflict with or result in a breach or violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body having jurisdiction over such Selling Stockholder or any of its subsidiaries or any property or assets of such Selling Stockholder except in the case of (A) and (C), for such conflicts, breaches and violations that individually or in the aggregate would not reasonably be expected to materially impact the ability of such Selling Stockholder to perform its obligations under this Agreement, and, to the extent applicable to such Selling Stockholder, the Power of Attorney and the Custody Agreement, and the consummation by such Selling Stockholder of the transactions contemplated by this Agreement, and, to the extent applicable to such Selling Stockholder, the Power of Attorney and the Custody Agreement, in connection with the Shares to be sold by such Selling Stockholder hereunder;

(iii)Such Selling Stockholder has, and immediately prior to each Time of Delivery (as defined in Section 4 hereof) such Selling Stockholder will have, good and valid title to, or a valid "security entitlement" within the meaning of Section 8-501 of the New York Uniform Commercial Code in respect of, the Shares to be sold by such Selling Stockholder hereunder at such Time of Delivery, free and clear of all liens, encumbrances, equities or claims, except for any liens, encumbrances, equities or claims arising under the Custody Agreement (if applicable to such Selling Stockholder);

(iv)Such Selling Stockholder has not taken and will not take, directly or indirectly, any action that is designed to or that has constituted or might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares;

(v)To the extent that any statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto are made in reliance upon and in conformity with written information furnished to the Company by such Selling Stockholder pursuant to Items 7 and 11(m) of Form S-1 expressly for use therein, (the "Selling Stockholder Information"), such Registration Statement and Preliminary Prospectus did, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will, when they become effective or are filed with the Commission not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; it being understood and agreed for the purposes of this Agreement, the Selling

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Stockholder Information for such Selling Stockholder consists only of (A) such Selling Stockholder's legal name, address and Stock beneficially owned by such Selling Stockholder before and after the offering contemplated hereby and (B) the other information with respect to such Selling Stockholder (excluding percentages) which appear under the caption "Principal and Selling Stockholders" in the Preliminary Prospectus.

(vi)In order to document the Underwriters' compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions herein contemplated, such Selling Stockholder will deliver to the Representatives prior to or at the First Time of Delivery a properly completed and executed United States Treasury Department Form W-9 or Form W-8BEN (or other applicable form or statement specified by Treasury Department regulations in lieu thereof);

(vii)In the case of each Selling Stockholder who is party to a Custody Agreement and Power of Attorney (each such Selling Stockholder being denoted with an asterisk ("*") on Schedule II hereto), certificates in negotiable form or book-entry securities entitlements representing all of the Shares to be sold by the Selling Stockholders set forth on Schedule hereunder have been placed in custody under a Custody Agreement, in the form heretofore furnished to the Representatives (the "Custody Agreement"), duly executed and delivered by such Selling Stockholder to Continental Stock Transfer & Trust Company, as custodian (the "Custodian"), and such Selling Stockholder has duly executed and delivered a Power of Attorney, in the form heretofore furnished to the Representatives (the "Power of Attorney"), appointing the persons indicated in Schedule II hereto, and each of them, as such Selling Stockholder's attorneys-in-fact (the "Attorneys-in-Fact") with authority to execute and deliver this Agreement on behalf of such Selling Stockholder, to determine the purchase price to be paid by the Underwriters to the Selling Stockholders as provided in Section 2 hereof, to authorize the delivery of the Shares to be sold by such Selling Stockholder hereunder and otherwise to act on behalf of such Selling Stockholder in connection with the transactions contemplated by this Agreement and the Custody Agreement;

(ix)The Shares held in custody for such Selling Stockholder under the Custody Agreement, to the extent applicable, are subject to the interests of the Underwriters hereunder; the arrangements made by such Selling Stockholder for such custody, and the appointment by such Selling Stockholder of the Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable; the obligations of the Company and the Selling Stockholders hereunder shall not be terminated by operation of law, whether by the death or incapacity of any individual Selling Stockholder or, in the case of an estate or trust, by the death or incapacity of any executor or trustee or the termination of such estate or trust, or in the case of a partnership or corporation, by the dissolution of such partnership, limited liability company or corporation, or by the occurrence of any other event; if any individual Selling Stockholder or any such executor or trustee should die or become incapacitated, or if any such estate or trust should be terminated, or if any such partnership, limited liability company or corporation should be dissolved, or if any other such event should occur, before the delivery of the Shares to be sold by such Selling Stockholder hereunder, certificates representing the Shares to be sold by such Selling Stockholder hereunder shall be delivered by or on behalf of the Selling Stockholders in accordance with the terms and conditions of this Agreement and, to the extent applicable to such Selling Stockholder, of the Custody Agreements; and, to the extent applicable to such Selling Stockholder, actions taken by the Attorneys-in-Fact pursuant to the Powers of Attorney

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shall be as valid as if such death, incapacity, termination, dissolution or other event had not occurred, regardless of whether or not the Custodian, the Attorneys-in-Fact, or any of them, shall have received notice of such death, incapacity, termination, dissolution or other event;

(x)Such Selling Stockholder will not directly or indirectly use the proceeds of the offering of the Shares hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, (i) to fund or facilitate any activities of or business with any person, or in any country or territory, that, at the time of such funding, is the subject or the target of Sanctions, or in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions, or (ii) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of any Money Laundering Laws or any applicable anti- bribery or anti-corruption laws; and

(xi)In the case of each Selling Stockholder who is party to a Custody Agreement and Power of Attorney, such Selling Stockholder is not prompted by any material information concerning the Company or any of its subsidiaries that is not disclosed in the Pricing Prospectus to sell its Shares pursuant to this Agreement.

2.Subject to the terms and conditions herein set forth, (a) the Company and each of the Selling Stockholders agree, severally and not jointly, to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company and each of the Selling Stockholders, at a purchase price per share of $[•], the number of Firm Shares (to be adjusted by the Representatives so as to eliminate fractional shares) determined by multiplying the aggregate number of Firm Shares to be sold by the Company and each of the Selling Stockholders as set forth opposite their respective names in Schedule II hereto by a fraction, the numerator of which is the aggregate number of Firm Shares to be purchased by such Underwriter as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the aggregate number of Firm Shares to be purchased by all of the Underwriters from the Company and all of the Selling Stockholders hereunder and (b) in the event and to the extent that the Underwriters shall exercise the election to purchase Optional Shares as provided below, the Company and the Selling Stockholders, as and to the extent indicated in Schedule II hereto agree, severally and not jointly, to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company and each of the Selling Stockholders, at the purchase price per share set forth in clause (a) of this Section 2 (provided that the purchase price per Optional Share shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm Shares but not payable on the Optional Shares), that portion of the number of Optional Shares as to which such election shall have been exercised (to be adjusted by the Representatives so as to eliminate fractional shares) determined by multiplying such number of Optional Shares by a fraction, the numerator of which is the maximum number of Optional Shares which such Underwriter is entitled to purchase as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the maximum number of Optional Shares that all of the Underwriters are entitled to purchase hereunder.

The Company and the Selling Stockholders, as and to the extent indicated in Schedule II hereto, hereby grant, severally and not jointly, to the Underwriters the right to purchase at their election up [•] Optional Shares, at the purchase price per share set forth in the paragraph above, for the sole purpose of covering sales of shares in excess of the number of Firm Shares, provided that

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the purchase price per Optional Share shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm Shares but not payable on the Optional Shares. Any such election to purchase Optional Shares shall be made in proportion to the maximum number of Optional Shares to be sold by the Company and all Selling Stockholders as set forth in Schedule II hereto. Any such election to purchase Optional Shares may be exercised only by written notice from the Representatives to the Company, each Selling Stockholder who is not a party to a Custody Agreement and Power of Attorney (the "Entity Selling Stockholders") and the Attorneys-in-Fact, given within a period of 30 calendar days after the date of this Agreement and setting forth the aggregate number of Optional Shares to be purchased and the date on which such Optional Shares are to be delivered, as determined by the Representatives but in no event earlier than the First Time of Delivery (as defined in Section 4 hereof) or, unless the Representatives, the Entity Selling Stockholders, the Company and the Attorneys-in-Fact otherwise agree in writing, earlier than two or later than ten business days after the date of such notice.

3.Upon the authorization by the Representatives of the release of the Firm Shares, the several Underwriters propose to offer the Firm Shares for sale upon the terms and conditions set forth in the Prospectus.

4.(a) The Shares to be purchased by each Underwriter hereunder, in definitive or book- entry form, and in such authorized denominations and registered in such names as the Representatives may request upon at least forty-eight hours' prior notice to the Company and the Selling Stockholders shall be delivered by or on behalf of the Company and the Selling Stockholders to the Representatives, through the facilities of the Depository Trust Company ("DTC"), for the account of such Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the accounts specified by the Company and the Custodian to the Representatives at least forty-eight hours in advance. The time and date of such delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New York time, on September [•], 2020. or such other time and date as the Representatives, the Company, the Entity Selling Stockholders and the Attorneys-in-Fact may agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m., New York time, on the date specified by the Representatives in each written notice given by the Representatives of the Underwriters' election to purchase such Optional Shares, or such other time and date as the Representatives, [and] the Company [and the Attorneys-in-Fact] may agree upon in writing. Such time and date for delivery of the Firm Shares is herein called the "First Time of Delivery", each such time and date for delivery of the Optional Shares, if not the First Time of Delivery, is herein called the "Second Time of Delivery", and each such time and date for delivery is herein called a "Time of Delivery".

(b)The documents to be delivered at each Time of Delivery by or on behalf of the parties hereto pursuant to Section 8 hereof, including the cross receipt for the Shares and any additional documents requested by the Underwriters pursuant to Section 8(l) hereof will be delivered at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153 (the "Closing Location"), and the Shares will be delivered at the office of DTC or its designated custodian, all at such Time of Delivery. A meeting will be held at the Closing Location at [•] p.m., New York City time, on the New York Business Day next preceding such Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close.

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5.The Company agrees with each of the Underwriters:

(a)To prepare the Prospectus in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Act; to make no further amendment or any supplement to the Registration Statement or the Prospectus prior to the last Time of Delivery which shall be disapproved by the Representatives promptly after reasonable notice thereof; to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any amendment or supplement to the Prospectus has been filed and to furnish the Representatives with copies thereof; to file promptly all material required to be filed by the Company with the Commission pursuant to Rule 433(d) under the Act; to advise the Representatives, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus in respect of the Shares, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus relating to the Shares or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order;

(b)Promptly from time to time to take such action as the Representatives may reasonably request to qualify the Shares for offering and sale under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Shares, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation (where not otherwise required) or to file a general consent to service of process in any jurisdiction or subject itself to taxation in respect of doing business in any jurisdiction where it is not present so subject;

(c)Prior to 10:00 a.m., New York City time, on the New York Business Day next succeeding the date of this Agreement and from time to time, to furnish the Underwriters with written and electronic copies of the Prospectus in New York City in such quantities as the Representatives may reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Shares and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus in order to comply with the Act, to notify the Representatives and upon your request to prepare and furnish without charge to each Underwriter and to any dealer in securities as many written and electronic copies as you may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; and in case any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any

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of the Shares at any time nine months or more after the time of issue of the Prospectus, upon your request but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as the Representatives may request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;

(d)To make generally available to its securityholders as soon as practicable (which may be satisfied by filing with the Commission's Electronic Data Gathering, Analysis and Retrieval System ("EDGAR")), but in any event not later than sixteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158);

(e)During the period beginning from the date hereof and continuing to and including the date 60 days after the date of the Prospectus (the "Company Lock-Up Period"), not to (i) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, or file with or confidentially submit to the Commission a registration statement under the Act relating to, any securities of the Company that are substantially similar to the Shares, including but not limited to any options or warrants to purchase shares of Stock or any securities that are convertible into or exchangeable for, or that represent the right to receive, Stock or any such substantially similar securities, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Stock or any such other securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Stock or such other securities, in cash or otherwise (other than the Shares to be sold hereunder or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this Agreement), without the prior written consent of Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, other than (A) the filing of any required post-effective amendments or supplements to the Resale Registration Statement and (B) the filing of any registration statement on Form S-8 (or amendment thereto);

(f)During a period of five years from the effective date of the Registration Statement, so long as the Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act, to furnish to the Representatives copies of all reports or other communications (financial or other) furnished to stockholders, and to deliver to the Representatives (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange on which any class of securities of the Company is listed; and (ii) such additional information concerning the business and financial condition of the Company as the Representatives may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its stockholders generally or to the Commission) provided, however, that no report, communication or financial statement need be furnished pursuant to this subsection (f) to the extent (i) they are furnished or filed by the Company and publicly available on the Commission's EDGAR system, in which case they shall be deemed to have been furnished and delivered to the Representatives at the same time furnished to or filed with the Commission or (ii) the provision of which would require public disclosure by the Company under Regulation FD;

(h)To use the net proceeds received by it from the sale of the Shares pursuant to this Agreement in the manner specified in the Pricing Prospectus under the caption "Use of Proceeds";

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(i)To use its best efforts to list for trading, subject to official notice of issuance, the Shares to be sold by the Company on the Exchange;

(j)If the Company elects to rely upon Rule 462(b), the Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of this Agreement, and the Company shall at the time of filing either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 3a(c) of the Commission's Informal and Other Procedures (16 CFR 202.3a);

(k)Upon request of any Underwriter, to furnish, or cause to be furnished, to such Underwriter an electronic version of the Company's trademarks, servicemarks and corporate logo for use on the website, if any, operated by such Underwriter for the purpose of facilitating the on-line offering of the Shares (the "License"); provided, however, that the License shall be used solely for the purpose described above, is granted without any fee and may not be assigned or transferred;

(l)To promptly notify the Representatives if the Company ceases to be an Emerging Growth Company at any time prior to the later of (i) completion of the distribution of the Shares within the meaning of the Act and (ii) the last Time of Delivery;

(m)Not to use or refer to any Free Writing Prospectus; and

(n)Not to take any action that would result in an Underwriter or the Company being required to file with the Commission pursuant to Rule 433(d) under the Act a Free Writing Prospectus prepared by or on behalf of the Underwriter that the Underwriter otherwise would not have been required to file thereunder.

6.(a) The Company represents and agrees that, without the prior consent of the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a "free writing prospectus" as defined in Rule 405 under the Act; each Selling Stockholder represents and agrees that, without the prior consent of the Company and the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a free writing prospectus; and each Underwriter represents and agrees that, without the prior consent of the Company and the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a free writing prospectus required to be filed with the Commission; any such free writing prospectus the use of which has been consented to by the Company and the Representatives is listed on Schedule III(a) hereto;

(b)The Company has complied and will comply with the requirements of Rule 433 under the Act applicable to any Free Writing Prospectus, including timely filing with the Commission or retention where required and legending;

(c)The Company agrees that if at any time following issuance of a Free Writing Prospectus or Written Testing-the-Waters Communication any event occurred or occurs as a result of which such Free Writing Prospectus or Written Testing-the-Waters Communication would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Representatives and, if requested by the Representatives, will prepare and furnish without charge to each Underwriter a Free Writing Prospectus, Written Testing- the-Waters Communication or other document which will correct such conflict, statement or omission;

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(d)The Company represents and agrees that (i) it has not engaged in, or authorized any other person to engage in, any Testing-the-Waters Communications, other than Testing-the-Waters Communications with the prior consent of the Representatives with entities that the Company reasonably believes are qualified institutional buyers as defined in Rule 144A under the Act or institutions that are accredited investors as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Act; and (ii) it has not distributed, or authorized any other person to distribute, any Written Testing-the-Waters Communication, other than those distributed with the prior consent of the Representatives that are listed on Schedule III(d) hereto; and the Company reconfirms that the Underwriters have been authorized to act on its behalf in engaging in Testing-the-Waters Communications;

(e)Each Underwriter represents and agrees that any Testing-the-Waters Communications undertaken by it were with entities that such Underwriter reasonably believes are qualified institutional buyers as defined in Rule 144A under the Act or institutions that are accredited investors as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Act.

7.(a) The Company covenants and agrees with the several Underwriters that it will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company's counsel and accountants and one special counsel for the Selling Stockholders in connection with the registration of the Shares under the Act and all other expenses in connection with the preparation, printing, reproduction and filing of the Registration Statement, any Preliminary Prospectus, any Written Testing-the-Waters Communication, any Free Writing Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing this Agreement, the Blue Sky Memorandum, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Shares; (iii) all expenses in connection with the qualification of the Shares for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky survey; (iv) all fees and expenses in connection with listing the Shares on the Exchange; and (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required review by FINRA of the terms of the sale of the Shares; (vi) the cost of preparing stock certificates; if applicable (vii) the cost and charges of any transfer agent, registrar or custodian, and (viii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section provided, however, that the amount payable by the Company and the Selling Stockholders pursuant to the fees and disbursements of counsel to the Underwriters described in subsections (iii) and (v) of this Section 7 shall not exceed an aggregate of $25,000 in the aggregate; and (b) each such Selling Stockholder will pay or cause to be paid all expenses and taxes incident to the sale and delivery of the Shares to be sold by such Selling Stockholder to the Underwriters hereunder. In connection with clause (b) of the preceding sentence, the Representatives agree to pay New York State stock transfer tax, and the Selling Stockholders agree to reimburse the Representatives for associated carrying costs if such tax payment is not rebated on the day of payment and for any portion of such tax payment not rebated. It is understood, however, that the Company shall bear, and the Selling Stockholders shall not be required to pay or to reimburse the Company for, the cost of any other matters not directly relating to the sale and purchase of the Shares pursuant to this Agreement, and that, except as provided in this Section, and Sections 9 and 12 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, stock transfer taxes on resale of any of the Shares by them, and any advertising expenses

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connected with any offers they may make. Notwithstanding the foregoing, the Underwriters, the Selling Stockholders and the Company will each be responsible for any costs and expenses that the parties may agree to in writing.

8.The obligations of the Underwriters hereunder, as to the Shares to be delivered at each Time of Delivery, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company and the Selling Stockholders herein are, at and as of the Applicable Time and such Time of Delivery, true and correct, the condition that the Company and the Selling Stockholders shall have performed all of its and their obligations hereunder theretofore to be performed, and the following additional conditions:

(a)The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Act within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; all material required to be filed by the Company pursuant to Rule 433(d) under the Act shall have been filed with the Commission within the applicable time period prescribed for such filing by Rule 433; if the Company has elected to rely upon Rule 462(b) under the Act, the Rule 462(b) Registration Statement shall have become effective by 10:00 p.m., Washington, D.C. time, on the date of this Agreement; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated, or to the knowledge of the Company, threatened by the Commission no stop order suspending or preventing the use of the Pricing Prospectus, Prospectus or any Free Writing Prospectus shall have been initiated or, to the knowledge of the Company, threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to the reasonable satisfaction of the Representatives;

(b)Weil, Gotshal & Manges LLP, counsel for the Underwriters, shall have furnished to you such written opinion and negative assurance letter, dated such Time of Delivery, in form and substance satisfactory to the Representatives, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;

(c)Fenwick & West LLP, counsel for the Company, shall have furnished to the Representative their written opinion (a form of such opinion is attached as Annex II(a) hereto), dated such Time of Delivery, in form and substance satisfactory to the Representatives;

(d)The respective counsel for each of the Selling Stockholders, as indicated in Schedule II hereto, each shall have furnished to the Representatives their written opinion with respect to each of the Selling Stockholders for whom they are acting as counsel [(a form of each such opinion is attached as Annex II(b) hereto)], dated such Time of Delivery, in form and substance satisfactory to the Representatives;

(e)On the date of the Prospectus at a time prior to the execution of this Agreement, at 9:30 a.m., New York City time, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at each Time of Delivery, each of KPMG LLP and RSM US LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to the Representatives, to the effect set forth in Annex I hereto (an executed copy of each letter delivered prior to the execution of this Agreement is attached as Annex I(a) hereto and a form of each of the letters to be delivered on the effective date of any post-effective amendment to the Registration Statement and as of each Time of Delivery is attached as Annex I(b) hereto);

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(f)(i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included in the Pricing Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus, and (ii) since the respective dates as of which information is given in the Pricing Prospectus there shall not have been any material change in the capital stock (other than the issuance of shares of Stock upon exercise of stock options or warrants or the settlement of restricted stock units, and the issuance of stock options or restricted stock units under the Company's existing equity incentive plans described in the Pricing Prospectus) or long-term debt of the Company or any of its subsidiaries or any change or effect, or any development involving a prospective change or effect, in or affecting (x) the business, properties, general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, taken as a whole, except as set forth or contemplated in the Pricing Prospectus, or (y) the ability of the Company to perform its obligations under this Agreement, including the issuance and sale of the Shares, or to consummate the transactions contemplated in the Pricing Prospectus and the Prospectus, the effect of which, in any such case described in clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the Pricing Prospectus and the Prospectus;

(g)On or after the Applicable Time (i) no downgrading shall have occurred in the rating accorded the Company's debt securities by any "nationally recognized statistical rating organization", as defined in Section 3(a)(62) of the Exchange Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's debt securities;

(h)On or after the Applicable Time there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the Exchange; (ii) a suspension or material limitation in trading in the Company's securities on the Exchange; (iii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the Pricing Prospectus and the Prospectus;

(i)The Shares to be sold at such Time of Delivery shall have been duly listed, subject to official notice of issuance, on the Exchange;

(j)The Company shall have obtained and delivered to the Underwriters executed copies of an agreement from each director, executive officer and each stockholder of the Company listed on Schedule IV hereto, substantially to the effect set forth in Annex III hereto in form and substance satisfactory to the Representatives;

21

(k)The Company shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement;

(l)The Company and the Selling Stockholders shall have furnished or caused to be furnished to you at such Time of Delivery certificates of officers of the Company and of the Selling Stockholders, respectively, satisfactory to the Representatives as to the accuracy of the representations and warranties of the Company and the Selling Stockholders, respectively, herein at and as of such Time of Delivery, as to the performance by the Company and the Selling Stockholders of all of their respective obligations hereunder to be performed at or prior to such Time of Delivery, as to such other matters as the Representatives may reasonably request, and the Company shall have furnished or caused to be furnished certificates as to the matters set forth in subsections (a) and (f) of this Section 8; and

(m)At each Time of Delivery, the Chief Financial Officer of the Company, in his capacity as such, shall have furnished to the Representatives a certificate in a form agreed by the Representatives and the Company and dated the respective date of delivery thereof, certifying that certain factual statements in the Registration Statement, the Pricing Prospectus, the Prospectus and any amendment or supplement thereto, are true and correct on and at such Time of Delivery with the same effect as if made on such Time of Delivery.

9.(a) The Company will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Free Writing Prospectus, any "roadshow" as defined in Rule 433(h) under the Act or any presentation (a "roadshow"), any "road show" (as defined in Rule 433(h) not constituting a Free Writing Prospectus (a "non-FWP roadshow"), any "issuer information" filed or required to be filed pursuant to Rule 433(d) under the Act or any Testing-the-Waters Communication, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any documented legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company and the Selling Stockholders shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Free Writing Prospectus or any Testing-the-Waters Communication, in reliance upon and in conformity with the Underwriter Information.

(b)Each of the Selling Stockholders will, severally and not jointly, indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Free Writing Prospectus, any roadshow, any non-FWP roadshow or any Testing-the-

22

Waters Communication, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto or any Free Writing Prospectus, or any roadshow, any non-FWP roadshow or any Testing-the- Waters Communication, in reliance upon and in conformity with the Selling Stockholder Information furnished to the Company by such Selling Stockholder; and will reimburse each Underwriter for any documented legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that such Selling Stockholder shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus or any amendment or supplement thereto or any Free Writing Prospectus in reliance upon and in conformity with the Underwriter Information; and provided, further, that the liability of such Selling Stockholders pursuant to this subsection (b) shall not exceed the net proceeds after underwriting commissions and discounts but before deducting expenses from the sale of Shares sold by the Selling Stockholder hereunder.

(c)Each Underwriter, severally and not jointly, will indemnify and hold harmless the Company and each Selling Stockholder against any losses, claims, damages or liabilities to which the Company or such Selling Stockholder may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Free Writing Prospectus, or any roadshow, or any non-FWP roadshow, or any Testing-the-Waters Communication, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Free Writing Prospectus, or any roadshow, any non-FWP roadshow or any Testing-the-Waters Communication, in reliance upon and in conformity with the Underwriter Information; and will reimburse the Company and each Selling Stockholder for any legal or other expenses reasonably incurred by the Company or such Selling Stockholder in connection with investigating or defending any such action or claim as such expenses are incurred. As used in this Agreement with respect to an Underwriter and an applicable document, "Underwriter Information" shall mean the written information furnished to the Company by such Underwriter through the Representatives expressly for use therein; it being understood and agreed upon that the only such information furnished by any Underwriter consists of the following information in the Prospectus furnished on behalf of each Underwriter: the concession and reallowance figures appearing in the [__] paragraph under the caption "Underwriting (Conflicts of Interest)", and the information contained in the [__] paragraph under the caption "Underwriting (Conflicts of Interest)".

(d)Promptly after receipt by an indemnified party under subsection (a), (b) or (c) of this Section 9 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; provided that the failure to notify the

23

indemnifying party shall not relieve it from any liability that it may have under the preceding paragraphs of this Section 9 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under the preceding paragraphs of this Section 9. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any documented legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party.

(e)If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a), (b) or (c) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Stockholders on the one hand and the Underwriters on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Selling Stockholders on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Stockholders on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (net of any underwriting discounts and commissions but before deducting expenses) received by the Company and the Selling Stockholders bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Selling Stockholders on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, each of the Selling Stockholders and the Underwriters agree that it would not be just and equitable if contribution pursuant to this

24

subsection (e) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (e), (i) no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, (ii) the contribution by the Selling Stockholders pursuant to this subsection (e) shall not exceed the Selling Stockholder Proceeds (reduced by any amounts such Selling Stockholder has paid under subsection (b) above), and (iii) the Selling Stockholders shall be liable only to the extent that the relevant loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission, in each case, which relates to the Selling Stockholder made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Free Writing Prospectus, or any roadshow, any non-FWP roadshow in reliance upon and in conformity with any Selling Stockholder Information furnished to the Company and/or the Underwriters in writing by the Selling Stockholder expressly for use therein. In no event shall the aggregate liability of a Selling Stockholder under Section 9(b) and this Section 9(e) exceed the limit set forth in Section 9(b). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (e) to contribute are several in proportion to their respective underwriting obligations and not joint.

(f)The obligations of the Company and the Selling Stockholders under this Section 9 shall be in addition to any liability which the Company and the Selling Stockholders may otherwise have and shall extend, upon the same terms and conditions, to each employee, officer and director of each Underwriter and each person, if any, who controls any Underwriter within the meaning of the Act and each broker-dealer or other affiliate of any Underwriter; and the obligations of the Underwriters under this Section 9 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company or any Selling Stockholder within the meaning of the Act.

10.(a) If any Underwriter shall default in its obligation to purchase the Shares that it has agreed to purchase hereunder at a Time of Delivery, you may in your discretion arrange for you or another party or other parties to purchase such Shares on the terms contained herein. If within thirty-six hours after such default by any Underwriter you do not arrange for the purchase of such Shares, then the Company and the Selling Stockholders shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to you to purchase such Shares on such terms. In the event that, within the respective prescribed periods, you notify the Company and the Selling Stockholders that you have so arranged for the purchase of such Shares, or the Company or a Selling Stockholder notifies you that it has so arranged for the purchase of such Shares, the Representatives or the Company or the Selling Stockholders shall have the right to postpone (such) Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any

25

other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Shares.

(b)If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you, the Company and the Selling Stockholders as provided in subsection (a) above, the aggregate number of such Shares which remains unpurchased does not exceed one-eleventh of the aggregate number of all the Shares to be purchased at such Time of Delivery, then the Company and the Selling Stockholders shall have the right to require each non-defaulting Underwriter to purchase the number of Shares which such Underwriter agreed to purchase hereunder at such Time of Delivery and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Shares which such Underwriter agreed to purchase hereunder) of the Shares of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

(c)If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you, the Company and the Selling Stockholders as provided in subsection (a) above, the aggregate number of such Shares which remains unpurchased exceeds one-eleventh of the aggregate number of all of the Shares to be purchased at such Time of Delivery, or if the Company and the Selling Stockholders shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement and the of obligations the Selling Stockholders to sell the Optional Shares shall thereupon terminate, without liability on the part of any non-defaulting Underwriter, the Company or the Selling Stockholders, except for the expenses to be borne by the Company, the Selling Stockholders and the Underwriters as provided in Section 7 hereof and the indemnity and contribution agreements in Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

11.The respective indemnities, agreements, representations, warranties and other statements of the Company, the Selling Stockholders and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company, or any of the Selling Stockholders, or any officer or director or controlling person of the Company, or any controlling person of any Selling Stockholder, and shall survive delivery of and payment for the Shares.

12.If this Agreement shall be terminated pursuant to Section 10 hereof, neither the Company nor the Selling Stockholders shall then be under any liability to any Underwriter except as provided in Sections 7 and 9 hereof; but, if for any other reason any Shares are not delivered by or on behalf of the Company and the Selling Stockholders as provided herein, or the Underwriters decline to purchase the Shares for any reason permitted under this Agreement, the Company will reimburse the Underwriters through the Representatives for all documented out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Shares not so

26

delivered, but the Company and the Selling Stockholders shall then be under no further liability to any Underwriter except as provided in Sections 7 and 9 hereof.

13.In all dealings hereunder, the Representatives shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by the Representatives jointly; and in all dealings with any Selling Stockholder hereunder, the Representatives and the Company shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of such Selling Stockholder made or given by any or all of the Attorneys-in-Fact for such Selling Stockholder.

In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Company and the Selling Stockholders, which information may include the name and address of their respective clients, as well as other information that will allow the Underwriters to properly identify their respective clients.

All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to Goldman Sachs & Co. LLC, 200 West Street, New York, New York 10282, Attention: Registration Department and to J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York 10179, Attention Equity Syndicate Desk (facsimile: (212) 622-8358); if to any Selling Stockholder shall be delivered or sent by mail, telex or facsimile transmission to counsel for such Selling Stockholder at its address set forth in Schedule II hereto; if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth on the cover of the Registration Statement, Attention: Secretary; and if to any stockholder that has delivered a lock-up letter described in Section 8(j) hereof shall be delivered or sent by mail to his or her respective address provided in Schedule IV hereto or such other address as such stockholder provides in writing to the Company; provided, however, that any notice to an Underwriter pursuant to Section 9(d) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters' Questionnaire or telex constituting such Questionnaire, which address will be supplied to the Company or the Selling Stockholders by the Representatives on request; provided further that notices under subsection 5(e) shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the Representatives at Goldman Sachs & Co. LLC, 200 West Street, New York, New York 10282, Attention: Control Room; and J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York 10179, Attention Equity Syndicate Desk (facsimile: (212) 622-8358). Any such statements, requests, notices or agreements shall take effect upon receipt thereof.

14.This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and the Selling Stockholders and, to the extent provided in Sections 9 and 11 hereof, the officers and directors of the Company and each person who controls the Company, any Selling Stockholder or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Shares from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.

15.Time shall be of the essence of this Agreement. As used herein, the term "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business.

16.The Company and the Selling Stockholders acknowledge and agree that (i) the purchase and sale of the Shares pursuant to this Agreement is an arm's-length commercial transaction between

27

the Company and the Selling Stockholders, on the one hand, and the several Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not the agent or fiduciary of the Company or any Selling stockholder,

(iii)no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company or any Selling Stockholder with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company or any Selling Stockholder on other matters) or any other obligation to the Company or any Selling Stockholder except the obligations expressly set forth in this Agreement and (iv) the Company and each Selling Stockholder has consulted its own legal and financial advisors to the extent it deemed appropriate. The Company and each Selling Stockholder agrees that it will not claim that the Underwriters, or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company or any Selling Stockholder, in connection with such transaction or the process leading thereto. Moreover, each Selling Shareholder acknowledges and agrees that, although the Representatives may be required or choose to provide certain Selling Stockholders with certain Regulation Best Interest and Form CRS disclosures in connection with the offering, the Representatives and the other Underwriters are not making a recommendation to any Selling Stockholder to participate in the offering, enter into a "lock-up" agreement, or sell any Shares at the price determined in the offering, and nothing set forth in such disclosures is intended to suggest that the Representatives or any Underwriter is making such a recommendation.

17.This Agreement supersedes all prior agreements and understandings (whether written or oral) between (i) the Company and the Underwriters and (ii) the Selling Stockholders and the Underwriters, in each case with respect to the subject matter hereof. Unless specifically set forth herein, this Agreement shall not supersede any agreement among the Company and the Selling Stockholders with respect to the subject matter hereof.

18.This Agreement and any transaction contemplated by this Agreement and any claim, controversy or dispute arising under or related thereto shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflict of laws that would result in the application of any other law than the laws of the State of New York. The Company and each Selling Stockholder agree that any suit or proceeding arising in respect of this Agreement or any transaction contemplated by this Agreement will be tried exclusively in the U.S. District Court for the Southern District of New York or, if that court does not have subject matter jurisdiction, in any state court located in The City and County of New York and the Company and each Selling Stockholder agree to submit to the jurisdiction of, and to venue in, such courts.

19.The Company, each Selling Stockholder and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

20.This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. Any signature to this Agreement may be delivered by facsimile, electronic mail (including pdf) or any electronic signature complying with the U.S. federal ESIGN Act of 2000 or the New York Electronic Signature and Records Act or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes to the fullest extent permitted by applicable law.

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21.Notwithstanding anything herein to the contrary, the Company and the Selling Stockholders are authorized to disclose to any persons the U.S. federal and state income tax treatment and tax structure of the potential transaction and all materials of any kind (including tax opinions and other tax analyses) provided to the Company and the Selling Stockholders relating to that treatment and structure, without the Underwriters imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, "tax structure" is limited to any facts that may be relevant to that treatment.

22.Recognition of the U.S. Special Resolution Regimes.

(a)In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.

(b)In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.

(c)As used in this section:

"BHC Act Affiliate" has the meaning assigned to the term "affiliate" in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).

"Covered Entity" means any of the following:

(i)a "covered entity" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

(ii)a "covered bank" as that term is defined in, and interpreted in accordance with, 12 C.F.R. §

47.3(b); or

(iii)a "covered FSI" as that term is defined in, and interpreted in accordance with, 12 C.F.R. §

382.2(b).

"Default Right" has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

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"U.S. Special Resolution Regime" means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.

If the foregoing is in accordance with your understanding, please sign and return to us counterparts hereof, and upon the acceptance hereof by the Representatives, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement among each of the Underwriters, the Company and each of the Selling Stockholders. It is understood that your acceptance of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company and the Selling Stockholders for examination, upon request, but without warranty on your part as to the authority of the signers thereof.

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Any person executing and delivering this Agreement as Attorney-in-Fact for a Selling Stockholder represents by so doing that he has been duly appointed as Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing and binding Power-of-Attorney that authorizes such Attorney-in-Fact to take such action.

Very truly yours,

ACCEL ENTERTAINMENT, INC.

By: ___________________________

Name:

Title:

Selling Stockholders:

By: ___________________________

Name:

Title:

Accepted as of the date hereof in New York, New York:

Goldman Sachs & Co. LLC

By: ___________________________

Name:

Title:

J.P. Morgan Securities LLC

By: ___________________________

Name:

Title:

On behalf of each of the Underwriters

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SCHEDULE I

			Number of
			Optional
			Shares to be
	Total Number of		Purchased if
		Firm Shares	Maximum Option
Underwriter	to be Purchased		Exercised
Goldman Sachs & Co. LLC ...............................................
J.P. Morgan Securities LLC..............................................
Credit Suisse Securities (USA) LLC .................................
Deutsche Bank Securities Inc. ..........................................
TPG Capital BD, LLC .......................................................
Raine Securities LLC ........................................................
[Names of other Underwriters]..........................................
Total				(7)]

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SCHEDULE II

	Number of
	Optional
	Shares to be
Total Number of	Sold if
Firm Shares	Maximum Option
to be Sold	Exercised

The Company. .................................................................

The Selling Stockholder(s):........................................

[•](a)

[•](b)

[•](c)

Total .......................................................................

_________

(a)This Selling Stockholder is represented by [•].

(b)This Selling Stockholder is represented by [•].

(c)This Selling Stockholder is represented by [•].

(*)This Selling Stockholder has appointed [•] and [•], and each of them, as the Attorneys-in-Fact for such Selling Stockholder.

33

SCHEDULE III

(a)Free Writing Prospectuses not included in the Pricing Disclosure Package None

(b)Additional documents incorporated by reference

None

(c)Information other than the Pricing Prospectus that comprise the Pricing Disclosure Package The initial public offering price per share for the Shares is $[•]

The number of Shares purchased by the Underwriters is [•].

(d)Written Testing-the-Waters Communications

None

SCHEDULE IV

Name of Stockholder Address

ANNEX I

[Forms of Comfort Letters]

ANNEX I(a)

COPIES OF COMFORT LETTERS DELIVERED

PRIOR TO EXECUTION OF THIS AGREEMENT

ANNEX I(b)

FORM OF COMFORT LETTERS TO BE DELIVERED

AT EACH TIME OF DELIVERY

ANNEX II(a)

FORM OF OPINION OF

COUNSEL FOR THE COMPANY

ANNEX II(b)

FORM OF OPINION OF

COUNSEL FOR THE SELLING STOCKHOLDERS

ANNEX III

[FORM OF LOCK-UP AGREEMENT]

EX-5.1

Exhibit 5.1

September 21, 2020

Accel Entertainment, Inc.

140 Tower Drive

Burr Ridge, Illinois 60527

Ladies and Gentlemen:

At your request, we have examined the Registration Statement on Form S-1 (the “Registration Statement”) initially filed by Accel Entertainment, Inc., a Delaware corporation (the “Company”), with the Securities and Exchange Commission on September 21, 2020, in connection with the registration under the Securities Act of 1933, as amended (the “Securities Act”), of an aggregate of 13,800,000 shares (the “Stock”) of the Company’s Class A-1 Common Stock, par value $0.0001 (the “Class A-1 Common Stock”), which number of shares includes the issuance and sale of up to 8,320,237 shares of Class A-1 Common Stock by the Company and the sale of up to 5,479,763 shares of Class A-1 Common Stock held by certain selling stockholders (the “Selling Stockholders”) of the Company (the “Selling Stockholder Shares”).

In rendering this opinion, we have examined such matters of fact as we have deemed necessary in order to render the opinion set forth herein, which included examination of the underwriting agreement pursuant to which the Stock will be sold to the underwriters, the Registration Statement, together with the exhibits filed as a part thereof or incorporated therein by reference, the prospectus prepared in connection with the Registration Statement (the “Prospectus”), the Company’s Amended and Restated Certificate of Incorporation, filed with and certified by the Delaware Secretary of State on November 20, 2019 (the “Restated Certificate”) the Company’s Amended and Restated Bylaws as amended to date, certified to us as of the date hereof by an officer of the Company as being complete and in full force and effect as of the date hereof (as amended, the “Restated Bylaws”), certain minutes of meetings and actions by written consent of the Company’s Board of Directors (the “Board”) and stockholders (the “Stockholders”) relating to the Registration Statement, the Restated Certificate and Restated Bylaws were approved, an opinion certificate addressed to us and dated of even date herewith executed by the Company containing certain factual representations (the “Opinion Certificate”) and such other agreements, documents, certificates and statements of the Company, its transfer agent, the Selling Stockholders and public or government officials, as we have deemed advisable.

In our examination of documents for purposes of this opinion, we have assumed, and express no opinion as to, the genuineness of all signatures on original documents, the authenticity and completeness of all documents submitted to us as originals, the conformity to originals and completeness of all documents submitted to us as copies, the legal capacity of all persons or entities (other than the Company) executing the same, the lack of any undisclosed termination, modification, waiver or amendment to any document reviewed by us.

The Company’s capital stock is uncertificated. We assume that the issued Class A-1 Common Stock will not be reissued by the Company in uncertificated form until any previously issued stock certificate representing such issued Class A-1 Common Stock have been surrendered to the Company in accordance with Section 158 of the Delaware General Corporation Law and that the Company will properly register the transfer of the Stock to the purchasers of such Class A-1 Common Stock on the Company’s record of uncertificated securities.

We render this opinion only with respect to, and express no opinion herein concerning the application or effect of the laws of any jurisdiction other than, the existing Delaware General Corporation Law.

In connection with our opinion expressed in paragraph (1) below, we have assumed that, at or prior to the time of the delivery of any shares of Stock, the Registration Statement will have been declared effective under the Securities Act, that the registration will apply to such shares of Stock and will not have been modified or rescinded and that there will not have occurred any change in law affecting the validity of the issuance of such shares of Stock.

This opinion is based upon the customary practice of lawyers who regularly give, and lawyers who regularly advise opinion recipients regarding, opinions of the kind set forth in this opinion letter, including customary practice as described in bar association reports.

Based upon the foregoing, we are of the following opinion:

(1) the up to 8,320,237 shares of Stock to be issued and sold by the Company, when issued, sold and delivered in the manner and for the consideration stated in the Registration Statement and the Prospectus and in accordance with the resolutions adopted by the Board and to be adopted by the Pricing Committee of the Board, will be validly issued, fully paid and nonassessable; and

(2) the up to 5,479,763 Selling Stockholder Shares to be sold by the Selling Stockholders are validly issued, fully paid and nonassessable.

We consent to the use of this opinion as an exhibit to the Registration Statement and further consent to all references to us, if any, in the Registration Statement, the Prospectus constituting a part thereof and any amendments thereto.

This opinion is intended solely for use in connection with issuance and sale of shares of Stock subject to the Registration Statement and is not to be relied upon for any other purpose. This opinion is rendered as of the date first written above and is based solely on our understanding of facts in existence as of such date after the aforementioned examination. In rendering the opinions above, we are opining only as to the specific legal issues expressly set forth therein, and no opinion shall be inferred as to any other matter or matters. We assume no obligation to advise you of any fact, circumstance, event or change in the law or the facts that may hereafter be brought to our attention whether or not such occurrence would affect or modify any of the opinions expressed herein.

Very truly yours,

/s/ Fenwick & West LLP

FENWICK & WEST LLP

EX-21.1

Exhibit 21.1

ACCEL ENTERTAINMENT, INC.

SUBSIDIARIES OF THE REGISTRTANT

Name of Subsidiary	State or Jurisdiction of Incorporation/Organization
Accel Entertainment LLC	Delaware
Accel Entertainment Gaming, LLC	Illinois
Accel Entertainment Gaming (PA), LLC	Pennsylvania
Bulldog Holding, LLC	Georgia
Bulldog Gaming, LLC	Georgia
Accel Abraham Facility, LLC	Illinois
Accel Momence Watseka LLC	Illinois
Grand River Jackpot, LLC	Illinois
Grand River Amusements LLC	Illinois

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Accel Entertainment, Inc.:

We consent to the use of our report dated March 13, 2020, with respect to the consolidated balance sheets of Accel Entertainment, Inc. and its subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes, included herein and to the reference to our firm under the heading “Experts” in the prospectus.

Our report contains explanatory paragraphs that state (1) the Company has changed its method of accounting for revenue from contracts with customers and related costs as of January 1, 2019 due to the adoption of the Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, and (2) the Company consummated a merger on November 20, 2019, which has been accounted for as a reverse recapitalization.

/s/ KPMG LLP

Chicago, Illinois

September 21, 2020

EX-23.2

Exhibit 23.2

Consent of Independent Auditor

We consent to the inclusion in the Registration Statement on Form S-1 of Accel Entertainment, Inc. of our report dated March 28, 2019, relating to the consolidated financial statements of Grand River Jackpot, LLC and Subsidiary as of and for fiscal year ending December 31, 2018, appearing in this Form S-1.

We also consent to the reference of our firm under the heading “Experts” in such Registration Statement.

/s/ RSM US LLP

Davenport, Iowa

September 21, 2020

EX-24.2

Exhibit 24.2

POWER OF ATTORNEY

KNOW BY ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Derek Harmer and Brian Carroll, and each of them, his or her true and lawful attorney-in-fact and agents with full and several power of substitution, for him or her and his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to a Registration Statement on Form S-1, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done.

/s/ Dee Robinson	Director	September 21, 2020
Dee Robinson

XML

As filed with the Securities and Exchange Commission on September 21, 2020

Registration Number 333-          

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Accel Entertainment, Inc.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

7900

(Primary Standard Industrial Classification Code Number)

98-1350261

(IRS Employer Identification Number)

140 Tower Drive

Burr Ridge, Illinois 60527

(630) 972 -2235

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Derek Harmer

General Counsel, Chief Compliance Officer and Secretary

140 Tower Drive

Burr Ridge, Illinois 60527

(630) 972 -2235

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Please send copies of all correspondence to:

Robert Freedman, Esq. Nicolas H.R. Dumont, Esq. Fenwick & West LLP 902 Broadway, Suite 14 New York, NY 10010 (212) 430-2600 Alexander D. Lynch, Esq. Barbra J. Broudy, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 (212) 310-8000

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act.  ☐

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered(1)	Proposed Maximum Offering Price Per Share	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee(3)(4)
Class A-1 common stock, par value $0.0001 per share	8,320,237(4)	$13.05	$108,579,092.85	$14,093.57

(1) Includes the offering of additional shares of Class A-1 common stock pursuant to the underwriters’ option to purchase additional shares.

(2) Pursuant to Rule 457(c) under the Securities Act, and solely for the purpose of calculating the registration fee, the proposed maximum offering price per share is $13.05, which is average of the $13.20 (high) and $12.89 (low) sales price of our Class A-1 common stock as reported on The New York Stock Exchange on September 14, 2020, which date is within five business days prior to filing this Registration Statement.

(3) Calculated by multiplying the proposed maximum aggregate offering price of securities to be registered by 0.0001298.

(4) Includes an aggregate of 8,320,237 shares of Class A-1 common stock offered by the registrant. As set forth below, 5,479,763 shares of the registrant’s Class A-1 common stock previously registered for resale on Registration No. 333-236501 are being carried forward to this registration statement pursuant to Rule 429 under the Securities Act and are being offered by the selling stockholders named herein. A filing fee of $143,564.95 was previously paid in connection with the prior registration statement.

Pursuant to Rule 429 under the Securities Act, the prospectus filed as part of this registrations statement is being filed as a combined prospectus with respect to (a)             shares of the registrant’s Class A-1 common stock remaining unsold under Registration No. 333-236501 and (b) 8,000,000 shares of the registrant’s Class A-1 common stock offered by the registrant. Pursuant to Rule 429, this registration statement constitutes Post-Effective Amendment No. 2 to Registration No. 333-236501 with respect to the offering of such unsold shares thereunder, which are not currently being terminated by the registrant. No other changes shall be deemed to be made to Registration No. 333-236501 other than with respect to the specific shares being sold hereunder by the selling stockholders. Except to the extent reflected herein, no other changes shall be deemed to be made to Registration No. 333-236501 other than with respect to the specific shares being sold hereunder by the selling stockholders. Such post-effective amendment will become effective concurrently with the effectiveness of this registration statement in accordance with Section 8(a) of the Securities Act.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED SEPTEMBER 21, 2020

PRELIMINARY PROSPECTUS

ACCEL ENTERTAINMENT, INC.

8,000,000 Shares of Class A-1 Common Stock

4,000,000 Shares of Class A-1 Common Stock Offered by the Selling Stockholders

We are offering 8,000,000 shares of our Class A-1 common stock and the selling stockholders named in this prospectus are offering 4,000,000 shares of our Class A-1 common stock. We will not receive any proceeds from the sale of shares of Class A-1 common stock by the selling stockholders pursuant to this prospectus. However, we will pay the expenses, other than underwriting discounts and commissions incurred by the selling stockholders. We intend to use the net proceeds from our offering for general corporate purposes.

You should read this prospectus and any prospectus supplement or amendment carefully before you invest in our securities. Our shares of Class A-1 common stock are traded on the New York Stock Exchange (“NYSE”) under the symbol “ACEL. ” The closing price for our Class A-1 common stock on September 18, 2020, was $14.00 per share, as reported on the NYSE.

We are an “emerging growth company,” as that term is defined under the federal securities laws and, as such, are subject to certain reduced public company reporting requirements.

Investing in our securities involves risks that are described in the “Risk Factors” section beginning on page 17 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this prospectus or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions(1)	$	$
Proceeds, before expenses, to us	$	$
Proceeds, before expenses, to the selling stockholders	$	$

(1) See “Underwriting (Conflicts of Interest)” beginning on page 130 for additional information regarding underwriting compensation.

We have granted the underwriters an option to purchase up to 320,237 additional shares of Class A-1 common stock, and the selling stockholders have granted the underwriters an option to purchase up to 1,479,763 shares of Class A-1 common stock, at the public offering price less the underwriting discount, at any time within 30 days of the date of this prospectus.

The underwriters expect to deliver the shares of Class A-1 common stock to purchasers on or about           , 2020.

Joint Book-Running Managers

Goldman Sachs & Co. LLC	J.P. Morgan
Credit Suisse	Deutsche Bank Securities

Co-Managers

TPG Capital BD, LLC The Raine Group

The date of this prospectus is                 , 2020.

ABOUT THIS PROSPECTUS	1
TRADEMARKS	2
SELECTED DEFINITIONS	3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	7
SUMMARY OF THE PROSPECTUS	8
THE OFFERING	15
RISK FACTORS	17
USE OF PROCEEDS	43
CAPITALIZATION	44
MARKET PRICE, TICKER SYMBOL AND DIVIDEND INFORMATION	45
SELECTED HISTORICAL FINANCIAL INFORMATION OF ACCEL	46
BUSINESS	50
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	65
MANAGEMENT	89
EXECUTIVE COMPENSATION	97
DESCRIPTION OF CAPITAL STOCK	102
SHARES AVAILABLE FOR FUTURE SALE	113
PRINCIPAL AND SELLING STOCKHOLDERS	115
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	118
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS	126
UNDERWRITING (CONFLICTS OF INTEREST)	131
LEGAL MATTERS	136
EXPERTS	136
WHERE YOU CAN FIND MORE INFORMATION	136
INDEX TO CONSOLIDATED FINANCIAL INFORMATION	F-1

i

ABOUT THIS PROSPECTUS

Pursuant to Rule 429 under the Securities Act of 1933, as amended (the “Securities Act”), this prospectus is a combined prospectus relating to (a) 5,479,763 shares of Class A-1 common stock offered by the selling stockholders that are currently registered and remain outstanding under Registration No. 333-236501 and (b) 8,320,237 shares of Class A-1 common stock offered by us that are being newly registered hereunder as part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”).

Neither we nor the selling stockholders have authorized anyone to provide any information or to make any representations other than those contained in this prospectus. We and the selling stockholders take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the securities offered hereby and only under circumstances and in jurisdictions where it is lawful to do so. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. This prospectus is not an offer to sell securities, and it is not soliciting an offer to buy securities, in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front of this prospectus only, regardless of the time of delivery of this prospectus or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.

A prospectus supplement or post-effective amendment to the registration statement may also add, update or change information included in this prospectus. Any statement contained in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in such prospectus supplement of post-effective amendment modifies or supersedes such statement. Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement so superseded will be deemed not to constitute a part of this prospectus. You should rely only on the information contained in this prospectus, any applicable prospectus supplement, any related free writing prospectus or any post-effective amendment to the registration statement of which this prospectus forms a part. See “Where You Can Find More Information.”

This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, or will be filed, with the SEC, and you may obtain copies of those documents as described below under “Where You Can Find More Information.”

Unless the context indicates otherwise, references to “the Company,” “Accel,” “we,” “us” and “our” refer to Accel Entertainment, Inc., a Delaware corporation, and its consolidated subsidiaries.

1

TRADEMARKS

This document contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

2

SELECTED DEFINITIONS

“Accel” means the historical operations of Accel Entertainment, Inc., an Illinois corporation, and its consolidated subsidiaries prior to the Business Combination (as defined below), and following the Business Combination, the operations of Accel Entertainment, Inc., a Delaware corporation, and its consolidated subsidiaries;

“Accel Public Warrants” means the 1,248,154 Accel Warrants issued on a registered basis to Sellers in connection with the Stock Purchase pursuant to the Proxy Statement/Prospectus (as such terms are defined below);

“Accel Stock” means the common stock and preferred stock of Accel prior to the Business Combination;

“Accel Warrants” means warrants exercisable for the shares of Class A-1 common stock (as defined below) of the Company, which include the Pace Warrants, Accel Public Warrants and Business Combination Private Placement Warrants (each as defined below);

“ATMs” means automatic teller machines;

“Business Combination” means the transactions contemplated by the Transaction Agreement (as defined below), which transactions were consummated on November 20, 2019;

“Business Combination Private Placement” refers to the private placement completed in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder to the Business Combination Private Placement Sellers (as defined below) of shares of Class A-1 common stock, shares of Class A-2 common stock (each as defined below) and Accel Warrants in connection with the Business Combination;

“Business Combination Private Placement Sellers” refers to Sellers (as defined below) who are “accredited investors” (as defined by Rule 501 of the Regulation D) and party to either that certain Key Holder Support Agreement or the Holder Support Agreement (each as defined in “Selling Holders—Material Relationships with the Selling Holders”) executed in accordance with the terms of the Transaction Agreement;

“Business Combination Private Placement Warrants” means the 1,196,283 Accel Warrants issued in the Business Combination Private Placement;

“Bylaws” means the Company’s Amended and Restated Bylaws, which came into effect at the Business Combination;

“Charter” means the Company’s Amended and Restated Certificate of Incorporation;

“Class A-1 common stock” means the shares of Class A-1 Common Stock, par value $0.0001 per share, of the Company, or, as applicable, of Pace, immediately following the Pace Domestication, but prior to the Stock Purchase and consummation of the Business Combination;

“Class A-2 common stock” means the shares of Class A-2 Common Stock, par value $0.0001 per share, of the Company, or, as applicable, of Pace, immediately following the Pace Domestication, but prior to the Stock Purchase and consummation of the Business Combination;

“Class F common stock” means the shares of Class F common stock, par value $0.0001 per share, of the Company, or, as applicable, of Pace, immediately following the Pace Domestication, but prior to the Stock Purchase and consummation of the Business Combination;

“Common Stock” means the Class A-1 common stock, the Class A-2 common stock and Class F common stock;

“Company Board” means the board of directors of the Company;

3

“Credit Agreement” means that certain Credit Agreement, dated as of November 13, 2019, among Accel Entertainment LLC, as borrower, Capital One, National Association, as Administrative Agent (in such capacity, the “Agent”), Collateral Agent and Issuing Bank and Swing Line Lender, the other lenders party thereto and Capital One, National Association, Fifth Third Bank, CIBC Bank USA, JPMorgan Chase Bank, N.A., and Keybank National Association, as Joint Lead Arrangers and Joint Lead Bookrunners and Mizuho Bank, Ltd., and West Suburban Bank as Co-Documentation Agents, as amended;

“DGCL” means the Delaware General Corporation Law;

“Director Share Exchange” refers to the receipt by the independent directors of Pace of 200,000 shares of Class A-1 common stock, in the aggregate, in exchange for an equal number of their Founder Ordinary Shares pursuant to the terms of those certain letter agreements, dated June 13, 2019, by and between Pace and such independent directors;

“Exchange Act” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder;

“Founder Ordinary Shares” mean the Class F ordinary shares, par value $0.0001 per share, of Pace;

“IGB” means the Illinois Gaming Board;

“Illinois Video Gaming Act” means the Illinois Video Gaming Act and amendments thereto enacted by the Illinois state legislature;

“Initial Pace Holders” means Chad Leat, Kathleen Philips, Robert Suss, Paul Walsh and Kneeland Youngblood;

“Initial Pace Sponsor” means TPG Pace II Sponsor, LLC, a Cayman Islands exempted limited liability company and an affiliate of TPG;

“Investment Private Placement” means the purchase of 4,696,675 shares of Class A-1 common stock, for cash, in a private placement to the PIPE Investors (as defined below) consummated pursuant to the terms of the Subscription Agreements (as defined below in the definition of “PIPE Investors”);

“Grand River Jackpot” means Grand River Jackpot, LLC, an Illinois limited liability company;

“NewCo” means New Pace LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Pace;

“PA Board” means the Pennsylvania Gaming Control Board;

“Pace” means the historical operations of TPG Pace Holdings Corp. prior to the consummation of the Business Combination;

“Pace Domestication” means the domestication of Pace as a Delaware corporation on November 20, 2019;

“Pace Governance” means TPG Pace Governance, LLC, a Cayman Islands limited liability company;

“Pace IPO” means Pace’s initial public offering, consummated on June 30, 2017;

“Pace Private Placement Warrants” means Accel Warrants that were issued to Initial Pace Sponsor in a private placement that closed simultaneously with the consummation of the Pace IPO;

“Pace Public Shares” mean the Class A ordinary shares, par value $0.0001 per share, of Pace;

4

“Pace Sponsor Members” means TPG Pace II Sponsor Successor, LLC, a Delaware limited liability company, Pace Governance and Peterson Capital Partners, L.P., collectively;

“Pace Public Warrants” means Accel Warrants that were included in the Pace Public Units (as defined below) sold in the Pace IPO;

“Pace Warrants” means the Pace Public Warrants and the Pace Private Placement Warrants, collectively;

“Pennsylvania Gaming Act” means the Pennsylvania Race Horse Development and Gaming Act and amendments thereto enacted by the Pennsylvania legislature;

“PIPE Investors” means those investors that participated in the Investment Private Placement, consisting of certain investors (the “Original General Investors”) and an affiliate of Pace (the “Pace Affiliate”) that entered into subscription agreements with Pace concurrently with the closing of the Transaction Agreement (such investors, the “Original Investors” and such subscription agreements, the “Original Subscription Agreements”) and an additional investor (the “Additional Investor,” and collectively with the Original General Investors, the “General Investors”) that entered into a subscription agreement with Pace on August 13, 2019 (such subscription agreement, collectively with the Original Subscription Agreements, the “Subscription Agreements”);

“Proxy Statement/Prospectus” means the Definitive Proxy Statement/Prospectus filed with the SEC on October 30, 2019;

“Pace Public Unit” means one Pace Public Share and one-third of a Pace Public Warrant, sold in the Pace IPO;

“Registration Rights Agreement” means that certain registration rights agreement entered into in connection with the consummation of the Business Combination among Pace, the Pace Sponsor Members and certain other persons, including certain members of management of Accel, certain Accel shareholders and the Initial Pace Holders (other than Kneeland Youngblood) and each other person who has executed and delivered a joinder to the Registration Rights Agreement, including any person who (1) became a stockholder of the Company immediately following the Business Combination, (2) either (A) made a written request to the Company to enter into the Registration Rights Agreement or (B) was, immediately following the Business Combination, subject to Section (b)(2) of Rule 144 of the Securities Act with respect to such person’s shares of Class A-1 common stock following the Business Combination and (3) elected to enter into a Registration Rights Agreement;

“Registration Rights Holders” means the parties to the Registration Rights Agreement, other than Pace, together with each other person who executed and delivered a joinder to the Registration Rights Agreement;

“SEC” means the United States Securities and Exchange Commission;

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;

“Seller” means each of the shareholders of Accel named as a Seller in the Transaction Agreement, each of the shareholders of Accel joined to the Transaction Agreement pursuant to that certain Drag-Along Agreement, dated as of June 13, 2019, by and among Pace and each of the Sellers who duly executed and delivered a signature page to the Transaction Agreement as of June 13, 2019 (collectively, the “Sellers”);

“Sponsor Share Exchange” refers to the receipt by the Initial Pace Sponsor of 7,800,000 shares of Class A-1 common stock and 2,000,000 shares of Class A-2 common stock in exchange for its Founder Ordinary Shares, pursuant to the terms of that certain letter agreement dated as of June 13, 2019 (as amended on July 22, 2019) by and among the Initial Pace Sponsor, Pace and the Shareholder Representatives (as defined below in the definition of “Transaction Agreement”);

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“Stock Purchase” means the acquisition by Pace, directly or indirectly, of all of the issued and outstanding Accel Stock held by the Sellers as part of the consummation of the Business Combination;

“TPG” means TPG Global, LLC and its affiliates;

“Transaction Agreement” means that certain Transaction Agreement, dated as of June 13, 2019 (as amended on July 22, 2019 and October 3, 2019), by and among Pace, each of David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein) (in their capacity as representatives of the shareholders of Accel) (the “Shareholder Representatives”) and the Sellers;

“Trust Account” means the trust account of Pace that held the proceeds from the Pace IPO prior to the Business Combination; and

“VGTs” means video gaming terminals.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the information contained in this prospectus contains forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. When contained in this prospectus, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside our management’s control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. These forward-looking statements are based on information available as of the date of this prospectus, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that results and events could differ materially and adversely from those contained in the forward-looking statements due to a number of factors including, but not limited to:

• The effect of COVID-19 on Accel’s operations and ability to operate;

• Accel’s ability to operate in existing markets or expand into new jurisdictions;

• Accel’s ability to manage its growth effectively;

• Accel’s ability to offer new and innovative products and services that fulfill the needs of licensed establishment partners and create strong and sustained player appeal;

• Accel’s dependence on relationships with key manufacturers, developers and third parties to obtain VGTs, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms;

• the negative impact on Accel’s future results of operations by the slow growth in demand for VGTs and by the slow growth of new gaming jurisdictions;

• Accel’s heavy dependency on its ability to win, maintain and renew contracts with licensed establishment partners;

• unfavorable economic conditions or decreased discretionary spending due to other factors such as terrorist activity or threat thereof, epidemics or other public health issues, civil unrest or other economic or political uncertainties, that could adversely affect Accel’s business, results of operations, cash flows and financial conditions; and

• other risks and uncertainties indicated in this prospectus, including those set forth under the section entitled “Risk Factors” beginning on page 17, and that may be set forth in any applicable prospectus supplement under any similar caption.

Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements. For a discussion of the risks involved in our business and investing in our Class A-1 common stock, see “Risk Factors.” You should read this prospectus and the documents that we have filed as exhibits to the registration statement of which this prospectus is a part completely and with the understanding that our actual future results may be materially different from what we expect. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our securities.

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SUMMARY OF THE PROSPECTUS

This summary highlights information contained elsewhere in this prospectus. Because it is a summary, it does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire prospectus, including our “Management Discussion and Analysis of Financial Condition and Results of Operations,” consolidated financial statements and the related notes and the information set forth under the section “Risk Factors,” along with documents that are filed as exhibits to the registration statement of which this prospectus forms a part. Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. See information set forth under the section entitled “Cautionary Note Regarding Forward-Looking Statements” beginning on page 7.

Overview

The Company is a leading distributed gaming operator in the United States on an Adjusted EBITDA basis, and a preferred partner for local business owners in the Illinois market. The Company’s business consists of the installation, maintenance and operation of VGTs, redemption devices that disburse winnings and contain ATM functionality, and other amusement devices in authorized non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores, which are referred to collectively as “licensed establishments.” The Company also operates a small number of stand-alone ATMs in gaming and non-gaming locations.

Corporate History

The Company was formed as a blank check company named “TPG Pace Holdings Corp.” and incorporated on February 14, 2017, as a Cayman Islands exempted company. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. On June 30, 2017, the Company consummated the Pace IPO and prior to the Business Combination, the Company was a “shell company” as defined under the Exchange Act because it had no operations and nominal assets consisting almost entirely of cash.

In connection with the Business Combination, the Pace Domestication occurred on November 20, 2019, and the Company domesticated as a Delaware corporation. Immediately following the Pace Domestication, the Company changed its name to “Accel Entertainment, Inc.” and consummated the Business Combination, including the Stock Purchase, and following the closing of the Stock Purchase, the merger of Accel with and into NewCo with NewCo surviving such merger. In connection with the Business Combination, the Company also consummated the Sponsor Share Exchange, the Director Share Exchange and the Investment Private Placement on November 20, 2019.

Corporate Information

Our principal executive offices are located at 140 Tower Drive, Burr Ridge, Illinois 60527, and our telephone number is (630) 972-2235. Our website is www.accelentertainment.com. The information found on our website is not part of this prospectus.

Recent Developments

DraftKings Partnership

On September 9, 2020, the Company announced that it has entered into an exclusive agreement with DraftKings Inc. (Nasdaq: DKNG) (“DraftKings”), a leader in the digital sports entertainment and gaming industries. Effective as of September 9, 2020, the Company’s more than 2,350 video gaming locations across the entire State of Illinois

 

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will promote exclusive DraftKings content and programming across all Accel marketing channels, including the Company’s in-location digital display screens, to drive awareness of and retention for sports betting among its loyal player base.

Impact of COVID-19

On July 1, 2020, video gaming resumed in Illinois after the Illinois Gaming Board (“IGB”) made the decision to shut down all video gaming terminals (“VGTs”) across the State of Illinois starting at 9:00 p.m. on March 16, 2020 in response to the COVID-19 outbreak. By the third day of the relaunch, more than 90% of Accel’s locations were live and less than 3% of Accel’s VGTs were inoperative due to resumption protocols.

The shut down that began March 16, 2020 ultimately extended through June 30, 2020. The temporary shutdown of Illinois video gaming impacted all of the gaming days during the three months ended June 30, 2020 and 106 of the 182 gaming days (or 58% of gaming days) during the six months ended June 30, 2020. In light of these events and their effect on the Company’s employees and licensed establishment partners, the Company took action to position the Company to help mitigate the effects of the temporary cessation of operations and to preserve future operating flexibility by, among other things, furloughing approximately 90% of its employees and deferring certain payments to major vendors. Additionally, members of the Company’s senior management decided to voluntarily forgo their base salaries until the resumption of video gaming operations. Beginning in early June, the Company started reinstating employees from furlough in anticipation of resuming operations on July 1, 2020.

As a result of these developments, the Company’s revenues, results of operations, Adjusted EBITDA and cash flows have been materially affected, and the Company expects it to continue for at least as long as COVID-19 is a threat to the public health.

While the IGB has permitted the resumption of all video gaming activities since July 1, 2020 it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events. The situation is rapidly changing and additional impacts to the business may arise that the Company is not aware of currently.

Preliminary Operating Trends

Based on data that is currently available, the following information reflects preliminary operating trends for July and August 2020 compared to the same period in 2019. However, these trends are preliminary estimates only, based solely on currently available information and the limited period that the properties were open in July and August 2020, and we caution you that these trends may not continue and that these trends may not recur at our other locations as they reopen, including as a result of varying levels of restrictions on operations imposed by the IGB or otherwise, customer response and demand, the potential for authorities reimposing restrictions in response to continued developments with the COVID-19 pandemic and other events that could require new closures or delayed reopenings of Accel’s locations and the other factors described under “Risk Factors” in this prospectus.

Accel does not intend to update interim results for the reopened locations. In addition, the results are preliminary, based on management estimates, have not been reviewed by Accel’s auditors, or any other independent accounting firm, and are subject to change. Accel has not yet closed the financial records for the quarter and, as a result, the figures below may not be indicative of final results for these periods in July or August or indicative of the full quarter. As a result, the discussion below constitutes forward-looking statements and, therefore, we caution you that these statements are subject to risks and uncertainties, including possible adjustments and the risk factors highlighted herein under “Risk Factors.”

 

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• Total net revenues were approximately $89.0 million combined for July and August of 2020 as compared to $66.8 million combined for the comparable periods in 2019 and as compared to $81.0 million combined for January and February of 2020; and

• Due to additional expenses to operate responsibly during COVID-19, margins in July and August combined decreased approximately 20 basis points for net (loss) income and 80 basis points for Adjusted EBITDA compared to the prior year period.

Adjusted EBITDA (defined below), is a non-GAAP financial measure and is defined as net (loss) income plus amortization of route and customer acquisition costs and location contracts acquired; stock-based compensation expense; other expenses, net; tax effect of adjustments; depreciation and amortization of property and equipment; interest expense; and provision for income taxes. For additional information regarding Adjusted EBITDA for historical periods and how management uses Adjusted EBITDA to evaluate operating performance, see “Selected Historical Financial Data of Accel and Non-GAAP Financial Measures—Non-GAAP Financial Measures—Adjusted EBITDA and Adjusted net (loss) income.”

In the third quarter of 2020, the Company filed its federal and state income tax returns and identified certain favorable return-to-provision adjustments following engagement of specialized tax technical expertise resulting in a change in estimate relative to the Company’s best estimate used in preparation of the 2019 income tax provision. The Company plans to record this change in estimate and related income tax benefit of approximately $7 million in the third quarter of 2020. 

 

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Accel’s Core Strengths

We believe that the following competitive strengths contribute to our industry leading position:

Gaming-as-a-service platform. When compared with traditional gaming businesses such as casinos, Accel believes its platform benefits from the following advantages:

• “business-to-business” model secured by long-term, exclusive contracts that are typically renewed, allowing for predictable, highly recurring revenue streams with low churn;

• operating a scalable business in fast-growing gaming segments that are primarily served by fragmented, sub-scale providers;

• data reporting solutions and analytics, offering insight and advice to help licensed establishment partners maximize revenues and ultimately grow their businesses;

• state-of-the-art technology-enabled slot machines from leading manufacturers who provide the most captivating titles in slots entertainment;

• comparatively low capital expenses and a comparatively asset-light operating model, in each case, when compared to casinos, which typically provide significantly higher capital-intensive offerings such as hotel accommodations, restaurants and stage-based entertainment;

• highly localized footprint that provides more access to gaming and convenience for consumers, as compared to regional casinos that market to players who may live up to several hours away and are thus prone to disruption of their feeder markets; and

• strong marketing, legal, compliance, cash management, financial and technical support systems, all of which remain in-house to boost efficiency and enhance the ability to serve as a premier gaming-as-a-service provider.

Strong relationships with licensed establishment partners. Accel has prioritized establishing strong, lasting relationships with its licensed establishment partners since its inception. Accel dedicates a relationship manager to each of its licensed establishment partners, who, with support from other personnel, oversees every aspect of partner relationship management and retention. Accel prides itself on providing prompt, reliable service and education, all of which helps to increase referral marketing by its partners. Accel’s relationship managers’ efforts to provide value-added services to their licensed establishment partners result in consistent pre-renewals long before contracts expire and are a key element of our competitive differentiation.

Proven track record in executing and integrating acquisitions. Accel continuously evaluates strategic acquisition opportunities. Accel has a successful track record of identifying, acquiring and integrating competitive operators at favorable terms. Since becoming a licensed terminal operator in 2012, Accel has acquired nine operator companies, adding more than 890 licensed establishments to our total portfolio of 2,312 licensed establishment partners as of December 31, 2019. Accel believes that its industry reputation, scale, proven track record of driving revenue synergies, and public acquisition currency enhances its ability to acquire other operators or licensed establishments on favorable terms and makes Accel a preferred partner of choice.

Diversified revenue base with limited churn. Accel believes that gaming regulations in Illinois facilitate a low revenue concentration per licensed establishment partner, and that its low-limit slots are more resilient to economic downturn as consumers typically continue to engage in locally convenient, lower cost forms of entertainment in such circumstances. Accel’s best-performing licensed establishment accounted for approximately $1.8 million, or less than 1% of gross revenue for the year ended December 31, 2019, its top 20 licensed establishments represented only 5% of gross revenue for the year ended December 31, 2019, and Accel’s licensed establishment partners each contributed an average of approximately $0.2 million of gross revenue for the year ended December 31, 2019. Accel’s voluntary contract renewal rate was over 98% for the

 

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three-year period ended December 31, 2019. While Accel experiences minor business disruptions each year due to business failures or natural disasters affecting licensed establishment partners, many of these sites reopen in subsequent years under new owners, and Accel believes it is best-positioned to reengage with those establishments as new licensed establishment partners because of its reputation and leading market position. Accel’s VGTs are geographically diversified across the state of Illinois, limiting systemic risk due to local weather patterns or regional economic downturns. Accel’s plans to expand into other states may further help to diversify its portfolio.

Deep industry and vendor relationships. Accel’s leading market position has led to strong relationships within its industry and with equipment suppliers. Accel has successfully integrated multiple other operators and believes this successful roll-up strategy positions it well with potential additional local operators who could benefit from Accel’s gaming-as-a-service platform. In addition, Accel’s industry leadership permits it to seek and obtain favorable pricing and supply of key gaming machines. Due to its ability to procure machines and parts easily, Accel is able to rotate machines quickly to licensed establishment partners where they are most needed across its operating footprint. This results in longer, more effective usage and greater lifetimes for Accel’s machines.

Management team. Accel’s management team has deep experience and industry knowledge, with an average of 12 years of gaming industry experience. Accel’s President, Chief Executive Officer and co-founder, Andy Rubenstein, has led Accel since its inception in 2009, and its general counsel, Derek Harmer, and chief financial officer, Brian Carroll, have been with Accel since 2012 and 2014, respectively. Accel believes that its industry-leading management team has a reputation for integrity and compelling customer service.

Company culture and training. Accel believes that it is an employer of choice for talented candidates. Accel’s corporate culture is strong and Accel invests heavily in employees’ success, including devoting significant resources to training and other development programs. Accel also experiences relatively low levels of employee turnover.

Accel’s Growth Opportunities

Accel’s key growth strategies include its plans to:

Maintain competitive advantage in Illinois and increase VGT segment share. Accel believes that there is substantial potential for further growth in Illinois. Accel has been successful in the past in signing competitors’ licensed establishments and has identified approximately 700 such prospects for engagement after current contracts with other partners expire. In particular, Accel sees opportunities for expansion in key local markets, such as Springfield, Bloomington and Decatur, where its VGT segment share is below its share in other regions. Accel also strives to further optimize revenues for VGTs it currently operates through refined data analysis, marketing and other initiatives. Accel seeks to increase distribution possibilities through corporate partners who operate multiple licensed establishments such as chain stores. Accel believes that these corporate businesses tend to favor larger operators who have substantial compliance infrastructures in addition to leading service capabilities. While such licensed establishments have been “second movers” in choosing to adopt video gaming, partnering with reputable operators such as Accel could render deployment of VGTs more attractive. Accel’s leadership position also creates an opportunity for it to take advantage of recent legislative changes in Illinois such as an increased number of allowed VGTs per establishment, higher bet limits, higher win amounts, and larger jackpots. Additionally, Accel may realize the benefits of potential municipal ordinance changes that would permit its business to operate in new municipalities.

Expand operations into Pennsylvania. In November 2017, Pennsylvania’s Governor signed the Pennsylvania Gaming Act. The law authorized, among other forms of gaming, VGT gaming at qualified truck stops. Accel estimates that the total potential VGT market in Pennsylvania is approximately 100 to 150 truck

 

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stops as of December 31, 2019, although municipalities are able to individually opt out from authorizing distributed gaming. Accel believes this market opportunity is attractive and has obtained a conditional terminal operator license from the PA Board. To qualify for gaming, a truck stop must meet requirements that are similar to those in Illinois. Accel has a binding agreement to install VGTs with a partner truck stop establishment in Pennsylvania that has received a conditional license from the PA Board. Accel is also in discussions with other potential partners who have not yet applied for licensure. Accel believes that Pennsylvania is a natural choice for its expansion outside of Illinois when compared to other states due to industry similarities with Illinois. See “Business Our Industry” for more information.

Expand operations in Georgia. The operation of coin-operated amusement machines in Georgia has been regulated by the Georgia Lottery Corporation since April 2013. Games are skill-based with winnings paid in points that may be redeemed for noncash merchandise, prizes, toys, gift certificates, or novelties. The most common type of establishment licensees are convenience stores. Licensed establishments are limited to a maximum of nine machines, unless a municipality specifically limits licensed establishments to a maximum of six machines. In addition, any local governing authority may vote to remove coin operated amusement machines from its jurisdiction upon 60 days’ advance notice. On June 12, 2020, we announced our agreement to acquire, subject to regulatory approvals including the Georgia Lottery Corporation, Tom’s Amusement Company, Inc., a Southeastern U.S. amusement operator and Master Licensee in the state of Georgia. The acquisition of Tom’s Amusement’s adds 11 Georgia Coin Operated Amusement Machine Class B locations to the Accel portfolio, including a total of 65 Class B COAM terminals.

Establish Player Rewards Program to further drive growth. As part of its gaming-as-a-service suite of offerings, Accel has considered offering a Player Rewards Program for players when permitted. The anticipated terms of the program will provide for players to accumulate points each time they use Accel’s products and may provide points that can be redeemed for rewards. Accel believes this program will result in increased brand loyalty from licensed establishment partners by rewarding players for using Accel’s VGTs. This opt-in program is expected to allow data analysis with respect to each player, location and machine, which will in turn permit Accel to better assess performance and serve its partners. Although player rewards programs are not specifically prohibited in Illinois, applicable regulations have not been enacted, and the IGB has not approved any player rewards programs for any terminal operator. Accel has not applied to the IGB to establish any such program but expects to apply in the event of applicable regulation enactment.

Expand operations to other states. Various states and other jurisdictions have proposed legislation permitting VGTs or other forms of gaming in the past. These states include Indiana, Missouri and Mississippi. Accel may also choose to expand operations through strategic acquisitions or otherwise in other, more mature gaming jurisdictions where VGTs are currently legal, such as Virginia, Louisiana, Montana, Nevada, Oregon, South Dakota and West Virginia. Accel may attempt to seek approval to operate in additional jurisdictions that authorize video gaming. Accel believes it would be a favored entrant into any such markets given its track record of success and compliance. Accel believes its market opportunity measured by gross revenue could grow by 2025 to approximately $3 billion in Illinois, assuming further penetration in existing cities, legalization of opt-our municipalities such as Chicago and growth rates of its business consistent with historical trends. Accel further believes its market opportunity to be approximately $10 billion including those other states where VGTs are currently legal, approximately $20 billion in other states where commercial and tribal casinos are legal assuming adoption of VGT gaming at 20% of current casino revenues in those states, and $30 billion across the United States including new product lines such as sports betting. 

Expand ancillary service offerings to licensed establishments. While distributing and servicing amusement devices such as jukeboxes, dartboards, pool tables, pinball machines and other ancillary equipment, such as redemption devices and stand-alone ATMs, is not the primary focus of its business, Accel believes that these services provide a key point for ongoing customer contact and enhances its image as a “one-stop shop” for entertainment devices, including, for example, through Accel’s partnerships with complementary service 

 

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providers such as DraftKings. Accel has observed that licensed establishment partners appreciate these services and continue to rely on Accel to provide them. Providing these services can also serve as a point of initial contact with potential partners who may decide to avail themselves later of Accel’s primary gaming services. As a result, Accel intends to continue prioritizing the installation of these devices and equipment.

 

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THE OFFERING

Class A-1 common stock offered by us 8,000,000 shares (or 8,320,237 shares if the underwriters exercise their option to purchase additional shares in full)

Class A-1 common stock offered by selling stockholders 4,000,000 shares (or 5,479,763 shares if the underwriters exercise their option to purchase additional shares in full)

Option to purchase additional shares of Class A-1 common stock We have granted the underwriters an option to purchase up to an aggregate of 320,237 shares of Class A-1 common stock and the selling stockholders have granted the underwriters an option to purchase up to an aggregate of 1,479,763 shares of Class A-1 common stock. This option is exercisable, in whole or in part, within 30 days after the date of this prospectus.

Class A-1 common stock to be outstanding immediately after this offering 91,784,083 shares (or 92,104,320 shares if the underwriters exercise their option to purchase additional shares in full).

Use of proceeds We estimate that after deducting underwriting discounts and commissions and estimated offering expenses payable by us, we will receive approximately $         million of net proceeds from this offering.

We currently intend to use the net proceeds from the offering for general corporate purposes which may include capital expenditures, repayment of debt, potential acquisitions and strategic business transactions.

We will not receive any proceeds from the sale of shares of Class A-1 common stock by the selling stockholders, including pursuant to the underwriters’ exercise of their option to purchase additional shares. We will, however, bear the costs associated with the sale of shares by the selling stockholders, other than underwriting discounts and commissions. See “Use of Proceeds”.

Risk Factors Investing in our Class A-1 common stock involves a high degree of risk. See “Risk Factors” in this prospectus.

NYSE Symbol “ACEL.”

Underwriting (Conflicts of Interest) An affiliate of TPG Capital BD, LLC, an underwriter in this offering, is a selling stockholder in this offering. As a result of the foregoing relationship, TPG Capital BD, LLC is deemed to have a “conflict of interest” within the meaning of FINRA Rule 5121. In addition, Gordon Rubenstein, one of our directors and a selling stockholder, is an employee of The Raine Group LLC. Raine Securities LLC, an underwriter in this offering, is a controlled affiliate of The Raine Group LLC. As a result of the foregoing relationship, Raine

 

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Securities LLC is also deemed to have a “conflict of interest” within the meaning of FINRA Rule 5121. Accordingly, this offering will be made in compliance with the applicable provisions of FINRA Rule 5121. Pursuant to that rule, the appointment of a qualified independent underwriter is not necessary in connection with this offering. In accordance with FINRA Rule 5121(c), no sales of the shares will be made to any discretionary account over which TPG Capital BD, LLC or Raine Securities LLC exercises discretion without the prior specific written approval of the account holder.

The number of shares of Class A-1 common stock to be outstanding immediately after this offering is based on 83,784,083 shares of Class A-1 common stock outstanding as of September 18, 2020 and does not include (i) 293,921 shares of Class A-1 common stock reserved for issuance under the Accel Entertainment, Inc. 2011 Plan (the “2011 Plan”), (ii) 603,253 shares of Class A-1 common stock reserved for issuance under the Accel Entertainment, Inc. 2016 Plan (the “2016 Plan”), (iii) 3,104,403 shares of Class A-1 common stock reserved for issuance under the Accel Entertainment, Inc. Long Term Incentive Plan (the “LTIP”), (iv) 208,382 shares of Class A-1 common stock issuable upon the exercise of outstanding options to purchase shares of our Class A-1 common stock outstanding as of September 18, 2020 and with a weighted average exercise price of $2.74, and (v) 1,452,867 shares of Class A-1 common stock underlying Accel’s warrants.

 

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RISK FACTORS

An investment in any securities offered pursuant to this prospectus involves risk and uncertainties. You should consider carefully the risk factors below before, in addition to other information contained in this prospectus. Any of the risk factors could significantly and negatively affect our business, financial condition, results of operations, cash flows, and prospects and the trading price of our securities. You could lose all or part of your investment. Furthermore, additional risks and uncertainties of which we are currently unaware, or which we currently consider to be immaterial, could have a material adverse effect on our business, financial condition or results of operations.

The outbreak and spread of the novel coronavirus disease known as COVID-19 has had, and could continue to have, an adverse impact on our business, operations and financial condition for an extended period of time.

On March 11, 2020 the World Health Organization declared the novel coronavirus disease (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. The global and national impact of COVID-19 could be immense and the length of the pandemic and its ultimate economic and human toll cannot yet be determined.

On March 16, 2020, the IGB issued an order requiring the suspension of all video gaming operations at all licensed video gaming establishments of any kind in Illinois (the “IGB Closure Order”). Additionally, on March 21, 2020, Illinois Governor J.B. Pritzker issued an executive order (the “Illinois Executive Order”) requiring the closure of all “non-essential” businesses and also requiring all individuals living within the State of Illinois to “stay at home” other than in the case of limited exceptions. The IGB Closure Order and the Illinois Executive Order were each extended multiple times. The Illinois Executive Order was canceled on June 26, 2020 as non-essential businesses were allowed to open at limited capacities. In response to the cancellation of the Illinois Executive Order, the IGB allowed video gaming operations to resume on July 1, 2020. The mandated complete shutdown of our licensed establishment partners’ gaming operations and our VGTs by the IGB Closure Order substantially and adversely impacted our business, operations and financial condition. In addition, we have been, and will continue to be further, negatively impacted by related developments, including heightened governmental regulations and travel advisories, recommendations by the U.S. Department of State and the Centers for Disease Control and Prevention, and travel bans and restrictions, each of which has impacted, and is expected to continue to significantly impact, travel of customers to our licensed establishment partners.

While the IGB has announced the resumption of all video gaming activities effective July 1, 2020, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events. It is difficult to predict at this time how quickly customers will return to our licensed establishment partners, which may be a function of continued concerns over safety and/or depressed consumer sentiment due to adverse economic conditions, including job losses. Demand for the video gaming and non-gaming services provided by our licensed establishment partners may remain weak for a significant length of time and we cannot predict if and when such demand will return to pre-outbreak demand, if at all. We also cannot predict whether all of our licensed establishment partners will re-open and continue operating, or if they do, whether they will choose to renew their contracts with Accel at pre-outbreak levels or at all. Certain of our licensed establishment partners may go out of business. We may be adversely impacted as a result of the adverse impact our licensed establishment partners suffer.

While our operations workforce returns to support our business, we continue to allow office employees to work from home, which, if continued, may have a substantial impact on employee attendance and productivity, may cause employee turnover, disrupt access to facilities, equipment, networks, corporate systems, books and records and may add additional expenses and strain on our business. Now that the IGB Closure and Illinois Executive Orders are lifted and our operations resume, we may experience difficulties in resuming our operations to pre-closure levels, and our ability to serve our clients may be disrupted or inconsistent with pre-closure service, all or any of which could have a material adverse effect on our business, operations and financial condition.

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Further, our business may be negatively impacted by the adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth resulting from the impact of COVID-19.

Additionally, given the existing impact of COVID-19 on our business, operations and financial condition and potential future impact, we can make no assurances that we will be able to successfully pursue expansion of gaming operations into new jurisdictions or that such jurisdictions will pass laws and regulations allowing VGT gaming, the opening of new licensed establishments, the addition of new VGTs and amusement machines in existing licensed establishments or the acquisition of other terminal operators.

There may be other adverse consequences to our business, operations and financial condition from the spread of COVID-19 that we have not considered. We have never previously experienced a complete cessation of our business operations, and as a consequence, our ability to predict the impact of such a cessation on our business and future prospects is inherently uncertain. We can offer no assurances that the effects of COVID-19 are temporary or that any losses that are incurred as a result of these uncertainties will be regained if and when this crisis has passed. As a result, COVID-19 may continue to have an adverse impact on our business, operations and financial condition for an extended period of time.

Accel’s ability to operate in existing markets or expand into new jurisdictions could be adversely affected by difficulties, delays, or failures by Accel or its stakeholders in obtaining or maintaining required licenses or approvals.

Accel operates only in jurisdictions where gaming is legal. The gaming industry is subject to extensive governmental regulation by federal, state, and local governments, which customarily includes some form of licensing or regulatory screening of operators, suppliers, manufacturers and distributors and their applicable affiliates, their major shareholders, officers, directors and key employees. In addition, certain gaming products and technologies must be certified or approved in certain jurisdictions in which Accel operates, and these regulatory requirements vary from jurisdiction to jurisdiction. The scope of the approvals required can be extensive. Regulators review many facets of an applicant or holder of a license, including its financial stability, integrity and business experience. While the regulatory requirements vary by jurisdiction, most require:

• licenses and/or permits;

• documentation of qualifications, including evidence of financial stability;

• other required approvals for companies who design, assemble, supply or distribute gaming equipment and services; and

• individual suitability of officers, directors, major equity holders, lenders, key employees and business partners.

Accel may not be able to obtain or maintain all necessary registrations, licenses, permits or approvals, or could experience delays related to the licensing process which could adversely affect its operations and ability to retain key employees. If Accel fails to obtain a license required in a particular jurisdiction for games and VGTs, hardware or software or have such license revoked, it will not be able to expand into, or continue doing business in, such jurisdiction. Any delay, difficulty or failure by Accel to obtain or retain a required license or approval in one jurisdiction could negatively impact the ability to obtain or retain required licenses and approvals in other jurisdictions, or affect eligibility for a license in other jurisdictions, which can negatively affect opportunities for growth. For example, if Accel’s license to operate in Illinois is not renewed as a result of a failure to satisfy suitability requirements or otherwise, its ability to obtain or maintain a license in Pennsylvania or Georgia may be harmed. Unexpected changes or concessions required by local, state or federal regulatory authorities could involve significant additional costs and delay. The necessary permits, licenses and approvals may not be obtained within the anticipated time frames, or at all. Additionally, licenses, approvals or findings of suitability may be revoked, suspended or conditioned at any time. If a license, approval or finding of suitability is required by a

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regulatory authority and Accel fails to seek or does not receive the necessary approval, license or finding of suitability, or if it is granted and subsequently revoked, it could have an adverse effect on Accel’s results of operations, cash flows and financial condition.

While Accel has received a conditional terminal operator license from the PA Board, there can be no assurance that the final license will be obtained on terms necessary to achieve its objectives, or at all. While Accel does not expect that the composition of the PA Board will change prior to the next Pennsylvania gubernatorial election in 2022, there can be no assurances with respect thereto, and any changes in composition to the PA Board could alter existing interpretations or enforcement of the Pennsylvania Gaming Act, or otherwise affect the status of Accel’s pending final license before the PA Board. In Illinois, Accel was granted its original license to conduct business as a terminal operator of VGTs by the IGB in 2012, and has most recently had its license renewed in April 2019, retroactive to March 2019 for a period of one year. Renewal is subject to, among other things, continued satisfaction of suitability requirements.

In addition to any licensing requirements, all of Accel’s licensed establishment partners are required to be licensed, and delays in or failure to obtain approvals of these licenses may adversely affect results of operations, cash flows and financial condition. Accel and certain of its affiliates, major stockholders (generally persons and entities beneficially owning a specified percentage (typically 5% or more) of equity securities), directors, officers and key employees are subject to extensive background investigations, personal and financial disclosure obligations and suitability standards in its businesses. Certain jurisdictions may require the same from Accel’s lenders or key business partners. The failure of these individuals and business entities to submit to such background checks and provide required disclosure, or delayed review or denial of application resulting from such submissions, could jeopardize Accel’s ability to obtain or maintain licensure in such jurisdictions. Any delay, difficulty, or failure by any of Accel’s major stockholders, directors, officers, key employees, products or technology, to obtain or retain a required license or approval in one jurisdiction could negatively impact its licensure in other jurisdictions, which can ultimately negatively affect opportunities for growth. In addition, the failure of Accel’s officers, directors, key employees or business partners, equity holders, or lenders to obtain or maintain licenses in one or more jurisdictions may require Accel to modify or terminate its relationship with such officers, directors, key employees or business partners, equity holders, or lenders, or forego doing business in such jurisdiction. The licensing procedures and background investigations of the authorities that regulate Accel’s businesses may inhibit potential investors from becoming significant stockholders, inhibit existing stockholders from retaining or increasing their ownership, or inhibit existing stockholders from selling their shares to potential investors who are found unsuitable to hold Accel stock by gaming authorities or whose stock ownership may adversely affect Accel’s ability to obtain, maintain, renew or qualify for a license, contract, franchise or other regulatory approval from a gaming authority.

If Accel fails to manage its growth effectively, Accel may be unable to execute its business plan or maintain high levels of service and customer satisfaction.

Accel has experienced, and expects to continue to experience, rapid growth, which has placed, and may continue to place, significant demands on its management and its operational and financial resources. Since its inception, Accel has acquired 10 distributed gaming operators adding more than 930 licensed establishments to its portfolio of over 2,300 total licensed establishments as of June 30, 2020. Accel has also experienced significant growth in the number of licensed establishment partners and players, and in the amount of data that it supports. Additionally, Accel’s organizational structure will become more complex as it scales its operational, financial and management controls to support additional jurisdictions as well as its reporting systems and procedures.

To manage growth in operations and personnel, Accel will need to continue to grow and improve its operational, financial, and management controls and reporting systems and procedures. Accel may require significant capital expenditures and the allocation of valuable management resources to grow and change in these areas without undermining its culture, which has been central to growth so far. Accel’s expansion has placed, and expected future growth will continue to place, a significant strain on management, customer experience, data analytics,

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sales and marketing, administrative, financial, and other resources. If Accel fails to manage its anticipated growth and change in a manner consistent with its reputation, the quality of its services may suffer, which could negatively affect its brand and reputation and harm its ability to attract licensed establishment partners and players.

Accel’s success depends on its ability to offer new and innovative products and services that fulfill the needs of licensed establishment partners and create strong and sustained player appeal.

Accel’s success depends upon its ability to fulfill the needs of licensed establishment partners and players by offering new and innovative products and services on a timely basis. Consumer preferences for games are usually cyclical and difficult to predict, and even the most successful content remains popular for only limited periods of time, unless refreshed with new content or otherwise enhanced. If Accel fails to accurately anticipate the needs of licensed establishments and player preferences, it could lose business to competitors, which would adversely affect Accel’s results of operations, cash flows and financial condition. Accel may not have the financial resources needed to introduce new products or services on a timely basis or at all.

Accel’s business depends on content for VGTs, stand-alone ATMs, redemption devices, and amusement devices that is developed by third-party suppliers. Accel believes that creative and appealing game content results in more players visiting its licensed establishment partners, which offers more revenue for licensed establishment partners and provides them with a competitive advantage, which in turn enhances Accel’s revenue and ability to attract new business and to retain existing business. The success of such content is dependent on these suppliers’ ability to anticipate changes in consumer tastes, preferences and requirements and deliver to Accel in sufficient quantities and on a timely basis a desirable, high-quality and price-competitive mix of products. Accel’s suppliers’ products may fail to meet the needs of licensed establishment partners due to changes in consumer preference or Accel’s suppliers may be unable to maintain a sufficient inventory to satisfy the requirements of licensed establishment partners. In addition, suppliers must obtain regulatory approvals for new products, and such approvals may be delayed or denied. Accordingly, Accel may not be able to sustain the success of its existing game content or effectively obtain from third parties products and services that will be widely accepted both by licensed establishment partners and players.

Accel’s suppliers may also increase their prices due to increasing demand for their products from Accel’s competitors. Further, because there exists a limited number of suppliers in the distributed gaming business, an increase in supplier pricing may limit Accel’s ability to seek alternate sources of gaming content and may result in increased operating expenses. See “—Accel is dependent on relationships with key manufacturers, developers and third parties to obtain VGTs, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms” for more information.

Accel is dependent on relationships with key manufacturers, developers and third parties to obtain VGTs, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms.

The supply of Accel’s VGTs, stand-alone ATMs, redemption devices and amusement devices depends upon the manufacture, development, assembly, design, maintenance and repair of such products by certain key providers, as well as regulatory approval for these products. Accel’s operating results could be adversely affected by an interruption or cessation in the supply of these items, a serious quality assurance lapse, including as a result of the insolvency of any key provider, or regulatory issues related to key providers’ products or required licenses. Additionally, certain components of our VGTs are sourced from China, where outbreaks of the COVID-19 or other widespread public health problems have led to quarantines, shutdowns, shipping or logistics changes, or other disruptions that could impair our ability to obtain VGTs and VGT components. Accel has achieved significant cost savings through centralized purchasing of equipment and non-equipment. However, as a result, Accel is exposed to the credit and other risks of having a small number of key suppliers. While Accel makes every effort to evaluate counterparties prior to entering into long-term and other significant procurement contracts, it cannot predict the impact on suppliers of the current economic environment and other developments

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in their respective businesses. Insolvency, financial difficulties, supply chain delays, regulatory issues or other factors may result in Accel’s suppliers not being able to fulfill the terms of their agreements. Further, such factors may render suppliers unwilling to extend contracts that provide favorable terms to Accel, or may force them to seek to renegotiate existing contracts.

Failure of key suppliers to meet their delivery commitments could result in Accel being in breach of and subsequently losing contracts with key licensed establishment partners. Although Accel believes it has alternative sources of supply for the equipment and other supplies used in its business, the limited number of suppliers in the distributed gaming business could lead to delays in the delivery of products or components, and possible resultant breaches of contracts that it is party to with licensed establishment partners, increases in the prices it must pay for products or components, problems with product quality or components coming to the end of their life and other concerns. Accel may be unable to find adequate replacements for suppliers within a reasonable time frame, on favorable commercial terms or at all.

Certain of Accel’s products and services, including a Player Rewards Program that Accel intends to implement, include know-your-customer programs or technologies supplied by third parties. These programs and technologies could be an important aspect of products and services because they can confirm certain information with respect to players and prospective players, such as age, identity and location. Payment processing programs and technologies, typically provided by third parties, are also a necessary feature of Accel’s products and services. In the event that these products and technologies are not made available to Accel on acceptable terms, or in the event that they are defective, Accel’s results of operations, cash flows and financial condition may be materially adversely affected.

Accel’s future results of operations may be negatively impacted by slow growth in demand for VGTs and by the slow growth of new gaming jurisdictions.

Slow growth or declines in the demand for VGTs could reduce the demand for Accel’s services and negatively impact results of operations, cash flows and financial condition. Moreover, even with the expansion of gaming into new jurisdictions, the opening of new licensed establishments and the addition of new VGTs and amusement machines in existing licensed establishments, demand for Accel’s services could decline due to the desires of licensed establishment partners, unfavorable economic conditions, failure to obtain regulatory approvals and the availability of financing. Accordingly, Accel may not be successful in placing additional VGTs or amusement machines with additional licensed establishments. See “—The outbreak and spread of the novel coronavirus disease known as COVID-19 has had, and could continue to have, an adverse impact on our business, operations and financial condition for an extended period of time” for more information.

Accel depends heavily on its ability to win, maintain and renew contracts with licensed establishment partners, and it could lose substantial revenue if it is unable to renew certain of its contracts on substantially similar terms or at all.

Accel’s contracts with its licensed establishment partners generally contain initial multi-year terms. Contracts entered into prior to February 2018 typically contain automatic renewal provisions that provide the individual partner with an option to terminate within a specified time frame. As a result of the IGB rule changes, contracts entered into after February 2018 do not contain renewal provisions, automatic or otherwise. At the end of a contract term, licensed establishment partners may choose to extend their engagement by signing a new contract or may sign with a competitor terminal operator, in their sole discretion.

While Accel has historically experienced high rates of contract extension or renewal, these rule changes may lead to declines in contract extension or renewal. The termination, expiration or failure to renew one or more of its contracts with its licensed establishment partners could cause it to lose substantial revenue, which could have an adverse effect on its ability to win or renew other contracts or pursue growth initiatives.

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In addition, Accel may not be able to obtain new or renewed contracts with licensed establishment partners that contain terms that are as favorable as Accel’s current terms in its current contracts, and any less favorable contract terms or diminution in scope could negatively impact Accel’s business.

Additionally, Accel’s revenue, business, result of operations, cash flows and financial condition could be negatively affected if its licensed establishment partners sell or merge themselves or their licensed establishments with other entities. Upon the sale or merger of such licensed establishments, Accel’s licensed establishment partners could choose to no longer partner with Accel and decide to contract with its competitors.

Outbreak of health epidemics such as COVID-19 may adversely affect our business, results of operations and financial condition.

Any outbreaks of contagious diseases and other adverse public health developments in regions where we, our customers and suppliers operate or are considering operations could have a material and adverse effect on our business, results of operations and financial condition. For example, the recent outbreak of COVID-19 has resulted in significant governmental measures being implemented to control the spread of the virus, including quarantines, travel restrictions, manufacturing restrictions, declarations of states of emergency, business shutdown and restrictions on the movement of employees in many regions of China and certain other countries, including the United States. COVID-19, or similar or related diseases, may result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect our suppliers’ supply to us, and demand for our customers’ products. The outbreak and any preventative or protective actions that governments or we may take in response to COVID-19 may result in a period of business disruption, reduced customer traffic and reduced operations. While our business is typically from local patrons, any of these events could materially and adversely affect our business, results of operations and financial condition. The extent of the impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 and the actions to contain COVID-19 or treat its impact, among others.

Unfavorable economic conditions or decreased discretionary spending due to factors such as terrorist activity or threat thereof, epidemics or other public health issues, civil unrest or other economic or political uncertainties, may adversely affect Accel’s business, results of operations, cash flows and financial condition.

Unfavorable economic conditions, including recession, economic slowdown, decreased liquidity in the financial markets, decreased availability of credit and relatively high rates of unemployment, could have a negative effect on Accel’s business. Unfavorable economic conditions could cause licensed establishment partners to shut down or ultimately declare bankruptcy, which could adversely affect Accel’s business. Unfavorable economic conditions may also result in volatility in the credit and equity markets. The difficulty or inability of licensed establishment partners to generate or obtain adequate levels of capital to finance their ongoing operations may cause some to close or ultimately declare bankruptcy. Accel cannot fully predict the effects that unfavorable social, political and economic conditions and economic uncertainties and decreased discretionary spending could have on its business.

Accel’s revenue is largely driven by players’ disposable incomes and level of gaming activity. Unfavorable economic conditions may reduce the disposable incomes of players at licensed establishment partners and may result in fewer players visiting licensed establishment partners, reduced play levels, and lower amounts spent per visit, adversely affecting Accel’s results of operations and cash flows. Adverse changes in discretionary consumer spending or consumer preferences, which may result in fewer players visiting licensed establishment partners and reduced frequency of visits and play levels, could also be driven by an unstable job market, outbreaks (or fear of outbreaks) of contagious diseases, such as the COVID-19 outbreak, or other factors. Socio-political factors such as terrorist activity or threat thereof, civil unrest or other economic or political uncertainties that contribute to consumer unease may also result in decreased discretionary spending by players and have a negative effect on Accel.

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Accel’s revenue growth and future success depends on its ability to expand into new markets, which may not occur as anticipated or at all.

Accel’s future success and growth depend in large part on the successful addition of new licensed establishments as partners (whether through organic growth, conversion from competitors or partner relationships) and on the entry into new markets, including other licensed jurisdictions such as Pennsylvania, where Accel was recently granted a conditional license as a VGT terminal operator and Georgia, where Accel recently acquired Tom’s Amusement Company, Inc., a Southeastern U.S. amusement operator and Master Licensee. These markets are new to Accel and its success depends in part on displacing entrenched competitors who are familiar with these markets and are known to players. In many cases, Accel is attempting to enter into or expand its presence in these new markets and where the appeal and success of VGTs and other forms of entertainment has not yet been proven. In some cases, Accel may need to develop or expand its sales channels and leverage the relationships with its licensed establishment partners in order to execute this strategy. There can be no assurance that video gaming will have success with new licensed establishment partners or in new markets, or that it will succeed in capturing a significant or even acceptable market share in any new markets, including Pennsylvania and Georgia. In addition, it is possible that Accel will not be able to enter the Pennsylvania market at all, due to regulatory or other concerns. See “ —Accel is subject to strict government regulations that are constantly evolving and may be amended, repealed, or subject to new interpretations, which may limit existing operations, have an adverse impact on the ability to grow or may expose Accel to fines or other penalties.” If Accel fails to successfully expand into these markets, it may have difficulty growing its business and may lose business to its competitors.

Accel’s business is geographically concentrated, which subjects it to greater risks from changes in local or regional conditions.

Accel currently installs VGTs and amusement devices in licensed establishments primarily in Illinois. Due to this geographic concentration, Accel’s results of operations, cash flows and financial condition are subject to greater risks from changes in local and regional conditions, such as:

• changes in local or regional economic conditions and unemployment rates;

• changes in local and state laws and regulations, including gaming laws and regulations;

• a decline in the number of residents in or near, or visitors to, licensed establishment partners;

• changes in the local or regional competitive environment; and

• adverse weather conditions and natural disasters (including weather or road conditions that limit access to licensed establishments).

Accel largely depends on local markets of licensed establishments for players. Local competitive risks and the failure of licensed establishment partners to attract a sufficient number of guests, players and other visitors in these locations could adversely affect Accel’s business. As a result of the geographic concentration of Accel’s businesses, it faces a greater risk of a negative impact on its results of operations, cash flows and financial condition in the event that Illinois is more severely impacted by any such adverse condition, as compared to other areas in the United States. If Accel is successful in expanding its operations into Pennsylvania or other gaming jurisdictions, it may face similar concentration risk there.

If Accel fails to offer a high-quality experience, its business and reputation may suffer.

Once Accel installs VGTs and amusement machines in licensed establishment partners, those licensed establishment partners rely on support from Accel to resolve any related issues. High-quality user and location education and customer service to the licensed establishments have been key to Accel’s brand and is important for the successful marketing and sale of its products and services and to increase the number of VGTs and amusement machines at licensed establishments. The importance of high-quality customer service to the licensed establishments will increase as Accel expands its business and pursues new licensed establishment partners and

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potentially expands into new jurisdictions. For instance, if Accel does not help its licensed establishment partners quickly resolve issues, whether those issues are regulatory, technical, or data related, and provide an effective ongoing level of support, its ability to retain or renew contracts with its licensed establishment partners could suffer and its reputation with existing or potential licensed establishment partners may be harmed. In some cases, Accel depends on third parties to resolve such issues, the performance of which is out of Accel’s control. Further, Accel’s success is highly dependent on business reputation and positive recommendations from existing licensed establishment partners. Any failure to maintain high-quality levels of service, or a market perception that Accel does not maintain a high-quality service to licensed establishments, could harm its reputation, its ability to market to existing and prospective licensed establishment partners, and Accel’s results of operations, cash flows and financial condition.

In addition, as Accel continues to grow its operations and expand into additional jurisdictions, Accel needs to be able to provide efficient support that meets the needs of its licensed establishment partners. The number of licensed establishments with Accel’s products has grown significantly and that may place additional pressure on its support organization. As Accel’s base of licensed establishment partners continues to grow, it may need to increase the number of relationship managers, customer service and other personnel it employs to provide personalized account management, assistance to its licensed establishment partners in navigating regulatory applications and ongoing compliance concerns, and customer service, training, and revenue optimization. If Accel is not able to continue to provide high levels of customer service, its reputation, as well as Accel’s results of operations, cash flows and financial condition, could be harmed.

Accel’s revenue growth and ability to achieve and sustain profitability will depend, in part on being able to expand its sales force and increase the productivity of its sales force.

Most of Accel’s revenue has been attributable to the efforts of its sales force, which consists of both in-house personnel and independent agents. In order to increase Accel’s revenue and achieve and sustain profitability, Accel intends to increase the size of its sales force to generate additional revenue from new and existing licensed establishment partners.

Accel’s ability to achieve significant revenue growth will depend, in large part, on its success in recruiting, training, and retaining sufficient numbers of in-house and independent sales personnel to support growth. New sales personnel require significant training and can take a number of months to achieve full productivity. Accel’s recent hires and planned hires may not become productive as quickly as expected and if new sales employees and agents do not become fully productive on the timelines that have been projected or at all, Accel’s revenue may not increase at anticipated levels and its ability to achieve long-term projections may be negatively impacted. In addition, as Accel continues to grow, a larger percentage of its sales force will be new to Accel and its business, which may adversely affect Accel’s sales if it cannot train its sales force quickly or effectively. Attrition rates may increase, and Accel may face integration challenges as it continues to seek to expand its sales force. Accel also believes that there is significant competition for sales personnel with the skills that it requires in the industries in which it operates, and may be unable to hire or retain sufficient numbers of qualified individuals in the markets where it operates or plans to operate. If Accel is unable to hire and train sufficient numbers of effective sales personnel or agents, or if the sales personnel or agents are not successful in obtaining new licensed establishment partners or promoting activity within Accel’s existing licensed establishment partners, Accel’s business may be adversely affected.

Accel periodically changes and adjusts its sales organization in response to market opportunities, competitive threats, management changes, product and service introductions or enhancements, acquisitions, sales performance, increases in sales headcount, cost levels, and other internal and external considerations. Any future sales organization changes may result in a temporary reduction of productivity, which could negatively affect Accel’s rate of growth. In addition, any significant change to the way Accel structures the compensation of its sales organization may be disruptive and may affect revenue growth.

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Accel’s inability to complete acquisitions and integrate acquired businesses successfully could limit its growth or disrupt its plans and operations.

Accel continues to pursue expansion and acquisition opportunities in gaming and related businesses. Accel’s ability to succeed in implementing its strategy will depend to some degree upon its ability to identify and complete commercially viable acquisitions. Accel may not be able to find acquisition opportunities on acceptable terms or at all, or obtain necessary financing or regulatory approvals to complete potential acquisitions.

Accel may not be able to successfully integrate any businesses that it acquires or do so within intended timeframes. Accel could face significant challenges in managing and integrating its acquisitions and combined operations, including acquired assets, operations and personnel. In addition, the expected cost synergies associated with such acquisitions may not be fully realized in the anticipated amounts or within the contemplated timeframes or cost expectations, which could result in increased costs and have an adverse effect on Accel’s results of operations, cash flows and financial condition. Accel expects to incur incremental costs and capital expenditures related to its contemplated integration activities.

Acquisition transactions may disrupt Accel’s ongoing business. The integration of acquisitions will require significant time and focus from management and may divert attention from the day-to-day operations of the combined business or delay the achievement of strategic objectives. Accel’s business may be negatively impacted following the acquisitions if it is unable to effectively manage expanded operations.

Accel faces significant competition from other gaming and entertainment operations, and Accel’s success in part relies on maintaining Accel’s competitive advantages and market share in key markets.

Accel faces significant competition from suppliers and other operators of VGTs and dartboards, pool tables, pinball and other related non-gaming equipment at licensed establishment partners. Accel competes on the basis of the responsiveness of its services, and the popularity, content, features, quality, functionality, accuracy, reliability of its products. In order to remain competitive and maintain Accel’s existing market share, Accel must continuously offer popular, high-quality games in a timely manner and new services or enhancements to its existing services. These services or enhancements may not be well received by licensed establishment partners or consumers, even if well reviewed and of high quality. In addition, some of Accel’s current and future competitors may enjoy substantial competitive advantages over it, such as greater name recognition, longer operating histories, or greater financial, technical, and other resources. These companies may use these advantages to offer services that respond better to the needs of licensed establishment partners, spend more on advertising and brand marketing, expand their operations, or respond more quickly and effectively than Accel does or can to new or changing opportunities, technologies, standards, regulatory conditions or requirements, or player preferences. These competitors could use these advantages to capture additional market share to Accel’s detriment in key markets. Additionally, Accel could lose some or all of the competitive advantages that it currently enjoys over its current and potential competitors. Accel also faces high levels of competition related to newly legalized gaming jurisdictions and for openings of new or expanded licensed establishments. Accel’s success depends on its ability to successfully enter new markets and compete successfully for new business, which is not certain to occur. Any of these developments could have an adverse effect on Accel’s results of operations, cash flows and financial condition and could result in a loss of market share in key markets.

Accel operates in the highly competitive gaming industry, and Accel’s success depends on its ability to effectively compete with numerous types of businesses in a rapidly evolving, and potentially expanding, gaming environment

While Accel’s operations face competition from many forms of leisure and entertainment activities, including shopping, athletic events, television and movies, concerts, and travel, Accel faces particularly robust competition from other forms of gaming. The gaming industry is characterized by an increasingly high degree of competition among a large number of participants on both a local and national level, including casinos, Internet gaming,

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sports betting, sweepstakes and poker machines not located in casinos, horse racetracks, including those featuring slot machines and/or table games, fantasy sports, real money iGaming, and other forms of gaming, such as, Internet-based lotteries, sweepstakes, and fantasy sports, and Internet-based or mobile-based gaming platforms, which allow their players to wager on a wide variety of sporting events and/or play casino games from home or in non-casino settings. This could divert players from using Accel’s products in licensed establishment partners, and adversely affect its business. Even Internet wagering services that are illegal under federal and state law but operate from overseas locations, may nevertheless be accessible to domestic gamblers and divert players from visiting licensed establishment partners to play on Accel’s VGTs.

The availability of competing gaming activities could increase substantially in the future. Voters and state legislatures may seek to supplement traditional tax revenue sources of state governments by authorizing or expanding gaming in Illinois, adjacent states or jurisdictions where Accel plans to operate in the future, such as Pennsylvania or Georgia. For example, on June 2, 2019, the Illinois legislature passed a significant gaming expansion bill authorizing the addition of multiple casinos to the state, including a casino in Chicago, permitting slot and table games at three horse racetracks, adding slot machines to two airports and creating licensing criteria for those eligible to provide sports betting services. In addition, other jurisdictions are considering or have already recently legalized, implemented and expanded gaming, and there are proposals across the country that would legalize Internet poker and other varieties of Internet gaming in a number of states and at the federal level. For example, Pennsylvania recently enacted legislation allowing regulated online poker and casino-style games within the commonwealth and legalizing sports betting in casinos. In addition, established gaming jurisdictions could award additional gaming licenses or permit the expansion or relocation of existing gaming operations (including VGTs). See “ —Accel’s revenue growth and future success depends on its ability to expand into new markets, including Pennsylvania, which may not occur as anticipated or at all” for more information. While Accel believes it is well positioned to take advantage of certain of these opportunities, expansion of gaming in other jurisdictions (both legal and illegal) could further compete with Accel’s VGTs, which could have an adverse impact on Accel’s results of operations, cash flows and financial condition.

The concentration and evolution of the VGT manufacturing industry could impose additional costs on Accel.

A majority of Accel’s revenue is attributable to VGTs and related systems supplied by it at licensed establishment partners. A substantial majority of the VGTs sold in the U.S. in recent years have been manufactured by a few select companies, and there has been extensive consolidation within the gaming equipment sector in recent years, including the acquisitions of Bally Technologies, Inc. (which had acquired SHFL Entertainment, Inc.) and WMS Industries, Inc. by Scientific Games Corporation (“Scientific Games”) and International Game Technology PLC by GTECH S.p.A, respectively.

Consolidation may force Accel to enter into purchase arrangements for new VGTs that are more expensive to operate than its existing VGTs. If the newer VGTs do not result in sufficient incremental revenues to offset the potential increased investment and costs, it could damage Accel’s profitability. In the event that Accel loses a supplier, it may be unable to replace such supplier, and Accel’s remaining suppliers may increase fees and costs. See “ — An increase in Accel’s borrowing costs would negatively affect its financial condition, cash flow and results of operations.”

Accel’s operations are largely dependent on the skill and experience of its management and key personnel. The loss of management and other key personnel could significantly harm Accel’s business, and it may not be able to effectively replace members of management who may leave Accel.

Accel’s success and competitive position are largely dependent upon, among other things, the efforts and skills of its senior executives and management team, including Andrew H. Rubenstein as the Chief Executive Officer and President, Karl Peterson as Chairman of the Company Board, Brian Carroll as Chief Financial Officer and Derek Harmer as General Counsel, Chief Compliance Officer and Secretary. Although Accel has entered into employment agreements with senior executives and key personnel, there can be no assurance that these

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individuals will remain employed. If Accel loses the services of any members of its management team or other key personnel, its business may be significantly impaired.

Accel relies on assumptions and estimates to calculate certain key metrics, and real or perceived inaccuracies in such metrics may harm its reputation and negatively affect its business.

Accel regularly reviews metrics, including the number of players and other measures, to evaluate growth trends, measure performance and make strategic decisions. Additionally, Accel commits significant amounts of resources and employee time to understanding the inherent historical patterns of gaming results within individual licensed establishment partners. Accel uses this pattern recognition process to implement more optimal gaming layouts for licensed establishment partners, with the goal of generating increased gaming revenue.

Certain of Accel’s key metrics, including the average post-acquisition net video gaming revenue per VGT per day (“hold-per-day”) and a number of other measures to evaluate growth trends and the quality of marketing and player behaviors, are calculated using data from Scientific Games, a contractor of the IGB. Scientific Games and the IGB may calculate certain metrics differently, which could limit the comparability of Accel’s key metrics and those of its competitors, who may use a different methodology to calculate similar metrics. For example, the IGB calculates average hold-per-day and other metrics using the number of VGTs that are active at the end of a given month, while Scientific Games uses the number of VGTs that are active at least one day during a month. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics” for more information. While Accel believe these figures to be reasonable and that its reliance on them is justified, there can be no assurance that such figures are reliable or accurate. Should Accel decide to review these or other figures, it may discover material inaccuracies, including unexpected errors in its internal data that result from technical or other errors. If Accel determines that any of its metrics are not accurate, they may be required to revise or cease reporting such metrics and such changes may harm Accel’s reputation and business.

Accel is subject to strict government regulations that are constantly evolving and may be amended, repealed, or subject to new interpretations, which may limit existing operations, have an adverse impact on the ability to grow or may expose Accel to fines or other penalties.

Accel is subject to the rules, regulations, and laws applicable to gaming, including, but not limited to, the Illinois Video Gaming Act, the Pennsylvania Gaming Act and the Georgia Lottery for Education Act. These gaming laws and related regulations are administered by the IGB and PA Board, respectively, which are regulatory boards with broad authority to create and interpret gaming regulations and to regulate gaming activities. These gaming authorities are authorized to:

• adopt additional rules and regulations under the implementing statutes;

• investigate violations of gaming regulations;

• enforce gaming regulations and impose disciplinary sanctions for violations of such laws, including fines, penalties and revocation of gaming licenses;

• review the character and fitness of manufacturers, distributors and operators of gaming services and equipment and make determinations regarding their suitability or qualification for licensure;

• review and approve transactions (such as acquisitions, material commercial transactions, securities offerings and debt transactions); and

• establish and collect related fees and/or taxes.

Although Accel plans to maintain compliance with applicable laws as they evolve and to generally maintain good relations with regulators, there can be no assurance that Accel will do so, and that law enforcement or gaming regulatory authorities will not seek to restrict Accel’s business in their jurisdictions or institute enforcement

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proceedings if Accel is not compliant. There can be no assurance that any instituted enforcement proceedings will be favorably resolved, or that such proceedings will not have an adverse effect on its ability to retain and renew existing licenses or to obtain new licenses in other jurisdictions. Gaming authorities may levy fines against Accel or seize certain assets if Accel violates gaming regulations. Accel’s reputation may also be damaged by any legal or regulatory investigation, regardless of whether Accel is ultimately accused of, or found to have committed, any violation. A negative regulatory finding or ruling in one jurisdiction could have adverse consequences in other jurisdictions, including with gaming regulators.

In addition to regulatory compliance risk, Illinois, Pennsylvania, Georgia or any other states or other jurisdiction in which Accel operates or may operate (including jurisdictions at the county, district, municipal, town or borough level), certain jurisdictions may amend or repeal gaming enabling legislation or regulations. Changes to gaming enabling legislation or new interpretations of existing gaming laws may hinder or prevent Accel from continuing to operate in the jurisdictions where it currently conducts business, which could increase operating expenses and compliance costs or decrease the profitability of operations. Repeal of gaming enabling legislation could result in losses of capital investments and revenue, limit future growth opportunities and have an adverse effect on Accel’s results of operations, cash flows and financial condition. If any jurisdiction in which Accel operates were to repeal gaming enabling legislation, there could be no assurance that Accel could sufficiently increase revenue in other markets to maintain operations or service existing indebtedness. In particular, the enactment of unfavorable legislation or government efforts affecting or directed at VGT manufacturers or gaming operators, such as referendums to increase gaming taxes or requirements to use local distributors, would likely have a negative impact on operations. For example, the Illinois legislature has recently approved a gaming expansion bill that, in addition to providing for an increased number of possible gaming venues, also increases Illinois state tax on gaming revenue. Additionally, membership changes within regulatory agencies could impact operations. The IGB in particular has experienced significant personnel changes since the commencement of Accel’s VGT operations in 2012. Changes in the composition of the IGB can impact current rules, regulations, policies, enforcement trends and overall agendas of the IGB.

Accel is obligated to develop and maintain proper and effective internal control over financial reporting. Accel has identified three material weaknesses in its internal control over financial reporting and if remediation of these material weaknesses is not effective, or if Accel fails to develop and maintain an effective system of disclosure controls and internal control over financial reporting, its ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired and its reputation and business could be adversely affected. In addition, the presence of material weaknesses increases the risk of material misstatement of the consolidated financial statements.

Accel is currently a public company and is required, pursuant to Section 404(a) of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of its internal control over financial reporting on its Annual Report on Form 10-K. Effective internal control over financial reporting is necessary for reliable financial reports and, together with adequate disclosure controls and procedures, such internal controls are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause Accel to fail to meet its reporting obligations. Ineffective internal controls could also cause investors to lose confidence in reported financial information, which could have a negative effect on the trading price of our Class A-1 common stock.

The report by management will need to include disclosure of any material weaknesses identified in internal control over financial reporting. However, for as long as Accel is an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) following the consummation of the Business Combination, its independent registered public accounting firm will not be required to attest to the effectiveness of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). Management’s assessment of internal controls, when implemented, could detect problems with internal controls, and an independent assessment of the effectiveness of internal controls by Accel’s auditors could detect further problems that management’s assessment might not, and could result in the

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identification of material weaknesses that were not otherwise identified. Undetected material weaknesses in internal controls could lead to financial statement restatements and require Accel to incur the expense of remediation.

In connection with the preparation of its consolidated financial statements for 2018, Accel identified a number of adjustments to its consolidated financial statements that resulted in a restatement of previously issued financial statements. These adjustments related to accounting for business acquisitions and subsequent accounting, accounting for route and customer acquisition costs and related liabilities, classification of items on the consolidated statements of stockholders’ equity and cash flows, accounting for income taxes, and other miscellaneous adjustments. Accel identified the cause of these adjustments was due to three material weaknesses in internal controls. A material weakness is a deficiency or combination of deficiencies in its internal control over financial reporting such that there is a reasonable possibility that a material misstatement of its consolidated financial statements would not be prevented or detected on a timely basis. This deficiency could result in additional misstatements to its consolidated financial statements that would be material and would not be prevented or detected on a timely basis.

The following three material weaknesses in internal control over financial reporting were identified, which are not remediated as of December 31, 2019, or currently:

• a material weakness related to review of the consolidated financial statements and certain of the associated accounting analyses, journal entries and accounting reconciliations due, in part, to the lack of formally documented accounting policies and procedures, as well as headcount necessary to support consistent, timely and accurate financial reporting in accordance with U.S. GAAP;

• a material weakness in the design and implementation of internal controls relating to business combination accounting and route and customer acquisition cost accounting due to the absence of formalized internal controls surrounding the determination of the fair value for assets acquired and liabilities assumed in business combinations, the accounting for initial route and customer acquisition costs and the accounting for such assets; and

• a material weakness related to general information technology controls including the design and implementation of access and change management internal controls.

Accel has begun evaluating and implementing additional processes, procedures and internal controls in order to remediate these material weaknesses, however, it cannot assure you that these or other measures will fully remediate the material weaknesses in a timely manner. As part of the remediation plan to address the material weakness identified above, Accel has hired additional accounting and finance employees with the specific technical accounting and financial reporting experience necessary for a public company. Accel has hired these personnel after considering the appropriateness of each individual’s experience and believe that these personnel are qualified to serve in their current respective roles. In addition, Accel has begun to implement more formal accounting policies and procedures to support timely and accurate financial reporting in accordance with GAAP. Accel will continue to assess the adequacy of its accounting and finance personnel and resources, and will add additional personnel, as well as adjust its resources, as necessary, commensurate with any increase in the size and complexity of its business. Accel also increased the depth and level of review procedures with regard to financial reporting and internal control procedures. If Accel is unable to remediate these material weaknesses, or otherwise maintain effective internal control over financial reporting, it may not be able to report its financial results accurately, prevent fraud or file its periodic reports in a timely manner. If Accel’s remediation of these material weaknesses is not effective, if Accel’s independent registered public accounting firm is unable to express an opinion on the effectiveness of its internal control or if it experiences additional material weaknesses or otherwise fails to maintain an effective system of internal controls in the future, it may not be able to accurately or timely report its financial condition or results of operations, which may cause Accel to become subject to investigation or sanctions by the SEC or adversely affect investor confidence in Accel and, as a result, the value of our Class A-1 common stock. There can be no assurance that all existing material weaknesses have been

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identified, or that additional material weaknesses will not be identified in the future. In addition, if Accel is unable to continue to meet its financial reporting obligations following the consummation of the Business Combination, it may not be able to remain listed on the NYSE.

Accel may be liable for product defects or other claims relating to its products that it provides to its licensed establishment partners.

The products that Accel provides to its licensed establishment partners could be defective, fail to perform as designed or otherwise cause harm to players or licensed establishment partners. If any of the products Accel provides are defective, Accel may be required to recall the products and/or repair or replace them, which could result in substantial expenses and affect profitability. In the event of any repair or recall, Accel could be dependent on the services, responsiveness or product stock of key suppliers, and any delay in their ability to resupply or assist in servicing key products could affect its ability to maintain the VGTs in licensed establishment partners. Any problem with the performance of Accel’s products could harm its reputation, which could result in a loss of existing or potential licensed establishments and players. In addition, the occurrence of errors in, or fraudulent manipulation of, Accel’s products or software may give rise to claims by licensed establishment partners or by players, including claims by licensed establishment partners for lost revenues and related litigation that could result in significant liability. Any claims brought against Accel by licensed establishment partners or players may result in the diversion of management’s time and attention, expenditure of large amounts of cash on legal fees and payment of damages, lower demand for products or services, or injury to reputation. Accel’s insurance or recourse against other parties may not sufficiently cover a judgment against it or a settlement payment, and any insurance payment is subject to customary deductibles, limits and exclusions. In addition, a judgment against Accel or a settlement could make it difficult for it to obtain insurance in the coverage amounts necessary to adequately insure its businesses, or at all, and could materially increase insurance premiums and deductibles. Software bugs or malfunctions, errors in distribution or installation of Accel’s software, failure of products to perform as approved by the appropriate regulatory bodies or other errors or malfunctions, may subject Accel to investigation or other action by gaming regulatory authorities, including fines.

Litigation may adversely affect Accel’s business, results of operations, cash flows and financial condition.

Accel may become subject to litigation claims in the operation of its business, including, but not limited to, with respect to employee matters, alleged product and system malfunctions, alleged intellectual property infringement and claims relating to contracts, licenses and strategic investments. Accel may incur significant expense defending or settling any such litigation. Additionally, adverse judgments that may be decided against Accel could result in significant monetary damages or injunctive relief that could adversely affect Accel’s ability to conduct business, its results of operations, cash flows and financial condition. See “Business—Legal Proceedings” for more information.

Accel’s results of operations, cash flows and financial condition could be affected by natural events in the locations in which it or its licensed establishment partners, suppliers or regulators operate.

Accel may be impacted by severe weather and other geological events, including hurricanes, tornados, earthquakes, floods or tsunamis that could disrupt operations or the operations of its licensed establishment partners, suppliers, data service providers and regulators. Natural disasters or other disruptions at any of Accel’s facilities or suppliers’ facilities may impair or delay the operation, development, provisions or delivery of its products and services. Additionally, disruptions experienced by Accel’s regulators due to natural disasters or otherwise could delay the introduction of new products or entry into new jurisdictions where regulatory approval is necessary. While Accel insures against certain business interruption risks, there can be no assurance that such insurance will adequately compensate for any losses incurred as a result of natural or other disasters. Any serious disruption to Accel’s operations, or those of its licensed establishment partners, suppliers, data service providers, or regulators, could have an adverse effect on Accel’s results of operations, cash flows and financial condition.

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If Accel’s estimates or judgments relating to critical accounting policies prove to be incorrect or financial reporting standards or interpretations change, its operating results could be adversely affected.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in its consolidated financial statements and accompanying notes. Accel bases its estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances, as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity as of the date of the financial statements, and the amount of revenue and expenses, during the periods presented, that are not readily apparent from other sources. Significant assumptions and estimates used in preparing consolidated financial statements include among other things, the useful lives for depreciable and amortizable assets, income tax provisions, the evaluation of the future realization of deferred tax assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with business acquisitions, the initial selection of useful lives for depreciable and amortizable assets in conjunction with business acquisitions, contingencies, and the expected term of share-based compensation awards and stock price volatility when computing share-based compensation expense. Accel’s operating results may be adversely affected if assumptions change or if actual circumstances differ from assumed circumstances, which could cause its operating results to fall below the expectations of industry or financial analysts and investors, resulting in a decline in the trading price of its common stock.

Additionally, Accel regularly monitors compliance with applicable financial reporting standards and reviews relevant new accounting pronouncements and drafts thereof. As a result of new standards, changes to existing standards, and changes in interpretation, Accel may be required to change accounting policies, alter operational policies and implement new or enhance existing systems so that they reflect new or amended financial reporting standards, or it may be required to restate published financial statements. Such changes to existing standards or changes in their interpretation may cause an adverse deviation from Accel’s revenue and operating profit target, which may negatively impact results of operations, cash flows and financial condition.

Accel may not have adequate insurance for potential liabilities.

In the ordinary course of business, Accel has, and in the future may become the subject of, various claims, lawsuits and administrative proceedings seeking damages or other remedies concerning its commercial operations, products, employees and other matters. Accel maintains insurance to cover these and other potential losses, and is subject to various self-retentions, deductibles and caps under its insurance. Accel faces the following risks with respect to insurance coverage:

• Accel may not be able to continue to obtain insurance on commercially reasonable terms;

• Accel may incur losses from interruptions of business that exceed insurance coverage;

• Accel may be faced with types of liabilities that will not be covered by insurance;

• Accel’s insurance carriers may not be able to meet their obligations under the policies; or

• the dollar amount of any liabilities may exceed policy limits.

Even a partially uninsured claim, if successful and of significant size, could have an adverse effect on Accel’s results of operations, cash flows and financial condition. Even in cases where Accel maintains insurance coverage, its insurers may raise various objections and exceptions to coverage that could make uncertain the timing and amount of any possible insurance recovery.

Accel’s business depends on the protection of intellectual property and proprietary information.

Accel believes that its success depends, in part, on protecting its intellectual property. Accel’s intellectual property includes certain trademarks and copyrights relating to its products and services, and proprietary or

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confidential information that is not subject to patent or similar protection. As of December 31, 2019, Accel owned five registered trademarks and 91 registered domain names. Accel’s success may depend, in part, on its ability to obtain protection for the trademarks, trade dress, names, logos or symbols under which it markets products and to obtain copyright and patent protection for proprietary technologies, designs, software and innovations. There can be no assurance that Accel will be able to build and maintain consumer value in its trademarks, obtain patent, trademark or copyright protection or that any patent, trademark or copyright will provide competitive advantages.

Accel’s intellectual property protects the integrity of its systems, products and services. Competitors may independently offer similar or superior products, software or systems, which could negatively impact results of operations, cash flows and financial condition. In cases where Accel’s technology or product is not protected by enforceable intellectual property rights, such independent development may result in a significant diminution in the value of such technology or product.

Accel also relies on trade secrets and proprietary knowledge and enters into confidentiality agreements with employees and independent contractors regarding trade secrets and proprietary information, however, there can be no assurance that the obligation to maintain the confidentiality of trade secrets and proprietary information will be honored.

Accel may, in the future, make claims of infringement, invalidity or enforceability against third parties. This could:

• cause Accel to incur greater costs and expenses in the protection of intellectual property;

• potentially negatively impact its intellectual property rights;

• cause one or more of its patents, trademarks, copyrights or other intellectual property interests to be ruled or rendered unenforceable or invalid; or

• divert management’s attention and resources.

Gaming opponents persist in their efforts to curtail the expansion of legalized gaming, which, if successful, could limit the growth of operations.

There is significant debate over, and opposition to, the gaming industry. There can be no assurance that this opposition will not succeed in preventing the legalization of gaming in jurisdictions where it is presently prohibited, prohibiting or limiting the expansion of gaming where it is currently permitted or causing the repeal of legalized gaming in any jurisdiction. Such opposition could also lead these jurisdictions to adopt legislation or impose a regulatory framework to govern gaming that restricts Accel’s ability to advertise games or substantially increases costs to comply with these regulations. Accel continues to devote significant attention to monitoring these developments, however, Accel cannot accurately predict the likelihood, timing, scope or terms of any state or federal legislation or regulation relating to its business. Any successful effort to curtail the expansion of, or limit or prohibit, legalized gaming could have an adverse effect on Accel’s results of operations, cash flows and financial condition.

For example, the Illinois legislature approved a gaming expansion bill in June 2019 that, in addition to providing for an increased number of possible gaming venues, also increased Illinois state tax on gaming revenue. Any tax increase by the state of Illinois, whether levied on licensed establishments or Accel, could have an adverse effect on Accel’s results of operations, cash flows and financial condition. Current and future appointees to the IGB may enact, change or rescind other rules and regulations in a way that negatively affects business.

Accel may not be able to capitalize on the expansion of gaming or other trends and changes in the gaming industries, including due to laws and regulations governing these industries, and other factors.

Accel participates in new and evolving aspects of the gaming industries. These industries involve significant risks and uncertainties, including legal, business and financial risks. The fast-changing environment in these

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industries can make it difficult to plan strategically and can provide opportunities for competitors to grow their businesses at Accel’s expense. Consequently, future results of operations, cash flows and financial condition are difficult to predict and may not grow at expected rates.

Part of Accel’s strategy is to take advantage of the liberalization of regulations covering these industries on a municipality and state basis, which can be a protracted process. To varying degrees, governments have taken steps to change the regulation of VGTs through the implementation of new or revised licensing and taxation regimes. For example, in addition to the State-issued gaming licenses, gaming licenses are also governed on a municipality-level in Illinois. While Accel has contracted for exclusive rights to operate in licensed establishments in over 600 different municipalities in Illinois, all of which have no prohibition or restriction with respect to gaming, there are many other municipalities that have “opt out” or “anti-gambling” ordinances which prohibit a range of activities characterized from “devices of chance” to “any gambling.” While a number of these municipalities have removed the ordinance or introduced an amendment to permit gaming activities germane to Accel’s business, they or other municipalities may choose to prohibit or limit gambling in the future. Additionally, Pennsylvania currently only permits the operation of VGTs at truck stops. While there are currently efforts to permit the expansion of VGTs into additional types of establishments, there can be no assurance that such efforts will succeed. Accel cannot predict the timing, scope or terms of the implementation or revision of any such state, federal or local laws or regulations, or the extent to which any such laws and regulations may facilitate or hinder its strategy.

Accel’s success depends on the security and integrity of the systems and products offered, and security breaches or other disruptions could compromise certain information and expose Accel to liability, which could cause Accel’s business and reputation to suffer.

Accel believes that success depends, in large part, on providing secure products, services and systems to licensed establishments and players, and on the ability to avoid, detect, replicate and correct software and hardware anomalies and fraudulent manipulation of products and services. Accel’s business sometimes involves the storage, processing and transmission of proprietary, confidential and personal information, and any future player program it may institute will also involve such information. Accel also maintains certain other proprietary and confidential information relating to its business and personal information of its personnel. All of Accel’s products, services and systems are designed with security features to prevent fraudulent activity. Despite these security measures, Accel’s products, services and systems may be vulnerable to attacks by licensed establishment partners, players, retailers, vendors or employees, or breaches due to cyber-attacks, viruses, malicious software, computer hacking, security breaches or other disruptions. Expanded use of the Internet and other interactive technologies may result in increased security risks for Accel and its licensed establishment partners because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not foreseeable or recognized until launched against a target and Accel may be unable to anticipate these techniques or to implement adequate preventative measures. Furthermore, hackers and data thieves are becoming increasingly sophisticated and could operate large-scale and complex automated attacks. Any security breach or incident could result in unauthorized access to, misuse of, or unauthorized acquisition of certain data, the loss, corruption or alteration of this data, interruptions in operations or damage to computers or systems or those of certain players or third-party platforms. Any of these incidents could expose Accel to claims, litigation, fines and potential liability. Accel’s ability to prevent anomalies and monitor and ensure the quality and integrity of its products and services is periodically reviewed and enhanced, and Accel regularly assesses the adequacy of security systems, including the security of its games and software, to protect against any material loss to licensed establishment partners and players, as well as the integrity of its products and services and its games. However, these measures may not be sufficient to prevent future attacks, breaches or disruptions.

There is a risk that Accel’s products, services or systems may be used to defraud, launder money or engage in other illegal activities at licensed establishments. Accel’s gaming machines have also experienced anomalies in the past. Games and gaming machines may be replaced by Accel and other gaming machine operators if they do not perform according to expectations, or they may be shut down by regulators. The occurrence of anomalies in,

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or fraudulent manipulation of, Accel’s gaming machines or other products and services, may give rise to claims from players or licensed establishment partners, may lead to claims for lost revenue and profits and related litigation by licensed establishment partners and may subject Accel to investigation or other action by regulatory authorities, including suspension or revocation of licenses or other disciplinary action. Additionally, in the event of the occurrence of any such issues with Accel’s products and services, substantial resources may be diverted from other projects to correct these issues, which may delay other projects and the achievement of strategic objectives. Further, third party hosted solution providers that provide services to Accel, such as Rackspace or Salesforce, could also be a source of security risk in the event of a failure of their own security systems and infrastructure.

Accel’s level of indebtedness could adversely affect results of operations, cash flows and financial condition.

As of June 30, 2020, Accel had total indebtedness of $407.2 million, all of which was borrowed under the Credit Agreement. As of June 30, 2020, there remained approximately $49.5 million of availability under the Credit Agreement.

Accel’s level of indebtedness could affect its ability to obtain financing or refinance existing indebtedness; require Accel to dedicate a significant portion of its cash flow from operations to interest and principal payments on indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures and other general corporate purposes, increase its vulnerability to adverse general economic, industry or competitive developments or conditions and limit its flexibility in planning for, or reacting to, changes in its businesses and the industries in which it operates or in pursuing its strategic objectives. In addition, Accel is exposed to the risk of higher interest rates as a significant portion of its borrowings are at variable rates of interest. If interest rates increase, the interest payment obligations would increase even if the amount borrowed remained the same, and results of operations, cash flows and financial condition could be negatively impacted. All of these factors could place Accel at a competitive disadvantage compared to competitors that may have less debt.

An increase in Accel’s borrowing costs could negatively affect its financial condition, cash flow and results of operations.

Certain of Accel’s VGTs and amusement machines acquisitions are financed using revolving credit facilities and bank loans. Accel’s financing agreements include variable interest rates and regular required interest, fee and amortization payments. If Accel is unable to generate sufficient revenue to offset the required payments, it could have an adverse effect on Accel’s results of operations, cash flows and financial condition. In addition, Accel is not currently involved in any interest rate hedging activities. Any such hedging activities could require Accel to incur additional costs, and there can be no assurance that Accel would be able to successfully protect itself from any or all negative interest rate fluctuations at a reasonable cost.

Accel may not have sufficient cash flows from operating activities, cash on hand and available borrowings under its Credit Agreement to finance required capital expenditures under new contracts and meet other cash needs.

Accel’s business generally requires significant upfront capital expenditures for VGTs and amusement machines, software customization and implementation, systems and equipment installation and telecommunications configuration. In connection with the signing or renewal of a gaming or amusement contract, Accel may provide new equipment or impose new service requirements at a licensed establishment, which may require additional capital expenditures in order to enter into or retain the contract. Historically, Accel has funded these upfront costs through cash flows generated from operations, available cash on hand and borrowings under the Credit Agreement.

In addition, since Accel is not paid for expenses and services, Accel may incur upfront costs (which may be significant) prior to receipt of any revenue under such arrangements. Accel’s ability to generate revenue and to

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continue to procure new contracts will depend on, among other things, its then present liquidity levels or its ability to obtain additional financing on commercially reasonable terms.

If Accel does not have adequate liquidity or is unable to obtain financing for these upfront costs and other cash needs on favorable terms or at all, it may not be able to pursue certain contracts, which could result in the loss of business or restrict the ability to grow. Moreover, Accel may not realize the return on investment that it anticipates on new or renewed contracts due to a variety of factors, including lower than anticipated retail sales or amounts wagered, higher than anticipated capital or operating expenses and unanticipated regulatory developments or litigation. Accel may not have adequate liquidity to pursue other aspects of its strategy, including bringing products and services to new licensed establishment partners or new or underpenetrated geographies (including through equity investments) or pursuing strategic acquisitions. In the event Accel pursues significant acquisitions or other expansion opportunities, conducts significant repurchases of outstanding securities, or refinances or repays existing debt, it may need to raise additional capital either through the public or private issuance of equity or debt securities or through additional borrowings under its existing financing arrangements, which sources of funds may not necessarily be available on acceptable terms, if at all.

Accel may not have sufficient cash flows from operating activities to service all of its indebtedness and other obligations, and may be forced to take other actions to satisfy obligations, which may not be successful.

Accel’s ability to make payments on and to refinance indebtedness and other obligations depends on its results of operations, cash flows and financial condition, which in turn are subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond its control. Accel may not be able to maintain a level of cash flows from operating activities sufficient to pay the principal, premium, if any, and interest on its indebtedness and other obligations.

Accel is required to make scheduled payments of principal in respect of the term loans under the Credit Agreement. Accel may also, from time to time, repurchase, or otherwise retire or refinance debt, through subsidiaries or otherwise. Such activities, if any, will depend on prevailing market conditions, contractual restrictions and other factors, and the amounts involved may or may not be material. If Accel needs to refinance all or part of its indebtedness at or before maturity, there can be no assurance that Accel will be able to obtain new financing or to refinance any of its indebtedness on commercially reasonable terms or at all.

Accel’s lenders, including the lenders participating in its delayed draw and/or revolving credit facilities under the Credit Agreement, may become insolvent or tighten their lending standards, which could make it more difficult for Accel to borrow under its delayed draw and/or revolving credit facilities or to obtain other financing on favorable terms or at all. Accel’s results of operations, cash flows and financial condition could be adversely affected if Accel is unable to draw funds under its delayed draw and/or revolving credit facilities because of a lender default or to obtain other cost-effective financing. Any default by a lender in its obligation to fund its commitment under the delayed draw and/or revolving credit facilities (or its participation in letters of credit) could limit Accel’s liquidity to the extent of the defaulting lender’s commitment. If Accel is unable to generate sufficient cash flow in the future to meet commitments, it may be required to adopt one or more alternatives, such as refinancing or restructuring indebtedness, selling material assets or operations or seeking to raise additional debt or equity capital. In addition, borrowings under Accel’s existing revolving credit facilities may be subject to capacity under an available borrowing base.

Indebtedness impose certain restrictions that may affect the ability to operate its business. Failure to comply with any of these restrictions could result in the acceleration of the maturity of indebtedness and require Accel to make payments on indebtedness. Were this to occur, Accel would not have sufficient cash to pay accelerated indebtedness.

Agreements governing Accel’s indebtedness impose, and future financing agreements are likely to impose, operating and financial restrictions on activities that may adversely affect its ability to finance future operations

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or capital needs or to engage in new business activities. In some cases, these restrictions require Accel to comply with or maintain certain financial tests and ratios. Subject to certain exceptions, Accel’s credit facilities restrict its ability to, among other things:

• incur or guarantee additional indebtedness;

• make loans to others;

• make investments;

• merge or consolidate with another entity;

• make dividends and certain other payments, including payment of junior debt;

• create liens that secure indebtedness and guarantees thereof;

• transfer or sell assets;

• enter into transactions with affiliates;

• change the nature of Accel’s business;

• enter into certain burdensome agreements;

• make certain accounting changes; and

• in the case of Accel Entertainment, Inc., change its passive holding company status.

In addition, the Credit Agreement contains financial covenants that require Accel to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of (i) (A) consolidated EBITDA minus (B) the sum of (i) cash taxes, (ii) 3.00% of consolidated revenue, (iii) operator earnout payments and (iv) regularly scheduled dividend payments that are financed with internally generated cash flow to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after November 20, 2019 and determined on the basis of the four most recently ended fiscal quarters of Accel for which financial statements have been or are required to have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights. If an event of default (as such term is defined in the Credit Agreement) occurs, the administrative agent on behalf of the lenders would be entitled to take various actions under certain circumstances, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto. Cross-default provisions may also be triggered. Under these circumstances, Accel might not have, or be able to obtain, sufficient funds or other resources to satisfy all of its obligations. In addition, the limitations imposed by financing agreements on Accel’s ability to incur additional debt, cause subsidiaries to guarantee certain debt, pay dividends or make other distributions, or take other actions might significantly impair its ability to obtain other financing.

There can be no assurance that Accel will be granted waivers or amendments to these agreements if for any reason it is unable to comply with these obligations or that it will be able to refinance its debt on terms acceptable or at all.

Risk Factors Relating to Our Common Stock

This offering and future sales of substantial amounts of Class A-1 common stock in the public market, or the perception that such sales may occur, could cause the market price for our Class A-1 common stock to decline.

The sale of shares of our Class A-1 common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Class A-1 common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

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Upon the closing of this offering, we expect to have outstanding an aggregate of 91,784,083 shares of Class A-1 common stock (or 92,104,320 if the underwriters exercise their option to purchase additional shares in full), based on 83,784,083 shares outstanding on September 18, 2020 and including the 8,000,000 shares of Class A-1 common stock offered by us in this offering.

In connection with this offering, we, our executive officers and directors and the selling stockholders have entered into lock-up agreements with the underwriters of this offering, under which we and they have agreed, or will agree, that, subject to certain exceptions, we and they will not sell, dispose of or hedge any shares or any securities convertible into or exchangeable for shares of our Class A-1 common stock until 60 days after the date of the final prospectus relating to this offering. At any time and without public notice, Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC may, in their sole discretion, release all or some of the securities.

The transfer restrictions in the lock-up agreement with the underwriters and the Stockholders Agreement include certain exclusions, including customary carve-outs. A transfer of shares pursuant to such carve-outs could result in additional shares becoming freely tradable prior to the expiration of the applicable lock-up period.

In addition, we have reserved a total of 293,921 shares of Class A-1 common stock for issuance under our 2011 Plan, 603,253 shares of Class A-1 common stock for issuance under our 2016 Plan and 3,104,403 shares of Class A-1 common stock for issuance under our LTIP, 208,382 shares of Class A-1 common stock issuable upon the exercise of outstanding options to purchase shares of our Class A-1 common stock outstanding as of September 18, 2020 and with a weighted average exercise price of $2.74, and 1,452,867 shares of Class A-1 common stock underlying Accel’s warrants. Any shares of Class A-1 common stock that we issue under our 2011 Plan, 2016 Plan or LTIP or other equity incentive plans that we may adopt in the future would dilute the percentage ownership held by the investors who purchase shares of Class A-1 common stock in this offering.

As restrictions on resale end or if these stockholders exercise their sale, exchange or registration rights and sell shares or are perceived by the market as intending to sell shares, the market price of our shares of Class A-1 common stock could drop significantly. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A-1 common stock or other securities.

In the future, we may also issue securities in connection with investments, acquisitions or capital raising activities. In particular, the number of shares of our Class A-1 common stock issued in connection with an investment or acquisition, or to raise additional equity capital, could constitute a material portion of our then-outstanding shares of our Class A-1 common stock. Any such issuance of additional securities in the future may result in additional dilution to you or may adversely impact the price of our Class A-1 common stock.

We have broad discretion over the use of net proceeds we receive from the sale of shares of Class A-1 common stock in this offering, and despite our efforts may not use them in a manner that increases the value of your investment.

Our management has broad discretion to use the net proceeds we receive from the sale of shares of Class A-1 common stock in this offering for general corporate purposes and could spend these funds in ways that do not improve our results of operations or enhance the value of our Class A-1 common stock. The failure by our management to apply these funds effectively could have an adverse effect on our business and cause the price of our Class A-1 common stock to decline.

The underwriters of this offering may waive or release parties to the lock-up agreements entered into in connection with this offering, which could adversely affect the price of our Class A-1 common stock.

We, all of our directors and executive officers and the selling stockholders have entered or will enter into lock-up agreements pursuant to which we and they will be subject to certain restrictions with respect to the sale or other

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disposition of our Class A-1 common stock until 60 days after the date of the final prospectus relating to this offering. Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as the representatives of the underwriters, at any time and without notice, may release all or any portion of the Class A-1 common stock subject to the foregoing lock-up agreements. See “Underwriting” for more information on these agreements. If the restrictions under the lock-up agreements are waived, then the Class A-1 common stock, subject to compliance with the Securities Act or exceptions therefrom, will be available for sale into the public markets, which could cause the market price of our Class A-1 common stock to decline and impair our ability to raise capital. Sales of a substantial number of shares upon expiration of the lock-up agreements, the perception that such sales may occur, or early release of these agreements, could cause our market price to fall or make it more difficult for you to sell your Class A-1 common stock at a time and price that you deem appropriate.

TPG Global, LLC, or TPG, Clairvest Group Inc., or Clairvest, and members of the Rubenstein Family own a significant portion of Common Stock and have representation on the Company Board. TPG and Clairvest, through their respective affiliates, and members of the Rubenstein Family may have interests that differ from those of other stockholders.

As of September 18, 2020, approximately 10.81% of the shares of our Class A-1 common stock were beneficially owned by Karl Peterson, TPG Pace Governance, LLC and TPG Pace II Sponsor Successor, LLC and approximately 20.17% of the shares of our Class A-1 common stock were beneficially owned by affiliates of Clairvest. Following the consummation of the Business Combination, (i) three directors were jointly nominated by Pace, an affiliate of TPG, the Sellers and the Shareholder Representatives to serve on the Company Board, (ii) another two directors were jointly nominated by Pace, an affiliate of TPG and the Shareholder Representatives and (iii) one director was jointly nominated by TPG and Clairvest. While Accel’s subsidiaries (including those holding gaming licenses) manage their respective operations in the ordinary course, TPG and Clairvest may be able to significantly influence the outcome of matters submitted for action by directors of the Company Board, subject to the Company’s directors’ obligation to act in the interest of all of the Company’s stakeholders, and for stockholder action, including the designation and appointment of the Company Board (and committees thereof) and approval of significant corporate transactions, including business combinations, consolidations and mergers. So long as TPG and Clairvest continue to directly or indirectly own a significant amount of Accel’s outstanding equity interests and any individuals affiliated with TPG and Clairvest are members of the Company Board and/or any committees thereof, TPG and Clairvest may be able to exert substantial influence on Accel and may be able to exercise its influence in a manner that is not in the interests of Accel’s other stakeholders. TPG’s and Clairvest influence over Accel’s management could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could cause the market price of Class A-1 common stock to decline or prevent public stockholders from realizing a premium over the market price for Class A-1 common stock. Additionally, TPG and Clairvest and their respective affiliates are in the business of making investments in companies and owning real estate, and may from time to time acquire and hold interests in businesses that compete directly or indirectly with Accel or that supply Accel with goods and services. TPG, Clairvest, or their respective affiliates may also pursue acquisition opportunities that may be complementary to (or competitive with) Accel’s business, and as a result those acquisition opportunities may not be available to Accel. Prospective investors should consider that the interests of TPG and Clairvest may differ from their interests in material respects.

In addition, as of September 18, 2020, approximately 10.31% of the shares of our Class A-1 common stock were beneficially owned by Mr. A. Rubenstein, approximately 3.63% of the shares of our Class A-1 common stock were beneficially owned by his brother, Mr. G. Rubenstein, and Mr. A. Rubenstein, together with Mr. G. Rubenstein and their father, Mr. Jeffrey Rubenstein (together, the “Rubenstein Family”) collectively beneficially own approximately 17.67% of the shares of our Class A-1 common stock. Although each of Mr. A. Rubenstein, Mr. G. Rubenstein, and Mr. J. Rubenstein each disclaim legal or beneficial ownership of any shares of Class A-1 common stock owned or controlled by the others, the Rubenstein Family have and may exert significant influence over corporate actions requiring stockholder approval. In addition, each of Mr. A. Rubenstein and Mr. G. Rubenstein are members of the Company Board. As a result, the Rubenstein Family, including Mr. A. Rubenstein and Mr. G. Rubenstein may be able to significantly influence the outcome of matters submitted for

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director action, subject to Accel’s director’s obligation to act in the interest of all of Accel’s stakeholders, and for stockholder action, including the designation and appointment of the Company Board (and committees thereof) and approval of significant corporate transactions, including business combinations, consolidations and mergers. So long as the Rubenstein Family, including Mr. A. Rubenstein and Mr. G. Rubenstein continues to directly or indirectly own a significant amount of Accel’s outstanding equity interests and any individuals affiliated with members of the Rubenstein Family are members of the Company Board and/or any committees thereof, and the Rubenstein Family, including Mr. A. Rubenstein and Mr. G. Rubenstein may be able to exert substantial influence on Accel and may be able to exercise its influence in a manner that is not in the interests of Accel’s other stakeholders. The Rubenstein Family, including Mr. A. Rubenstein’s and Mr. G. Rubenstein’s influence over Accel’s management could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of Accel, which could cause the market price of Class A-1 common stock to decline or prevent public stockholders from realizing a premium over the market price for Class A-1 common stock. Prospective investors should consider that the interests of the Rubenstein Family may differ from their interests in material respects. In addition, pursuant to the Transaction Agreement and subject to certain limitations set forth in the Transaction Agreement, any person who held (together with such person’s affiliates) at least 8% of the outstanding shares of Class A-1 common stock immediately following the closing of the Stock Purchase in connection with the Business Combination, had the right to nominate an individual to be a member of the Company Board. So long as any such stockholder with director nomination rights continues to directly or indirectly own a significant amount of Accel’s outstanding equity interests and any individuals affiliated with such stockholder are members of the Company Board and/or any committees thereof, such major stockholder may be able to exert substantial influence on Accel and may be able to exercise its influence in a manner that is not in the interests of Accel’s other stakeholders. This influence over Accel’s management could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of Accel, which could cause the market price of Class A-1 common stock to decline or prevent public stockholders from realizing a premium over the market price for Class A-1 common stock.

Holders of Common Stock are subject to certain gaming regulations, and if a holder is found unsuitable by a gaming authority, that holder would not be able to, directly or indirectly, beneficially own Common Stock.

Holders of Common Stock are subject to certain gaming regulations. In Illinois, Pennsylvania and other regulated gaming jurisdictions, gaming laws can require any holder of Common Stock to be disclosed, file an application, be investigated, and qualify or have his, her or its suitability determined by gaming authorities. Gaming laws in Illinois, Pennsylvania and other regulated gaming jurisdictions also require any person who acquires beneficial ownership of more than 5% of voting securities of a gaming company to notify the gaming authorities, and gaming authorities may require such holders to apply for qualification or a finding of suitability, subject to limited exceptions for “institutional investors” that hold a company’s voting securities for investment purposes only. If a holder is found unsuitable by a gaming authority, that holder would not be able to, directly or indirectly, beneficially own Common Stock.

Gaming authorities have very broad discretion in determining whether an applicant should be deemed suitable. For any cause deemed reasonable by the gaming authorities, subject to certain administrative proceeding requirements, gaming regulators in Illinois, Pennsylvania or elsewhere would have the authority to (i) deny any application; (ii) limit, condition, restrict, revoke, or suspend any license, registration, finding of suitability or approval, including revoking any licenses held by Accel to conduct business in the state or (iii) fine any person licensed, registered, or found suitable or approved. Any person required by a gaming authority to be found suitable, who is found unsuitable by the gaming authority, may not hold, directly or indirectly, the beneficial ownership of any voting security or beneficial or record ownership of any non-voting security or any debt security of any public corporation that is registered with the gaming authority beyond the time prescribed by the gaming authority. A finding of unsuitability by a particular gaming authority in Illinois, Pennsylvania or elsewhere will impact that person’s ability to associate or affiliate with gaming licensees in that particular

39

jurisdiction and could impact the person’s ability to associate or affiliate with gaming licensees in other jurisdictions.

Accel is a holding company and depends on the ability of Accel’s subsidiaries to pay dividends.

Accel has never declared or paid any cash dividends, nor does Accel intend to pay cash dividends. Accel is a holding company without any direct operations and will have no significant assets other than Accel’s ownership interest in its subsidiaries. Accordingly, Accel’s ability to pay dividends will depend upon the financial condition, liquidity and results of operations of, and Accel’s receipt of dividends, loans or other funds from, its subsidiaries. Accel’s subsidiaries are separate and distinct legal entities and have no obligation to make funds available to Accel. In addition, there are various statutory, regulatory and contractual limitations and business considerations on the extent, if any, to which Accel’s subsidiaries may pay dividends, make loans or otherwise provide funds to Accel. For example, the ability of Accel’s subsidiaries to make distributions, loans and other payments to it for the purposes described above and for any other purpose will be limited by the terms of the Credit Agreement.

The market price and trading volume of Class A-1 common stock may be volatile and could decline significantly.

The stock markets, including the NYSE have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for the Class A-1 common stock, the market price of Class A-1 common stock may be volatile and could decline significantly. In addition, the trading volume in Class A-1 common stock may fluctuate and cause significant price variations to occur. If the market price of Class A-1 common stock declines significantly, you may be unable to resell your Class A-1 common stock at or above the market price of Class A-1 common stock as of the date hereof. Accel cannot assure you that the market price of Class A-1 common stock will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:

• the realization of any of the risk factors presented in this prospectus;

• actual or anticipated differences in Accel’s estimates, or in the estimates of analysts, for Accel’s revenues, Adjusted EBITDA, results of operations, level of indebtedness, liquidity or financial condition;

• additions and departures of key personnel;

• failure to comply with the requirements of the NYSE;

• failure to comply with the Sarbanes-Oxley Act or other laws or regulations;

• changes to gaming laws, regulations or enforcement policies of applicable gaming authorities;

• future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of Accel’s capital stock;

• publication of research reports about Accel, its licensed establishments or the video gaming terminal industry generally;

• the performance and market valuations of other similar companies;

• commencement of, or involvement in, litigation involving Accel;

• broad disruptions in the financial markets, including sudden disruptions in the credit markets;

• speculation in the press or investment community;

• actual, potential or perceived control, accounting or reporting problems; and

• changes in accounting principles, policies and guidelines.

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In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result in substantial costs and divert Accel’s management’s attention and resources, which could have a material adverse effect on Accel.

If securities or industry analysts do not publish research, publish inaccurate or unfavorable research or cease publishing research about Accel, our share price and trading volume could decline significantly.

The market for our Class A-1 common stock will depend in part on the research and reports that securities or industry analysts publish about Accel or its business. If one or more of the analysts who cover Accel downgrade their opinions about Class A-1 common stock, publish inaccurate or unfavorable research about Accel, or cease publishing about it regularly, demand for Class A-1 common stock could decrease, which might cause our share price and trading volume to decline significantly.

Future issuances of debt securities and equity securities may adversely affect Accel, including the market price of its securities and may be dilutive to existing stockholders.

In the future, Accel may incur debt or issue equity ranking senior to its securities. Those securities will generally have priority upon liquidation. Such securities also may be governed by an indenture or other instrument containing covenants restricting Accel’s operating flexibility. Additionally, any convertible or exchangeable securities that Accel issues in the future may have rights, preferences and privileges more favorable than those of Accel’s securities. Because Accel’s decision to issue debt or equity in the future will depend on market conditions and other factors beyond its control, Accel cannot predict or estimate the amount, timing, nature or success of future capital raising efforts. As a result, future capital raising efforts may reduce the market price of Accel’s securities and be dilutive to existing stockholders.

Accel is an “emerging growth company,” and Accel cannot be certain if the reduced SEC reporting requirements applicable to emerging growth companies will make its securities less attractive to investors, which could have a material and adverse effect on Accel, including its growth prospects.

Accel is an “emerging growth company” as defined in the JOBS Act. Accel will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following June 30, 2022, the fifth anniversary of the IPO of Pace, (b) in which Accel has total annual gross revenue of at least $1.0 billion or (c) in which Accel is deemed to be a large accelerated filer, which means the market value of Class A-1 common stock that is held by non-affiliates exceeds $700 million as of the last business day of the prior second fiscal quarter, and (ii) the date on which Accel has issued more than $1.0 billion in non-convertible debt during the prior three-year period. Accel intends to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, whether or not they are classified as “emerging growth companies,” including, but not limited to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that Accel’s independent registered public accounting firm provide an attestation report on the effectiveness of Accel’s internal control over financial reporting and reduced disclosure obligations regarding executive compensation in Accel’s periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. The JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in the Securities Act for complying with new or revised accounting standards. Accel has not chosen to “opt out” of this extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, Accel, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of Accel’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Accel cannot predict if investors will find its securities less attractive because it intends to rely on certain of these exemptions and benefits under the JOBS Act. If some investors find Accel

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securities less attractive as a result, there may be a less active, liquid and/or orderly trading market for Accel’s securities and the market price and trading volume of its securities may be more volatile and decline significantly.

Provisions in Accel’s Charter designate the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain times of actions and proceedings that may be initiated by Accel’s stockholders, and provisions in Accel’s Bylaws also provide that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act which could limit the ability of Accel’s stockholders to obtain a favorable judicial forum for disputes with Accel or with its directors, officers or employees and may discourage stockholders from bringing such claims.

The Charter provides that, to the fullest extent permitted by law, unless Accel consents to the selection of an alternative forum, and subject to the Court of Chancery of the State of Delaware having personal jurisdiction over the parties named as defendants therein, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for:

• any derivative action or proceeding brought on behalf of Accel;

• any action asserting a claim of breach of a fiduciary duty owed by any of Accel’s directors or officers to Accel or its stockholders, creditors or other constituents;

• any action asserting a claim against Accel or any of its directors or officers arising pursuant to any provision of the DGCL, the Charter or the Bylaws (as either may be amended and/or restated from time to time); or

• any action asserting a claim against Accel that is governed by the internal affairs doctrine.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Accel or any of its directors, officers, or other employees, which may discourage lawsuits with respect to such claims. However, stockholders will not be deemed to have waived Accel’s compliance with the federal securities laws and the rules and regulations thereunder and this provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act, which provides for the exclusive jurisdiction of the federal courts with respect to all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. The Bylaws also provide that the federal district courts of the United States are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. If a court were to find the choice of forum provision contained in the Charter to be inapplicable or unenforceable in an action, Accel may incur additional costs associated with resolving such action in other jurisdictions, which could harm Accel’s business, results of operations and financial condition.

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USE OF PROCEEDS

We estimate that the net proceeds from our issuance and sale of shares of our Class A-1 common stock in this offering will be approximately $        million (or                  shares if the underwriters exercise their option to purchase additional shares in full), after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any of the proceeds from the sale of Class A-1 common stock offered by the selling stockholders. We will, however, bear the costs associated with the sale of shares by the selling stockholders, other than underwriting discounts and commissions.

We intend to use the net proceeds from the offering for general corporate purposes which may include capital expenditures, repayment of debt, potential acquisitions and strategic business transactions.

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CAPITALIZATION

The following table sets forth Accel’s cash and cash equivalents and capitalization as of June 30, 2020:

• On an actual basis; and

• On an as adjusted basis to reflect the issuance of shares of common stock by us in this offering and the receipt of approximately $        million in net proceeds from the sale of such shares (assuming the underwriters do not exercise their option to purchase additional shares).

This table should be read in conjunction with “Use of Proceeds,” Accel’s audited financial statements and related notes, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information, included elsewhere in this prospectus.

	As of June 30, 2020
(In thousands, except par value and share amounts)	Actual			As Adjusted
Cash and cash equivalents	$	148,834		$
Revolving credit facility	$	50,500		$
Term Loan		234,000
Delayed Draw Term Loan		122,688
Total debt		407,188
Stockholders’ equity:
Preferred Stock, par value of $0.0001; 1,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2020		—
Class A-1 common stock, par value $0.0001; 250,000,000 shares authorized; 78,382,405 shares issued and outstanding at June 30, 2020; 86,382,405 shares issued and outstanding, as adjusted		8
Class A-2 common stock, par value $0.0001; 10,000,000 shares authorized; 3,403,363 shares issued and outstanding at June 30, 2020		1
Additional paid-in capital		108,732
Accumulated deficit		(43,710	)
Total stockholders’ equity		65,031
Total capitalization	$	472,219		$

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MARKET PRICE, TICKER SYMBOL AND DIVIDEND INFORMATION

Market Price and Ticker Symbol

Our Class A-1 common stock is currently listed on the NYSE under the symbol “ACEL.”

The closing price of the Class A-1 common stock on September 18, 2020, was $14.00.

Holders

As of September 18, 2020, there were 107 holders of record of our Class A-1 common stock. Such numbers do not include beneficial owners holding our securities through nominee names.

Dividend Policy

The Company has not paid any cash dividends on its Class A-1 common stock to date. The payment of cash dividends in the future will be dependent upon the Company’s revenues and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends will be within the discretion of the Company Board at such time.

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SELECTED HISTORICAL FINANCIAL DATA OF ACCEL AND NON-GAAP FINANCIAL MEASURES

The following tables present selected financial data for (i) the six-month period ended June 30, 2020 and as of June 30, 2020 and 2019 and (ii) each fiscal year in the three-year period ended December 31, 2019 for Consolidated Statements of Operations, Cash Flows and Other Data, and the two-year period ended December 31, 2019 for Consolidated Balance Sheets Data. The selected financial data below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and related notes thereto contained elsewhere in this prospectus.

The condensed consolidated statements of income data and consolidated statements of cash flows data for the six-month periods ended June 30, 2020 and 2019, and the consolidated balance sheet data as of June 30, 2020, are derived from Accel’s unaudited condensed consolidated financial statements contained herein. The consolidated statements of income data and consolidated statements of cash flows data for the years ended December 31, 2019, 2018 and 2017, and the consolidated balance sheet data as of December 31, 2019 and 2018, are derived from Accel’s audited consolidated financial statements contained herein.

Our historical results are not necessarily indicative of the results that should be expected in the future and the selected financial data is not intended to replace the consolidated financial statements and related notes thereto included elsewhere in this prospectus. Accel presents below certain statistical data and comparative information commonly used in the gaming industry to monitor performance. Management uses this information for financial planning, strategic planning and employee compensation decisions.

In response to the COVID-19 outbreak, the IGB decided to shut down all VGTs across the State of Illinois starting at 9:00 p.m. on March 16, 2020 and ultimately extended the shutdown through June 30, 2020. The temporary shutdown of Illinois video gaming impacted all of the gaming days during the three months ended June 30, 2020 and 106 of the 182 gaming days (or 58% of gaming days) during the six months ended June 30, 2020. While the IGB has announced the resumption of all video gaming activities effective July 1st, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events.

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Consolidated Statements of Operations, Cash Flows and Other Data

	Six Months Ended June 30,						Year Ended December 31,
(in thousands, except key metrics data)	2020			2019			2019			2018			2017
	(Unaudited)						(Audited)
Consolidated Statements of Operations Data:
Total net revenues	$	105,607		$	201,692		$	424,385		$	331,993		$	248,435
Operating (loss) income		(21,696	)		17,975			13,336			24,869			18,170
(Loss) income before income tax (benefit) expense		(28,434	)		11,772			(665	)		15,225			10,065
Net (loss) income	$	(23,240	)	$	8,323		$	(5,864	)	$	10,803		$	8,311
Consolidated Statements of Cash Flows Data:
Net cash (used in) provided by operating activities	$	(17,284	)	$	26,083		$	45,565		$	44,343		$	33,097
Net cash used in investing activities		(4,002	)		(10,548	)		(151,532	)		(73,547	)		(70,870	)
Net cash provided by (used in) financing activities		44,717			(8,257	)		139,141			46,122			59,081
Other Financial Data:
Adjusted EBITDA(1)	$	6,095		$	40,669		$	79,594		$	63,815		$	46,865
Adjusted net (loss) income(2)	$	(7,402	)	$	15,071		$	22,695		$	23,136		$	17,310
Key Metrics:
Licensed establishments(3)		2,335			1,762			2,312			1,686			1,442
Video gaming terminals(4)		11,108			8,082			10,499			7,649			6,439
Average remaining contract term (years)(5)		6.8			7.4			6.9			7.6			8.3
Hold-per-day(6) (in whole dollars)	$	124		$	137		$	130		$	125		$	115

(1) Adjusted EBITDA is defined as net (loss) income plus amortization of route and customer acquisition costs and location contracts acquired; stock-based compensation expense; other expenses, net; tax effect of adjustments; depreciation and amortization of property and equipment; interest expense; and provision for income taxes. For additional information on Adjusted EBITDA and a reconciliation of net (loss) income to Adjusted EBITDA, see “—Non-GAAP Financial Measures—Adjusted EBITDA and Adjusted net (loss) income.”

(2) Adjusted Net (loss) income is defined as net (loss) income plus amortization of route and customer acquisition costs and location contracts acquired; stock-based compensation expense; other expenses, net; and tax effect of adjustments. For additional information on Adjusted net (loss) income and a reconciliation of net (loss) income to Adjusted net (loss) income, see “—Non-GAAP Financial Measures—Adjusted EBITDA and Adjusted net (loss) income.”

(3) Based on Scientific Games International third-party terminal operator portal data which is updated at the end of each gaming day and includes licensed establishments that may be temporarily closed but still connected to the central system. This metric is utilized by Accel to continually monitor growth from existing locations, organic openings, acquired locations, and competitor conversions.

(4) Based on Scientific Games International third-party terminal operator portal data which is updated at the end of each gaming day and includes VGTs that may be temporarily shut off but still connected to the central system. This metric is utilized by Accel to continually monitor growth from existing locations, organic openings, acquired locations, and competitor conversions.

(5) Calculated by determining the average expiration date of all outstanding contracts, and then subtracting the applicable measurement date. The IGB limited the length of contracts entered into after February 2, 2018 to a maximum of eight years with no automatic renewals.

(6) Calculated by dividing the difference between cash deposited in all VGTs and tickets issued to players by the average number of VGTs in operation during the period being measured, and then further dividing such quotient by the number of days in such period.

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Consolidated Balance Sheets Data

	As of June 30,		As of December 31,
(in thousands)	2020		2019		2018
	(Unaudited)		(Audited)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	148,834	$	125,403	$	92,229
Total current assets		179,821		151,495		102,011
Property and equipment, net		123,759		119,201		92,442
Total assets		525,276		509,317		335,174
Total current liabilities		50,475		54,946		85,882
Total long-term liabilities		409,770		368,846		192,174
Stockholders’ equity		65,031		85,525		57,118

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted net income are non-GAAP financial measures and are key metrics used to monitor ongoing core operations. Management of Accel believes Adjusted EBITDA and Adjusted net income enhance the understanding of Accel’s underlying drivers of profitability and trends in Accel’s business and facilitate company-to-company and period-to- period comparisons, because these non-GAAP financial measures exclude the effects of certain non-cash items or represent certain nonrecurring items that are unrelated to core performance. Management of Accel also believes that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance and to evaluate Accel’s ability to fund capital expenditures, service debt obligations and meet working capital requirements.

Adjusted net (loss) income and Adjusted EBITDA

	Six Months Ended June 30,						Year Ended December 31,
(in thousands)	2020			2019			2019			2018			2017
Net (loss) income	$	(23,240	)	$	8,323		$	(5,864	)	$	10,803		$	8,311
Adjustments:
Amortization of route and customer acquisition costs and location contracts acquired(1)		11,130			8,927			17,975			14,681			9,792
Stock-based compensation(2)		2,387			256			2,236			453			804
Other expenses, net(3)		4,336			1,370			19,649			3,030			1,331
Tax effect of adjustments(4)		(2,015	)		(3,805	)		(11,301	)		(5,831	)		(2,928	)
Adjusted net (loss) income	$	(7,402	)	$	15,071		$	22,695		$	23,136		$	17,310
Depreciation and amortization of property and equipment		9,938			12,141			26,398			20,782			16,768
Interest expense		6,738			6,203			12,860			9,644			8,105
Income tax (benefit) expense		(3,179	)		7,254			16,500			10,253			4,682
Loss on debt extinguishment		—			—			1,141			—			—
Adjusted EBITDA	$	6,095		$	40,669		$	79,594		$	63,815		$	46,865

(1) Route and customer acquisition costs consist of upfront cash payments and future cash payments to third party sales agents to acquire the licensed video gaming establishments that are not connected with a business combination. Accel amortizes the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items. Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the

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contract. Future cash payments do not include cash costs associated with renewing customer contracts as Accel does not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 10 years. “Amortization of route and customer acquisition costs and location contracts acquired” aggregates the non- cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired.

(2) Stock-based compensation consists of options, restricted stock units and warrants.

(3) Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring expenses including expenses relating to lobbying efforts and legal expenses in Pennsylvania, lobbying efforts in Missouri and a settlement in connection with a gaming acquisition, and (iii) non-recurring expenses associated with the Business Combination.

(4) Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations.

Adjusted EBITDA for the six months ended June 30, 2020 was $6.1 million, a decrease of $34.6 million, or 85.0%, compared to prior year period primarily due to the impact of the temporary shutdown of video gaming in the state of Illinois due to the COVID-19 outbreak.

Adjusted EBITDA for the year ended December 31, 2019 was $79.6 million, an increase of $15.8 million, or 24.7%, compared to year ended December 31, 2018. The increase was primarily attributable to an increase in licensed establishments and VGTs.

Adjusted EBITDA for the year ended December 31, 2018 was $63.8 million, an increase of $16.9 million, or 36.1%, compared to year ended December 31, 2017. The increase in Adjusted EBITDA is attributable to both organic growth of the business as well as the acquisitions of Skyhigh Gaming on August 1, 2018, G3 Gaming on October 16, 2018, (collectively, the “2018 Acquisitions”). The increase was primarily attributable to an increase in licensed establishments and VGTs.

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BUSINESS

Overview

We are a leading distributed gaming operator in the United States on an Adjusted EBITDA basis, and a preferred partner for local business owners in the Illinois market. Our business consists of the installation, maintenance and operation of VGTs, redemption devices that disburse winnings and contain ATM functionality, and other amusement devices in authorized non-casino locations such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores, which are referred to collectively as “licensed establishments.” We also operate stand-alone ATMs in gaming and non-gaming locations. Accel has been licensed by the IGB since 2012 and holds a conditional license from the PA Board. In July 2020, the Georgia Lottery Corporation approved one of our consolidated subsidiaries as a Master Licensee.

Our gaming-as-a-service platform provides local businesses with a turnkey, capital efficient gaming solution. We own all of our VGT equipment and manage the entire operating process for our licensed establishment partners. We also offer our licensed establishment partners VGT solutions that appeal to players who patronize those businesses. We devote significant resources to licensed establishment partner retention, and seek to provide prompt, personalized player service and support, which we believe is unparalleled among other distributed gaming operators. Dedicated relationship managers assist licensed establishment partners with regulatory applications and compliance onboarding, train licensed establishment partners on how to engage with players and potential players, monitor individual gaming areas for compliance, cleanliness and comfort and recommend potential changes to improve both player gaming experience and overall revenue for each licensed establishment. We also provide weekly gaming revenue reports to our licensed establishment partners and analyze and compare gaming results within individual licensed establishment partners. This information is used to determine an optimal selection of games, layouts and other ideas to generate foot traffic for our licensed establishment partners with the goal of generating increased gaming revenue. Further, our in-house collections and security personnel provide highly secure cash transportation and vault management services. Our best-in-class technicians ensure minimal downtime through proactive service and routine maintenance. As a result, Accel’s voluntary contract renewal rate was over 98% for the three-year period ended December 31, 2019.

In addition to our VGT business, we also install, operate and service redemption devices that have ATM functionality, stand-alone ATMs and amusement devices, including jukeboxes, dartboards, pool tables, pinball machines and other related entertainment equipment. These operations provide a complementary source of lead generation for our VGT business by offering a “one-stop” source of additional equipment for its licensed establishment partners.

Impact of COVID-19

The COVID-19 outbreak is having a significant impact on global markets as a result of supply chain and production disruptions, workforce restrictions, travel restrictions, reduced consumer spending and sentiment, amongst other factors, which are, individually or in the aggregate, negatively affecting the financial performance, liquidity and cash flow projections of many companies in the United States and abroad.

In response to the COVID-19 outbreak, the IGB made the decision to shut down all VGTs across the State of Illinois starting at 9:00 p.m. on March 16, 2020 and ultimately extended the shutdown through June 30, 2020. As a result, we borrowed $65 million on our delayed draw term loan in March 2020 to increase our cash position and help preserve our financial flexibility. The temporary shutdown of Illinois video gaming impacted 106 of the 182 gaming days (or 58% of gaming days) during the first half of 2020. In light of these events and their effect on Accel’s employees and licensed establishment partners, we took action to reduce our monthly cash expenses down to $2 to $3 million during the shutdown to position us to help mitigate the effects of the temporary cessation of operations by, among other things, furloughing approximately 90% of our employees and deferring certain payments to major vendors. Additionally, members of our senior management decided to voluntarily forgo their base salaries until the resumption of video gaming operations. Beginning in early June, we started reinstating employees from furlough in order to properly resume operations.

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As a result of these developments, our revenues, results of operations and cash flows have been materially affected. The situation is rapidly changing and additional impacts to the business and financial results may arise that we are not aware of currently. In close consultation with the Illinois Department of Public Health and the governor, the IGB issued resumption protocols to guide casino and terminal operators in their resumption planning. Based on those protocols, we provided a Pandemic Resumption Plan to the IGB to guide our operations upon the resumption of gaming on July 1, 2020 at 9:00 a.m. Our plan included working with our licensed establishment partners to, among other things:

• follow social distancing requirements within the gaming area by moving the gaming equipment or installing spacers that meet IGB guidelines;

• determine how personal protective equipment usage requirements will be observed and enforced;

• develop procedures and schedules for cleaning, disinfecting and sanitizing the establishment as well the gaming area, including the VGTs; and

• proper signage to remind patrons of social distancing requirements, proper hand washing, use of sanitizers, use of personal protective equipment, and to stay at home if feeling sick.

Accel supports these measures to protect the safety of our fellow Illinois citizens, as the health and safety of players and licensed partner establishments is of paramount importance to us. We have been in constant contact with our licensed partner establishments to keep them aware of current developments, and have been working with them through this plan. As a result, by day 3 of the relaunch, more than 90% of Accel’s locations were live and less than 3% of Accel’s VGTs were down due to resumption protocols.

We have incurred non-recurring, one-time expenses of $1.3 million and $1.9 million for the three and six months ended June 30, 2020, respectively, for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown. These costs are included within other expenses, net. We also spent $1.4 million in capital costs related to the purchase of IGB-mandated spacers for our VGTs to promote social distancing requirements within the gaming area and incurred operating expenses of $0.3 million related to cleaning, disinfecting and sanitizing supplies.

While the IGB has announced the resumption of all video gaming activities effective July 1, 2020, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events.

Accel’s Core Strengths

We believe that the following competitive strengths contribute to our industry leading position:

• Gaming-as-a-service platform. When compared with traditional gaming businesses such as casinos, Accel believes its platform benefits from the following advantages:

• “business-to-business” model secured by long-term, exclusive contracts that are typically renewed, allowing for predictable, highly recurring revenue streams with low churn;

• operating a scalable business in fast-growing gaming segments that are primarily served by fragmented, sub-scale providers;

• data reporting solutions and analytics, offering insight and advice to help licensed establishment partners maximize revenues and ultimately grow their businesses;

• state-of-the-art technology-enabled slot machines from leading manufacturers who provide the most captivating titles in slots entertainment;

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• comparatively low capital expenses and a comparatively asset-light operating model, in each case, when compared to casinos, which typically provide significantly higher capital-intensive offerings such as hotel accommodations, restaurants and stage-based entertainment;

• highly localized footprint that provides more access to gaming and convenience for consumers, as compared to regional casinos that market to players who may live up to several hours away and are thus prone to disruption of their feeder markets; and

• strong marketing, legal, compliance, cash management, financial and technical support systems, all of which remain in-house to boost efficiency and enhance the ability to serve as a premier gaming-as-a-service provider.

• Strong relationships with licensed establishment partners. Accel has prioritized establishing strong, lasting relationships with its licensed establishment partners since its inception. Accel dedicates a relationship manager to each of its licensed establishment partners, who, with support from other personnel, oversees every aspect of partner relationship management and retention. Accel prides itself on providing prompt, reliable service and education, all of which helps to increase referral marketing by its partners. Accel’s relationship managers’ efforts to provide value-added services to their licensed establishment partners result in consistent pre-renewals long before contracts expire and are a key element of our competitive differentiation.

• Proven track record in executing and integrating acquisitions. Accel continuously evaluates strategic acquisition opportunities. Accel has a successful track record of identifying, acquiring and integrating competitive operators at favorable terms. Since becoming a licensed terminal operator in 2012, Accel has acquired 10 operator companies, adding more than 930 licensed establishments to our total portfolio of 2,312 licensed establishment partners as of December 31, 2019. Accel believes that its industry reputation, scale, proven track record of driving revenue synergies, and public acquisition currency enhances its ability to acquire other operators or licensed establishments on favorable terms and makes Accel a preferred partner of choice.

• Diversified revenue base with limited churn. Accel believes that gaming regulations in Illinois facilitate a low revenue concentration per licensed establishment partner, and that its low-limit slots are more resilient to economic downturn as consumers typically continue to engage in locally convenient, lower cost forms of entertainment in such circumstances. Accel’s best-performing licensed establishment accounted for approximately $1.8 million, or less than 1% of gross revenue for the year ended December 31, 2019, its top 20 licensed establishments represented only 5% of gross revenue for the year ended December 31, 2019 and Accel’s licensed establishment partners each contributed an average of approximately $0.2 million of gross revenue for the year ended December 31, 2019. Accel’s voluntary contract renewal rate was over 98% for the three-year period ended December 31, 2019. While Accel experiences minor business disruptions each year due to business failures or natural disasters affecting licensed establishment partners, many of these sites reopen in subsequent years under new owners, and Accel believes it is best-positioned to reengage with those establishments as new licensed establishment partners because of its reputation and leading market position. Accel’s VGTs are geographically diversified across the state of Illinois, limiting systemic risk due to local weather patterns or regional economic downturns. Accel’s plans to expand into other states may further help to diversify its portfolio.

• Deep industry and vendor relationships. Accel’s leading market position has led to strong relationships within its industry and with equipment suppliers. Accel has successfully integrated multiple other operators, and believes this successful roll-up strategy positions it well with potential additional local operators who could benefit from Accel’s gaming-as-a-service platform. In addition, Accel’s industry leadership permits it to seek and obtain favorable pricing and supply of key gaming machines. Due to its ability to procure machines and parts easily, Accel is able to rotate machines quickly to licensed establishment partners where they are most needed across its operating footprint. This results in longer, more effective usage and greater lifetimes for Accel’s machines.

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• Management team. Accel’s management team has deep experience and industry knowledge, with an average of 12 years of gaming industry experience. Accel’s President, Chief Executive Officer and co-founder, Andy Rubenstein, has led Accel since its inception in 2009, and its general counsel, Derek Harmer, and chief financial officer, Brian Carroll, have been with Accel since 2012 and 2014, respectively. Accel believes that its industry-leading management team has a reputation for integrity and compelling customer service.

• Company culture and training. Accel believes that it is an employer of choice for talented candidates. Accel’s corporate culture is strong and Accel invests heavily in employees’ success, including devoting significant resources to training and other development programs. Accel also experiences relatively low levels of employee turnover.

Accel’s Growth Opportunities

Accel’s key growth strategies include its plans to:

• Maintain competitive advantage in Illinois and increase VGT segment share. Accel believes that there is substantial potential for further growth in Illinois. Accel has been successful in the past in signing competitors’ licensed establishments and has identified approximately 700 such prospects for engagement after current contracts with other partners expire. In particular, Accel sees opportunities for expansion in key local markets, such as Springfield, Bloomington and Decatur, where its VGT segment share is below its share in other regions. Accel also strives to further optimize revenues for VGTs it currently operates through refined data analysis, marketing and other initiatives. Accel seeks to increase distribution possibilities through corporate partners who operate multiple licensed establishments such as chain stores. Accel believes that these corporate businesses tend to favor larger operators who have substantial compliance infrastructures in addition to leading service capabilities. While such licensed establishments have been “second movers” in choosing to adopt video gaming, partnering with reputable operators such as Accel could render deployment of VGTs more attractive. Accel’s leadership position also creates an opportunity for it to take advantage of recent legislative changes in Illinois such as an increased number of allowed VGTs per establishment, higher bet limits, higher win amounts, and larger jackpots. Additionally, Accel may realize the benefits of potential municipal ordinance changes that would permit its business to operate in new municipalities.

• Expand operations into Pennsylvania. In November 2017, Pennsylvania’s Governor signed the Pennsylvania Gaming Act. The law authorized, among other forms of gaming, VGT gaming at qualified truck stops. Accel estimates that the total potential VGT market in Pennsylvania is approximately 100 to 150 truck stops as of December 31, 2019, although municipalities are able to individually opt out from authorizing distributed gaming. Accel believes this market opportunity is attractive and has obtained a conditional terminal operator license from the PA Board. To qualify for gaming, a truck stop must meet requirements that are similar to those in Illinois. Accel has a binding agreement to install VGTs with a partner truck stop establishment in Pennsylvania that has received a conditional license from the PA Board. Accel is also in discussions with other potential partners who have not yet applied for licensure. Accel believes that Pennsylvania is a natural choice for its expansion outside of Illinois when compared to other states due to industry similarities with Illinois. See “ —Our Industry” for more information.

• Expand operations in Georgia. The operation of coin-operated amusement machines in Georgia has been regulated by the Georgia Lottery Corporation since April 2013. Games are skill-based with winnings paid in points that may be redeemed for noncash merchandise, prizes, toys, gift certificates, or novelties. The most common type of establishment licensees are convenience stores. Licensed establishments are limited to a maximum of nine machines, unless a municipality specifically limits licensed establishments to a maximum of six machines. In addition, any local governing authority may vote to remove coin operated amusement machines from its jurisdiction upon 60 days’ advance notice. On June 12, 2020, we announced our agreement to acquire, subject to regulatory approvals including the Georgia Lottery Corporation, Tom’s Amusement Company, Inc., a Southeastern U.S. amusement operator and Master Licensee in the state of Georgia. The acquisition of Tom’s Amusement’s adds 11 Georgia Coin Operated Amusement Machine Class B locations to the Accel portfolio, including a total of 65 Class B COAM terminals.

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• Establish Player Rewards Program to further drive growth. As part of its gaming-as-a-service suite of offerings, Accel has considered offering a Player Rewards Program for players when permitted. The anticipated terms of the program will provide for players to accumulate points each time they use Accel’s products, and may provide points that can be redeemed for rewards. Accel believes this program will result in increased brand loyalty from licensed establishment partners by rewarding players for using Accel’s VGTs. This opt-in program is expected to allow data analysis with respect to each player, location and machine, which will in turn permit Accel to better assess performance and serve its partners. Although player rewards programs are not specifically prohibited in Illinois, applicable regulations have not been enacted, and the IGB has not approved any player rewards programs for any terminal operator. Accel has not applied to the IGB to establish any such program, but expects to apply in the event of applicable regulation enactment.

• Expand operations to other states. Various states and other jurisdictions have proposed legislation permitting VGTs or other forms of gaming in the past. These states include Indiana, Missouri and Mississippi. Accel may also choose to expand operations through strategic acquisitions or otherwise in other, more mature gaming jurisdictions where VGTs are currently legal, such as Virginia, Louisiana, Montana, Nevada, Oregon, South Dakota and West Virginia. Accel may attempt to seek approval to operate in additional jurisdictions that authorize video gaming. Accel believes it would be a favored entrant into any such markets given its track record of success and compliance.

• Expand ancillary service offerings to licensed establishments. While distributing and servicing amusement devices such as jukeboxes, dartboards, pool tables, pinball machines iGaming and other ancillary equipment, such as redemption devices and stand-alone ATMs, is not the primary focus of its business, Accel believes that these services provide a key point for ongoing customer contact and enhances its image as a “one-stop shop” for entertainment devices, including, for example, through Accel’s partnerships with complementary service providers such as DraftKings. Accel has observed that licensed establishment partners appreciate these services and continue to rely on Accel to provide them. Providing these services can also serve as a point of initial contact with potential partners who may decide to avail themselves later of Accel’s primary gaming services. As a result, Accel intends to continue prioritizing the installation of these devices and equipment.

Our Industry

We operate within the U.S. distributed gaming industry, which consists of the installation and service of slot machines at non-casino licensed establishments. Generally, a VGT or slot machine is any electronic video game machine that, upon insertion of cash, electronic cards or vouchers, or any combination thereof, is available to play or simulate the play of a video game, including but not limited to video poker and slots, and utilizes a video display and microprocessors in which players may receive free games or credits that can be redeemed for cash. Currently, all VGTs operated by us only accept cash. Distributed gaming is currently legal in Illinois, Louisiana, Montana, Nevada, Oregon, Pennsylvania, South Dakota and West Virginia. Other states such as Georgia have a similar but separately regulated coin-operated amusement machine market. We believe that the distributed gaming industry is supported by generally favorable trends, including an increasing number of states approving, or contemplating approving, gaming to increase tax revenues, broader acceptance in the U.S. of gaming generally, including online and digital gaming, an aging population that appreciates the convenience of gaming entertainment close to home, expected resilience through economic downturns and attractive revenue and return on invested capital profiles when compared to traditional gaming venues, such as casinos. We believe that, as an increasing number of jurisdictions have legalized distributed gaming, the industry has witnessed both a growing player base and increased variety of higher quality game profiles available through VGTs.

Our operations are based primarily in Illinois. We have been licensed as a terminal operator in Illinois under the Illinois Video Gaming Act since 2012. We were one of the first VGT operators licensed in Illinois. The Illinois distributed gaming industry has grown significantly since 2012, with 7,180 licensed establishments operating a total of 33,294 VGTs as of December 31, 2019, according to Scientific Games International’s

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terminal operator portal and the Video Gaming Revenue Reports published by the IGB. According to the IGB, approximately 1,378 out of approximately 1,497 municipalities in Illinois do not prohibit the operation of VGTs. VGTs in Illinois can be played in licensed bars, restaurants, gaming cafes, truck stops, fraternal organizations, veterans’ organizations, and other retail establishments, including some convenience stores, in areas accessible only to players who are 21 years of age or older. Gaming revenue in Illinois from VGTs generates significant tax revenue, amounting to approximately $530 million in fiscal year 2019, according to the IGB Video Gaming Report showing Statewide Allocation Summary from January 2019 to December 2019. The Illinois state legislature has recently increased applicable marginal tax rates on gaming from 30% to 33% effective July 1, 2019 and from 33% to 34% effective July 1, 2020. While the increase in gaming tax rates could negatively impact the distributed gaming industry, we believe other recent legislative changes, such as an increase in the number of permitted VGTs at a given location, an increase in maximum wager limits and maximum win payouts are expected to drive overall video gaming demand upward.

The IGB generally oversees gambling and video gaming operations in the state of Illinois. The IGB is authorized to issue licenses to distributed gaming operators and has broad disciplinary authority over Illinois’s distributed gaming industry which includes the power to fine operators and licensed establishments for non-compliance with IGB regulations. As enforcement efforts and incidents of discipline among licensees increase, fine amounts for noncompliance have also increased. While the IGB has licensed a significant number of new video gaming establishments in recent years, it has also experienced an increase in its application backlog. In addition, Illinois’ governor is empowered to appoint board members to the IGB and select its administrator for the IGB to ultimately approve. Not only do new appointments have the potential to change the composition of the IGB, they can impact current rules, regulations, policies and agendas of the IGB, which may result in increased enforcement measures or further delays in licensing new establishments. The IGB dictates the maximum bet, maximum win, and approves payout percentages for games played on VGTs which are required by regulation to exceed 80%. Generally, suppliers have designed VGTs to include between 6 and 49 games. In 2019, payout percentages for VGTs across Illinois averaged approximately 92%, according to the Video Gaming Revenue Reports published by the IGB. In the same period, Accel’s payouts ranged from 88% to 95%, with an average of 92%. Additionally, newly-passed Illinois legislation has increased the maximum number of VGTs that may be operated at a given licensed establishment from five to six, with certain qualifying truck stop licensed establishments allowed to operate up to ten VGTs. This newly-passed legislation has also increased the maximum wager that may be placed on a VGT from $2.00 to $4.00 and the maximum win from a single play from $500 to $1,199. All VGTs are monitored and controlled by the IGB through a central communications system. The IGB has recently established minimum standards that licensed establishment partner contracts must meet, including limiting the length of contracts entered into after February 2, 2018 to a maximum of eight years with no automatic renewals.

We have made substantial investments in regulatory training and compliance for its staff and licensed establishment partners. Accel has designed and implemented systems and controls that facilitate compliance with applicable regulatory requirements in Illinois and is working on implementing similar systems and controls for the anticipated start of live gaming in Pennsylvania.

As of May 15, 2019, we hold a conditional license as a Terminal Operator in Pennsylvania under the Pennsylvania Race Horse Development and Gaming Act, although Accel has not yet commenced any gaming operations in Pennsylvania. In November 2017, Pennsylvania’s Governor signed the Pennsylvania Gaming Act. The law authorized, among other forms of gaming, VGT gaming at qualified truck stops. We believe that Pennsylvania is a natural choice for our expansion outside of Illinois when compared to other states due to gaming industry similarities with Illinois, including similar regulatory requirements, similar VGT suppliers and truck stops as a type of licensed establishment partner in both jurisdictions. We believe the current total addressable market in Pennsylvania consists of approximately 100 to 150 truck stop establishments although municipalities are able to individually opt out from authorizing distributed gaming. These establishments consist of corporate truck stops and individual and corporate convenience stores that meet current regulatory requirements for VGT installation. As of September 16, 2020, 106 truck stops have applied for licensure with the

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PA Board. Of those 106 applicants, 35 have been issued a conditional license, which permits the guarantee to operate until a final license is issued, 40 have been issued final licenses, 14 have surrendered their conditional licenses, six have requested to withdraw their license applications and one has been denied. As of September 16, 2020, 16 terminal operators had applied for licensure with the PA Board. Of those 16, 14 have been either issued a conditional license, including Accel, or a final license, with two applications still pending with the PA Board. We are in discussions with potential partners who have not yet applied for licensure.

The operation of coin-operated amusement machines in Georgia has been regulated by the Georgia Lottery Corporation since April 2013. Games are skill-based with winnings paid in points that may be redeemed for noncash merchandise, prizes, toys, gift certificates, or novelties. The most common type of establishment licensees are convenience stores. Licensed establishments are limited to a maximum of nine machines, unless a municipality specifically limits licensed establishments to a maximum of six machines. In addition, any local governing authority may vote to remove coin operated amusement machines from its jurisdiction upon 60 days’ advance notice. On July 22, 2020, we completed our acquisition of Tom’s Amusement Company, Inc., a Southeastern U.S. amusement operator and Master Licensee in the state of Georgia. The acquisition of Tom’s Amusement’s adds 11 Georgia Coin Operated Amusement Machine Class B locations to the Accel portfolio, including a total of 65 Class B COAM terminals.

In addition, our marketing and sales efforts are subject to the rules and regulations of the regulatory gaming bodies and municipal laws and regulations in the jurisdictions where we do business, including rules promulgated by the IGB, the PA Board and local municipalities in Illinois. These rules generally require sales agent registration, include prohibitions related to inducements and restrict certain advertising and promotional activities.

We may also enter states other than Pennsylvania that currently permit or may consider permitting VGTs. Indiana, Missouri and Mississippi have proposed legislation permitting VGTs or other forms of gaming in the past, and VGTs are currently legal in Louisiana, Montana, Nevada, Oregon, South Dakota and West Virginia. Other states, counties or municipalities facing tax revenue shortfalls or other fiscal pressure may adopt similar measures.

Business Model and Capabilities

Accel provides a full suite of services and capabilities to enhance its business. These include:

• Sales team that drives the initial acquisition of licensed establishment partners. Accel has a dedicated internal sales team that drives sourcing of new licensed establishment partners. Accel also uses external independent sales agents. When seeking to sign a new licensed establishment partner, Accel’s marketing team employs a data-driven sales process to identify and nurture leads using a variety of digital and traditional strategies to drive organic VGT partnerships and preference. Accel’s marketing team uses email, social media, blogs, search engine optimization, paid search and display advertising to create a robust pipeline of leads. Sales teams are incentivized based on a competitive commission-based structure, which has driven performance. Accel believes that it can continue to attract talented sales employees.

• Dedicated on-boarding process that works with new licensed establishments to provide quick access to VGTs and other equipment. Accel engages with licensed establishment partners through every step of the VGT installation process. This process begins with providing assistance with preparation and submission of a license application to the applicable gaming regulatory board and educating each licensed establishment partner on legal and regulatory topics to minimize compliance issues. Accel assists in the design and construction of gaming areas in licensed establishments, including advising with respect to Illinois Video Gaming Act requirements that restrict access to persons under 21 years of age. Accel then delivers VGTs to the licensed establishment partner after receipt of the proper state and municipal licenses, which typically takes between two and six months from submission to receipt of approval to operate VGTs.

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• Relationship management team that offers value to licensed establishment partners. Each of Accel’s licensed establishment partners has a dedicated relationship manager who works with the licensed establishment partner in maximizing revenue, based upon the licensed establishment’s unique characteristics. Compliance support is offered to assist the licensed establishment partner with understanding gaming regulations, optimizing services that analyze video gaming data against established benchmarks to assess and improve performance, offering marketing advice ranging from traditional advertising and signage to social media advice, providing industry tracking and reporting measured against Accel’s industry data, and delivering ongoing training for licensed establishment partner staff.

• Digital and data analytics team that helps licensed establishment partners capture gaming revenue. Accel’s digital and data analytics team studies the VGT market and licensed establishment partner performance to provide insight and advice to maximize gaming revenue. The team actively monitors machine optimization, service analytics, video game popularity analytics, marketing and player behavior to identify new opportunities and provide insights to maximize gaming revenues. Typical suggestions might involve adding new games, switching machines, adding machines or changing machine location within a licensed establishment. The digital and data analytics team also seeks to improve the quality of customer service and satisfaction by monitoring service calls to identify trends and solutions with the goal of optimizing response time to decrease periods of machine inoperability.

• Dedicated legal and compliance function that assists licensed establishment partners to remain in regulatory compliance. Accel’s legal and compliance team provides support and resources related to licensed establishment regulatory compliance, which includes sending compliance reminders and industry updates to licensed establishment partners on a regular basis. It does not dispense legal advice to licensed establishment partners but may recommend that licensed establishment partners obtain legal counsel in certain instances. In addition, the legal and compliance team participates in lobbying measures, which includes working with gaming regulators and trade associations to encourage legislation and regulation which may be favorable to the distributed gaming industry. Accel also regularly works with regulators in other states as they explore the legalization of VGTs.

• Strong relationships with equipment manufacturers to provide top-flight machines and software that help attract players. Accel partners and has entered into purchase agreements with many industry-leading manufacturers of VGTs. Accel benefits from favorable pricing and other terms with respect to its supplier partners. Accel believes that by providing world-class premium equipment, it can assist licensed establishment partners in securing competitive advantages. By using high-quality equipment, Accel aims to limit downtime and help maximize revenue and player retention.

• Cash collection and analytics. Accel offers cash collection and analytics services at multiple strategic locations across Illinois to help ensure secure, fast and accurate collection of revenue for licensed establishment partners. Additionally, Accel’s data team provides information to its treasury department enabling it to deliver efficient, secure, and optimized collection services. These cash collection locations function as a key point of contact for licensed establishment partners, and Accel believes that this service differentiates it from most of its competitors.

• Marketing services that aid in player awareness and gameplay. In addition to its business-to-business focus, Accel’s marketing team uses a variety of player marketing strategies to drive player preference, loyalty, and increase play at Accel locations. Player marketing initiatives include a dedicated player website, AEPlayer.com, a statewide player sweepstakes including a tablet based in-location entry option as well as a mobile app, player email and text messaging communications, indoor and outdoor signage, cooperative location advertising and other media to increase awareness and encourage gameplay. Accel believes that these initiatives increase Accel’s branding at each location. Accel believes that it has the most extensive and accomplished marketing team in the Illinois VGT segment.

• Best-in-class technicians who assist licensed establishment partners in the event of any mechanical or software issues with the devices Accel provides. Accel leverages technology and data-driven algorithms to enable a 24/7 call center to direct service technicians all across Illinois. These technicians serve to prevent

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and solve technical issues with VGTs at licensed establishment partners in a timely manner. Accel’s service tracking process begins when a licensed establishment partner identifies an issue at their licensed establishment and contacts the service center. As of December 31, 2019, more than 17% of service issues are resolved by the call center directly without the need to dispatch any technician. In the event a technician is required, 92% of customer service issues are addressed on a first-time technician dispatch, with an average response time of 50 to 60 minutes. Replacement parts for VGTs, if required, are sourced from Accel’s offices and warehouses located across the state. Accel uses system analytics across its gaming-as-a-service platform to keep track of parts used and, if necessary, order new parts for delivery to various warehouses. A similar system is being designed for anticipated live gaming operations in Pennsylvania.

• Sports betting. Accel believes it is well positioned to participate in the fast-growing sports betting segment that has recently been legalized in Illinois. While Accel expects to remain focused on video gaming in the near future and has not applied to the IGB or otherwise to engage in these activities, it may consider doing so in the future.

Licensed Establishments and VGTs

As of June 30, 2020, Accel operates 11,108 VGTs in 2,335 licensed establishments. Licensed establishments typically include bars, restaurants, gaming cafes, truck stops, fraternal organizations, veterans’ organizations, and other retail establishments.

Accel enters into long-term exclusive location and VGT use agreements with its licensed establishment partners, or master exclusive VGT use agreements with licensed establishment partners who have several licensed establishments. Under those agreements, Accel has the exclusive right to place VGTs and redemption devices in such licensed establishments. Once proper licenses are received, Accel experiences minimal delay related to the installation of VGTs in those licensed establishments. As of June 30, 2020, the average remaining term on Accel’s agreements is 6.8 years. Excluding the acquisition of Grand River Jackpot on September 16, 2019, Accel’s exclusive contracts with its licensed establishment partners have remaining terms averaging approximately 7.0 years. In addition, Accel’s voluntary contract renewal rate for the three-year period ended December 31, 2019 was over 98%.

Under these agreements, Accel is responsible for providing hardware and related software, accounting and reporting functions as required by the Illinois Video Gaming Act and/or Pennsylvania Gaming Act, and placement of devices such as stand-alone ATMs and redemption devices at the discretion of the licensed establishment.

Under IGB regulations, tax and administrative fees in Illinois are required to be split evenly between VGT operators and licensed establishments. Accordingly, Accel shares the responsibility with its licensed establishment partners of the payment of a 33% tax on gross gaming revenue, with such tax to increase to 34% beginning on July 1, 2020. In accordance with IGB regulations, Accel further shares the responsibility of a 0.8513% administrative fee with its licensed establishment partners, payable to Scientific Games International, the company that maintains the central communications system to which all VGTs across Illinois are connected. The remaining after-tax profits from a video gaming terminal, 50% shall be paid to Accel and 50% shall be paid to the licensed establishment in accordance with Illinois state law. Accel typically remits the amount to licensed establishment partners on a weekly basis. Accel’s agreements with licensed establishment partners are typically not subject to termination rights by licensed establishment partners in the event of a sale or relocation of the licensed establishments during the term of the agreements, though termination may occur upon closure of the business or if the licensed establishment partner chooses to terminate at the end of a term.

In addition, Accel has a very limited number of revenue-share agreements with other licensed terminal operators in Illinois, which provide splitting gross gaming revenue. For the year ended December 31, 2019, revenue shared with other terminal operators accounted for less than 1% of gross revenue.

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Suppliers

Accel installs cutting-edge software and multi-game VGTs, at each licensed establishment, from leading manufacturers such as Scientific Games International, WMS (owned by Scientific Games International), IGT, Bally (owned by Scientific Games International), Novomatic and Aristocrat. Under agreements with these manufacturers, Accel is able to provide more than 20 different types of VGT models and 200 different games to licensed establishment partners. Accel believes its efforts to procure VGTs from various sources better enables it to meet the needs of licensed establishment partners and players.

Accel purchases VGTs in upright and slant varieties. Games include different varieties of slots, poker, and keno games. Accel routinely meets with existing and potential manufacturers in the market to discuss performance, service trends, and feedback from licensed establishment partners and players. Accel purchases VGTs from certain suppliers under master purchase agreements and purchase orders. Under these master purchase agreements with certain suppliers, pricing is determined by purchase commitments made for delivery over defined periods. Accel generally pays its suppliers within 90 days after the date of invoice. Accel also purchases redemption devices, amusement devices and stand-alone ATMs from reputable suppliers such as NRT, Touch Tunes, Arachnid, and Diamond.

Competition

Accel competes on the basis of the responsiveness of its services to players, and the popularity, content, features, quality, functionality, accuracy and reliability of its products. Accel generally does not consider pricing to be a factor in its VGT business as all minimum and maximum wagers are mandated by the IGB and all revenue splits with the licensed establishments are mandated by the IGB and by law. Accel believes most licensed establishments focus on player appeal, customer service and reputation when making their decisions to collaborate with terminal operators. In Illinois, Accel currently competes with 52 terminal operators that operate in 4,910 gaming establishments as of December 31, 2019. The top five terminal operators with which Accel principally competes are J&J Ventures Gaming, LLC, Gold Rush Amusements, Inc., Illinois Gaming Investors LLC, Gaming & Entertainment Management-Illinois LLC, and Illinois Gaming Systems, LLC. Together with Accel, they operate in more than 71% of all licensed establishments in Illinois, and the top 10 terminal operators in Illinois operate in approximately 85% of all licensed establishments. Accel currently operates VGTs and/or amusement devices in 32% of all establishments licensed to operate VGTs in Illinois.

Accel faces particularly robust competition from other forms of gaming. The distributed gaming industry is characterized by an increasingly high degree of competition among a large number of participants on both a local and national level, including casinos, Internet gaming, sports betting, sweepstakes and poker machines not located in casinos, horse racetracks, including those featuring slot machines and/or table games, fantasy sports, real money iGaming, and other forms of gaming. In addition, Internet-based lotteries, sweepstakes, and fantasy sports, and Internet-based or mobile-based gaming platforms, which allow their customers to wager on a wide variety of sporting events and/or play casino games from home or in non-casino settings and could divert players from using Accel’s products in its licensed establishments. Even Internet wagering services that may be illegal under federal and state law but operate from overseas locations, may nevertheless sometimes be accessible to domestic gamblers and divert players from visiting licensed establishment partners to play on Accel’s VGTs.

The availability of other forms of gaming could increase substantially in the future. Voters and state legislatures may seek to supplement traditional sources of tax revenue by authorizing or expanding gaming. For example, on June 2, 2019, the Illinois legislature passed a significant gaming expansion bill authorizing the addition of more casinos to the state, including a casino in Chicago, permitting slot and table games at three horse racetracks, adding slot machines to two Illinois airports, and sports betting at a variety of approved establishments throughout the state. In addition, jurisdictions are considering or have already recently legalized, implemented and expanded gaming, and there are proposals across the country that would legalize Internet poker and other varieties of Internet gaming in a number of states and at the federal level. Pennsylvania enacted legislation

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allowing regulated online poker and casino-style games within the commonwealth and legalizing sports betting in casinos. Established gaming jurisdictions could also award additional gaming licenses or permit the expansion or relocation of existing gaming operations, including VGTs. While Accel believes it is well positioned to take advantage of certain of these opportunities, expansion of gaming in other jurisdictions, both legal and illegal, could further compete with its VGTs.

In addition to competition from other forms of gaming and entertainment and the expansion thereof, Accel’s business faces significant competition from suppliers and other terminal operators, stand-alone ATMs, jukeboxes, dartboards, pool tables, pinball machines and related entertainment machines. Accel’s operations also face competition from many forms of leisure and entertainment activities, including shopping, athletic events, television and movies, concerts, and travel. See “Risk Factors—Risks Related to Our Business—Accel operates in the highly competitive gaming industry, and Accel’s success depends on its ability to effectively compete with numerous types of businesses in a rapidly evolving, and potentially expanding, gaming environment.”

Intellectual property

Accel owns or has rights to use the trademarks, service marks or trade names that it uses or will use in conjunction with the operation of its business. In the highly competitive gaming industry, trademarks, service marks, trade names and logos are important to the success of its business.

As of December 31, 2019, Accel owned five registered trademarks and 91 registered domain names. Accel also relies on software or technologies that it licenses from third parties. These licenses may not continue to be available to Accel on commercially reasonable terms in the future and as a result, Accel may be required to obtain substitute software or technologies. See “Risk Factors—Risks Related to Our Business—Accel’s business depends on the protection of intellectual property and proprietary information.”

Seasonality

Accel’s results of operations can fluctuate due to seasonal trends and other factors. For example, the gross revenue per machine per day is typically lower in the summer when players will typically spend less time indoors at licensed establishment partners, and higher in cold weather between February and April, when players will typically spend more time indoors at licensed establishment partners. Holidays, vacation seasons and sporting events may also cause Accel’s results to fluctuate.

Corporate Information

Accel was formed as a corporation under Illinois law on December 8, 2010. Upon the consummation of the Pace Domestication and the Business Combination, Accel merged with and into NewCo, with NewCo surviving the merger as a subsidiary of Pace. Pace changed its name to Accel Entertainment, Inc. Accel is the sole owner of the IL Operating Subsidiary, Accel Entertainment Gaming (PA), LLC, a Pennsylvania limited liability company formed in 2018 for the purposes of providing video gaming services in Pennsylvania and Bulldog Gaming, LLC, a Georgia limited liability company formed in 2020 for the purposes of providing video gaming services in Georgia. Accel’s principal facility and headquarters office building are located at 140 Tower Drive, Burr Ridge, Illinois 60527 and its telephone number is (630) 972-2235. Accel’s website address is https://www.accelentertainment.com/. The information contained on, or that can be accessed through, Accel’s website is not incorporated by reference into, and is not a part of, this prospectus.

Employees

As of June 30, 2020, Accel employed approximately 745 people in Illinois. None of Accel’s employees are represented by a labor union or covered by a collective bargaining agreement. Accel believes its current staffing levels to be adequate for its needs and operations, and that relations with employees are generally good.

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Properties

We own our 58,000 sq. ft. corporate headquarters in Burr Ridge, Illinois. This facility houses service, support and sales functions for the Chicagoland region. It also houses the executive management team, as well as several other business units and shared services such as compliance, human resources, information technology, security, fleet, finance/accounting, data digital, sales, service, amusements, and marketing and service units. The facility supports Accel’s 24/7 Service Solutions Call Center, as well as onsite route management and collection processing. This facility also contains Accel’s largest warehouse, from which equipment installations, preparation, programming, and repairs occur, as well as VGT quality assurance processes and general storage. In this facility there is an IGB-approved secured storage site for sensitive video gaming equipment and materials.

We also own facilities in Peoria, Springfield, Glen Carbon and Rockford, all of which are located in Illinois, that support our operations.

We also lease an additional 14 locations throughout Illinois that are used to support our operations and provide warehousing for our equipment.

We believe that our current facilities are in good working order and are capable of supporting our operations for the foreseeable future; however, we will continue to evaluate buying or leasing additional space as needed to accommodate our growth.

Legal Proceedings

Lawsuits and claims are filed against Accel from time to time in the ordinary course of business, including related to employment agreements and non-compete clauses and agreements. Other than settled matters explained as follows, these actions are in various stages, and no judgments or decisions have been rendered. Management, after reviewing matters with legal counsel, believes that the outcome of such matters are not expected to have a material adverse effect on our financial position or results of operations.

Accel has been involved in a series of related litigated matters stemming from claims that Accel wrongly contracted with 10 different licensed establishments (the “Defendant Establishments”) in 2012 in violation of the contractual rights held by J&J Ventures Gaming, LLC (“J&J”), as further described below.

On August 21, 2012, one of Accel’s operating subsidiaries entered into certain agreements with Jason Rowell (“Rowell”), a member of Action Gaming LLC (“Action Gaming”), which was an unlicensed terminal operator that had exclusive rights to place and operate VGTs within a number of establishments, including the Defendant Establishments. Under agreements with Rowell, Accel agreed to pay him for each licensed establishment which decided to enter into exclusive location agreements with Accel. In late August and early September 2012, each of the Defendant Establishments signed separate location agreements with Accel, purporting to grant it the exclusive right to operate VGTs in those establishments. Separately, on August 24, 2012, Action Gaming sold and assigned its rights to all its location agreements to J&J, including its exclusive rights with the Defendant Establishments (the “J&J Assigned Agreements”). At the time of the assignment of such rights to J&J, the Defendant Establishments were not yet licensed by the IGB.

Action Gaming, J&J, and other parties, collectively, the Plaintiffs, filed a complaint against Accel, Rowell, and other parties in the Circuit Court of Cook County (the “Circuit Court”), on August 31, 2012, as amended on November 1, 2012, December 19, 2012, and October 3, 2013, alleging, among other things, that Accel aided and abetted Rowell in breaches of his fiduciary duties and contractual obligations with Action Gaming and tortiously interfered with Action Gaming’s contracts with Rowell and agreements assigned to J&J. The complaint seeks damages and injunctive and equitable relief. On January 24, 2018, Accel filed a motion to dismiss for lack of subject matter jurisdiction, as further described below. On May 14, 2018, the Circuit Court denied Accel’s motion to dismiss and granted a stay to the case, pending a ruling from the IGB on the validity of the J&J Assigned Agreements.

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From 2013 to 2015, the Plaintiffs filed additional claims, including J&J Ventures Gaming, LLC et al. v. Wild, Inc. (“Wild”), in various circuit courts seeking declaratory judgements with a number of establishments, including each of the Defendant Establishments, requesting declarations that, among other things, J&J held the exclusive right to operate VGTs at each of the Defendant Establishments as a result of the J&J Assigned Agreements. Accel was granted leave to intervene in all of the declaratory judgements. The circuit courts found that the J&J Assigned Agreements were valid because each of the underlying location agreements were between an unlicensed establishment and an unlicensed terminal operator, and therefore did not constitute use agreements that were otherwise precluded from assignment under the IGB’s regulations. Upon Accel’s appeal, the Illinois Appellate Court, Fifth District (the “District Court”), vacated the circuit courts’ judgments and dismissed the appeals, holding that the IGB had exclusive jurisdiction over the matter that formed the basis of the parties’ claims, and declined to consider the merits of the parties’ disputes. On September 22, 2016, and after the IGB intervened, the Supreme Court of Illinois issued a judgment in Wild, affirming the District Court’s decision vacating the circuit courts’ judgments for lack of subject matter jurisdiction and dismissing the appeals, determining that the IGB has exclusive jurisdiction to decide the validity and enforceability of VGT use agreements.

Between May 2017 and September 2017, both Accel and J&J filed petitions with the IGB seeking adjudication of the rights of the parties and the validity of the use agreements. Those petitions have been fully briefed and remain pending. There is no indication as to when the IGB will rule on the petitions. Accel does not have a present estimate regarding the potential damages, if any, that could potentially be awarded in this litigation and, accordingly, have established no reserves relating to such matters. There are also petitions pending with the IGB which could lead to Accel obtaining new locations.

On October 7, 2019, Accel filed a lawsuit in the Circuit Court of Cook County against Jason Rowell and other parties related to Mr. Rowell’s breaches of his non-compete agreement with Accel. Accel alleged that Mr. Rowell and a competitor were working together to interfere with Accel’s customer relationships. That lawsuit, which seeks equitable relief and legal damages, has not yet been served. On November 7, 2019, Mr. Rowell filed a lawsuit in the Circuit Court of Cook County against Accel alleging that he had not received certain equity interests in Accel to which he was allegedly entitled under his agreement. Accel intends to defend itself against the allegations. Accel does not have a present estimate regarding the potential damages, nor does it believe any payment of damages is probable, and, accordingly, has established no reserves relating to these matters.

On July 2, 2019, Illinois Gaming Investors, LLC filed a lawsuit against Accel. The lawsuit alleges that a current employee violated his non-competition agreement with Illinois Gaming Investors, LLC, and together with Accel, wrongfully solicited prohibited licensed video gaming locations. The lawsuit on its face seeks damages of $10,000,000. The parties are engaging in discovery. We are in the process of defending this lawsuit, and have not accrued any amounts as losses related to this suit are not probable or reasonably estimable.

Business of Pace and Certain Information Regarding the Business Combination

Pace was a blank check company incorporated on February 14, 2017 as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Pace neither engaged in any operations nor generated any revenue during its existence. Based on its business activities, Pace was a “shell company” as defined under the Exchange Act because it had no operations and nominal assets consisting almost entirely of cash.

Prior to the Pace IPO, on February 22, 2017, Initial Pace Sponsor purchased 11,500,000 Founder Ordinary Shares for an aggregate purchase price of $25,000, or approximately $0.002 per share. On June 19, 2017, Initial Pace Sponsor transferred 40,000 Founder Ordinary Shares to each of Pace’s five independent directors at their original purchase price. On August 14, 2017, Initial Pace Sponsor forfeited 250,000 Founder Ordinary Shares on

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the expiration of the unexercised portion of the underwriters’ over-allotment option. As of June 30, 2019, Initial Pace Sponsor and five independent directors, collectively, held 11,250,000 Founder Ordinary Shares.

On June 30, 2017, Pace consummated the Pace IPO of 45,000,000 Pace Public Units (which included the purchase of 5,000,000 Pace Public Units subject to the underwriters’ 6,000,000 Pace Public Unit over-allotment option) at a price of $10.00 per Pace Public Unit, generating gross proceeds of $450,000,000 before underwriting discounts and expenses. Each Pace Public Unit consisted of one Pace Public Share and one-third of one Pace Public Warrant. Each Pace Public Warrant entitled the holder to purchase one-third of one Pace Public Share for $11.50 per share. Simultaneous with the closing of the Pace IPO, Pace completed the private placement of an aggregate 7,333,333 Pace Private Placement Warrants to Initial Pace Sponsor, each exercisable to purchase one Pace Public Share for $11.50 per share, at a price of $1.50 per Pace Private Placement Warrant.

Pace received gross proceeds from the Pace IPO and the sale of the Pace Private Placement Warrants of $450,000,000 and $11,000,000, respectively, for an aggregate of $461,000,000. $450,000,000 of the gross proceeds was deposited in the Trust Account with Continental Stock Transfer & Trust Company (the “Trustee”). At the closing of the Pace IPO, the remaining $11,000,000 was held outside of the Trust Account, of which $9,000,000 was used to pay underwriting discounts and $300,000 was used to repay notes payable to Initial Pace Sponsor, with the balance reserved to pay accrued offering and formation costs, business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. A portion of interest income on the funds held in the Trust Account was permitted to be released to Pace to pay tax obligations. On January 2, 2018, Pace invested the funds held in the Trust Account in a money market account invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act, having a maturity of 180 days or less, or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act. On September 12, 2019, Pace transferred a portion of the funds held in the Trust Account to a non-interest bearing U.S.-based trust account at J.P. Morgan Chase Bank, N.A.

On August 17, 2017, Pace announced that, commencing August 18, 2017, holders of the 45,000,000 Pace Public Units sold in the Pace IPO may elect to separately trade the Pace Public Shares and Pace Public Warrants included in the Pace Public Units. Those Pace Public Units not separated continued to trade on the NYSE under the symbol “TPGH.U” and the Pace Public Shares and Pace Public Warrants that are separated continued to trade on the NYSE under the symbols “TPGH” and “TPGH.WS,” respectively.

On June 13, 2019, Pace entered into the Transaction Agreement with respect to the Business Combination.

On September 20, 2019, Pace held an extraordinary general meeting (the “Extension EGM”). At the Extension EGM, the following matters were submitted to and approved by the holders of Pace Public Shares: (i) a proposal to amend Pace’s amended and restated memorandum and articles of association (the “Articles”) at the time of the Extension EGM and (ii) a proposal to amend Pace’s Investment Management Trust Agreement, dated June 27, 2017, by and between Pace and the Trustee, to extend the date on which to commence liquidating the Trust Account in the event Pace had not consummated a business combination prior to September 30, 2019, from September 30, 2019 to December 31, 2019. In connection with this vote, the holders of 3,247,267 Pace Public Shares indicated that they wished to exercise their right under Pace’s Articles to redeem their Pace Public Shares for cash at a redemption price of approximately $10.29 per share, for an aggregate redemption amount of approximately $33,416,715. These Pace Public Shares were redeemed on September 25, 2019, in accordance with the Articles. As of September 30, 2019 proceeds and interest totaling approximately $429,732,943 were held in the Trust Account.

On November 20, 2019, Pace and Accel consummated the Business Combination pursuant to the Transaction Agreement. Pursuant to the Transaction Agreement and in connection therewith, Pace completed the Stock Purchase and, following the closing of the Stock Purchase, Accel merged with and into NewCo, with NewCo surviving such merger.

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In connection with the consummation of the Business Combination, Pace changed its name to Accel Entertainment, Inc.

Immediately prior to the Stock Purchase, Pace domesticated (or transferred by way of continuation as a matter of Cayman Islands law) as a Delaware corporation (the “Pace Domestication”) in accordance with Section 388 of the DGCL, whereupon, by virtue of the filing of the Charter with the Secretary of State of Delaware, (i) each Pace Public Share converted into one Class A-1 Share, (ii) each Founder Ordinary Share converted into one Class F Share and (iii) the Pace Private Placement Warrants held by Initial Pace Sponsor and the Pace Public Warrants, in each case, entitled the holder to acquire a corresponding number of Class A-1 common stock on the same terms as in effect immediately prior to the effective time of the Pace Domestication.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information that management believes is relevant to an understanding and assessment of our consolidated financial condition and results of operations. You should read this discussion in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this prospectus. This discussion and analysis of our financial condition and results of operations also contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those set forth under the section entitled “Risk Factors.”

Company Overview

Accel is a leading distributed gaming operator in the United States on an Adjusted EBITDA basis, and a preferred partner for local business owners in the Illinois market. Accel’s business consists of the installation, maintenance and operation of VGTs, redemption devices that disburse winnings and contain ATM functionality, and other amusement devices in authorized non- casino locations such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores, which are referred to collectively as “licensed establishments.” Accel also operates a small number of stand-alone ATMs in gaming and non- gaming locations. Accel has been licensed by the Illinois Gaming Board since 2012 and holds a conditional license from the PA Board. In July 2020, the Georgia Lottery Corporation approved one of Accel’s consolidated subsidiaries as a Master Licensee. Accel operates 11,108 video gaming terminals across 2,335 locations in the State of Illinois as of June 30, 2020 and 10,499 video gaming terminals across 2,312 locations in the State of Illinois as of December 31, 2019.

Impact of COVID-19

The COVID-19 outbreak is having a significant impact on global markets as a result of supply chain and production disruptions, workforce restrictions, travel restrictions, reduced consumer spending and sentiment, amongst other factors, which are, individually or in the aggregate, negatively affecting the financial performance, liquidity and cash flow projections of many companies in the United States and abroad.

In response to the COVID-19 outbreak, the IGB made the decision to shut down all VGTs across the State of Illinois starting at 9:00 p.m. on March 16, 2020 and ultimately extended the shutdown through June 30, 2020. As a result, we borrowed $65 million on our delayed draw term loan in March 2020 to increase our cash position and help preserve our financial flexibility. The temporary shutdown of Illinois video gaming impacted 106 of the 182 gaming days (or 58% of gaming days) during the first half of 2020. In light of these events and their effect on Accel’s employees and licensed establishment partners, we took action to reduce our monthly cash expenses down to $2 to $3 million during the shutdown to position us to help mitigate the effects of the temporary cessation of operations by, among other things, furloughing approximately 90% of our employees and deferring certain payments to major vendors. Additionally, members of our senior management decided to voluntarily forgo their base salaries until the resumption of video gaming operations. Beginning in early June, we started reinstating employees from furlough in order to properly resume operations.

As a result of these developments, our revenues, results of operations and cash flows have been materially affected. The situation is rapidly changing and additional impacts to the business and financial results may arise that we are not aware of currently.

In close consultation with the Illinois Department of Public Health and the governor, the IGB issued resumption protocols to guide casino and terminal operators in their resumption planning. Based on those protocols, we

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provided a Pandemic Resumption Plan to the IGB to guide our operations upon the resumption of gaming on July 1, 2020 at 9:00 a.m. Our plan included working with our licensed establishment partners to, among other things:

• follow social distancing requirements within the gaming area by moving the gaming equipment or installing spacers that meet IGB guidelines;

• determine how personal protective equipment usage requirements will be observed and enforced;

• develop procedures and schedules for cleaning, disinfecting and sanitizing the establishment as well the gaming area, including the VGTs; and

• proper signage to remind patrons of social distancing requirements, proper hand washing, use of sanitizers, use of personal protective equipment, and to stay at home if feeling sick.

Accel supports these measures to protect the safety of our fellow Illinois citizens, as the health and safety of players and licensed partner establishments is of paramount importance to us. We have been in constant contact with our licensed partner establishments to keep them aware of current developments, and have been working with them through this plan. As a result, by day 3 of the relaunch, more than 90% of Accel’s locations were live and less than 3% of Accel’s VGTs were down due to resumption protocols.

We have incurred non-recurring, one-time expenses of $1.3 million and $1.9 million for the three and six months ended June 30, 2020, respectively, for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown. These costs are included within other expenses, net. We also spent $1.4 million in capital costs related to the purchase of IGB-mandated spacers for our VGTs to promote social distancing requirements within the gaming area and incurred operating expenses of $0.3 million related to cleaning, disinfecting and sanitizing supplies.

While the IGB has announced the resumption of all video gaming activities effective July 1st, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events.

Components of Performance

Revenues

Net video gaming. Net video gaming revenue represents net cash received from gaming activities, which is the difference between gaming wins and losses. Net video gaming revenue includes the amounts earned by the licensed establishments and is recognized at the time of gaming play.

Amusement. Amusement revenue represents amounts collected from amusement devices operated at various licensed establishments and is recognized at the point the amusement device is used.

ATM fees and other revenue. ATM fees and other revenue represents fees charged for the withdrawal of funds from Accel’s redemption devices and stand-alone ATMs and is recognized at the time of the ATM transaction.

Operating Expenses

Video gaming expenses. Gaming expenses consist of (i) a 33% tax on net video gaming revenue (such tax increased from 30% beginning on July 1, 2019 and will increase to 34% beginning on July 1, 2020) that is payable to the IGB, (ii) an administrative fee (0.8513% currently) payable to Scientific Games International, the third-party contracted by IGB to maintain the central system to which all VGTs across Illinois are connected and (iii) establishment revenue share, which is defined as 50% of gross gaming revenue after subtracting the tax and administrative fee.

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General and administrative. General and administrative expenses consist of operating expense and general and administrative (“G&A”) expense. Operating expense includes payroll and related expense for service technicians, route technicians, route security, and preventative maintenance personnel. Operating expense also includes vehicle fuel and maintenance, ATM and amusement commissions and fees, and non-capitalizable parts expenses. Operating expenses are generally proportionate to the number of licensed establishments and VGTs. G&A expense includes payroll and related expense for account managers, business development managers, marketing, and other corporate personnel. In addition, G&A includes marketing, information technology, insurance, rent and professional fees.

Depreciation and amortization of property and equipment. Depreciation is computed using the straight-line method over the estimated useful lives of the individual assets. Leasehold improvements are amortized over the shorter of the useful life or the lease.

Amortization of route and customer acquisition costs and location contracts acquired. Route and customer acquisition costs consist of fees paid at the inception of contracts entered into with third parties and licensed video gaming establishments throughout the State of Illinois which allow Accel to install and operate video gaming terminals. The route and customer acquisition costs and route and customer acquisition costs payable are recorded at the net present value of the future payments using a discount rate equal to Accel’s incremental borrowing rate associated with its long-term debt. Route and customer acquisition costs are amortized on a straight-line basis beginning on the date the location goes live and amortized over the estimated life of the contract, including expected renewals.

Location contracts acquired in a business combination are recorded at fair value and then amortized as an intangible asset on a straight-line basis over the expected useful life of 10 years.

Interest expense, net

Interest expense, net consists of interest on Accel’s current and prior credit facilities, amortization of financing fees, and accretion of interest on route and customer acquisition costs payable. Interest on the current credit facility is payable monthly on unpaid balances at the variable per annum LIBOR rate plus an applicable margin, as defined under the terms of the credit facility, ranging from 1.75% to 2.75% depending on the first lien net leverage ratio. Interest on our prior credit facility was payable monthly on unpaid balances at the variable per annum LIBOR rate plus an applicable margin, as defined under the terms of the prior credit facility, ranging from 1.70% to 2.50% depending on the ratio of total net debt to EBITDA. Interest expense, net also consists of interest income on convertible promissory notes from another terminal operator that bear interest at 3% per annum.

Income tax (benefit) expense

Income tax (benefit) expense consists mainly of taxes (receivable) payable to national, state and local authorities. Deferred income taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of the assets and liabilities.

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Results of Operations

The following table summarizes Accel’s results of operations on a consolidated basis for the three months ended June 30, 2020 and 2019:

	Three Months Ended June 30,					Increase / (Decrease)
(in thousands, except %’s)	2020			2019		Change ($)			Change (%)
Revenues:
Net video gaming	$	—		$	100,994	$	(100,994	)		(100.0	)%
Amusement		260			1,348		(1,088	)		(80.7	)%
ATM fees and other revenue		119			1,925		(1,806	)		(93.8	)%
Total revenues		379			104,267		(103,888	)		(99.6	)%
Operating expenses:
Video gaming expenses		—			66,082		(66,082	)		(100.0	)%
General and administrative		10,451			17,476		(7,025	)		(40.2	)%
Depreciation and amortization of property and equipment		5,071			6,100		(1,029	)		(16.9	)%
Amortization of route and customer acquisition costs and location contracts acquired		5,565			4,624		941			20.4	%
Other expenses, net		3,132			730		2,402			329.0	%
Total operating expenses		24,219			95,012		(70,793	)		(74.5	)%
Operating (loss) income		(23,840	)		9,255		(33,095	)		(357.6	)%
Interest expense, net		2,489			3,156		(667	)		(21.1	)%
(Loss) income before income tax (benefit) expense		(26,329	)		6,099		(32,428	)		(531.7	)%
Income tax (benefit) expense		(5,055	)		1,771		(6,826	)		(385.4	)%
Net (loss) income	$	(21,274	)	$	4,328	$	(25,602	)		(591.5	)%

Revenues

Total revenues for the three months ended June 30, 2020 were $0.4 million, a decrease of $103.9 million, or 99.6%, compared to the prior year period. This decline was driven by a decrease in net video gaming revenue of $101.0 million, or 100.0%, a decrease in amusement revenue of $1.1 million, or 80.7% and a decrease in ATM fees and other revenue of $1.8 million, or 93.8%. The decrease in revenue is attributable to the shutdown of Illinois video gaming due to the COVID-19 outbreak which resulted in no gaming days for the three months ended June 30, 2020.

Video gaming expenses

Total video gaming expenses for the three months ended June 30, 2020 decreased $66.1 million, or 100.0%, compared to the prior year period attributable to the shutdown of Illinois video gaming due to the COVID-19 outbreak.

General and administrative

Total general and administrative expenses for the three months ended June 30, 2020 were $10.5 million, a decrease of $7.0 million, or 40.2%, compared to the prior year period. The decrease was attributable to a reduction to our monthly cash expenses during the IGB mandated shutdown which included furloughing approximately 90% of our employees.

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Depreciation and amortization of property and equipment

Depreciation and amortization of property and equipment for the three months ended June 30, 2020 was $5.1 million, a decrease of $1.0 million, or 16.9%, compared to the prior year period. The decrease in depreciation and amortization is the result of a change in estimate in which we extended the useful lives of our video gaming terminals and equipment from 7 to 10 years. The impact of this change in estimate for the second quarter of 2020 was a net decrease in depreciation expense of $1.9 million. Partially offsetting this decrease was an increased number of licensed establishments and VGTs.

Amortization of route and customer acquisition costs and location contracts acquired

Amortization of route and customer acquisition costs and location contracts acquired for the three months ended June 30, 2020 was $5.6 million, an increase of $0.9 million, or 20.4%, compared to the prior year period. The increase is primarily attributable to our business and asset acquisitions and their related performance, partially offset by the favorable impact from the adoption of Topic 606 which increased the period over which route and customer acquisition costs are amortized to include expected renewals.

Other expenses, net

Other expenses, net for the three months ended June 30, 2020 were $3.1 million, an increase of $2.4 million, or 329.0%, compared to the prior year period. Included in Other expenses, net for the three months ended June 30, 2020 were non-recurring, one-time expenses of $1.3 million for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown.

Interest expense, net

Interest expense, net for the three months ended June 30, 2020 was $2.5 million, a decrease of $0.7 million, or 21.1%, compared to the prior year period primarily due to lower rates and interest income on the convertible notes, partially offset by an increase in borrowings. For the three months ended June 30, 2020, the weighted average interest rate was approximately 2.7% compared to a rate of approximately 4.6% for the prior year period.

Income tax (benefit) expense

Income tax benefit for the three months ended June 30, 2020 was $5.1 million, a decrease of $6.8 million, or 385.4%, compared to the prior year period which had income tax expense of $1.8 million. The effective tax rate for the three months ended June 30, 2020 was 19.2% compared to 29.0% in the prior year period. The lower tax rate in the second quarter of 2020 was due to permanent differences related to stock options, transaction costs and executive compensation.

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The following table summarizes Accel’s results of operations on a consolidated basis for the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30,					Increase / (Decrease)
(in thousands, except %‘s)	2020			2019		Change ($)			Change (%)
Revenues:
Net video gaming	$	101,575		$	195,169	$	(93,594	)		(48.0	)%
Amusement		1,952			2,786		(834	)		(29.9	)%
ATM fees and other revenue		2,080			3,737		(1,657	)		(44.3	)%
Total revenues		105,607			201,692		(96,085	)		(47.6	)%
Operating expenses:
Video gaming expenses		67,980			127,703		(59,723	)		(46.8	)%
General and administrative		33,919			33,600		319			0.9	%
Depreciation and amortization of property and equipment		9,938			12,141		(2,203	)		(18.1	)%
Amortization of route and customer acquisition costs and location contracts acquired		11,130			8,927		2,203			24.7	%
Other expenses, net		4,336			1,346		2,990			222.1	%
Total operating expenses		127,303			183,717		(56,414	)		(30.7	)%
Operating (loss) income		(21,696	)		17,975		(39,671	)		(220.7	)%
Interest expense, net		6,738			6,203		535			8.6	%
(Loss) income before income tax (benefit) expense		(28,434	)		11,772		(40,206	)		(341.5	)%
Income tax (benefit) expense		(5,194	)		3,449		(8,643	)		(250.6	)%
Net (loss) income	$	(23,240	)	$	8,323	$	(31,563	)		(379.2	)%

Revenues

Total revenues for the six months ended June 30, 2020 were $105.6 million, a decrease of $96.1 million, or 47.6%, compared to the prior year period. This decline was driven by a decrease in net video gaming revenue of $93.6 million, or 48.0%, a decrease in amusement revenue of $0.8 million, or 29.9% and a decrease in ATM fees and other revenue of $1.7 million, or 44.3%. The decrease in net video gaming revenue is largely attributable to the temporary shutdown of Illinois video gaming since March 16, 2020, due to the COVID-19 outbreak which impacted 106 of the 182 gaming days (or 58% of gaming days) in the first half of 2020, partially offset by the acquisition of Grand River Jackpot on September 16, 2019, which collectively contributed $12.3 million in net video gaming revenue. Excluding Grand River Jackpot, net video gaming revenue decreased in the first half of 2020 by $105.9 million, or 54.3%, compared to the prior period, largely attributable to the previously mentioned temporary shutdown of Illinois video gaming due to the COVID-19 outbreak, partially offset by an increase in the number of licensed establishments and VGTs.

Video gaming expenses

Total video gaming expenses for the six months ended June 30, 2020 were $68.0 million, a decrease of $59.7 million, or 46.8%, compared to the prior year period. The components of video gaming expenses as a percentage of revenue of 64.4% for the six months ended June 30, 2020 was slightly higher than the 63.3% for the six months ended June 30, 2019 due to the increase in the gaming tax from 30% to 33% on July 1, 2019. The decrease of $59.7 million was the result of the previously mentioned temporary shutdown of Illinois video gaming due to the COVID-19 outbreak.

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General and administrative

Total general and administrative expenses for the six months ended June 30, 2020 were $33.9 million, an increase of $0.3 million, or 0.9%, compared to the prior year period. We experienced higher costs related to professional fees and stock-based compensation, partially offset by a reduction in our monthly cash expenses during the IGB mandated shutdown which included furloughing approximately 90% of our employees.

Depreciation and amortization of property and equipment

Depreciation and amortization of property and equipment for the six months ended June 30, 2020 was $9.9 million, a decrease of $2.2 million, or 18.1%, compared to the prior year period. The decrease in depreciation and amortization is the result of a change in estimate in which we extended the useful lives of our video gaming terminals and equipment from 7 to 10 years. The impact of this change in estimate for the first half of 2020 was a net decrease in depreciation expense of $4.5 million. Partially offsetting this decrease was an increased number of licensed establishments and VGTs. Depreciation and amortization as a percentage of revenue was 9.4% for the six months ended June 30, 2020 compared to 6.0% for the prior year period.

Amortization of route and customer acquisition costs and location contracts acquired

Amortization of route and customer acquisition costs and location contracts acquired for the six months ended June 30, 2020 was $11.1 million, an increase of $2.2 million, or 24.7%, compared to the prior year period. The increase is primarily attributable to our business and asset acquisitions and their related performance, partially offset by the favorable impact from the adoption of Topic 606 which increased the period over which route and customer acquisition costs are amortized to include expected renewals. Amortization of route and customer acquisition costs and location contracts acquired as a percentage of revenue was 10.5% for the six months ended June 30, 2020 compared to 4.4% for the prior year period.

Other expenses, net

Other expenses, net for the six months ended June 30, 2020 were $4.3 million, an increase of $3.0 million, or 222.1%, compared to the prior year period. Included in Other expenses, net for the six months ended June 30, 2020 were non-recurring, one-time expenses of $1.9 million for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown as well as additional non-recurring costs related to public company registration statements, partially offset by a favorable revaluation of consideration payable in connection with gaming acquisitions.

Interest expense, net

Interest expense, net for the six months ended June 30, 2020 was $6.7 million, an increase of $0.5 million, or 8.6%, compared to the prior year period primarily due to an increase in borrowings, partially offset by lower rates and interest income on the convertible notes. For the six months ended June 30, 2020, the weighted average interest rate was approximately 3.3% compared to a rate of approximately 4.6% for the prior year period.

Income tax (benefit) expense

Income tax benefit for the six months ended June 30, 2020 was $5.2 million, a decrease of $8.6 million, or 250.6%, compared to the prior year period which had income tax expense of $3.4 million. The effective tax rate for the six months ended June 30, 2020 was 18.3% compared to 29.3% in the prior year period. The lower tax rate in the first half of 2020 was due to permanent differences related to stock options, transaction costs and executive compensation.

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The following table summarizes Accel’s results of operations on a consolidated basis for the years ended December 31, 2019 and 2018:

	Year Ended December 31,					Increase / Decrease
(in thousands, except %’s)	2019			2018		Change			Change %
Revenues:
Net video gaming	$	410,636		$	321,711	$	88,925			27.6	%
Amusement		5,912			4,199		1,713			40.8	%
ATM fees and other revenue		7,837			6,083		1,754			28.8	%
Total revenues		424,385			331,993		92,392			27.8	%
Operating expenses:
Video gaming expenses		271,999			210,507		61,492			29.2	%
General and administrative		75,028			58,157		16,871			29.0	%
Depreciation and amortization of property and equipment		26,398			20,782		5,616			27.0	%
Amortization of route and customer acquisition costs and location contracts acquired		17,975			14,681		3,294			22.4	%
Other expenses, net		19,649			2,997		16,652			555.6	%
Total operating expenses		411,049			307,124		103,925			33.8	%
Operating income		13,336			24,869		(11,533	)		(46.4	)%
Interest expense		12,860			9,644		3,216			33.3	%
Loss on debt extinguishment		1,141			—		1,141			—
(Loss) income before income tax expense		(665	)		15,225		(15,890	)		(104.4	)%
Income tax expense		5,199			4,422		777			17.6	%
Net (loss) income	$	(5,864	)	$	10,803	$	(16,667	)		(154.3	)%

Revenues

Total revenues for the year ended December 31, 2019 were $424.4 million, an increase of $92.4 million, or 27.8%, compared to the year ended December 31, 2018. This growth was driven by an increase in net video gaming revenue of $88.9 million, or 27.6%, an increase in amusement revenue of $1.7 million, or 40.8% and an increase in ATM fees and other revenue of $1.8 million, or 28.8%. The increase in net video gaming revenue is partially attributable to the 2018 Acquisitions and the acquisition of Grand River Jackpot on September 16, 2019, which collectively contributed $39.6 million in net video gaming revenue to the above comparative increase. Excluding all acquisitions, net video gaming revenue increased in 2019 by $48.3 million, or 21.2%, compared to the prior period, largely due to an increase in the number of licensed establishments and VGTs.

Video gaming expenses

Total video gaming expenses for the year ended December 31, 2019 were $272.0 million, an increase of $61.5 million, or 29.2%, compared to the year ended December 31, 2018. The components of video gaming expenses as a percentage of revenue of 64.1% for the year ended December 31, 2019 was slightly higher than the 63.4% for the year ended December 31, 2018 due to the increase in the gaming tax from 30% to 33% on July 1, 2019. The increase of $61.5 million was the result of an increase in net video gaming revenue and corollary increase in gaming tax at a higher tax rate, as well as, establishment revenue share costs and required payments to the IGB’s third-party system administrator.

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General and administrative

Total general and administrative expenses for the year ended December 31, 2019 were $75.0 million, an increase of $16.9 million, or 29.0%, compared to the year ended December 31, 2018. The increase was primarily attributable to a $9.4 million increase in operating costs that increase variably based on the number of licensed establishments and VGTs, which includes increases in payroll and employee related expenses, licenses, permits and marketing expenses.

Depreciation and amortization of property and equipment

Depreciation and amortization of property and equipment for the year ended December 31, 2019 was $26.4 million, an increase of $5.6 million, or 27.0%, compared to the year ended December 31, 2018. The increase in depreciation and amortization is the result of increased number of licensed establishments and VGTs. Depreciation and amortization as a percentage of revenue was 6.2% for the year ended December 31, 2019 compared to 6.3% for the comparable prior year period.

Amortization of route and customer acquisition costs and location contracts acquired

Amortization of route and customer acquisition costs and location contracts acquired for the year ended December 31, 2019 was $18.0 million, an increase of $3.3 million, or 22.4%, compared to the year ended December 31, 2018. The increase is primarily attributable to our business and asset acquisitions and their related performance, partially offset by the favorable impact from the adoption of Topic 606 of $1.1 million which increased the period over which route and customer acquisition costs are amortized to include expected renewals. Amortization of route and customer acquisition costs and location contracts acquired as a percentage of revenue decreased to 4.2% from 4.4% for the year ended December 31, 2019 and 2018, respectively.

Other expenses, net

Other expenses, net for the year ended December 31, 2019 were $19.6 million, an increase of $16.7 million, or 555.6%, compared to the year ended December 31, 2018. The increase was largely attributed to one-time expenses for the Business Combination and larger fair value adjustments associated with the revaluation of contingent consideration liabilities related to acquisitions.

Interest expense

Interest expense for the year ended December 31, 2019 was $12.9 million, an increase of $3.2 million, or 33.3%, compared to the year ended December 31, 2018 primarily due to an increase in borrowings related to our business and asset acquisitions. For the year ended December 31, 2019, the weighted average interest rate was approximately 4.5% compared to the average interest rate of approximately 4.60% for the year ended December 31, 2018.

Loss on debt extinguishment

Loss on debt extinguishment of $1.1 million for the year ended December 31, 2019 was recorded in connection with the extinguishment of our Prior Credit Facility in November 2019. For more information on the extinguishment of our Prior Credit Facility see Liquidity and Capital Resources later in this section.

Income tax expense

Income tax expense for the year ended December 31, 2019 was $5.2 million, an increase of $0.8 million, or 17.6%, compared to the year ended December 31, 2018. Income tax expense increased due to permanent differences attributable to transaction costs associated with the Business Combination and executive compensation.

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The following table summarizes Accel’s results of operations on a consolidated basis for the years ended December 31, 2018 and 2017:

	Year Ended December 31,				Increase /Decrease
(in thousands, except %’s)	2018		2017		Change		Change %
Revenues:
Net video gaming	$	321,711	$	240,235	$	81,476		33.9	%
Amusement		4,199		3,422		777		22.7	%
ATM fees and other revenue		6,083		4,778		1,305		27.3	%
Total revenues		331,993		248,435		83,558		33.6	%
Operating expenses:
Video gaming expenses		210,507		157,010		53,497		34.1	%
General and administrative		58,157		45,364		12,793		28.2	%
Depreciation and amortization of property and equipment		20,782		16,768		4,014		23.9	%
Amortization of route and customer acquisition costs and location contracts acquired		14,681		9,792		4,889		49.9	%
Other expenses, net		2,997		1,331		1,666		125.2	%
Total operating expenses		307,124		230,265		76,859		33.4	%
Operating income		24,869		18,170		6,699		36.9	%
Interest expense		9,644		8,105		1,539		19.0	%
Income before income tax expense		15,225		10,065		5,160		51.3	%
Income tax expense		4,422		1,754		2,668		152.1	%
Net income	$	10,803	$	8,311	$	2,492		30.0	%

Revenues

Total revenues for the year ended December 31, 2018 were $332.0 million, an increase of $83.6 million, or 33.6%, compared to the year ended December 31, 2017. This growth was driven by an increase in net video gaming revenue of $81.5 million, or 33.9%, an increase in amusement revenue of $0.8 million, or 22.7%, and an increase in ATM fees and other revenue of $1.3 million, or 27.3%. The increase is partially attributable to the 2018 Acquisitions and Accel’s 2017 purchase of Fair Share Gaming, LLC and Fair Share Amusement Company, a licensed terminal operator in the state of Illinois and an operator of amusement games and ATMs for $60,000,000 (the “Fair Share Gaming Acquisition”), which collectively contributed $29.9 million of incremental net video gaming revenue to the above comparative increase. Excluding all acquisitions, net video gaming revenue for year ended December 31, 2018 increased by $48.6 million, or 27.1%, compared to the year ended December 31, 2017, largely due to an increase in the number of licensed establishments and VGTs.

Video gaming expenses

Total video gaming expenses for the year ended December 31, 2018 were $210.5 million, an increase of $53.5 million, or 34.1%, compared to the year ended December 31, 2017. The components of gaming expenses as a percentage of revenue remained relatively consistent from 2017 to 2018 and, as a result, gaming expenses as a percentage of revenue was 63.4% for the year ended December 31, 2018 compared to 63.2% the year ended December 31, 2017, reflecting proportional increases in revenue and gaming expenses. The increase of $53.5 million was the result of an increase in net video gaming revenue and corollary increase in gaming tax and establishment revenue share costs, along with required payments to the IGB’s third-party system administrator.

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General and administrative

Total general and administrative expenses for the year ended December 31, 2018 were $58.2 million, an increase of $12.8 million, or 28.2%, compared to the year ended December 31, 2017. General and administrative expenses as a percentage of revenue improved to 17.5% in year ended December 31, 2018 compared to 18.3% for the prior year. This improvement was realized considering a $10.7 million increase in payroll and employee related expenses resulting from an increase in employee headcount to support new licensed establishments and VGTs, as well as expense related to the use of salesforce™ customer relationship management (“CRM”), a cloud-based system expected to improve the efficiency and effectiveness of Accel’s sales and operation teams.

Depreciation and amortization of property and equipment

Depreciation and amortization for the year ended December 31, 2018 was $20.8 million, an increase of $4.0 million, or 23.9%, compared to the year ended December 31, 2017. The increase was primarily attributable to additional gaming equipment for new licensed establishments and purchased licensed establishments. Depreciation and amortization as a percentage of revenue was 6.3% for the year ended December 31, 2018 compared to 6.7% for the year ended December 31, 2017.

Amortization of route and customer acquisition costs and location contracts acquired

Amortization of route and customer acquisition costs and location contracts acquired for the year ended December 31, 2018 was $14.7 million, an increase of $4.9 million, or 49.9%, compared to the year ended December 31, 2017. The increase is primarily attributable to the Fair Share Gaming Acquisition in 2017. These increases are offset by certain route acquisition liabilities that were extinguished related to prior periods. Amortization of route and customer acquisition costs and location contracts acquired as a percentage of revenue increased from 3.9% to 4.4% for the year ended December 31, 2017 and 2018, respectively.

Other expenses, net

Other expenses, net for the year ended December 31, 2018 were $3.0 million, an increase of $1.7 million, or 125.1%, compared to the year ended December 31, 2017. The increase was largely attributed lobbying efforts in Pennsylvania to allow route gaming, and a revaluation of consideration payable in connection with the gaming acquisitions.

Interest expense

Interest expense for the year ended December 31, 2018 was $9.6 million, an increase of $1.5 million, or 19.0%, compared to year ended December 31, 2017 primarily due to a $50.1 million increase in Accel’s senior secured debt due to the 2018 Acquisitions.

Income tax expense

Income tax expense for the year ended December 31, 2018 was $4.4 million, an increase of $2.7 million, or 152.2%, compared to year ended December 31, 2017. Income tax expense increased due to Accel’s increase in income before income tax expense and the impact of the prior revaluation of deferred tax assets and liabilities offset by lower federal tax rates in 2018 resulting from the Tax Cuts and Jobs Act of 2017.

Key Business Metrics

Accel uses a variety of statistical data and comparative information commonly used in the gaming industry to monitor the performance of the business, none of which are prepared in accordance with GAAP, and therefore

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should not be viewed as indicators of operational performance. Accel’s management uses this information for financial planning, strategic planning and employee compensation decisions. The key indicators include:

• Number of licensed establishments;

• Number of VGTs;

• Average remaining contract term (years); and

• Hold-per-day.

Number of licensed establishments

The number of licensed establishments is calculated based on data provided by Scientific Games, a contractor of the IGB. Terminal operator portal data is updated at the end of each gaming day and includes licensed establishments that may be temporarily closed but still connected to the central system. Accel utilizes this metric to continually monitor growth from organic openings, purchased licensed establishments, and competitor conversions. Competitor conversions occur when a licensed establishment chooses to change terminal operators.

Number of video game terminals (VGTs)

The number of VGTs in operation is based on Scientific Games terminal operator portal data which is updated at the end of each gaming day and includes VGTs that may be temporarily shut off but still connected to the central system. Accel utilizes this metric to continually monitor growth from existing licensed establishments, organic openings, purchased licensed establishments, and competitor conversions.

Average remaining contract term

Average remaining contract term is calculated by determining the average expiration date of all outstanding contracts with Accel’s current licensed establishment partners, and then subtracting the applicable measurement date. The IGB limited the length of contracts entered into after February 2, 2018 to a maximum of eight years with no automatic renewals.

Hold-per-day

Hold-per-day is calculated by dividing the difference between cash deposited in all VGTs and tickets issued to players by the average number of VGTs in operation during the period being measured, and then dividing the calculated amount by the number of operating days in such period.

The following table sets forth information with respect to Accel’s licensed establishments, number of VGTs, and average remaining contract term as of June 30, respectively:

	As of June 30,				Increase / (Decrease)
	2020		2019		Change $			Change %
Licensed establishments		2,335		1,762		573			32.5	%
Video gaming terminals		11,108		8,082		3,026			37.4	%
Average remaining contract term (years)(1)		6.8		7.4		(0.6	)		(8.1	)%

(1) Excluding the Grand River Jackpot acquisition, the Average remaining contract life was 7.0 years as of June 30, 2020.

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The following table sets forth information with respect to Accel’s hold-per-day for the three and six months ended June 30, respectively:

	June 30				Increase / (Decrease)
	2020		2019		Change $			Change %
Hold-per-day—for the three months ended(1)		—	$	139	$	(139	)		(100.0	)%
Hold-per-day—for the six months ended(2)	$	124	$	137	$	(13	)		(9.5	)%

(1) There were no gaming days for the three months ended June 30, 2020, due to the IGB mandated COVID-19 shutdown.

(2) Excluding the Grand River Jackpot acquisition, Hold-per-day was $132 for the six months ended June 30, 2020. Hold per day for the six months ended June 30, 2020 is computed based on 76-eligible days of gaming (excludes 106 non-gaming days due to the IGB mandated COVID-19 shutdown).

The following tables set forth information with respect to Accel’s licensed establishments, number of VGTs, average remaining contract term and hold-per-day as of and for the years ended December 31, 2019, 2018 and 2017, respectively.

	As of and for the year ended December 31,				Increase / Decrease
	2019		2018		Change			Change %
Licensed establishments		2,312		1,686		626			37.1	%
Video gaming terminals		10,499		7,649		2,850			37.3	%
Average remaining contract term (years)(1)		6.9		7.6		(0.7	)		(9.2	)%
Hold-per-day(2)	$	130	$	125	$	5			4.0	%

(1) Excluding the Grand River Jackpot acquisition, the average remaining contract life was 7.2 years as of December 31, 2019.

(2) Excluding the Grand River Jackpot acquisition, Hold-per-day was $133 for the year ended December 31, 2019.

	As of and for the year ended December 31,				Increase / Decrease
	2018		2017		Change			Change %
Licensed establishments		1,686		1,442		244			16.9	%
Video gaming terminals		7,649		6,439		1,210			18.8	%
Average remaining contract term (years)		7.6		8.3		(0.7	)		(8.4	)%
Hold-per-day	$	125	$	115	$	10			8.7	%

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted net income are non-GAAP financial measures and are key metrics used to monitor ongoing core operations. Management of Accel believes Adjusted EBITDA and Adjusted net income enhance the understanding of Accel’s underlying drivers of profitability and trends in Accel’s business and facilitate company-to-company and period-to-period comparisons, because these non-GAAP financial measures exclude the effects of certain non-cash items or represent certain nonrecurring items that are unrelated to core performance. Management of Accel also believe that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance and to evaluate Accel’s ability to fund capital expenditures, service debt obligations and meet working capital requirements.

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Adjusted net (loss) income and Adjusted EBITDA

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2020			2019			2020			2019
Net (loss) income	$	(21,274	)	$	4,328		$	(23,240	)	$	8,323
Adjustments:
Amortization of route and customer acquisition costs and location contracts acquired(1)		5,565			4,624			11,130			8,927
Stock-based compensation(2)		1,327			128			2,387			256
Other expenses, net(3)		3,132			754			4,336			1,370
Tax effect of adjustments(4)		(2,343	)		(2,311	)		(2,015	)		(3,805	)
Adjusted net (loss) income	$	(13,593	)	$	7,523		$	(7,402	)	$	15,071
Depreciation and amortization of property and equipment		5,071			6,100			9,938			12,141
Interest expense, net		2,489			3,156			6,738			6,203
Income tax (benefit) expense		(2,712	)		4,082			(3,179	)		7,254
Adjusted EBITDA	$	(8,745	)	$	20,861		$	6,095		$	40,669

(1) Route and customer acquisition costs consist of upfront cash payments and future cash payments to third party sales agents to acquire the licensed video gaming establishments that are not connected with a business combination. Accel amortizes the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items. Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the contract. Future cash payments do not include cash costs associated with renewing customer contracts as Accel does not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 10 years. “Amortization of route and customer acquisition costs and location contracts acquired” aggregates the non-cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired.

(2) Stock-based compensation consists of options, restricted stock units and warrants.

(3) Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring expenses including expenses relating to lobbying efforts and legal expenses in Pennsylvania and lobbying efforts in Missouri, (iii) non-recurring expenses and (iv) non-recurring costs associated with COVID-19.

(4) Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations.

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Adjusted EBITDA for the three months ended June 30, 2020, was a loss of $8.7 million, a decrease of $29.6 million, or 141.9%, compared to the prior year period. Adjusted EBITDA for the six months ended June 30, 2020, was $6.1 million, a decrease of $34.6 million, or 85.0%, compared to prior year period. Both the three and six month periods ended June 30, 2020, were lower primarily due to the impact of the previously mentioned temporary shutdown of video gaming in the state of Illinois due to the COVID-19 outbreak.

	Year Ended December 31,
(in thousands)	2019			2018			2017
Net (loss) income	$	(5,864	)	$	10,803		$	8,311
Adjustments:
Amortization of route and customer acquisition costs and location contracts acquired(1)		17,975			14,681			9,792
Stock-based compensation(2)		2,236			453			804
Other expenses, net(3)		19,649			3,030			1,331
Tax effect of adjustments(4)		(11,301	)		(5,831	)		(2,928	)
Adjusted net income	$	22,695		$	23,136		$	17,310
Depreciation and amortization of property and equipment		26,398			20,782			16,768
Interest expense		12,860			9,644			8,105
Income tax expense		16,500			10,253			4,682
Loss on debt extinguishment		1,141			—			—
Adjusted EBITDA	$	79,594		$	63,815		$	46,865

(1) Route and customer acquisition costs consist of upfront cash payments and future cash payments to third party sales agents to acquire the licensed video gaming establishments that are not connected with a business combination. Accel amortizes the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items. Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the contract. Future cash payments do not include cash costs associated with renewing customer contracts as Accel does not generally incur significant costs as a result of extension or renewal of an existing contract. Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 10 years. “Amortization of route and customer acquisition costs and location contracts acquired” aggregates the non-cash amortization charges relating to upfront route and customer acquisition cost payments and location contracts acquired.

(2) Stock-based compensation consists of options, restricted stock units and warrants.

(3) Other expenses, net consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring expenses including expenses relating to lobbying efforts and legal expenses in Pennsylvania, lobbying efforts in Missouri and a settlement in connection with a gaming acquisition, and (iii) non-recurring expenses associated with the Business Combination.

(4) Calculated by excluding the impact of the non-GAAP adjustments from the current period tax provision calculations.

Adjusted EBITDA for the year ended December 31, 2019 was $79.6 million, an increase of $15.8 million, or 24.7%, compared to year ended December 31, 2018. The increase was primarily attributable to an increase in licensed establishments and VGTs.

Adjusted EBITDA for the year ended December 31, 2018 was $63.8 million, an increase of $16.9 million, or 36.1%, compared to year ended December 31, 2017. The increase in Adjusted EBITDA is attributable to both

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organic growth of the business as well as the 2018 Acquisitions (as defined in “Management’s Discussion and Analysis of Financial Condition and Result of Operations”). The increase was primarily attributable to an increase in licensed establishments and VGTs.

Liquidity and Capital Resources

In order to maintain sufficient liquidity, Accel reviews its cash flow projections and available funds with its Board of Directors to consider modifying its capital structure and seeking additional sources of liquidity, if needed. The availability of additional liquidity options will depend on the economic and financial environment, Accel’s credit, its historical and projected financial and operating performance, and continued compliance with financial covenants. As a result of possible future economic, financial and operating declines, possible declines in Accel’s creditworthiness and potential non-compliance with financial covenants, Accel may have less liquidity than anticipated, fewer sources of liquidity than anticipated, less attractive financing terms and less flexibility in determining when and how to use the liquidity that is available.

Accel believes that its cash and cash equivalents, cash flows from operations and borrowing availability under its senior secured credit facility will be sufficient to meet its capital requirements for the next twelve months. Accel’s primary short-term cash needs are paying operating expenses, servicing outstanding indebtedness and funding near term acquisitions. As of June 30, 2020, Accel had $148.8 million in cash and cash equivalents.

In response to the decision by the IGB to shut down all VGTs across the State of Illinois due to the COVID-19 outbreak, we took action to reduce our projected monthly cash expenses down to $2-$3 million during the shutdown to position us to help mitigate the effects of the temporary cessation of operations. The actions taken include furloughing approximately 90% our employees and deferring certain payments to major vendors. Additionally, members of our management team decided to voluntarily forgo their salaries until the resumption of video gaming operations. We also borrowed $65 million on our delayed draw term loan in March 2020 to increase our cash position and help preserve our financial flexibility.

2019 Senior Secured Credit Facility

On November 13, 2019, in order to refinance its prior credit facility, for working capital and other general purposes, we entered into a credit agreement (the “Credit Agreement”) as borrower, Accel and our wholly-owned domestic subsidiaries, as a guarantor, the banks, financial institutions and other lending institutions from time to time party thereto, as lenders, the other parties from time to time party thereto and Capital One, National Association, as administrative agent (in such capacity, the “Agent”), collateral agent, issuing bank and swingline lender, providing for a:

• $100.0 million revolving credit facility, including a letter of credit facility with a $10.0 million sublimit and a swing line facility with a $10.0 million sublimit,

• $240.0 million initial term loan facility, and

• $125.0 million additional term loan facility.

As of June 30, 2020, there remained approximately $49.5 million of availability under the Credit Agreement.

The obligations under the Credit Agreement are guaranteed by Accel and our wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”). The obligations under the Credit Agreement are secured by substantially all of assets of the Guarantors, subject to certain exceptions. Certain future-formed or acquired wholly-owned domestic subsidiaries of the Company will also be required to guarantee the Credit Agreement and grant a security interest in substantially all of its assets (subject to certain exceptions) to secure the obligations under the Credit Agreement.

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Borrowings under the Credit Agreement bear interest, at Accel’s option, at a rate per annum equal to either (a) the adjusted LIBOR rate (“LIBOR”) (which cannot be less than zero) for interest periods of 1, 2, 3 or 6 months (or if consented to by (i) each applicable Lender, 12 months or any period shorter than 1 month or (ii) the Agent, a shorter period necessary to ensure that the end of the relevant interest period would coincide with any required amortization payment ) plus the applicable LIBOR margin or (b) the alternative base rate (“ABR”) plus the applicable ABR margin. ABR is a fluctuating rate per annum equal to the highest of (i) the Federal Funds Effective Rate plus 1/2 of 1.0%, (ii) the prime rate announced from time to time by Capital One, National Association and (iii) LIBOR for a 1-month Interest Period on such day plus 1.0%. The Credit Agreement also includes provisions for determining a replacement rate when LIBOR is no longer available. As of June 30, 2020, the weighted-average interest rate was approximately 3.33%.

Interest is payable quarterly in arrears for ABR loans, at the end of the applicable interest period for LIBOR loans (but not less frequently than quarterly) and upon the prepayment or maturity of the underlying loans. Accel is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the revolving credit facility and the additional term loan facility. Additionally, we are required to pay an upfront fee with respect to any funded additional term loans.

The applicable LIBOR and ABR margins and the commitment fee rate are calculated based upon the first lien net leverage ratio of Accel and its restricted subsidiaries on a consolidated basis, as defined in the Credit Agreement. Until the delivery of the initial financial statements under the Credit Agreement, the revolving loans and term loans bear interest, at the option of Accel, at either

(a) ABR plus a margin of 1.25% or

(b) LIBOR plus a margin of 2.25%.

The additional term loan facility is available for borrowings until the first anniversary of November 13, 2019 (the “Closing Date”). Each of the revolving loans and the term loans mature on November 13, 2024.

The term loans and, once drawn, the additional term loans will amortize at an annual rate equal to approximately 5.00% per annum. Upon the consummation of certain non-ordinary course asset sales, we may be required to apply the net cash proceeds thereof to prepay outstanding term loans and additional term loans. The loans under the Credit Agreement may be prepaid without premium or penalty, subject to customary LIBOR “breakage” costs.

The Credit Agreement contains certain customary affirmative and negative covenants and events of default, and requires Accel and certain of its affiliates obligated under the Credit Agreement to make customary representations and warranties in connection with credit extensions thereunder.

In addition, the Credit Agreement requires Accel to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of consolidated EBITDA to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after the Closing Date and determined on the basis of the four most recently ended fiscal quarters of Accel for which financial statements have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights.

If an event of default (as such term is defined in the Credit Agreement) occurs, the lenders would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto.

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Accel was in compliance with all debt covenants as of June 30, 2020. Given our assumptions about the future impact of COVID-19 on the gaming industry, which could be materially different due to the inherent uncertainties of future restrictions on the industry, we expect to meet our cash obligations as well as remain in compliance with the debt covenants in our credit facility for the next 12 months. However, given the uncertainty of COVID-19 and the resulting potential impact to the gaming industry and our future assumptions, as well as to provide additional financial flexibility, we and the other parties thereto amended the Credit Agreement on August 4, 2020 to provide a waiver of financial covenant breach for the periods ended September 30, 2020 through March 31, 2021 of the First Lien Net Leverage Ratio and Fixed Charge Coverage Ratio (each as defined under the Credit Agreement).

Prior Credit Facility

Accel’s Prior Credit Facility was a senior secured first lien credit facility, as amended, that consisted of a $125.0 million term loan, a contract draw loan facility of $170.0 million and a revolving credit facility of $85.0 million. Accel’s prior credit facility was with a syndicated group of banks with CIBC Bank USA, as administrative agent for the lenders. Included in the revolving credit facility and contract draw loan were swing line sub-facilities of $5.0 million each.

The Prior Credit Facility was paid off with the proceeds from the 2019 Senior Secured Credit Facility.

Cash Flows

The following table summarizes Accel’s net cash provided by or used in operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with our condensed consolidated financial statements and the notes thereto included in this filing:

	Six Months Ended June 30,
(in thousands)	2020			2019
Net cash (used in) provided by operating activities	$	(17,284	)	$	26,083
Net cash used in investing activities		(4,002	)		(10,548	)
Net cash provided by (used in) financing activities		44,717			(8,257	)

Net cash (used in) provided by operating activities

For the six months ended June 30, 2020, net cash used in operating activities was $17.3 million, a decrease of $43.4 million over the comparable period. In addition to our decrease in net income, we had $1.5 million in payments on contingent consideration and experienced a decrease in working capital adjustments.

Net cash used in investing activities

For the six months ended June 30, 2020, net cash used in investing activities was $4.0 million, a decrease of $6.5 million over the comparable period and was primarily attributable to less cash used to purchase property and equipment.

Net cash provided by (used in) financing activities

Cash from financing activities is primarily used to fund acquisitions, purchases of property and equipment, and for working capital requirements. For the six months ended June 30, 2020, net cash provided by financing activities was $44.7 million, an increase of $53.0 million over the comparable period. The increase was primarily due to an increase in net borrowings on Accel’s credit facility, partially offset by higher payments on consideration payable.

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Year ended December 31, 2019, 2018 and 2017

The following table summarizes Accel’s net cash provided by or used in operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this prospectus:

	Year Ended December 31,
(in thousands)	2019			2018			2017
Net cash provided by operating activities	$	45,565		$	44,343		$	33,097
Net cash used in investing activities		(151,532	)		(73,547	)		(70,870	)
Net cash provided by financing activities		139,141			46,122			59,081

Net cash provided by operating activities

For the year ended December 31, 2019, net cash provided by operating activities was $45.6 million, an increase of $1.2 million over the comparable period of 2018. The increase was primarily attributable to an increase in gaming revenue from licensed establishments acquired from the 2018 Acquisitions and the 2019 acquisition of Grand River Jackpot.

For the year ended December 31, 2018, net cash provided by operating activities was $44.3 million, an increase of $11.2 million over the comparable period of 2017. The increase was primarily attributable to an increase in gaming revenue from new licensed establishments gained from the 2018 Acquisitions, and the full-year impact of licensed establishments from the Fair Share Gaming Acquisition in July 2017.

For the year ended December 31, 2017, net cash provided by operating activities was $33.1 million, an increase of $8.3 million over the comparable period of 2016. The increase was primarily attributable to an increase in gaming revenue from new licensed establishments and licensed establishments from the Fair Share Gaming Acquisition in July 2017.

Net cash used in investing activities

For the year ended December 31, 2019, net cash used in investing activities was $151.5 million, an increase of $78.0 million over the comparable period of 2018 and was primarily attributable to more cash used to fund business and asset acquisitions and our investment in convertible notes of $30 million. We anticipate our capital expenditures will be approximately $25 million in 2020.

For the year ended December 31, 2018, net cash used in investing activities was $73.5 million, an increase of $2.7 million over the comparable period of 2017. Capital spending, net of disposal of property and equipment, was $22.1 million and primarily attributable to purchases of video gaming equipment. Cash used for the 2018 Acquisitions, net of cash acquired, totaled $51.4 million.

For the year ended December 31, 2017, net cash used in investing activities was $70.9 million, an increase of $19.3 million over the comparable period of 2016. The increase in cash used was primarily attributed to the Fair Share Gaming Acquisition and purchases of gaming equipment for new and existing licensed establishments. Capital spending, net of disposal of property and equipment, was $23.4 million and primarily attributable to purchases of video gaming equipment. Cash used for the Fair Share Gaming Acquisition, net of cash acquired, totaled $45.1 million.

Net cash provided by financing activities

Cash from financing activities is primarily used to fund acquisitions, purchases of property and equipment, and for working capital requirements.

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For the year ended December 31, 2019, net cash used in financing activities was $139.1 million, an increase of $93.0 million over the comparable period of 2018. The increase was due to increased borrowings on Accel’s credit facility to fund our business and asset acquisitions.

For the year ended December 31, 2018, net cash provided by financing activities was $46.1 million, a decrease of $13.0 million over the comparable period of 2017. The decrease was due to increased paydowns on Accel’s credit facility.

For the year ended December 31, 2017, net cash provided by financing activities was $59.1 million, an increase of $9.8 million over the comparable period of 2016. The increase was due to additional borrowings on Accel’s credit facility for the Fair Share Gaming Acquisition.

Critical Accounting Policies and Estimates

Accel prepares its consolidated financial statements in accordance with U.S. GAAP. In applying accounting principles, it is often required to use estimates. These estimates consider the facts, circumstances and information available, and may be based on subjective inputs, assumptions and information known and unknown to Accel. Material changes in certain of the estimates that Accel uses could affect, by a material amount, its consolidated financial position and results of operations. Although results may vary, Accel believes its estimates are reasonable and appropriate. The following describes certain significant accounting policies that involve more subjective and complex judgments where the effect on Accel’s consolidated financial position and operating performance could be material.

Revenue recognition

Accel generates revenues in the State of Illinois from the following types of services: Video gaming terminals, Amusements and ATMs. Revenue is disaggregated by type of revenue and is presented on the face of the consolidated statements of operations. Video gaming revenue is the win from gaming activities, which is the difference between gaming wins and losses. Amusement revenue represents amounts collected from machines operated at various licensed establishments. ATM fees and other revenue represents fees charged for the withdrawal of funds from Accel’s redemption devices and stand-alone ATMs.

Accel determined that in a gaming environment, whenever a customer’s money has been accepted by a machine, we have an obligation (an implied contract) to provide the customer access to the game and honor the outcome of the game (in the case of video gaming terminals). Accel determined that the implied contract is entered into between us and customers satisfies the requirements of a contract under Topic 606, as (i) the contract is legally enforceable with the customer, (ii) the arrangement identifies the rights of the parties, (iii) the contract has commercial substance, and (iv) the cash is received upfront from the customer so its collectability is probable. The gaming service is a single performance obligation in each implied contract with the customer. Accel applies the portfolio approach of all wins and losses by VGT daily to determine the total transaction price of the portfolio of implied contracts. Accel recognizes revenue when the single performance obligation is satisfied, which is at the completion of each game.

Route and customer acquisition costs

Accel’s route and customer acquisition costs consist of fees paid, typically an upfront payment and future installment payments over the life of the contract, entered into with third parties and licensed establishments throughout the State of Illinois. These contracts are non-cancelable and allow Accel to install and operate VGTs in various establishments throughout the State of Illinois. The upfront payment and future installment payments are recorded at the net present value using a discount rate equal to Accel’s incremental borrowing costs. Route acquisition costs are amortized on a straight-line basis beginning on the date the location goes live and amortized over the life of the contract, which upon adoption of Topic 606, includes expected renewals. Accel records the

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accretion of interest on the route installment payments in the consolidated statements of operations as a component of interest expense, net. For locations that close prior to the end of the contractual term, Accel writes-off the net book value of the route and the related installment payables not yet paid and records a gain or loss in the consolidated statements of operations as a component of general and administrative expense. Additionally, most of the route acquisition contracts allow Accel to clawback some upfront and installment payments over the first few years of a contract if the location is unable to secure the appropriate licensing or it goes out of business prior to the end of the contract term. In the case of instances where a claw-back is triggered and Accel assesses it as recoverable, a receivable will be recorded. Upfront payments with a claw-back prior to a location going live are capitalized and will not begin amortization until the respective licensed establishment commences operations.

Consideration payable

Consideration payable consists of amounts payable related to certain business acquisitions as well as contingent consideration for future licensed establishment performance related to certain business acquisitions. The contingent consideration is measured at fair value on a recurring basis. Accel uses a discounted cash flow analysis to determine the value of contingent consideration upon acquisition and updates this estimate on a recurring basis. The significant assumptions in the cash flow analysis include the probability adjusted projected revenues after state taxes, a discount rate as applicable to each acquisition, and the estimated number of licensed establishments at which Accel commences operations during the contingent consideration period. The changes in the fair value of contingent consideration are recognized within Accel’s consolidated statements of operations as other expenses, net.

Business combinations and goodwill

For acquisitions meeting the definition of a business combination, the acquisition method of accounting is used. The acquisition date is the date on which Accel obtains operating control over the acquired business.

The consideration paid is determined on the acquisition date and is the sum of the fair values of the assets acquired by Accel and the liabilities assumed by Accel, including the fair value of any asset or liability resulting from a deferred consideration arrangement. Acquisition-related costs, such as professional fees, are excluded from the consideration transferred and are expensed as incurred.

Any contingent consideration is measured at its fair value on the acquisition date, recorded as a liability and accreted over its payment term in Accel’s consolidated statements of operations as other expenses, net.

Goodwill is measured as the excess of the consideration transferred over the fair value of the net identifiable assets acquired and liabilities assumed. Historically, the fair value determinations of net identifiable assets acquired and liabilities assumed for each of Accel’s business combinations did not result in the recognition of goodwill. On September 16, 2019, Accel acquired Grand River

Jackpot which was accounted for as a business combination using the acquisition method of accounting. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed resulted in goodwill of $34.5 million.

Accel reviews goodwill for impairment annually, as of October 1st, and whenever events or changes in circumstances indicate that the carrying value of the goodwill may not be recoverable. We compare the fair value of the reporting unit to its carrying value. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, we would record an impairment loss equal to the difference. Given the very short timeframe between the initial recording of the goodwill and our annual impairment test on October 1, 2019, we did not perform a full valuation by a third party to determine the fair value of our goodwill. Instead, we assessed qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of our goodwill is less than its carrying amount. In performing this assessment, we considered such factors as our historical performance; our growth opportunities in existing markets; new markets; and new products.

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We also referenced our forecasts of revenue, operating income, and capital expenditures. If a valuation by a third party was performed, we would have been required us to make significant estimates and assumptions such as company forecasts, discount rates and growth rates, among others. Changes in assumptions concerning future financial results or other underlying assumptions could have a significant impact on either the fair value of the goodwill, the amount of the goodwill impairment charge, or both.

Change in Estimate

During the first quarter of 2020, we conducted a review of our estimates of depreciable lives for our video gaming terminals and equipment. As a result of this review, we extended the useful lives of our video gaming terminals and equipment from 7 to 10 as the equipment is lasting longer than originally estimated. We have many video gaming terminals and equipment that were purchased when we started operations that are still being used today. The impact of this change in estimate for the three and six months ended June 30, 2020, was a net decrease in depreciation expense of $1.9 million and $4.5 million, and $1.5 million and $3.7 million net of tax, respectively.

Quarterly Results of Operations

The following table presents unaudited consolidated statement of operations data for each of the quarters ended March 31, 2020, June 30, 2020 and the four quarters ended December 31, 2019 and 2018. We believe that all necessary adjustments have been included to fairly present the quarterly information when read in conjunction with our annual consolidated financial statements and related notes. The operating results for any quarter are not necessarily indicative of the results for any subsequent quarter.

(in thousands, except per share data)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
2020:
Total revenues	$	105,228		$	379		$	—		$	—
Operating income (loss)		2,144			(23,840	)		—			—
Loss before income taxes		(2,105	)		(26,329	)		—			—
Net loss		(1,966	)		(21,274	)		—			—
Net loss per common share:
Basic(1)		(0.03	)		(0.27	)		—			—
Diluted(1)		(0.03	)		(0.27	)		—			—
2019:
Total revenues	$	97,425		$	104,267		$	101,294		$	121,399
Operating income (loss)		8,720			9,255			1,018			(5,657	)
Income (loss) before income taxes		5,673			6,099			(2,297	)		(10,140	)
Net income (loss)		3,995			4,328			(1,598	)		(12,589	)
Net (loss) income per common share:
Basic(1)		0.07			0.07			(0.03	)		(0.18	)
Diluted(1)		0.06			0.07			(0.03	)		(0.18	)
2018:
Total revenues	$	78,425		$	80,940		$	81,713		$	90,915
Operating income		7,092			6,766			4,681			6,330
Income before income taxes		5,038			4,554			2,514			3,119
Net income		3,593			3,233			2,126			1,851
Net income per common share:
Basic(1)		0.06			0.06			0.04			0.03
Diluted(1)		0.06			0.05			0.03			0.03

(1) Share amounts have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 3 to the consolidated financial statements.

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As previously discussed, we incurred higher operating expenses in the third and fourth quarter of 2019 attributable to one-time expenses related to the Business Combination. The loss in the fourth quarter of 2019 was also impacted by larger fair value adjustments associated with the revaluation of contingent consideration liabilities related to acquisitions. Revenues in the fourth quarter of 2019 were positively impacted by the Grand River Jackpot acquisition.

As an EGC, we elected to use the non-public effective date and adopted the Topic 606 in the fourth quarter of 2019 for the annual period ended December 31, 2019. Our quarterly financial statement disclosure for the first nine months of 2019 reflect the previous accounting standard of Topic 605 and will not be restated for the adoption of Topic 606. The cumulative impact of the new revenue standard for fiscal year 2019 was recorded in the fourth quarter and reflects the adjustment as if we adopted the standard as of January 1, 2019.

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Contractual Obligations

The following table sets forth Accel’s obligations and commitments to make future payments under contracts and contingent commitments as of June 30, 2020 (in thousands):

	Less than 1 Year		Due in 1 to 3 years		Due in 3 to 5 years		Due in over 5 years		Total
Credit facility principal payments(1)	$	18,250	$	36,500	$	352,438	$	—	$	407,188
Interest payments on credit facility(2)		10,110		18,873		11,612		—		40,595
Operating lease obligations(3)		208		207		32		—		447
Total contractual obligations	$	28,568	$	55,580	$	364,081	$	—	$	448,229

(1) Term Loans require quarterly principal payments of 1.25% of the outstanding loan amounts on the Closing Date.

(2) Interest payable monthly on unpaid balances at variable per annum LIBOR rate plus applicable margin.

(3) Represents leased office space under agreements expiring between January 2020 through December 2023.

Route acquisition costs payable

Accel enters into contracts with third parties and licensed establishments throughout the State of Illinois which allow Accel to install and operate VGTs. Payments are due over varying terms of the individual agreements and are discounted at Accel’s incremental borrowing cost at the time the contract is acquired. As of June 30, 2020 and December 31, 2019, route acquisition costs payable was $6.4 million and $6.5 million, respectively. The cost payable is included on Accel’s balance sheets as a liability as its deemed to be both probable and estimable based on all available information; however, contractual payments are contingent upon continued future operations of the licensed establishments including ongoing compliance with licensing requirements.

Consideration payable

Consideration payable consists of amounts payable related to certain business acquisitions as well as contingent consideration for future licensed establishment performance related to certain business acquisitions. The contingent consideration is measured at fair value on a recurring basis. Accel uses a discounted cash flow analysis to determine the value of contingent consideration upon acquisition and updates this estimate on a

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recurring basis. The significant assumptions in the cash flow analysis include the probability adjusted projected revenues after state taxes, a discount rate as applicable to each acquisition, and the estimated number of licensed establishments at which Accel commences operations during the contingent consideration period. The changes in the fair value of contingent consideration are recognized within Accel’s condensed consolidated statements of operations in other expenses, net. As of June 30, 2020 and December 31, 2019, the consideration payable balance was $19.8 million and $26.7 million, respectively.

Seasonality

Accel’s results of operations can fluctuate due to seasonal trends and other factors. For example, the gross revenue per machine per day is typically lower in the summer when players will typically spend less time indoors at licensed establishment partners, and higher in cold weather between February and April, when players will typically spend more time indoors at licensed establishment partners. Holidays, vacation seasons, and sporting events may also cause Accel’s results to fluctuate.

Quantitative and qualitative disclosure about market risk

Market risk represents the risk of loss that may impact Accel’s financial position due to adverse changes in financial market prices and rates. Market risk exposure is primarily the result of fluctuations in interest rates as well as, to a lesser extent, inflation.

Interest rate risk

Accel is exposed to interest rate risk in the ordinary course of its business. Accel’s borrowings under its senior secured credit facility were $407.2 million as of June 30, 2020. If the underlying interest rates were to increase by 1.0%, or 100 basis points, the increase in interest expense on Accel’s floating rate debt would negatively impact Accel’s future earnings and cash flows by approximately $4.1 million annually, assuming the balance outstanding under Accel’s credit facility remained at $407.2 million. Cash and cash equivalents are held in cash vaults, highly liquid, checking and money market accounts, VGTs, redemption terminals, ATMs, and amusement equipment. As a result, these amounts are not materially affected by changes in interest rates.

Inflation Risk

Accel does not believe that inflation has had a material effect on its results of operations, cash flows and financial condition in the last three years. Inflation may become a greater risk in the event of changes in current economic conditions and governmental fiscal policy.

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MANAGEMENT

Directors and Executive Officers

The following table lists the names, ages and positions of our current executive officers and directors:

Name	Age		Title
Andrew Rubenstein		51	Chief Executive Officer, President and Director
Karl Peterson (2)(3)(4)		49	Chairman and Director
Brian Carroll		57	Chief Financial Officer
Derek Harmer		52	General Counsel, Chief Compliance Officer and Secretary
Mark Phelan		51	Chief Revenue Officer
Michael Marino		40	Chief Commercial Officer
Ryan Hammer		43	President, Gaming Operations
Gordon Rubenstein		48	Director
Kathleen Philips (1)(2)(3)		53	Director
David W. Ruttenberg (1)(3)(4)		78	Director
Eden Godsoe (1)(2)(4)		50	Director
Kenneth B. Rotman		53	Director
Dee Robinson (3)(4)		59	Director

(1) Member of the audit committee

(2) Member of the compensation committee

(3) Member of the nominating and governance committee

(4) Member of the compliance committee

Each of the directors will serve until his or her successor is appointed or, if earlier, upon such director’s resignation, removal or death.

Directors

A brief biography of each of our directors is set forth below.

Andrew Rubenstein has served as Accel’s Chief Executive Officer, Chairman (prior to the Business Combination) and a director since January 2013. Mr. A. Rubenstein is also a Manager of Accel Entertainment Gaming, LLC, a subsidiary of Accel and a regulated gaming entity in the state of Illinois. In 2009, Mr. A. Rubenstein founded Accel and served as founding chairman of the Accel Board (as defined in “Certain Relationships and Related Transactions”). Prior to serving as Accel’s founding chairman, Mr. A. Rubenstein was a co-owner and an executive of Seven, LLC and was an owner and operator of the largest liquor store chain in central Illinois by revenue, Super Liquors, Inc. Mr. A. Rubenstein is a graduate of Brandeis University where he earned a Bachelor of Arts degree, with honors, in Economics and Master of Arts degree in International Finance and Economics. We believe that Mr. Rubenstein’s prior experience working at Accel Entertainment as the CEO makes him well qualified to serve as a member of the Company Board.

Karl Peterson is a Senior Partner of TPG and Managing Partner of TPG Pace Group, the firm’s effort to sponsor special purpose acquisition companies and other permanent capital solutions for companies. Mr. Peterson served as a director, President and Chief Executive Officer of Pace from February of 2017 through the consummation of the Business Combination. Previously, he served as a director, President and Chief Executive Officer of Pace Holdings Corp. from its inception in 2015 through its business combination with Playa Hotels & Resorts B.V. in March of 2017.

From 2010 through 2016, Mr. Peterson was Managing Partner of TPG Europe LLP. Since rejoining TPG in 2004, Mr. Peterson has led investments for TPG in technology, media, financial services, and travel sectors. Prior

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to 2004, he was a co-founder and the president and chief executive officer of Hotwire.com and served as the company’s President and Chief Executive Officer. He led the business from its inception through its sale to InterActiveCorp in 2003. Before Hotwire, Mr. Peterson was a principal at TPG in San Francisco, and from 1992 to 1995 he was a financial analyst at Goldman Sachs & Co. LLC. Mr. Peterson is currently a director of Sabre Corporation and Playa Hotels & Resorts B.V.

Mr. Peterson is a graduate of the University of Notre Dame, where he earned a Bachelor of Business Administration Degree with High Honors. Mr. Peterson is well-qualified to serve as a director because of his significant directorship experience, his broad experience in the technology, media, financial services and travel sectors and his previous role as a director of Pace Holdings Corp. We believe that Mr. Peterson’s prior experience with high growth companies, especially in media, makes him well qualified to serve as a member of the Company Board.

Gordon Rubenstein is Managing Partner of Raine Ventures where he leads the Raine Group’s venture capital platform. He is also the Co-Founder of Accel, is one of the original and current Managers of Accel Entertainment Gaming, LLC, and serves on the Company Board and also has held the title of Vice Chairman. Prior to joining Raine in 2013, Mr. G. Rubenstein founded and managed Pacific Partners, an operationally-focused venture capital partnership with backing from George Soros, Sam Zell, leading technology executives and entrepreneurs as well as partners from KKR, Silver Lake and Freeman Spogli. In addition, Mr. G. Rubenstein co-founded Astro Gaming (acquired by Skullcandy (Nasdaq: SKUL)), and Rave Digital Media (acquired by AMC Entertainment). Currently, Mr. G. Rubenstein serves on the boards of directors of Tastemade Inc., Happn and TVTime. Additionally, Mr. G. Rubenstein served on the board of directors of Cheddar until stepping down after its sale to Altice (ATUS). In addition, he is an observer to several other Raine Venture partner company boards. Mr. G. Rubenstein has an A.B. from the University of Michigan. He serves on the San Francisco Education Fund Leadership Counsel and lives in San Francisco with his wife and three children. We believe that Mr. Rubenstein’s experience in high growth companies, the gaming industry, and experience at Accel makes him well qualified to serve as a member of the Company Board.

Kathleen Philips served as a director of Pace from June 2017 through the consummation of the Business Combination. Ms. Philips has served as an advisor at Zillow Group, Inc. since January 2019. During her tenure with Zillow Group, Ms. Philips has held many leadership positions, including chief legal officer from September 2014 until December 2018, secretary from July 2010 until December 2018, chief financial officer and treasurer from August 2015 until May 2018, chief operating officer from August 2013 to August 2015 and general counsel from July 2010 to September 2014. Prior to joining Zillow Group, Ms. Philips served as general counsel at FanSnap, Inc., a search engine for live event tickets, from June 2008 to June 2010, as general counsel at Pure Digital Technologies, Inc., the producer of Flip Video camcorders, from September 2007 to June 2008, and as general counsel at StubHub, Inc., an online live event ticket marketplace, from May 2005 to April 2006. Ms. Philips served as general counsel at Hotwire, Inc. from 2001 to 2004 and as its corporate counsel from 2000 to 2001. Ms. Philips was an attorney in private practice at Cooley Godward LLP from 1998 to 2000 and at Stoel Rives LLP from 1997 to 1998. Ms. Philips holds a B.A. in Political Science from the University of California, Berkeley, and a J.D. from the University of Chicago. Ms. Philips is well-qualified to serve as a director because of her senior management experience at a growth-oriented, publicly-traded company. We believe that Ms. Philips’s wide range of legal experience with rapidly growing companies makes her well qualified to serve as a member of the Company Board.

David W. Ruttenberg has served as Accel’s director since 2013, and served as Chairman of the compensation committee of the Accel Board until the consummation of the Business Combination. Mr. Ruttenberg founded and served as Chairman of Belgravia Group Limited, a real estate development company, since 2014. In addition, Mr. Ruttenberg is the founder and President of Lakewest, Inc. (a real estate investment company), President of Lakeden Ltd. (a real estate investment company), Partner of Lakewest Venture Partners (a venture investment company), Ruttenberg, Gilmartin and Reis LLC (law firm) and President of David C. & Sarajean Ruttenberg Arts Foundation (a private operating foundation). Mr. Ruttenberg received his Bachelor of Science degree in

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Economics from Cornell University and his Juris Doctor degree from Northwestern School of Law. We believe that Mr. Ruttenberg’s business expertise, financial acumen and business industry contacts make him well qualified to serve as a member of the Company Board.

Eden Godsoe is currently the Vice President of Operations at Zeus Living. In this role, Ms. Godsoe manages all aspects of operations including customer experience, field operations and supply chain. Prior to joining Zeus Living, Ms. Godsoe served as Vice President of Strategy and Market Effectiveness at Sunrun where she was responsible for setting the corporate strategy and operating plan as well as implementing growth and margin initiatives. Prior to Sunrun, Ms. Godsoe was the Founder and CEO of two startups—FaveRave, an employee engagement and workforce insights platform, and SkinnyScoop, a consumer polling and social curation platform. Earlier in her career, Ms. Godsoe was the Director of Sales, Marketing and Customer Service at Comcast and Director of Product Management and Marketing at Covad Communications. Ms. Godsoe began her career as an M&A financial analyst at Morgan Stanley. Ms. Godsoe holds an M.B.A. from Stanford Graduate School of Business and a B.A. in Economics and Philosophy from the University of Western Ontario. She currently serves on the board of SMART, a San Francisco non-profit, and has previously served on the board of the Stanford Business School Fund. We believe that Ms. Godsoe’s past experience running her own startups makes her well qualified to serve as a member of the Company Board.

Kenneth B. Rotman is the Chief Executive Officer and Managing Director of Clairvest Group Inc., a publicly-traded Toronto-based private equity firm (Toronto Stock Exchange: CVG). He has more than 25 years of experience as a private equity investor. Prior to joining Clairvest in October 1993, Mr. Rotman spent just under three years at E. M. Warburg, Pincus & Co. where Mr. Rotman principally focused on media, communications and manufacturing transactions in North America and the United Kingdom. In addition to serving on the board of directors of Clairvest, he has participated on the boards of numerous public and private companies, including: Also Energy, MAG Aerospace, Discovery Air, Top Aces, Light Tower Rental, PEER 1 Network Enterprises, Hudson Valley Waste, Shepellfgi, Sparkling Spring Water and Winters Brothers Waste Systems. Mr. Rotman also serves on the board of directors of numerous charitable organizations. He earned a B.A. from Tufts University in 1988, a M.Sc. from the London School of Economics in 1989 and a M.B.A. from New York University Stern School of Business in 1991. We believe that Mr. Rotman’s experience with Clairvest and extensive business experience with a variety of companies makes him well qualified to serve as a member of the Company Board.

Dee Robinson is the founder and CEO of Robinson Hill, Inc., a Chicago-based concessions management firm founded in 1995 with locations in non-traditional venues focusing on airports. Prior to Robinson Hill, Ms. Robinson founded product merchandiser Unity Square, which sold ethnic-inspired products through a strategic partnership with Sears, Roebuck and Company. She has also served as an advertising executive for Leo Burnett and an associate product director for Johnson and Johnson Consumer Products Company, with additional experience in commercial banking at Ameritrust and Northern Trust. Ms. Robinson holds an M.B.A. from Northwestern University, Kellogg School of Management and a B.A. from the University of Pennsylvania. We believe that Ms. Robinson’s commercial success and gaming experience make her well qualified to serve as a member of the Company Board.

Officers

A brief biography of each of our officers (other than Andrew Rubenstein) is set forth below. Please see the section entitled “—Directors” for biographical information about Andrew Rubenstein.

Brian Carroll has served as Accel’s Chief Financial Officer since 2014. Prior to joining Accel in 2014, Mr. Carroll was the Chief Executive Officer of Calumet Holdings International (a photographic and lighting retailer and manufacturer) consisting of 7 operating companies throughout the U.S, China and the balance throughout Europe. Prior to joining Calumet, Mr. Carroll served as Vice President of Finance for Chef Solutions Holdings—a food manufacturing subsidiary of Lufthansa Airlines which was then sold to the private equity arm

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of Jay Alix Partners (American consulting firm best known for its work in the turnaround space.). Prior to joining Chef Solutions, Mr. Carroll was the principal for LCK Consulting which provided complex financial and litigation-related consulting. Additionally, from 2002 to 2004 Mr. Carroll was appointed as Special Master mediating complex financial litigation for the United States District Court for the Southern District of Ohio. Mr. Carroll is a C.P.A., and holds a Bachelor of Business Administration degree in Finance from Loyola University Chicago, a Master of Business Administration degree from DePaul University and a Juris Doctor degree from University of Illinois-Chicago John Marshall Law School.

Derek Harmer served as Accel’s General Counsel, Chief Compliance Officer and Secretary since 2012, and currently serves as Secretary of the Company. Mr. Harmer has served as Vice President and Secretary of the Illinois Gaming Machine Operators Association for the past four years. Prior to joining Accel in 2012, Mr. Harmer was the President of Stadium Technology Group, a software and systems company dedicated to creating race and sports book management systems for kiosk and mobile platforms. Prior to joining Stadium Technology Group, Mr. Harmer served as Senior Vice President of Progressive Gaming International Corporation where he oversaw a strategic business unit created to commercialize emerging gaming technologies. Prior to joining Progressive Gaming International Corporation, Mr. Harmer served in various management positions at WMS Gaming Inc. and as Deputy Attorney General in the state of Nevada, Gaming Division, where he was in house counsel to the Nevada Gaming Control Board and Nevada Gaming Commission. Mr. Harmer received his Bachelor of Arts degree in Criminal Justice from the University of Illinois-Chicago and his Juris Doctor degree from Drake University.

Mark Phelan has served as Accel’s Chief Revenue Officer since 2017. Prior to joining Accel in 2017, Mr. Phelan has worked as a Director of Research and Portfolio Manager at SFG Asset Advisors, an investment office. Prior to this experience, Mr. Phelan was the Chief Executive Officer of M22 Capital LLC, a Registered Investment Advisor that managed capital for high net worth individuals, from 2011 to 2013. He also served as a Managing Director of Piper Jaffray & Co., an investment banking platform, from 2004 to 2011. Prior to Piper Jaffray, Mr. Phelan served as the Head of Asian Derivatives Trading at DRW Trading Group. Mr. Phelan received his Bachelor of Arts in English Language and Literature/Letters from the University of Chicago, a Masters of Arts in International Relations and Affairs from the University of Chicago and a Master of Business Administration from the University of Chicago Booth School of Business.

Michael Marino has served as Accel’s Chief Commercial Officer since March 2020. Prior to joining Accel, Mr. Marino most recently served the last three years as Senior Vice President of Marketing and Chief Experience Officer at Caesars Entertainment where he managed the end-to-end customer journey including oversight of Caesars Rewards, the gaming industry’s leading loyalty program, partnerships, advertising, brand, digital and online hotel distribution. He also helped expand Caesars’ efforts in sports inclusive of marketing, partnerships and betting. Mr. Marino’s earlier roles at Caesars included oversight of marketing analytics, Vice President and Chief of Staff to the Chairman & CEO and Senior Vice President of loyalty and digital. Prior to Caesars, Mr. Marino worked four years as a management consultant at Bain & Company and five years in a variety of marketing, risk management, strategy and M&A roles at Capital One Financial. Mr. Marino holds a B.S. in Computer Science from the University of Virginia and an MBA from the Darden School of Business at the University of Virginia.

Ryan Hammer has served as Accel’s President of Gaming Operations since March 2020. Prior to joining Accel, Mr. Hammer most recently served as Senior Vice President & General Manager at Caesars Entertainment, where he oversaw operations at five Las Vegas resorts. Mr. Hammer began his career with the company in 2003 as an Analytics Manager and since that time has held a number of executive roles of increasing importance in finance, human resources and operations, and across five markets including Chicago, Louisville, Atlantic City, St. Louis and Las Vegas. Mr. Hammer holds a B.S. in Finance from Southern Illinois University, an MBA from Indiana University’s Kelley School of Business, and a J.D. from Indiana University’s Maurer School of Law. He is currently a board member for the Junior Achievement of Southern Nevada.

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Director and Executive Officer Qualifications

The Company has not formally established any specific, minimum qualifications that must be met by each of its officers or directors or specific qualities or skills that are necessary for one or more of its officers or members of the Company Board to possess. However, the Company expects generally to evaluate the following qualities in evaluating candidates for director and officer positions: educational background, diversity of professional experience, including whether the person is a current or was a former chief executive officer or chief financial officer of a public company or the head of a division of a prominent international organization, knowledge of the Company’s business, integrity, professional reputation, independence, wisdom, and ability to represent the best interests of the Company’s stockholders.

A majority of the members of the Company Board meet the criteria for independence under applicable SEC and NYSE rules. The Nominating and Governance Committee of the Company Board will prepare policies regarding director qualification requirements and the process for identifying and evaluating director candidates for adoption by the Company Board.

The above-mentioned attributes, along with the leadership skills and other experiences of the Company’s officers and the Company Board members described above, are expected to provide the Company with a diverse range of perspectives and judgment necessary to facilitate the Company’s goals of stockholder value appreciation through organic and acquisition growth.

Number and Terms of Office of Officers and Directors

The Company Board is divided into three classes with staggered three-year terms: Class I, Class II and Class III. The number of directors in each class shall be as nearly equal as possible. Upon expiration of the term of a class of directors, directors for that class will be elected for three-year terms at the annual meeting of stockholders in the year in which that term expires. As a result, only one class of directors will be elected at each annual meeting of Accel stockholders, with the other classes continuing for the remainder of their respective three-year terms. The term of office of Class I directors, which consist of Karl Peterson, Andrew Rubenstein and Dee Robinson, will expire at the 2023 annual meeting of stockholders. The initial term of office of Class II directors, which consists of Gordon Rubenstein and David W. Ruttenberg, will expire at the 2021 annual meeting of stockholders. The initial term of office of Class III directors, which consists of Eden Godsoe, Kathleen Philips and Kenneth B. Rotman, will expire at the 2022 annual meeting of stockholders.

The Charter and Bylaws, which came into effect upon the consummation of the Business Combination, provide that only the Company Board may fill vacancies on the Company Board by a vote of the majority of the Company Board then in existence. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so as to maintain the number of directors in each class as nearly equal as possible.

The Company’s officers are elected by the Company Board and serve at the discretion of the Company Board, rather than for specific terms of office. The Company Board is authorized to appoint persons to the offices set forth in the Charter as it deems appropriate. The Bylaws provide that the Company’s officers may consist of a Chief Executive Officer, a Chief Financial Officer, Secretary, Chairman, Treasurer, Presidents, Vice Presidents, Assistant Secretaries and such other offices as may be determined by the Company Board.

Director Independence

NYSE listing standards require that a majority of the Company Board be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the Company Board, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Messrs. Ruttenberg, Rotman and Peterson and Mses. Godsoe, Robinson and Philips are independent pursuant to the NYSE listing rules.

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Board Leadership Structure

Currently, our leadership structure separates the roles of Chairman of the Board and Chief Executive Officer, with Mr. Rubenstein serving as our Chief Executive Officer and Mr. Peterson serving as our Chairman of the Board. Our board believes that separating these roles provides the appropriate balance between strategy development, flow of information between management and the board of directors, and oversight of management. We believe this provides guidance for our board of directors, while also positioning our Chief Executive Officer as the leader of the Company in the eyes of our customers, employees, and other stakeholders. As Chairman, Mr. Peterson, among other responsibilities, presides over regularly scheduled meetings of the Company Board, serves as a liaison between the directors, and performs such additional duties as the Company Board may otherwise determine and delegate. By having Mr. Peterson serve as Chairman of the Company Board, Mr. Rubenstein is better able to focus his attention on running our Company. Additionally, as of February 27, 2020, Mr. Gordon Rubenstein serves as the Vice Chairman of the Company Board. His responsibilities as Vice Chairman include acting as a resource to other members of the Company Board in respect of industry practices, competitive landscape, regulatory issues, business opportunities and other matters, and leading Company Board meetings in conjunction with the Chairman of the Company Board, Mr. Peterson, or acting in such capacity in his absence.

Board Committees

Upon the consummation of the Business Combination, the Company Board established three standing committees, each of which will have the composition and responsibilities described below. NYSE rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committees be independent. The Company Board may from time to time establish other committees to facilitate the Company’s governance. Members serve on these committees until their resignation or until otherwise determined by the Company Board. Each committee shall operate under a written charter approved by the Company Board that satisfies the applicable rules of the SEC and the listing standards of the NYSE.

Audit Committee

The Audit Committee (the “Audit Committee”) consists of three members appointed by the Company Board, with one member serving as the chairperson. As of July 13, 2020, the members of the Audit Committee were Kathleen Philips (Chair), David W. Ruttenberg and Eden Godsoe. The chairperson of the Audit Committee qualifies as an “audit committee financial expert” as that term is as defined in Item 407(d) of Regulation S-K promulgated under the Securities Act. This designation does not impose any duties, obligations, or liabilities that are greater than are generally imposed on members of the Company’s Audit Committee and the Company Board. Each of the Audit Committee members must meet the requirements for independence under the current NYSE rules and SEC rules and regulations. Under Rule 10A-3 under the Exchange Act, in order to be considered independent, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (i) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (ii) be an affiliated person of the listed company or any of its subsidiaries. Effective upon the consummation of the Business Combination, the Company Board adopted an Audit Committee Charter, pursuant to which the Audit Committee is responsible for, among other things:

• selecting a firm to serve as the independent registered public accounting firm to audit the Company’s consolidated financial statements;

• ensuring the independence of the independent registered public accounting firm;

• discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, the Company’s interim and year-end operating results;

• establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters;

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• considering the adequacy of the Company’s internal controls and internal audit function:

• reviewing proposed waivers of the global code of conduct for directors, executive officers, and employees (with waivers for directors or executive officers to be approved by the board of directors);

• reviewing material related party transactions or those that require disclosure;

• selecting a firm to serve as the independent registered public accounting firm to audit the Company’s consolidated financial statements; and

• approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm.

Compensation Committee

The Compensation Committee (the “Compensation Committee”) consists of three members appointed by the Company Board, with one member serving as the chairperson. As of July 13, 2020, the members of the Compensation Committee were Karl Peterson, Kathleen Philips and Eden Godsoe (Chair). The composition of the Compensation Committee must meet the requirements for independence under the current NYSE rules and SEC rules and regulations. Additionally, each member of the Compensation Committee will be a non-employee director, as defined in Rule 16b-3 promulgated under the Exchange Act. Effective upon the consummation of the Business Combination, the Company Board adopted a Compensation Committee Charter, pursuant to which the Compensation Committee is responsible for, among other things:

• reviewing and approving the compensation of the Company’s executive officers, other than the Company’s chief executive officer;

• evaluating the performance of the Company’s chief executive officer in light of the Company’s goals and objectives;

• reviewing and recommending to the Company Board the compensation of the Company’s directors;

• administering the Company’s cash and equity incentive plans;

• reviewing and approving, or making recommendations to the Company Board with respect to, incentive compensation and equity plans; and

• reviewing the Company’s overall compensation policies.

Nominating and Governance Committee

The Nominating and Governance Committee (the “Nominating and Governance Committee”) consists of three members appointed by the Company Board, with one member serving as the chairperson. As of July 13, 2020, the members of the Nominating and Governance Committee were Karl Peterson (Chair), Kathleen Philips, David W. Ruttenberg and Dee Robinson. The composition of the Nominating and Governance Committee must meet the requirements for independence under the current NYSE rules and SEC rules and regulations. Effective upon the consummation of the Business Combination, the Company Board adopted a Nominating and Governance Committee Charter, pursuant to which the Nominating and Governance Committee is responsible for, among other things:

• identifying and recommending candidates for membership on the Company Board;

• recommending directors to serve on board committees;

• reviewing and recommending the Company’s corporate governance guidelines and policies;

• reviewing senior management succession, including with respect to the chief executive officer;

• evaluating, and overseeing the process of evaluating, the performance of the Company Board and individual directors; and

• assisting the Company Board on corporate governance matters.

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Compliance Committee

The Compliance Committee (the “Compliance Committee”) consists of three members appointed by the Company Board, with one member serving as the chairperson. As of July 13, 2020, the members of the Compliance Committee were Karl Peterson, David W. Ruttenberg (Chair), Eden Godsoe and Dee Robinson. Effective upon the consummation of the Business Combination, the Company Board adopted a Compliance Committee Charter, pursuant to which the Compliance Committee’s principal functions are:

• ensuring compliance with gaming laws, regulations, policies applicable to the operations of the Company in all jurisdictions in which it conducts business;

• providing appropriate reports to gaming authorities advising the authorities of the Company’s compliance efforts;

• performing due diligence in respect of proposed transactions and associations; and

• collecting information from gaming authorities to help the Company maintain and enhance its compliance with gaming laws and regulations.

Code of Business Conduct and Ethics

Upon the consummation of the Business Combination, the Company Board adopted a code of business conduct and ethics that applies to all of the employees, officers and directors of the Company. Among other matters, the code of business conduct and ethics requires the employees, officers and directors of the Company to adhere to the following principles:

• honesty and candor in the Company’s activities, including observance of the spirit, as well as the letter of the law;

• avoidance of conflicts between personal interests and the interests of the Company, or even the appearance of such conflicts;

• avoidance of payments to candidates running for government posts or other government officials;

• compliance with generally accepted accounting principles and controls;

• maintenance of the Company’s reputation and avoidance of activities which might reflect adversely on the Company; and

• integrity in dealing with the Company’s assets.

The code of business conduct and ethics codifies the business and ethical principles that govern all aspects of the Company’s business.

Compensation Committee Interlocks and Insider Participation

Since the consummation of the Business Combination on November 20, 2019, our Compensation Committee has been comprised of Eden Godsoe, Karl Peterson and Kathleen Philips. Other than Mr. Peterson, who served as President and Chief Executive Officer of Pace prior to the consummation of the Business Combination, none of the foregoing individuals has ever served as an officer or employee of the Company. For information required to be disclosed under Item 404(a) of Regulation S-K for Ms. Godsoe, Mr. Peterson and Ms. Philips, please see the section entitled “Certain Relationships and Related Transactions.”

None of our executive officers currently serves, or in the past year has served, as a member of the board or compensation committee of any other entity at which any of the executive officers of such other entity have served on the Company Board, or the Compensation Committee.

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EXECUTIVE COMPENSATION

Pace was, and immediately following the Business Combination Accel is, an emerging growth company. Accordingly, Accel has opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies” as such term is defined in rules promulgated under the Securities Act.

2019 and 2018 Summary Compensation Table

Accel’s “named executive officers” for the fiscal years ended December 31, 2019 and December 31, 2018, were Andrew Rubenstein, Chief Executive Officer, Brian Carroll, Chief Financial Officer, Derek Harmer, General Counsel, Chief Compliance Officer and Secretary and Karl Peterson, the former Chief Executive Officer (collectively, the “NEOs”).

The following table sets forth the annual base salary and other compensation paid to each of the NEOs for the fiscal years ended December 31, 2019 and December 31, 2018.

Name and Principal Position	Fiscal Year		Salary		Stock Awards($)(1)		Option Awards($)(2)		Nonequity Incentive Plan($)(3)		All Other Compensation(4)		Total ($)
Andrew Rubenstein		2019	$	637,981	$	1,094,220		—	$	750,000	$	10,346	$	2,492,547
Chief Executive Officer		2018	$	522,596	$	988		—	$	650,000	$	12,178	$	1,185,762
Brian Carroll		2019	$	268,826		—		—		—	$	12,521	$	281,347
Chief Financial Officer		2018	$	256,025		—	$	39,436	$	55,000	$	11,843	$	362,304
Derek Harmer		2019	$	308,751		—		—	$	155,000	$	12,951	$	476,702
General Counsel, Chief Compliance Officer and Secretary		2018	$	274,683		—	$	63,098	$	100,000	$	8,648	$	446,429
Karl Peterson		2019		—		—		—		—		—		—
Former Chief Executive Officer(5)		2018		—		—		—		—		—		—

(1) The amounts reported in the “Stock Awards” column represent grant date fair value of the restricted stock granted to the NEOs during the fiscal years ended December 31, 2019 and December 31, 2018 as computed in accordance with FASB Accounting Standards Codification Topic 718. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the NEOs from the restricted stock.

(2) The amounts reported in the “Option Awards” column represent the grant date fair value of the stock options granted to the NEOs during the fiscal years ended December 31, 2019 and December 31, 2018 as computed in accordance with FASB Accounting Standards Codification Topic 718. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the NEOs from the stock options.

(3) The amount reported in the “Nonequity Incentive Plan Compensation” column represents the annual cash discretionary bonuses, which were approved by the Accel Board (as defined in “Certain Relationships and Related Transactions”), earned by the NEOs pursuant to the achievement of certain Accel and individual performance objectives.

(4) “Other Compensation” consists of Accel’s matching contributions to the 401(k) Plan or other retirement plan, health insurance premiums, vehicle allowances and travel expenses.

(5) Karl Peterson ceased to be the Chief Executive Officer of Pace on November 20, 2019 in connection with the consummation of the Business Combination.

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Outstanding Equity Awards at Fiscal Year-End

The following table sets forth specified information concerning unexercised stock options for each of the NEOs outstanding as of December 31, 2019.

Name	Grant Date(1)			Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date
Andrew Rubenstein		5/9/2016	(2)(3)		—		343,770	$	2.33		8/30/2021
Brian Carroll		5/9/2016	(3)(4)		—		103,131	$	2.33		8/30/2021
		12/12/2017	(2)(3)		4,297		12,891	$	4.07		12/12/2023
		12/19/2018	(2)(3)		4,297		17,188	$	5.24		12/11/2024
Derek Harmer		5/9/2016	(3)(4)		—		103,131	$	2.33		8/30/2021
		12/12/2017	(2)(3)		6,875		20,626	$	4.07		12/12/2023
		12/19/2018	(2)(3)		6,875		27,502	$	5.24		12/11/2024

(1) This table does not include warrants or performance-based Shares that the NEOs have received in connection with the consummation of the Business Combination. For additional information, please see the section entitled “Principal and Selling Stockholders” beginning on page 114.

(2) Granted under Accel’s 2016 Plan (as defined in “—Equity Incentive Plans of Accel—Accel Entertainment, Inc.’s 2016 Equity Incentive Plan.”) The shares subject to the stock option vest over a four-year period, with 25% of the shares vesting on each annual anniversary of the vesting commencement date, subject to continued service with Accel through each vesting date. The options may be exercised for three months after the termination of the grantee’s employment with Accel.

(3) Vesting commenced on the date that is one year after the grant date.

(4) Granted under Accel’s 2011 Plan (as defined in “—Equity Incentive Plans of Accel—Accel Entertainment, Inc.’s 2016 Equity Incentive Plan”). The shares subject to the stock option vest over a five-year period, with 20% of the shares vesting on each annual anniversary of the vesting commencement date, subject to continued service with Accel through each vesting date. The options may be exercised for three months after the termination of the grantee’s employment with Accel.

Employment Agreements

Andrew Rubenstein

On July 15, 2020, Accel entered into an amended and restated employment agreement with Andrew Rubenstein. Under the terms of his amended and restated employment agreement, Mr. Rubenstein is employed as the Chief Executive Officer of Accel, reporting to the Accel Board (as defined in “Certain Relationships and Related Transactions”). Mr. Rubenstein is entitled to receive an annual base salary of $750,000 and he will be eligible to receive an annual bonus with a target level of 100% of his annual base salary. He will also be eligible to receive grants of equity-based incentive compensation awards on an annual basis in accordance with Accel’s annual grants to similarly situated senior executives, if any. Such grants, if any, will be made in the Accel Board’s sole discretion. Mr. Rubenstein’s target annual long-term incentive opportunity as of the date of his amended and restated employment agreement is 200% of his annual base salary.

In the event Mr. Rubenstein experiences a termination of his employment without “cause” or he resigns for “good reason” (each as defined in his amended and restated employment agreement), he will become entitled to (i) an amount equal to the sum of (A) the annual base salary paid to him during two-year period immediately preceding such termination plus (B) the two most recent annual bonus payments made to him immediately preceding such termination and (ii) two years of continued COBRA coverage. In addition to the foregoing, if

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Mr. Rubenstein’s termination of employment without cause or resignation for good reason occurs in connection with a change in control of Accel (within the meaning of his amended and restated employment agreement), then he will receive a pro-rated portion of his target annual bonus for the year of such termination and accelerated vesting of any unvested equity awards that were outstanding as of the date of such change in control. In each case, Mr. Rubenstein’s receipt of the foregoing severance payments and benefits is subject to his delivery of an effective release of claims against Accel and its affiliates. Mr. Rubenstein’s amended and restated employment agreement includes a three-year post-termination non-competition covenant and a three-year post-termination employee and customer non-solicitation covenant.

Brian Carroll

On July 16, 2020, Accel entered into an amended and restated employment agreement with Brian Carroll. Under the terms of his amended and restated employment agreement, Mr. Carroll is employed as the Chief Financial Officer of Accel, reporting to the Chief Executive Officer. Mr. Carroll is entitled to receive an annual base salary of $350,000 and he will be eligible to receive an annual bonus with a target value of 50% of his annual base salary. He will also be eligible to receive grants of equity-based incentive compensation awards on an annual basis in accordance with Accel’s annual grants to similarly situated senior executives, if any, with a target grant-date value of 100% of his annual base salary. Such grants, if any, will be made in the Accel Board’s sole discretion.

In the event Mr. Carroll experiences a termination of his employment without “cause” or he resigns for “good reason” (each as defined in his amended and restated employment agreement), he will become entitled to (i) an amount equal to the sum of (A) the annual base salary paid to him during twelve-month period immediately preceding such termination plus (B) the most recent annual bonus payment made to him immediately preceding such termination and (ii) twelve months of continued COBRA coverage. Mr. Carroll’s receipt of the foregoing severance payments and benefits is subject to his delivery of an effective release of claims against Accel and its affiliates. Mr. Carroll’s amended and restated employment agreement includes a one-year post-termination non-competition covenant and a one-year post-termination employee and customer non-solicitation covenant.

Derek Harmer

On July 16, 2020, Accel entered into an amended and restated employment agreement with Derek Harmer. Under the terms of his amended and restated employment agreement, Mr. Harmer is employed as the General Counsel, Chief Compliance Officer and Secretary of Accel, reporting to the Chief Executive Officer. Mr. Harmer is entitled to receive an annual base salary of $400,000 and he will be eligible to receive an annual bonus with a target value of 55% of his annual base salary. Mr. Harmer will also be eligible to receive grants of equity-based incentive compensation awards on an annual basis in accordance with Accel’s annual grants to similarly situated senior executives, if any, with a target value equal of 100% of his annual base salary.

In the event Mr. Harmer experiences a termination of his employment without “cause” or he resigns for “good reason” (each as defined in his amended and restated employment agreement), he will become entitled to (i) an amount equal to the sum of (A) the annual base salary paid to him during the twelve-month period immediately preceding such termination plus (B) the most recent annual bonus payment made to him immediately preceding such termination and (ii) twelve months of continued COBRA coverage. Mr. Harmer’s receipt of the foregoing severance payments and benefits is subject to his delivery of an effective release of claims against Accel and its affiliates. Mr. Harmer’s amended and restated employment agreement includes a one-year post-termination non-competition covenant and a one-year post-termination employee and customer non-solicitation covenant.

Equity Incentive Plans of Accel

Accel Entertainment, Inc. 2011 Equity Incentive Plan

On April 13, 2011, the Accel Board approved the Accel Entertainment, Inc. 2011 Equity Incentive Plan (the “2011 Plan”), which was subsequently approved by the Accel majority stockholders on December 2, 2011. The

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Accel Board, or a committee thereof appointed by the Accel Board, administered the 2011 Plan and the awards granted under it.

A total of 270,000 shares of Class A common stock, no par value, of Accel (the “Accel Class A Common Stock”) were initially reserved for issuance pursuant to future awards under the 2011 Plan. The 2011 Plan provided for the grant of incentive stock options, which qualify for favorable tax treatment to their recipients under Section 422 of the Code, nonqualified stock options, restricted stock awards, and stock appreciation rights. Such awards could be granted under the 2011 Plan to Accel’s employees, directors and consultants.

Accel Entertainment, Inc. 2016 Equity Incentive Plan

On June 20, 2016, the Accel Board approved the Accel Entertainment, Inc. 2016 Plan (“2016 Plan”), which was subsequently approved by Accel stockholders on December 13, 2016. The Accel Board, or a committee thereof appointed by the Accel Board, administered the 2016 Plan and the awards granted under it.

A total of 305,724 shares of Accel Class A Common Stock were initially reserved for issuance pursuant to future awards under the 2016 Plan.

The 2016 Plan provided for the grant of incentive stock options, which qualified for favorable tax treatment to their recipients under Section 422 of the Code, nonqualified stock options, restricted stock awards, and stock appreciation rights. Such awards could be granted under the 2016 Plan to Accel’s employees, directors and consultants.

In connection with the Business Combination, any vested and unexercised stock options outstanding under the 2011 Plan or the 2016 Plan were cancelled for no consideration and ceased to exist upon the consummation of the Business Combination. In addition, any unvested stock options outstanding under the 2011 Plan or the 2016 Plan were converted into a stock option that will be exercisable for a number of shares of Class A-1 common stock calculated as specified in the Transaction Agreement, in accordance with the vesting schedule as in effect prior to the Business Combination. The total number of stock options subject to such vesting following the Business Combination was 71,467.

Long Term Incentive Plan

On the closing date of the Business Combination, the Accel Entertainment, Inc. Long Term Incentive Plan (the “LTIP”) became effective. The purpose of the LTIP is to enhance the Company and its affiliates’ ability to attract, retain and motivate persons who make important contributions to the Company and its affiliates by providing those individuals with equity ownership opportunities. The LTIP provides for grants of a variety of awards, including, but not limited to: incentive stock options qualified as such under U.S. federal income tax laws, stock options that do not qualify as incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, cash incentive awards, and other stock-based awards. Officers or employees of the Company or any of its affiliates or any other person who provides services to the Company or any of its affiliates, including directors of the Company, will be eligible for grants under the LTIP. The Company has reserved a total of 6,000,000 shares of Class A-1 common stock for issuance pursuant to the LTIP, subject to certain adjustments set forth therein.

Retirement and Other Benefits

Accel maintains a tax-qualified defined contribution plan that meets the requirements of Section 401(k) of the Internal Revenue Code, commonly called a 401(k) plan, for substantially all of its employees. The 401(k) plan is available on the same basis to all employees, including the NEOs. Each participant in the 401(k) plan may elect to defer from 0% to 90% of compensation, subject to limitations under the Internal Revenue Code and Employee Retirement Income Security Act. Accel matches up to 50% of its employees’ contributions to the 401(k) plan, so

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long as the employee contributes at least 5% of their annual compensation (not including any bonus, severance or legal settlements). Accel does not provide any pension benefits. Accel maintains various other employee benefit plans, including medical, dental and life insurance.

Director Compensation

In fiscal year 2019, non-employee directors received no other form of remuneration, perquisites or benefits, but are reimbursed for their expenses in attending meetings, including travel, and lodging expenses. Accordingly, Accel did not pay fees to directors for attendance at meetings of its board of directors or its committees in fiscal year 2019.

Bankruptcies

Brian Carroll was the Chief Executive Officer of Calumet Holdings International and its principal U.S. operating subsidiary, Calumet Photographic Inc., until November 2013. In addition to Calumet Photographic Inc., Calumet Holdings International also consisted of an operating company in China and five operating companies in Europe. In March of 2014, Calumet Photographic Inc. filed for Chapter 13 Bankruptcy Protection.

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DESCRIPTION OF CAPITAL STOCK

The following summary of the material terms of our securities is not intended to be a complete summary of the rights and preferences of such securities. We urge you to read our Charter and Bylaws, which are included as exhibits to the registration statement of which this prospectus is a part in their entirety for a complete description of the rights and preferences of our securities.

Authorized and Outstanding Capital Stock

The Charter authorizes the issuance of (a) 280,000,000 shares of Common Stock, including three separate series of common stock consisting of (i) 250,000,000 shares of Class A-1 common stock, (ii) 10,000,000 shares of Class A-2 common stock and (iii) 20,000,000 shares of Class F common stock and (b) 1,000,000 shares of preferred stock with a par value of $0.0001 per share (the “Preferred Stock”).

As of September 18, 2020, the Company’s issued and outstanding share capital consists of (a) (i) 83,784,083 shares of Class A-1 common stock, (ii) 3,403,363 shares of Class A-2 common stock and (iii) no shares of Class F common stock; (b) no shares of Preferred Stock; (c) 1,452,867 Accel Warrants consisting of (i) 1,439,812 Pace Private Placement Warrants, and (ii) 13,055 Accel Public Warrants.

Common Stock

Class A-1 common stock

Upon the Pace Domestication, each Class A ordinary share, par value $0.0001 of Pace was converted into one Class A-1 Share.

Class A-2 common stock

In connection with the Business Combination, the Company, the Pace Sponsor Members and certain other persons, including certain Sellers that received shares of Class A-2 common stock in the Stock Purchase entered into that certain Restricted Stock Agreement (the “Restricted Stock Agreement”), which sets forth the terms upon which the Class A-2 common stock will be exchanged for an equal number of validly issued, fully paid and non-assessable shares of Class A-1 common stock. The exchange of shares of Class A-2 common stock for shares of Class A-1 common stock will be subject to the terms and conditions set forth in the Restricted Stock Agreement, with such exchanges occurring in three separate tranches upon the satisfaction of the following triggers:

• Tranche I, equal to 1,666,666 shares of Class A-2 common stock, will be exchanged for shares of Class A-1 common stock if either (i) the EBITDA for the last twelve months (“LTM EBITDA”) of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2021, March 31, 2022 or June 30, 2022 equals or exceeds $132 million or (ii) the closing sale price of Class A-1 common stock on the NYSE equals or exceeds $12.00 for at least twenty trading days in any consecutive thirty trading day period (which threshold was reached on January 14, 2020, resulting in the issuance of 1,596,636 shares of Class A-1 common stock upon exchange of shares of Class A-2 common stock);

• Tranche II, equal to 1,666,667 shares of Class A-2 common stock, will be exchanged for shares of Class A-1 common stock if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $152 million or (ii) the closing sale price of Class A-1 common stock on the NYSE equals or exceeds $14.00 for at least twenty trading days in any 30 trading day period; and

• Tranche III, equal to 1,666,667 shares of Class A-2 common stock, will be exchanged for shares of Class A-1 common stock if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $172 million or (ii) the closing sale price of Class A-1 common stock on the NYSE equals or

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exceeds $16.00 for at least twenty trading days in any 30 trading day period. The LTM EBITDA and LTM EBITDA thresholds will be reasonably adjusted by the independent directors of the Company Board from time to time to take into account the anticipated effect of any acquisitions or dispositions that exceed certain thresholds and are otherwise materially different from certain forecasts.

Notwithstanding the foregoing, Class A-2 common stock, if not previously exchanged pursuant to the triggers described above, will be exchanged for an equal number of shares of Class A-1 common stock immediately prior to the consummation of a transaction or series of related transactions that would result in a third party or group (as defined in or under Section 13 of the Exchange Act) becoming the beneficial owner of, directly or indirectly, more than fifty percent of the total voting power of the equity securities of the Company, or more than fifty percent of the consolidated net revenues, net income or total assets (including equity securities of its subsidiaries) of the Company, provided that the satisfaction of the conditions set forth in the aforementioned triggers cannot be determined at such time.

The Restricted Stock Agreement further provides that holders of shares of Class A-2 common stock are not required to exchange such shares for Class A-1 common stock if, (x) prior to giving effect to exchanges pursuant to the triggers described above, such holder beneficially owns less than 4.99% of the issued and outstanding Class A-1 common stock, and (y) after giving effect to the exchanges pursuant to the triggers described above, such holder would beneficially own in excess of 4.99% of the issued and outstanding Class A-1 common stock. However, notwithstanding the limitation described in the previous sentence, if and when a holder of shares of Class A-2 common stock has obtained all required gaming approvals from the applicable gaming authorities permitting such holder to beneficially own Class A-1 common stock in excess of 4.99%, then the shares of Class A-2 common stock held by such holder which are subject to exchange shall immediately be exchanged for Class A-1 common stock without regard to the limitation.

The shares of Class A-2 common stock may not be transferred, other than to certain permitted transferees as set forth in the Restricted Stock Agreement, and the rights and obligations under the Restricted Stock Agreement may not be assigned to any person or entity, other than to certain permitted transferees as set forth in the Restricted Stock Agreement.

Upon exchange of Class A-2 common stock to Class A-1 common stock, such shares of Class A-2 common stock will be cancelled and the number of authorized Class A-2 common stock will be reduced by a corresponding number.

The foregoing summary of the Charter and the Restricted Stock Agreement is not complete and is qualified in its entirety by reference to the complete text of the Charter and the Restricted Stock Agreement.

Voting Power

Except as otherwise required by law or the Charter (including any resolution or resolution adopted by the Company Board providing for the issuance of one or more series of Preferred Stock stating the voting rights, if any, designations, powers, preferences and relative, participating, optional, special and other rights, if any, of each such series and any qualifications, limitations and restrictions thereof and included in a certificate of designation (a “Preferred Stock Designation”), holders of Class A-1 common stock exclusively possess all voting power with respect to the Company, including with respect to the election of directors, and shall be entitled to one vote for each Class A-1 Share on each matter properly submitted to the stockholders on which holders of Class A-1 common stock are entitled to vote. However, except as otherwise required by law or the Charter (including any Preferred Stock Designation), holders of any series of Common Stock shall not be entitled to vote on any amendment to the Charter (including any amendment to any Preferred Stock Designation) that relates solely to the terms of one or more outstanding series of Preferred Stock or other series of Common Stock if the holders of such affected series of Preferred Stock or Common Stock, as applicable, are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the Charter (including any Preferred Stock Designation) or the DGCL.

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Dividends

Subject to applicable law and the rights, if any, of the holders of any outstanding series of the Preferred Stock and except as otherwise set forth herein, the holders of Class A-1 common stock shall be entitled to receive such dividends and other distributions (payable in cash, property or capital stock of the Company) when, as and if declared thereon by the Company Board from time to time out of any assets or funds of the Company legally available therefor and shall share equally on a per share basis in such dividends and distributions subject to such rights of the holders of Preferred Stock.

Liquidation, Dissolution and Winding Up

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, after payment or provision for payment of the debts and other liabilities of the Company, and subject to applicable law and to the rights, if any, of the holders of outstanding Preferred Stock in respect thereof, the holders of Class A-1 common stock shall be entitled to receive all the remaining assets of the Company available for distribution to its stockholders, ratably in proportion to the Class A-1 common stock held by them.

Preemptive or Other Rights

The holders of Common Stock do not have preemptive or other subscription rights and there is no sinking fund or redemption provisions applicable to the Common Stock.

Preferred Stock

The Charter provides that the Company Board is authorized to provide out of the unissued shares of the Preferred Stock for one or more series of Preferred Stock, establish the number of shares to be included in each such series and fix the voting rights, designations, powers, preferences and relative, participating, optional, special and other rights, of each such series and any qualifications, limitations and restrictions thereof, as stated in the resolution or resolutions adopted by the Company Board providing for the issuance of such series and included in a Preferred Stock Designation filed pursuant to the DGCL. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding or reserved for issuance) by the affirmative vote of the holders of a majority of the outstanding Class A-1 common stock, without a vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders of Preferred Stock is required pursuant to the Charter, including any Preferred Stock Designation. As of December 31, 2019, the Company had no shares of Preferred Stock outstanding. Although the Company does not currently intend to issue any Preferred Stock, it may do so in the future.

The Charter provides that the Company has the authority to create and issue rights, warrants and options entitling the holders thereof to acquire from the Company any shares of its capital stock of any class or classes, with such rights, warrants and options to be evidenced by or in instrument(s) approved by the Company Board. The Company Board is empowered to set the exercise price, duration, times for exercise and other terms and conditions of such rights, warrants or options; provided, however, that the consideration to be received for any shares of capital stock issuable upon exercise thereof may not be less than the par value thereof.

Warrants

For purposes of the following description of the Pace Warrants, (i) “Pace” shall refer to Pace prior to the Business Combination and shall refer to the Company following the Business Combination and (ii) “initial business combination” shall refer to the Business Combination, as applicable. From and after the Business Combination, the Pace Warrants became securities of the Company, and upon satisfaction of the applicable conditions described below, are exercisable for shares of Class A-1 common stock of the Company.

On July 16, 2020, the Company consummated the redemption of all of the Pace Public Warrants in accordance with their terms. The Company exchanged each Pace Public Warrant for 0.250 shares of the Company’s

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Class A-1 common stock and issued 3,784,416 shares of its Class A-1 common stock in exchange for the Pace Public Warrants at settlement of the redemption. On August 14, 2020, the Company consummated its exchange offer for the Pace Private Placement Warrants, Accel Public Warrants and Business Combination Private Placement Warrants, pursuant to which each holder had the right to receive 0.250 shares of Class A-1 common stock in exchange for each such warrant tendered by the holder and exchanged pursuant to the offer (the “Offer”). A total of 7,189,990 Pace Private Placement Warrants, Accel Public Warrants and Business Combination Private Placement Warrants, or approximately 99.93% of Accel’s warrants then outstanding, were validly tendered and not withdrawn in the Offer. The Company issued 1,797,474 shares of its Class A-1 common stock in exchange for Pace Private Placement Warrants, Accel Public Warrants and Business Combination Private Placement Warrants tendered in the Offer.

Pace Warrants

Prior to the Pace Domestication, each Pace Public Warrant entitled the registered holder to purchase one Pace Public Share at a price of $11.50 per share. Upon the Pace Domestication, each Pace Public Share converted to one Class A-1 Share, and each Pace Public Warrant entitles the holder to acquire a corresponding number of shares of Class A-1 common stock on the same terms as in effect immediately prior to the effective time of the Pace Domestication. Following the Business Combination, each Pace Public Warrant entitles the registered holder to purchase one Class A-1 Share at a price of $11.50 per share, subject to adjustment as discussed below, at any time 30 days after the completion of the Business Combination. Prior to the Pace Domestication, each Pace Private Placement Warrant entitled the registered holder to purchase one Pace Public Share at a price of $11.50 per share. Following the Pace Domestication, each Pace Private Placement Warrant entitles the holder to acquire a corresponding number of shares of Class A-1 common stock on the same terms as in effect immediately prior to the effective time of the Pace Domestication. Except as described below, the Pace Private Placement Warrants have terms and provisions that are identical to those of the Pace Public Warrants.

Each Pace Warrant must be exercised for a whole Class A-1 Share. The Pace Warrants will expire five years after the completion of an initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any shares of Class A-1 common stock pursuant to the exercise of a Pace Public Warrant and will have no obligation to settle such Pace Public Warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A-1 common stock underlying the Pace Public Warrant is then effective and a prospectus relating thereto is current, subject to Pace satisfying its obligations described below with respect to registration. No Pace Public Warrant will be exercisable for cash or on a cashless basis, and Pace will not be obligated to issue any shares of Class A-1 common stock to holders seeking to exercise their Pace Public Warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption is available. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a Pace Public Warrant, the holder of such Pace Public Warrant will not be entitled to exercise such Pace Public Warrant and such Pace Public Warrant may have no value and expire worthless. In no event will Pace be required to net cash settle any Pace Public Warrant. In the event that a registration statement is not effective for the exercised Pace Public Warrants, a warrantholder that acquired such Pace Public Warrant through the purchase of a Pace Public Unit containing such Pace Public Warrant will have paid the full purchase price for the Pace Public Unit solely for the Pace Public Share (which converted into a Class A-1 Share upon the Pace Domestication) underlying such Pace Public Unit.

The Company has filed with the SEC a registration statement that is currently effective for the registration, under the Securities Act, of the shares of Class A-1 common stock issuable upon exercise of the Pace Warrants, and the Company will use its best efforts to maintain such effectiveness until the expiration of the Pace Warrants in accordance with the provisions of that certain Warrant Agreement, by and between Pace and Continental Stock Transfer & Trust Company, as warrant agent, dated as of June 27, 2017 (the “Continental Warrant Agreement”).

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Notwithstanding the above, if the shares of Class A-1 common stock are at the time of any exercise of a Pace Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Pace Public Warrants who exercise their Pace Public Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Redemption of Pace Warrants for Cash. Once the Pace Warrants become exercisable, the Company may redeem such Pace Warrants:

• in whole and not in part;

• at a price of $0.01 per Pace Warrant;

• upon not less than 30 days’ prior written notice of redemption (the “30-day redemption period”) to registered holders of the Pace Public Warrants; and

• if, and only if, the reported last sale price of the Class A-1 common stock equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends to the notice of redemption to the holders of the Pace Warrants.

If and when the Pace Warrants become redeemable by the Company, the Company may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

The last of the redemption criterion discussed above was established to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and the Company issues a notice of redemption of the Pace Warrants, each holder of a Pace Warrant will be entitled to exercise his, her or its Pace Public Warrant prior to the scheduled redemption date. However, the price of the Class A-1 common stock may fall below the $18.00 redemption trigger price as well as the $11.50 warrant exercise price after the redemption notice is issued.

Redemption of Pace Warrants for Class A-1 common stock. Ninety days after the Pace Warrants become exercisable, the Company may redeem the outstanding Pace Warrants (except as described herein with respect to the Pace Private Placement Warrants):

• in whole and not in part;

• at a price equal to a number of shares of Class A-1 common stock to be determined by reference to the table below, based on the redemption date and the “fair market value” of the Class A-1 common stock (as defined below) except as otherwise described below;

• upon a minimum of 30 days’ prior written notice of redemption; and

• if, and only if, the last sale price of the Class A-1 common stock equals or exceeds $10.00 per share (as adjusted per share splits, share dividends, reorganizations, reclassifications, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the holders of Pace Warrants.

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The numbers in the table below represent the “redemption prices,” or the number of shares of Class A-1 common stock that a holder of Pace Warrants will receive upon redemption by the Company pursuant to this redemption feature, based on the “fair market value” of the Class A-1 common stock on the corresponding redemption date, determined based on the average of the last reported sales price for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Pace Warrants, and the number of months that the corresponding redemption date precedes the expiration date of the Pace Warrants, each as set forth in the table below.

Redemption Date (period to expiration of warrants)	Fair Market Value of Class A-1 common stock
	$10.00		$11.00		$12.00		$13.00		$14.00		$15.00		$16.00		$17.00		$18.00
57 months		0.257		0.277		0.294		0.310		0.324		0.337		0.348		0.358		0.365
54 months		0.252		0.272		0.291		0.307		0.322		0.335		0.347		0.357		0.365
51 months		0.246		0.268		0.287		0.304		0.320		0.333		0.346		0.357		0.365
48 months		0.241		0.263		0.283		0.301		0.317		0.332		0.344		0.356		0.365
45 months		0.235		0.258		0.279		0.298		0.315		0.330		0.343		0.356		0.365
42 months		0.228		0.252		0.274		0.294		0.312		0.328		0.342		0.355		0.364
39 months		0.221		0.246		0.269		0.290		0.309		0.325		0.340		0.354		0.364
36 months		0.213		0.239		0.263		0.285		0.305		0.323		0.339		0.353		0.364
33 months		0.205		0.232		0.257		0.280		0.301		0.320		0.337		0.352		0.364
30 months		0.196		0.224		0.250		0.274		0.297		0.316		0.335		0.351		0.364
27 months		0.185		0.214		0.242		0.268		0.291		0.313		0.332		0.350		0.364
24 months		0.173		0.204		0.233		0.260		0.285		0.308		0.329		0.348		0.364
21 months		0.161		0.193		0.223		0.252		0.279		0.304		0.326		0.347		0.364
18 months		0.146		0.179		0.211		0.242		0.271		0.298		0.322		0.345		0.363
15 months		0.130		0.164		0.197		0.230		0.262		0.291		0.317		0.342		0.363
12 months		0.111		0.146		0.181		0.216		0.250		0.282		0.312		0.339		0.363
9 months		0.090		0.125		0.162		0.199		0.237		0.272		0.305		0.336		0.362
6 months		0.065		0.099		0.137		0.178		0.219		0.259		0.296		0.331		0.362
3 months		0.034		0.065		0.104		0.150		0.197		0.243		0.286		0.326		0.361
0 months		—		—		0.042		0.115		0.179		0.233		0.281		0.323		0.361

The “fair market value” of Class A-1 common stock shall mean the average reported last sale price of the Class A-1 common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Pace Warrants.

The exact fair market value and redemption date may not be set forth in the table above, in which case, if the fair market value is between two values in the table or the redemption date is between two redemption dates in the table, the number of Class A-1 common stock to be issued for each Pace Warrant redeemed will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower fair market values and the earlier and later redemption dates, as applicable, based on a 365-day year. For example, if the average reported last sale price of the Class A-1 common stock for the 10 trading days ending on the third trading date prior to the date on which the notice of redemption is sent to the holders of the Pace Warrants is $11 per share, and at such time there are 57 months until the expiration of the Pace Warrants, the Company may choose to, pursuant to this redemption feature, redeem the Pace Warrant at a “redemption price” of 0.277 shares of Class A-1 common stock for each whole Pace Warrant. For an example where the exact fair market value and redemption date are not as set forth in the table above, if the average reported last sale price of Class A-1 common stock for the 10 trading days ending on the third trading date prior to the date on which the notice of redemption is sent to the holders of the Pace Warrants is $13.50 per share, and at such time there are 38 months until the expiration of the Pace Warrants, the Company may choose to, pursuant to this redemption feature, redeem the warrants at a “redemption price” of 0.298 shares of Class A-1 common stock for each whole Pace Warrants. Finally, as reflected in the table above, the Company can redeem the Pace Warrants for no consideration in the event that the Pace Warrants are “out of the money” (i.e. the trading price of the Class A-1 common stock is below the exercise price of the Pace Warrants) and about to expire.

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Any Pace Public Warrants held by the Company’s officers or directors will be subject to this redemption feature, except that such officers and directors shall only receive “fair market value” for such Pace Public Warrants so redeemed (“fair market value” for such Pace Public Warrants held by the Company’s officers or directors being defined as the last sale price of the Pace Public Warrants on such redemption date).

This redemption feature differs from the typical warrant redemption features used in other blank check offerings, which typically only provide for a redemption of warrants for cash (other than Pace Private Placement Warrants) when the trading price for Class A ordinary shares exceeds $18.00 per share for a specified period of time. This redemption feature is structured to allow for all of the outstanding Pace Warrants (other than Pace Private Placement Warrants) to be redeemed when the shares of Class A-1 common stock are trading at or above $10.00 per share, which may be at a time when the trading price of the shares of Class A-1 common stock are below the exercise price of the Pace Warrants. This redemption feature has been established to provide the Pace Warrants with an additional liquidity feature, which provides the Company with the flexibility to redeem the Pace Warrants for Class A-1 stock, instead of cash, for “fair value” without the warrants having to reach the $18.00 per share threshold set forth above under “—Redemption of Pace Warrants for Cash.” Holders of the Pace Warrants will, in effect, receive a number of shares having a value reflecting a premium for their Pace Warrants, based on the “redemption price” as determined pursuant to the above table. The “redemption prices” as set forth in the table above have been calculated to reflect a premium in value as compared to the expected trading price that the Pace Warrants would be expected to trade. This redemption right provides the Company not only with an additional mechanism by which to redeem all of the outstanding Pace Warrants, in this case, for shares of Class A-1 common stock, and therefore have certainty as to (i) its capital structure as the Pace Warrants would no longer be outstanding and would have been exercised or redeemed and (ii) to the amount of cash provided by the exercise of the Pace Warrants and available to the Company, and also provides a ceiling to the theoretical value of the warrants as it locks in the “redemption prices” the Company would pay to holders of Pace Warrants if the Company chose to redeem Pace Warrants in this manner. While the Company will effectively be required to pay a “premium” to holders of Pace Warrants if the Company chooses to exercise this redemption right, it will allow the Company to quickly proceed with a redemption of the warrants for shares of Class A-1 common stock if the Company determines it is in its best interest to do so. As such, the Company would redeem the Pace Warrants in this manner when the Company believes it is in its best interest to update its capital structure to remove the Pace Warrants and pay the premium to the holders of Pace Warrants. In particular, it would allow the Company to quickly redeem the Pace Warrants for shares of Class A-1 common stock, without having to negotiate a redemption price with the holders of Pace Warrants, which in some situations, may allow the Company to more quickly and easily close an initial business combination. And for this right, the Company is effectively agreeing to pay a premium to the holders Pace Warrants. In addition, the holders of Pace Warrants will have the ability to exercise their Pace Warrants prior to redemption if they should choose to do so.

As stated above, the Company can redeem the Pace Warrants when the shares of Class A-1 common stock are trading at a price starting at $10.00, which is below the exercise price of $11.50, because it will provide certainty with respect to the Company’s capital structure and cash position while providing holders of Pace Warrants with a premium (in the form of shares of Class A-1 common stock). If the Company chooses to redeem the Pace Warrants when the shares of Class A-1 common stock are trading at a price below the exercise price of the Pace Warrants, this could result in the holders of Pace Warrants receiving fewer shares of Class A-1 common stock than they would have received if they had chosen to wait to exercise their Pace Warrants for shares of Class A-1 common stock if and when such shares of Class A-1 common stock were trading at a price higher than the exercise price of $11.50.

No fractional shares of Class A-1 common stock will be issued upon redemption. If, upon redemption, a holder would be entitled to receive a fractional interest in a share, the Company will round down to the nearest whole number of the number of shares of Class A-1 common stock to be issued to the holder.

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Pace Private Placement Warrants

The Pace Private Placement Warrants have terms and provisions that are identical to those of the Pace Public Warrants, except that:

• The Pace Private Placement Warrants (including the shares of Class A-1 common stock issuable upon exercise of the Pace Private Placement Warrants) were subject to lock-up provisions that provided that the Pace Private Placement Warrants would not be transferable, assignable or salable until 30 days after the completion of an initial business combination and will not be redeemable, as applicable, so long as they are held by Initial Pace Sponsor or its permitted transferees, except that the Pace Private Placement Warrants (including the shares of Class A-1 common stock issuable upon exercise of the Pace Private Placement Warrants) can be transferred by such holders (a) to Pace’s officers or directors, any affiliates or family members of any of Pace’s officers or directors, members of Initial Pace Sponsor (which at the consummation of the Business Combination consisted of the Pace Sponsor Members), or any affiliates of Initial Pace Sponsor, (b) in the case of an individual, by gift to a member of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family, an affiliate of such person or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of an initial business combination at prices no greater than the price at which the shares were originally purchased; (f) in the event of Pace’s liquidation prior to its completion of an initial business combination; (g) by virtue of the laws of the Cayman Islands or Initial Pace Sponsor’s limited liability company agreement upon dissolution of Initial Pace Sponsor; or (h) in the event of Pace’s liquidation, merger, share exchange, reorganization or other similar transaction which results in all of Pace’s stockholders having the right to exchange their Pace Public Shares for cash, securities or other property subsequent to Pace’s completion of an initial business combination; provided, however, that in the case of clauses (a) through (e) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions.

• If holders of the Pace Private Placement Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of Class A-1 common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A-1 common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Class A-1 common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent.

Business Combination Private Placement Warrants and Accel Public Warrants

In connection with the consummation of the Business Combination, the Company and the Sellers that have received Business Combination Private Placement Warrants and Accel Public Warrants entered into that certain New Accel Warrant Agreement, pursuant to which the Company has issued to each such Seller who made a cash election with respect to less than 70% of its shares of Accel Stock, its respective pro rata share of 2,444,444 newly issued warrants of the Company, with such pro rata share determined with reference to a number of shares equal to 70% of such Seller’s Accel Stock less the number of shares in respect of which the Seller elected to receive cash in exchange for such shares. Each Accel Public Warrant and Business Combination Private Placement Warrant entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding Accel Warrants, at any time 30 days after the consummation of the Business Combination. The Business Combination Private Placement

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Warrants and Accel Public Warrants have terms and provisions that are identical to those of the Pace Public Warrants, except:

• The Business Combination Private Placement Warrants and Accel Public Warrants will expire five years after the consummation of the Business Combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.

• The Business Combination Private Placement Warrants and Accel Public Warrants (including the shares of Class A-1 common stock issuable upon exercise thereof) are subject to lock-up provisions that provide that so long as such warrants are held by a Seller receiving Business Combination Private Placement Warrants and/or Accel Public Warrants in connection with the Business Combination or its permitted transferees, such securities are not transferable, assignable or salable until 30 days after the consummation of the Business Combination and will not be redeemable, except that such warrants (including the shares of Class A-1 common stock issuable upon exercise thereof) may be transferred by such holders (a) to the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors, any members of the Accel holder, or any affiliates of the Accel holder, (b) in the case of an individual, by gift to a member of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family, an affiliate of such person or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) in the event of the Company’s liquidation, merger, share exchange, reorganization or other similar transaction which results in all of the Company’s stockholders having the right to exchange their Pace Public Shares for cash, securities or other property subsequent to the completion of the Business Combination; provided, however, that in the case of clauses (a) through (d) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions.

• If holders of the Business Combination Private Placement Warrants and/or Accel Public Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of Class A-1 common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A-1 common stock underlying the warrants, multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrants by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the shares of Class A-1 common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of warrant exercise is sent to the warrant agent.

• The Business Combination Private Placement Warrants and Accel Public Warrants may not be exercised if (a) prior to giving effect to the exercise, the holder such warrant beneficially owns less than 4.99% of the total number of shares of Class A-1 common stock issued and outstanding at such time and (b) after giving effect to such exercise, the holder of such warrant would beneficially own in excess of 4.99% of the total Class A-1 common stock issued and outstanding at such time. However, notwithstanding the foregoing limitation, the Business Combination Private Placement Warrants and Accel Public Warrants held by a holder that has obtained all required gaming approvals from applicable gaming authorities permitting such holder to beneficially own shares of Class A-1 common stock in an amount in excess of 4.99% of the total number of shares of Class A-1 common stock issued and outstanding at such time shall immediately be exercisable without regard to such limitation.

The Business Combination Private Placement Warrants and Accel Public Warrants were issued under the Business Combination Warrant Agreement. You should review a copy of the Business Combination Warrant Agreement for a complete description of the terms and conditions applicable to the Business Combination Private Placement Warrants and Accel Public Warrants.

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Certain Anti-Takeover Provisions of Delaware Law, the Charter and Bylaws

The Company is subject to the provisions of Section 203 of the DGCL (“Section 203”) regulating corporate takeovers.

Section 203 prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination” with:

• a stockholder who owns fifteen percent or more of the Company’s outstanding voting stock (otherwise known as an “interested stockholder”);

• an affiliate of an interested stockholder; or

• an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder.

A “business combination” includes a merger or sale of more than ten percent of the Company’s assets. However, the above provisions of Section 203 do not apply if:

• the Company Board approves the transaction that made the stockholder an interested stockholder, prior to the date of the transaction;

• after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of the Company’s voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or

• on or subsequent to the date of the transaction, the business combination is approved by the Company Board and authorized at a meeting of the Company’s stockholders, and not by written consent, by an affirmative vote of two-thirds of the outstanding voting stock not owned by the interested stockholder.

In addition, the Charter does not provide for cumulative voting in the election of directors. The Company Board will be empowered to elect a director to fill a vacancy created by the expansion of the Company Board or the resignation, death, or removal of a director in certain circumstances; and the advance notice provisions will require that stockholders must comply with certain procedures in order to nominate candidates to the Company Board or to propose matters to be acted upon at a stockholders’ meeting.

The Company’s authorized but unissued common stock and preferred stock will be available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved Common Stock and Preferred Stock could render more difficult or discourage an attempt to obtain control of the Company by means of a proxy contest, tender offer, merger or otherwise.

Forum Selection

Subject to certain limitations, the Charter provides that unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring: (i) any derivative action or proceeding brought on behalf of the Company; (ii) any action asserting a claim of breach of fiduciary duty owed by any director or officer of the Company to the Company or the Company’s stockholders, creditors or other constituents; (iii) any action asserting a claim arising pursuant to any provision of the DGCL or Charter or the Bylaws; or (iv) any action asserting a claim against the Company governed by the internal affairs doctrine. The Bylaws also provide that the federal district courts of the United States are the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.

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Rule 144

Pursuant to Rule 144 of the Securities Act (“Rule 144”), a person who has beneficially owned restricted shares or warrants for at least six months would be entitled to sell their securities, provided that (i) such person is not deemed to have been one of the Company’s affiliates at the time of, or at any time during the three months preceding, a sale and (ii) the Company is subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as the Company was required to file reports) preceding the sale. Persons who have beneficially owned restricted shares or warrants for at least six months but who are affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:

• one percent (1%) of the total number of shares of Common Stock outstanding as shown on the most recent report or statement published by the Company; or

• the average weekly reported trading volume of trading in such securities during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Sales by the Company’s affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about the Company.

Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies

Rule 144 is not available for the resale of securities initially issued by shell companies (other than business combination related shell companies) or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:

• the issuer of the securities that was formerly a shell company has ceased to be a shell company;

• the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;

• the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and

• at least one year has elapsed from the filing of our Current Report on Form 8-K, filed with the SEC on November 26, 2019, reflecting our status as an entity that is not a shell company.

As of September 18, 2020, the Company had 83,784,083 shares of Class A-1 common stock outstanding. 24,285,196 shares of Class A-1 common stock issued to Sellers in connection with the Business Combination Private Placement and 4,696,675 shares of Class A-1 common stock issued to the PIPE Investors in connection with the Investment Private Placement are restricted securities for purposes of Rule 144. 200,000 shares of Class A-1 common stock issued in connection with the Director Share Exchange and 7,800,000 shares of Class A-1 common stock issued in connection with the Sponsor Share Exchange are restricted securities under Rule 144, in that they were issued in private transactions not involving a public offering. All such restricted shares have been registered for resale under the Securities Act.

As of September 18, 2020, the Company had 3,403,363 shares of Class A-2 common stock outstanding.

As of September 18, 2020, the Company had 1,452,867 Accel Warrants outstanding, consisting of 1,439,812 Pace Private Placement Warrants, and 13,055 Accel Public Warrants. All such restricted warrants have been registered for resale under the Securities Act.

Listing of Securities

Our Class A-1 common stock is listed on the NYSE under the symbols “ACEL.”

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SHARES AVAILABLE FOR FUTURE SALE

Future sales of substantial amounts of our Class A-1 common stock in the public market could adversely affect prevailing market prices. Furthermore, since only a limited number of shares will be available for sale shortly after the offering because of contractual and legal restrictions on resale described below, sales of substantial amounts of shares of our Class A-1 common stock in the public market after the restrictions lapse could adversely affect the prevailing market price for shares of our Class A-1 common stock as well as our ability to raise equity capital in the future.

As of September 18, 2020, we had 83,784,083 shares of Class A-1 common stock outstanding. 56,669,265 of such shares are freely tradable without restriction or further registration under the Securities Act, except that any shares purchased by our affiliates may generally only be sold in compliance with Rule 144, which is described below.

In addition, we have reserved a total of 293,921 shares of Class A-1 common stock for issuance under our 2011 Plan, 603,253 shares of Class A-1 common stock for issuance under our 2016 Plan and 3,104,403 shares of Class A-1 common stock for issuance under our LTIP.

Based on the number of shares of Class A-1 common stock outstanding as of September 18, 2020, assuming we sell 8,000,000 shares in this offering and the underwriters do not exercise their option to purchase additional shares, then upon the closing of this offering, 91,784,083 shares of Class A-1 common stock will be outstanding. At the end of a 60-day contractual lock up period, pursuant to which our directors, officers and the selling stockholders will be restricted from selling, disposing of, or hedging any shares or any securities convertible into or exchangeable for shares of our Class A-1 common stock, up to 61,868,235 of our shares of Class A-1 common stock will be eligible for resale under the Registration Statement on Form S-1 (333-236501) or otherwise freely tradable, subject to contractual restrictions in our Registration Rights Agreement. On November 27, 2020, the one-year anniversary of the date on which we filed the information required by a Form 10 Registration Statement with the SEC, we expect that our Class A-1 common stock will become available for sale under Rule 144 (subject to volume, manner of sale limitations and other conditions applicable to affiliates as set forth under Rule 144 as described further below).

As of the date of this registration statement, there are approximately 1,452,867 warrants outstanding, consisting of (i) 1,439,812 Pace Private Placement Warrants, and (ii) 13,055 Accel Public Warrants. Each such warrant is exercisable for one share of our Class A-1 common stock at an exercise price of $11.50 per share.

Lock-Up Agreements

We, our executive officers and directors and the selling stockholders have entered into lock-up agreements with the underwriters of this offering, under which we and they have agreed, or will agree, that, subject to certain exceptions, we and they will not sell, dispose of, or hedge any shares or any securities convertible into or exchangeable for shares of our Class A-1 common stock until 60 days after the date of the final prospectus relating to this offering. The restrictions with the underwriters also apply to common stock owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition. At any time and without public notice, Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC may, in their sole discretion, release all or some of the securities from these lock-up agreements.

The transfer restrictions in the lock-up agreement with the underwriters include certain exclusions, including customary carve-outs. A transfer of shares pursuant to such carve-outs could result in additional shares becoming freely tradable prior to the expiration of the applicable lock-up period.

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Rule 144

Pursuant to Rule 144, a person who has beneficially owned restricted shares of our common stock or our warrants for at least six months would be entitled to sell their securities provided that (1) such person is not deemed to have been an affiliate of us at the time of, or at any time during the three months preceding, a sale and (2) we are subject to the Exchange Act periodic reporting requirements for at least three months before the sale and have filed all required reports under Section 13 or 15(d) of the Exchange Act during the 12 months (or such shorter period as we were required to file reports) preceding the sale.

Persons who have beneficially owned restricted shares of our common stock or our warrants for at least six months but who are affiliates of us at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of:

• 1% of the total number of shares of our common stock then outstanding; or

• the average weekly reported trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Sales by our affiliates under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about us.

Restrictions on the Use of Rule 144 by Shell Companies or Former Shell Companies

Rule 144 is generally not available for the resale of securities initially issued by shell companies or issuers that have been at any time previously a shell company. However, Rule 144 also includes an important exception to this prohibition if the following conditions are met:

• the issuer of the securities that was formerly a shell company has ceased to be a shell company;

• the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act;

• the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and

• at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company.

While we were formed as a shell company, since the completion of the Business Combination we are no longer a shell company, and so, once the conditions set forth in the exceptions listed above are satisfied, Rule 144 will become available for the resale of the above noted restricted securities.

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information known to the Company regarding the beneficial ownership of Class A-1 common stock, that upon the consummation of this offering, will be owned by:

• each person known to the Company to be the beneficial owner of more than 5% of outstanding Company common stock;

• each of the Company’s executive officers and directors;

• all executive officers and directors of the Company as a group; and

• the selling stockholders.

For further information regarding material transactions between us and our selling stockholders, see “Certain Relationships and Related Transactions.”

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days. Company stock issuable upon exercise of options and warrants currently exercisable within 60 days are deemed outstanding solely for purposes of calculating the percentage of total voting power of the beneficial owner thereof.

The beneficial ownership of Company common stock is based on 83,784,083 shares of Class A-1 common stock outstanding as of September 18, 2020 before the offering, 91,784,083 shares of Class A-1 common stock to be outstanding after this offering, assuming no exercise of the underwriters’ option to purchase additional shares and 92,104,320 shares of Class A-1 common stock to be outstanding after this offering assuming full exercise of the underwriters’ option to purchase additional shares.

Unless otherwise indicated, the Company believes that each person named in the table below has sole voting and investment power with respect to all shares of Company common stock beneficially owned by them. Such beneficial ownership reflects security ownership known to the Company.

	Beneficial Ownership of Class A-1 Shares Before Offering					Class A-1 Shares to be Sold in the Offering		Beneficial Ownership of Class A-1 Shares After Offering (Assuming Exercise of Option to Purchase Additional Class A-1 Shares in Full)					Beneficial Ownership of Class A-1 Shares After Offering (Assuming No Exercise of Option to Purchase Additional Class A-1 Shares in Full)
Name and Address of Beneficial Owners(1)	Number of Shares		Percentage			Number of Shares		Number of Shares		Percentage			Number of Shares		Percentage
5% Stockholders:
The Rubenstein Family(2)(6)(8)		14,801,676		17.67	%		900,000		13,901,676		15.09	%		14,144,713		15.41	%
Entities affiliated with Clairvest(3)		16,898,868		20.17	%		3,379,774		13,519,094		14.68	%		14,431,773		15.72	%
Simcoe Capital Management, LLC(4)		4,037,009		4.82	%		—		4,037,009		4.38	%		4,037,009		4.40	%
Fairview Capital Management, LLC(5)		7,227,235		8.63	%		—		7,227,235		7.85	%		7,227,235		7.87	%
Named Executive Officers and Directors:
Andrew Rubenstein(6)		8,637,854		10.31	%		500,000		8,137,854		8.84	%		8,272,875		9.01	%
Karl Peterson(7)		3,155,512		3.77	%		250,036		2,905,476		3.15	%		2,991,717		3.26	%
Brian Carroll		387,812			*		100,000		287,812			*		314,816			*
Derek Harmer		253,274			*		40,000		213,274			*		224,076			*
Gordon Rubenstein(8)		3,045,088		3.63	%		100,000		2,945,088		3.20	%		2,972,092		3.24	%
Kathleen Philips(9)		40,000			*		—		40,000			*		40,000			*

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	Beneficial Ownership of Class A-1 Shares Before Offering					Class A-1 Shares to be Sold in the Offering		Beneficial Ownership of Class A-1 Shares After Offering (Assuming Exercise of Option to Purchase Additional Class A-1 Shares in Full)					Beneficial Ownership of Class A-1 Shares After Offering (Assuming No Exercise of Option to Purchase Additional Class A-1 Shares in Full)
Name and Address of Beneficial Owners(1)	Number of Shares		Percentage			Number of Shares		Number of Shares		Percentage			Number of Shares		Percentage
David W. Ruttenberg(10)		1,987,878		2.37	%		—		1,987,878		2.16	%		1,987,878		2.17	%
Ken Rotman(11)		—			*		—		—			*		—			*
Eden Godsoe(12)		—			*		—		—			*		—			*
Dee Robinson		—			*		—		—			*		—			*
All executive officers and directors as a group (13 persons)		17,590,811		21.00	%		990,036		16,600,775		18.02	%		16,886,847		18.40	%
Selling Stockholders:
Jeffrey C Rubenstein, Trustee or his successors in trust, of the Susan Rubenstein Family Trust		2,761,059		3.30	%		300,000		2,461,059		2.67	%		2,542,071		2.77	%
TPG Pace Governance, LLC(13)		4,585,737		5.47	%		809,953		3,775,784		4.10	%		3,975,784		4.33	%
Clairvest Equity Partners V Limited Partnership(14)		9,941,741		11.87	%		1,988,348		7,953,393		8.64	%		8,490,329		9.25	%
Clairvest Equity Partners V-A Limited Partnership(15)		1,887,457		2.25	%		377,492		1,509,965		1.64	%		1,611,904		1.76	%
CEP V Co-Invest Limited Partnership(16)		5,069,670		6.05	%		1,013,934		4,055,736		4.40	%		4,329,540		4.72	%

 * Less than 1 percent.

(1) Unless otherwise noted, the business address of each of the persons and entities listed above is 140 Tower Drive, Burr Ridge, IL 60527.

(2) Includes shares beneficially owned by Andrew Rubenstein, Gordon Rubenstein, Jeffrey C. Rubenstein and Jeffrey C. Rubenstein, as trustee, or his successors in trust, of the Susan Rubenstein Family Trust and reflects the shares being sold by each of them set forth separately in the table above.

(3) Includes shares beneficially owned by Clairvest Equity Partners V-A Limited Partnership, Clairvest Equity Partners V Limited Partnership and CEP V Co-Investment Limited Partnership and reflects the shares being sold by each of them set forth separately in the table above. Of the shares beneficially owned, each of the foregoing limited partnerships has the power to make voting and dispositive decisions with respect to such shares. Clairvest Group Inc. is the sole shareholder of (i) Clairvest GP (GPLP) Inc., which is the general partner of Clairvest General Partner V L.P., which is the general partner of (a) Clairvest Equity Partners V-A Limited Partnership and (b) CEP V Co-Investment Limited Partnership and (ii) Clairvest GP Manageco Inc., which is the general partner of Clairvest Equity Partners V Limited Partnership. Mr. Ken Rotman is a director of the Company and the Chief Executive Officer and Managing Director of Clairvest Group Inc. The address of each of the foregoing is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3.

(4) Based solely on information contained in a Schedule 13G filed with the SEC by Simcoe Capital Management, LLC on November 25, 2019. Of the shares beneficially owned, Simcoe Capital Management, LLC reported that it had sole voting and dispositive power with respect to 0 shares, and shared voting and dispositive power with respect to 4,037,009 shares. The address for Simcoe Capital Management, LLC is 509 Madison Avenue, Suite 2200, New York, New York 10022.

(5) Based solely on information contained in a Schedule 13G filed with the SEC by Fairview Capital Investment Management, LLC on December 23, 2019. Of the shares beneficially owned, Fairview Capital Investment Management, LLC reported that it had sole voting and dispositive power with respect to 0 shares, and shared voting and dispositive power with respect to 7,227,235 shares. The address for Fairview Capital Investment Management, LLC is 300 Drakes Landing Road, Suite 250, Greenbrae, CA 94904.

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(6) Includes shares beneficially owned by Mr. A. Rubenstein through Harry R, LLC, of which Mr. A. Rubenstein is the sole member and has shared voting and dispositive power thereto, and 21,885 shares of Class A-1 common stock issuable upon exercise of stock options within 60 days of September 18, 2020. The shares of Class A-1 common stock being sold in the offering are held by Andrew Rubenstein.

(7) Includes shares beneficially owned by Mr. Peterson through Peterson Capital Partners, L.P., of which Mr. Peterson is the President and has sole voting and dispositive power thereto, by Karter Peterson and by Kennedy Peterson. The shares of Class A-1 common stock being sold in the offering are held by Peterson Capital Partners, L.P. Peterson Capital Partners, L.P.’s address is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102.

(8) Includes shares beneficially owned by Mr. G. Rubenstein through Fund Indy LLC, of which Mr. G. Rubenstein is the sole member and has shared voting and dispositive power thereto, The PrivateBank &Trust Company, as Custodian of the Gordon Rubenstein SEP IRA, of which Mr. G. Rubenstein is the sole member and has shared voting and dispositive power thereto and Gordon S. Rubenstein and Krista M. Ramonas Joint Revocable Trust, of which Mr. G. Rubenstein is the trustee and has shared voting and dispositive power thereto. The shares of Class A-1 common stock being sold in the offering are held by the Gordon S. Rubenstein and Krista M. Ramonas Joint Revocable Trust.

(9) The address of Ms. Philips is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102.

(10) Includes shares beneficially owned by Mr. Ruttenberg, solely as trustee, or his successors in trust, of the David W. Ruttenberg Revocable Trust, as now or hereafter amended, of which Mr. Ruttenberg is the trustee and has sole voting and dispositive power thereto, and through Grant Place Fund LLC, of which Mr. Ruttenberg is a member and has shared voting and dispositive power thereto, Crilly Court Trust, of which Mr. Ruttenberg is the sole beneficiary and Lakewest Gaming G.P., of which Mr. Ruttenberg has sole voting and dispositive power.

(11) Mr. Ken Rotman is a director of the Company and the Chief Executive Officer and Managing Director of Clairvest Group Inc. The address of Mr. Rotman is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3.

(12) The address of Ms. Godsoe is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102.

(13) Includes 359,953 shares of Class A-1 common stock issuable upon the settlement of a warrant exchange within 60 days of September 18, 2020. The sole member of TPG Pace Governance, LLC is TPG Holdings III, L.P., a Delaware limited partnership, whose general partner is TPG Holdings III-A, L.P., a Cayman Islands limited partnership, whose general partner is TPG Holdings III-A, Inc., a Cayman Islands corporation, whose sole shareholder is TPG Group Holdings (SBS), L.P., a Delaware limited partnership, whose general partner is TPG Group Holdings (SBS) Advisors, LLC, a Delaware limited liability company, whose sole member is TPG Group Holdings (SBS) Advisors, Inc., a Delaware corporation. David Bonderman and James Coulter are sole shareholders of TPG Group Holdings (SBS) Advisors, Inc. and may therefore be deemed to be the beneficial owners of the securities held by TPG Pace Governance, LLC. Messrs. Bonderman and Coulter disclaim beneficial ownership of the securities held by TPG Pace Governance, LLC except to the extent of their pecuniary interest therein. The address of TPG Pace Governance, LLC is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102.

(14) The address of Clairvest Equity Partners V Limited Partnership is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3. See Note (3) above for more information.

(15) The address of Clairvest Equity Partners V-A Limited Partnership is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3. See Note (3) above for more information.

(16) The address of CEP V Co-Invest Limited Partnership is c/o Clairvest Group Inc., 22 St. Clair Avenue East, Suite 1700, Toronto, Ontario, Canada M4T 2S3. See Note (3) above for more information.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Other than as described in “Executive Compensation,” the following is a summary of transactions since January 1, 2017 to which Pace or Accel, as applicable, has been a participant, in which:

• the amount involved exceeded or will exceed $120,000; and

• any of its directors, executive officers, or holders of more than 5% of its capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest, other than compensation and other arrangements that are described in the section titled “Executive Compensation” or that were approved by the board of directors of Accel prior to the Business Combination (the “Accel Board”) or the Company Board, as applicable.

Accel believes the terms obtained or consideration that it paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable in arm’s-length transactions.

Tender and Exchange Agreement

Each of the following (and/or an affiliate thereof) agreed to tender all of their outstanding Pace Private Placement Warrants, Accel Public Warrants and Business Combination Private Placement Warrants in exchange offer, pursuant to which each holder had the right to receive 0.250 shares of Accel’s Class A-1 common stock in exchange for each warrant tendered by the holder and exchanged pursuant to the offer, pursuant to a Tender and Exchange Agreement: (i) Andrew Rubenstein, our Chief Executive Officer, President and Director, (ii) Brian Carroll, our Chief Financial Officer, (iii) Derek Harmer, our General Counsel, Chief Compliance Officer and Secretary, (iv) Gordon S. Rubenstein, a member of our board of directors, (v) David W. Ruttenberg, a member of our board of directors, (vi) the Clairvest Investors, which are affiliated with Kenneth B. Rotman, a member of our board of directors and (vii) the Pace Sponsor Members. The Tender and Exchange Agreement related to approximately 94% of the then-outstanding Pace Private Placement Warrants, Accel Public Warrants and Business Combination Private Placement Warrants.

Investment Private Placement

In connection with the Business Combination, Pace entered into Subscription Agreements concurrently with the execution of the Transaction Agreement and an additional Subscription Agreement on August 13, 2019 (collectively, “Subscription Agreements”). Pursuant to the Subscription Agreements, the investors party thereto agreed to subscribe for and Pace agreed to issue and sell to such investors, 4,696,675 shares of Class A-1 common stock for a purchase price of $10.22 per share, or an aggregate of approximately $48 million (the “Investment Private Placement”). The proceeds from the Investment Private Placement were used to fund a portion of the cash consideration required to effect the Stock Purchase.

Founder Ordinary Shares

On February 22, 2017, Initial Pace Sponsor purchased 11,500,000 Founder Ordinary Shares for $25,000, or approximately $0.002 per share. On June 19, 2017, Initial Pace Sponsor transferred 40,000 Founder Ordinary Shares to each of Pace’s five independent directors at their original purchase price. On August 14, 2017, Initial Pace Sponsor forfeited 250,000 Founder Ordinary Shares on the expiration of the unexercised portion of the underwriters’ over-allotment option.

In connection with the Business Combination and immediately prior to the Stock Purchase, at the effective time of the Pace Domestication, each Founder Ordinary Share was converted into the right to receive one Class F Share. Following the Pace Domestication, Initial Pace Sponsor, pursuant to a letter agreement dated as of June 13, 2019 (as amended, the “Pace Sponsor Support Agreement”), by and among Initial Pace Sponsor, Pace

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and the Shareholder Representative, agreed to (i) surrender for cancellation 1,250,000 shares of Class F common stock, (ii) exchange 2,000,000 shares of Class F common stock for an equal number of shares of Class A-2 common stock, subject to the terms set forth in the Restricted Stock Agreement, (iii) exchange the remaining 7,800,000 shares of Class F common stock for an equal number of shares of Class A-1 common stock, pursuant to the Charter. See also “—Waiver Agreement” beginning on page 119.

Pace Private Placement Warrants

On the closing date of the Pace IPO, Initial Pace Sponsor purchased 7,333,333 Pace Private Placement Warrants at a price of $1.50 per Pace Private Placement Warrant, or $11,000,000 in the aggregate, in a private placement. Each Pace Private Placement Warrant entitled the holder to purchase one Pace Public Share at a price of $11.50 per share. Pace Private Placement Warrants may not be redeemed by Pace so long as they are held by Initial Pace Sponsor or its permitted transferees. If any Pace Private Placement Warrants are held by holders other than Initial Pace Sponsor or its permitted transferees, such Pace Private Placement Warrants will be redeemable by Pace and exercisable by the holders on the same basis as the Pace Public Warrants. Initial Pace Sponsor or its permitted transferees have the option to exercise the Pace Private Placement Warrants on a cashless basis.

In connection with the Business Combination and following the Pace Domestication, Initial Pace Sponsor surrendered for cancellation 2,444,444 Pace Private Placement Warrants, and distributed its remaining 4,888,889 Pace Private Placement Warrants to the Pace Sponsor Members. In connection with the Pace Domestication, each Pace Private Placement Warrant, originally exercisable for one Pace Public Share at $11.50 per Pace Public Share, now entitles its holder to acquire a corresponding number of shares of Class A-1 common stock on the same terms as in effect immediately prior to the Pace Domestication.

For more information on the Pace Private Placement Warrants, see the section entitled “Description of Capital Stock—Warrants” beginning on page 103.

Pace Registration Rights Agreement

Initial Pace Sponsor and the original independent directors of Pace, as holders of the Founder Ordinary Shares, and the resulting shares of Class A-1 common stock following the Business Combination, and Pace Private Placement Warrants were entitled to registration rights pursuant to a registration rights agreement (the “Pace Registration Rights Agreement”) entered into in connection with the Pace IPO. The holders of these securities were entitled to make up to three demands that Pace register the shares of Class A-1 common stock issued or issuable upon conversion of any Founder Ordinary Shares, the Pace Private Placement Warrants and the shares of Class A-1 common stock underlying the Pace Private Placement Warrants. In addition, the holders had certain “piggy-back” registration rights with respect to other registration statements filed by Pace subsequent to its completion of an initial business combination and rights to require Pace to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provided that Pace would not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock up period. Pace agreed to bear the expenses incurred in connection with the filing of any such registration statements.

At the consummation of the Business Combination, Accel entered into the Registration Rights Agreement with, among others, the holders of Founder Ordinary Shares and Pace Private Placement Warrants who were previously party to the Pace Registration Rights Agreement (the “Pace Registration Rights Holders”), which replaced the Pace Registration Rights Agreement. Pursuant to the Registration Rights Agreement, the Pace Registration Rights Holders are entitled to certain registration rights. See “—Registration Rights Agreement” beginning on page 122.

Related Party Notes

Between February 14, 2017 (inception) and June 30, 2017 (the closing date of the Pace IPO), Initial Pace Sponsor loaned Pace $300,000 in unsecured promissory notes. The funds were used to pay up front expenses

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associated with the Pace IPO. These notes were non-interest bearing and were repaid in full to Initial Pace Sponsor on June 30, 2017.

Initial Pace Sponsor, executive officers and directors, or any of their respective affiliates, were reimbursed for any out-of-pocket expenses incurred in connection with activities on Pace’s behalf, such as identifying potential target businesses and performing due diligence on suitable business combination opportunities. Pace’s audit committee reviewed on a quarterly basis all payments that were made to Initial Pace Sponsor, officers or directors of Pace or their respective affiliates and determined which expenses and the amount of expenses that would be reimbursed. There was no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on Pace’s behalf.

In addition, in order to finance transaction costs in connection with an initial business combination, Initial Pace Sponsor or an affiliate of Initial Pace Sponsor or certain of Pace’s officers and directors may have, but were not obligated to, loan Pace funds as may have been required. On September 25, 2019, Initial Pace Sponsor agreed to loan Pace unsecured promissory notes in an aggregate principal balance of up to $7,000,000, with advances and re-advances outstanding under the note to be updated from time to time. On September 25, 2019, Pace borrowed $3,000,000 against the unsecured promissory notes. The funds were used to finance transaction costs in connection with the Business Combination. Pace repaid amounts outstanding under such promissory notes at the consummation of the Business Combination. In the event that the Business Combination did not close, Pace was permitted to use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account were permitted to be used for such repayment.

Promoters of Pace

Initial Pace Sponsor and Pace’s executive officers and directors prior to the Business Combination (including Karl Peterson, Chad Leat, Robert Suss, Paul Walsh and Kathleen Philips) were deemed to be Pace’s “promoters” as such term is defined under the federal securities laws.

Waiver Agreement

Concurrently with the execution of the Transaction Agreement, Pace and holders of Founder Ordinary Shares entered into a Waiver Agreement (the “Waiver Agreement”), pursuant to which such holders agreed to waive any adjustment to the conversion ratio of Founder Ordinary Shares as set forth in Pace’s amended and restated memorandum and articles of association at the time of execution of such Waiver Agreement, resulting from the Investment Private Placement.

Private Aircraft Travel

Pace reimbursed affiliates for reasonable travel related expenses incurred while conducting business on behalf of Pace, including the use of private aircraft. During the period from February 14, 2017 (inception) to December 31, 2019, travel related reimbursements for private aircraft use were less than $65,000. Private aircraft services were provided by independent third parties, coordinated by an affiliate of Pace and billed to Pace at cost.

Indemnity

Initial Pace Sponsor agreed that it would be liable to Pace if and to the extent any claims by a vendor (other than Pace’s independent auditors) for services rendered or products sold to Pace, or a prospective target business with which Pace has discussed entering into a transaction agreement, reduced the amount of funds in the Trust Account to below (i) $10.00 per Pace Public Share or (ii) such lesser amount per Pace Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which was permitted to be withdrawn to fund Pace’s working capital requirements, subject to an annual limit of $750,000, and/or to pay taxes. Claims by a third party who executed a

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waiver of any and all rights to seek access to the Trust Account were also an exception to this agreement with Initial Pace Sponsor, as were any claims under Pace’s indemnity of the underwriters of the Pace IPO against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver were deemed to be unenforceable against a third party, Initial Pace Sponsor would not be responsible to the extent of any liability for such third-party claims. Pace did not independently verify whether Initial Pace Sponsor had sufficient funds to satisfy its indemnity obligations and believed that Initial Pace Sponsor’s only assets were securities of Pace and, therefore, Initial Pace Sponsor would not be able to satisfy those obligations. Pace had not asked Initial Pace Sponsor to reserve for such eventuality as Pace believed the likelihood of Initial Pace Sponsor having to indemnify the Trust Account was limited because Pace would endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with Pace waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Administrative Services Agreement

On June 30, 2017, Pace entered into an agreement to pay monthly recurring expenses of $20,000 for office space, administrative and support services to an affiliate of Initial Pace Sponsor. The agreement terminated upon the completion of the Business Combination. For the three months ended December 31, 2019 and 2018, Pace incurred expenses of $20,000 and $60,000, respectively, under this agreement. For each of the nine months ended December 31, 2019 and 2018, Pace incurred expenses of $140,000 under this agreement.

Related Party Notes and Debts

On October 1, 2018, Brian Carroll, the Chief Financial Officer of Accel, entered into a promissory note with Accel Entertainment Gaming, LLC, a subsidiary of Accel, pursuant to which Mr. Carroll borrowed a principal amount of $172,200. The promissory note was satisfied in full prior to the consummation of the Business Combination.

On October 1, 2018, Derek Harmer, the General Counsel, Chief Compliance Officer and Secretary of Accel, entered into a promissory note with Accel Entertainment Gaming, LLC, a subsidiary of Accel, pursuant to which Mr. Harmer borrowed a principal amount of $154,397. The promissory note was satisfied in full prior to the consummation of the Business Combination.

On September 30, 2018, Andrew Rubenstein, the Chief Executive Officer and a director of Accel, entered into two promissory notes with Accel Entertainment Gaming, LLC, a subsidiary of Accel, pursuant to which Mr. A. Rubenstein borrowed principal amounts of $95,354 and $325,000. The promissory notes were satisfied in full prior to the consummation of the Business Combination.

As of December 31, 2018, Mr. A. Rubenstein owed Accel $502,894 in connection with a federal tax liability arising from a grant of restricted stock that Accel paid on Mr. A. Rubenstein’s behalf. The debt was satisfied in full prior to the consummation of the Business Combination.

Director Letter Agreements

Concurrently with the execution of the Transaction Agreement, Pace and the independent directors of Pace entered into letter agreements pursuant to which such directors agreed that, following the Pace Domestication but prior to the effectiveness of the Stock Purchase, 200,000 shares of Class F common stock held by such directors would be exchanged for an equal number of validly issued, fully paid and non-assessable shares of Class A-1 common stock.

Key Holder Support Agreement

Concurrently with the execution of the Transaction Agreement, Pace and certain Sellers who are members of management of Accel entered into that certain Key Holder Support Agreement (the “Key Holder Support

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Agreement”), pursuant to which such members agreed (i) to restrict the amount of Accel Stock they exchange to receive cash for to less than 20% of the number of shares of Accel Stock owned by such member and each of its affiliates on an aggregated basis (ii) not to transfer any of their Accel Stock (except to a permitted transferee or in furtherance of the transactions contemplated by the Transaction Agreement) and (iii) to enter into the Registration Rights Agreement.

Holder Support Agreement

Concurrently with the execution of the Transaction Agreement, Pace, NewCo and certain Sellers entered into a holder support agreement, pursuant to which such Sellers agreed (i) to make non-binding elections to receive cash in exchange for their shares of Accel Stock, (ii) not to transfer any of their Accel Stock and any security convertible or exchangeable into Accel Stock (except to a permitted transferee or in furtherance of the transactions contemplated by the Transaction Agreement), and (iii) to enter into the Registration Rights Agreement if such Seller was entitled to receive Business Combination Private Placement Warrants and shares of Class A-2 common stock in the Stock Purchase as consideration for such Seller’s Accel Stock.

Drag-Along Agreement

Concurrently with the execution of the Transaction Agreement, Pace and the Business Combination Private Placement Sellers entered into a Drag-Along Agreement, pursuant to which such Sellers agreed to exercise their drag-along rights pursuant to and in accordance with the articles of incorporation of Accel and the shareholders agreement of Accel, in a manner so as to facilitate the consummation of the transactions contemplated by the Transaction Agreement.

Nominating and Support Agreement and Mutual Support Agreement

On November 6, 2019, Pace, NewCo, Clairvest Equity Partners V Limited Partnership, an Ontario limited partnership (“CEP V”), Clairvest Equity Partners V-A Limited Partnership, an Ontario limited partnership (“CEP V-A”), and CEP V Co-Investment Limited Partnership, a Manitoba limited partnership (“CEP Co-Invest,” and together with CEP V and CEP V-A, the “Clairvest Investors”), entered into a Nominating and Support Agreement (the “Nominating Agreement”), whereby, in consideration for the Clairvest Investors delivering (a) a joinder agreement to the Transaction Agreement, and (b) a cash election form setting forth a cash election with respect to (i) the shares of Accel Stock that the Clairvest Investors owned, beneficially (as defined in Rule 13d-3 under the Exchange Act) or of record, (ii) any security convertible or exchangeable into Accel Stock and (iii) any additional such securities that the Clairvest Investors acquired after the execution of the Nominating Agreement, Pace agreed to (x) appoint Kenneth B. Rotman to the Company Board contemporaneously with the closing of the Business Combination as a Class III director with a term expiring at the 2022 annual meeting of the stockholders of the Company and (y) nominate Kenneth B. Rotman to the Company Board as set forth in the Nominating Agreement.

Pursuant to the Nominating Agreement, Pace also agreed, subject to the requirements of fiduciary duties under applicable laws, to include in its slate of nominees for election as directors at any meeting of stockholders or action by written consent at which directors are to be elected to the Company Board (each such meeting or action by written consent, an “Election Meeting”), one individual (an “8% Nominee”) nominated to the Company Board by the Clairvest Investors, provided that the Clairvest Investors hold (together with their affiliates) at least 8% of the outstanding shares of Class A-1 common stock until the earlier of (i) the date upon which the Clairvest Investors (together with its affiliates) do not own at least 8% of the outstanding shares of Class A-1 common stock, or (ii) November 20, 2026, the seven year anniversary of the consummation of the Business Combination; provided, that, certain requirements listed in the Nominating Agreement are met. Additionally, the Clairvest Investors agreed, until Kenneth B. Rotman or an 8% Nominee is no longer serving on the Company Board, to vote (or cause to be voted) all shares of Class A-1 common stock beneficially owned or owned of record by the

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Clairvest Investors at any meeting of the stockholders of the Company in favor of each director nominated by the Company Board (or its Nominating and Corporate Governance Committee), as provided in any notice of any meeting of the stockholder of the Company and the accompanying management information circular, including all schedules, appendices and exhibits to, and information incorporated by reference in, such management information circular, to be sent to the stockholders of the Company in connection with any such meeting of the stockholders of the Company.

On November 6, 2019, the Clairvest Investors, Mr. Andrew Rubenstein and Mr. Gordon Rubenstein (together with Mr. A. Rubenstein, the “Rubenstein Parties”), entered into a Mutual Support Agreement (the “Mutual Support Agreement”) whereby (i) the Rubenstein Parties agreed to vote in favor of any 8% Nominee, all in accordance with the Nominating Agreement and provided such nominee is included by the Company in its slate of nominees for election as directors of the Company at any Election Meeting and (ii) the Clairvest Investors agreed to vote in favor of any 8% Nominee to the Company Board nominated by the Rubenstein Parties in accordance with the Nominating Agreement and included by the Company in its slate of nominees for election as directors of the Company at any Election Meeting, in each case, with respect to the shares of Class A-1 common stock, beneficially owned (as defined in Rule 13d-3 under the Exchange Act) or owned of record by each such respective party.

Registration Rights Agreement

On November 20, 2019 and in connection with the closing of the Business Combination, Pace, the Pace Sponsor Members, and certain other persons, including certain members of management of Accel, certain Accel shareholders and certain other persons, including the CV Entities, entered into the Registration Rights Agreement (the “Registration Rights Agreement,” and such parties other than Pace, the “Registration Rights Holders”), entitling such holders to demand that Accel register for resale certain shares of Accel held by them at any time from and after the consummation of the Business Combination and subject to certain lock-up restrictions. In connection with the offering described herein, certain parties to the Registration Rights Agreement affiliated with the Company (Andrew H. Rubenstein, Harry R, LLC, Jeffrey C. Rubenstein, Jeffrey C. Rubenstein, as trustee, or his successors in trust, of the Susan Rubenstein Family Trust, Gordon S. Rubenstein, Gordon S. Rubenstein and Krista M. Ramonas Joint Revocable Trust, The PrivateBank & Trust Company, as Custodian of the Gordon Rubenstein SEP IRA and Fund Indy LLC) approved the transfer of, and waived certain transfer restrictions under the Registration Rights Agreement relating to, shares of Class A-1 common stock held by TPG Pace Governance, LLC and Peterson Capital Partners, L.P.

Sponsor Letter Agreement

In connection with the initial public offering of Pace, Pace, Initial Pace Sponsor and certain affiliates entered into that certain Letter Agreement (the “Sponsor Letter Agreement”). In connection with the offering described herein, the parties to the Sponsor Letter Agreement approved the transfer of, and waived certain transfer restrictions under the Sponsor Letter Agreement relating to, shares of Class A-1 common stock held by TPG Pace Governance, LLC and Peterson Capital Partners, L.P.

New Accel Warrant Agreement

In connection with the consummation of the Business Combination, the Company and the Sellers entitled to receive Accel Warrants in the Stock Purchase entered into that certain New Accel Warrant Agreement, pursuant to which the Company issued to each such Sellers their respective pro rata share of 2,444,444 Accel Warrants, with such pro rata share to be determined with reference to a number of shares equal to 70% of such Seller’s shares of Accel Stock, less the number of shares of Accel Stock in respect of which the Seller elected to receive cash. Each Accel Warrant entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the Pace Warrants, at any time 30 days after the consummation of the Business Combination.

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See the section entitled “Description of Capital Stock—Warrants—Business Combination Private Placement Warrants and Accel Public Warrants” beginning on page 108.

Restricted Stock Agreement

In connection with the consummation of the Business Combination, the Company, the Pace Sponsor Members and the Sellers entitled to receive shares of Class A-2 common stock in the Stock Purchase (including all of the Business Combination Private Placement Sellers) entered into the Restricted Stock Agreement (as defined in “Description of Capital Stock—Common Stock—Class A-2 common stock”), which set forth the terms upon which the Class A-2 common stock will be exchanged for an equal number of shares of Class A-1 common stock. The exchange of shares of Class A-2 common stock for shares of Class A-1 common stock will be subject to the terms and conditions set forth in the Restricted Stock Agreement, with such exchanges occurring in three separate tranches upon the satisfaction of certain triggers. On January 14, 2020, the trigger for the first such tranche was satisfied, and 1,596,636 Class A-1 were issued upon exchange of shares of Class A-2 common stock.

See the section entitled “Description of Capital Stock—Common Stock—Class A-2 common stock” beginning on page 101.

Expense Reimbursement Letter

On June 19, 2019, Accel entered into the KPMG Engagement Letter, pursuant to which Accel engaged KPMG to provide professional services to Accel. Pursuant to the KPMG Engagement Letter, any fee amounts to be paid for, and expenses reimbursed under, the Engagement Letter in excess of $750,000 in the aggregate will be paid solely by David W. Ruttenberg, a director and shareholder of Accel and a Shareholder Representative under the Transaction Agreement. In connection with the KPMG Engagement Letter, on June 19, 2019, Pace entered into a letter agreement with David W. Ruttenberg, pursuant to which Pace agreed to reimburse Mr. Ruttenberg for any and all fees and expenses paid by Mr. Ruttenberg in connection with the KPMG Engagement Letter. Since June 19, 2019, Mr. Ruttenberg has been reimbursed for approximately $2.9 million of expenses related to the KPMG Engagement Letter.

Share Repurchases

In connection with the Business Combination, Accel repurchased 36,157 shares of its stock from certain employees, directors and officers at a repurchase price of $177 per share in order to facilitate (x) the repayment of then-existing loans to Accel’s executive officers described in this section (y) the exercise of vested options (including by way of withholding additional shares in connection with the cashless exercise of vested options as permitted by the 2011 Plan (as defined in “Executive Compensation”) and the 2016 Plan (as defined in “Executive Compensation”) and (z) funding any resulting tax obligations from the exercise of such vested options (including by way of withholding additional shares in connection with the cashless exercise of vested options as permitted by the 2011 Plan and the 2016 Plan). In connection with the foregoing, Accel repurchased 30,924 shares from Andrew Rubenstein, 877 shares from Derek Harmer and 978 shares from Brian Carroll. See the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 64.

Engagement of Raine Securities LLC

Accel engaged Raine Securities LLC to provide investment banking services to Accel in connection with the Business Combination. Prior to engaging Raine Securities LLC, Accel acknowledged that Gordon Rubenstein, a director of Accel, is the Managing Partner of Raine Ventures, an affiliate of Raine Securities LLC, where he leads the firm’s venture capital platform. Gordon Rubenstein is also the brother of Accel’s Chief Executive Officer, Andrew Rubenstein. Since January 1, 2017, Accel has paid Raine Securities LLC approximately $11.04 million in fees and expenses in connection with the Business Combination. Raine Securities LLC is also an underwriter of this offering. See “Underwriting (Conflicts of Interest).”

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Engagement of Much Shelist, P.C.

From time to time, Accel engages Much Shelist, P.C. (“Much Shelist”), as its legal counsel for general legal and business matters. Much Shelist has provided limited counsel to Accel with respect to the Business Combination. Jeffrey Rubenstein, an attorney at Much Shelist, is the father of Accel’s Chief Executive Officer, Andrew Rubenstein. For the years ended December 31, 2019, 2018 and 2017, Accel paid Much Shelist $0.6 million, $0.3 million and $0.6 million, respectively.

Asset Acquisition of Fair Share Gaming, LLC and Fair Share Amusement Company

On June 30, 2017, Accel purchased the assets of Fair Share Gaming, LLC and Fair Share Amusement Company, a licensed terminal operator in the state of Illinois and an operator of amusement games and ATMs, respectively, from Michael Pappas, for approximately $60,000,000 (the “Fair Share Gaming Acquisition”). Prior to the Business Combination, Mr. Pappas was an officer and director of Accel.

Relationships with Certain Licensed Establishment Partners

Michael Pappas is the father of William Pappas, a current equityholder of two licensed establishment partners with which Accel has binding agreements to provide VGTs. For the period from January 1, 2017 to December 31, 2019, Accel’s total revenue with respect to these two licensed establishment partners, Pinewoods, LLC and CC of OP, LLC was approximately $10.1 million and $.5 million, respectively.

Indemnification Agreements

On November 20, 2019, Accel entered into indemnity agreements with Messrs. Andrew Rubenstein, Brian Carroll, Derek Harmer, Gordon Rubenstein, David W. Ruttenberg, Kenneth B. Rotman and Karl Peterson and Mses. Eden Godsoe and Kathleen Philips, each of whom is a director and/or officer of Accel. Accel also entered into an indemnity agreement with Ms. Robinson on June 25, 2020. Each indemnity agreement provides that, subject to limited exceptions, and among other things, Accel will indemnify the director or officer to the fullest extent not prohibited by the provisions of its bylaws and the DGCL for claims arising in his or her capacity as our director or officer.

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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a discussion of certain material U.S. federal income tax consequences of the acquisition, ownership and disposition of shares of our Class A-1 common stock. This discussion applies only to shares that are held as capital assets for U.S. federal income tax purposes (generally, property held for investment) and is applicable only to holders who are receiving our shares in this offering.

This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), and administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations as of the date hereof, which are subject to change, possibly on a retroactive basis, and changes to any of which subsequent to the date of this prospectus may affect the tax consequences described herein. We have not sought, and will not seek, a ruling from the IRS as to any U.S. federal income tax consequence described herein. The IRS may disagree with the discussion herein, and its determination may be upheld by a court. This discussion does not address any aspect of state, local or non-U.S. taxation, any tax treaties or any U.S. federal taxes other than income taxes (such as gift and estate taxes).

This discussion is a summary only and does not describe all of the tax consequences that may be relevant to you in light of your particular circumstances, including but not limited to the alternative minimum tax, the Medicare tax on certain investment income and the different consequences that may apply if you are subject to special rules that apply to certain types of investors , including but not limited to:

• financial institutions or financial services entities;

• broker-dealers;

• governments or agencies or instrumentalities thereof;

• qualified foreign pension funds (or any entities all of the interests of which are held by a qualified foreign pension fund);

• regulated investment companies;

• real estate investment trusts;

• expatriates or former long-term residents of the U.S.;

• persons that actually or constructively own five percent or more of our voting shares;

• insurance companies;

• dealers in securities or foreign currencies;

• “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax;

• dealers or traders subject to a mark-to-market method of accounting with respect to shares of Class A-1 common stock;

• persons holding shares of Class A-1 common stock as part of a “straddle,” hedge, integrated transaction or similar transaction;

• persons that receive shares of Class A-1 common stock upon the exercise of employee stock options or otherwise as compensation;

• U.S. holders (as defined below) whose functional currency is not the U.S. dollar;

• partnerships or other pass-through entities for U.S. federal income tax purposes and any beneficial owners of such entities; and

• tax-exempt entities.

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You are urged to consult your tax advisor with respect to the application of U.S. federal tax laws to your particular situation, as well as any tax consequences arising under the laws of any state, local or foreign jurisdiction.

This discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold shares of Class A-1 common stock through such entities. If a partnership (or other entity or arrangement classified as a partnership or other pass-through entity for U.S. federal income tax purposes) is the beneficial owner of shares of Class A-1 common stock, the U.S. federal income tax treatment of a partner or member in the partnership or other pass-through entity generally will depend on the status of the partner or member and the activities of the partnership or other pass-through entity. If you are a partner or member of a partnership or other pass-through entity holding our securities, we urge you to consult your own tax advisor.

THIS DISCUSSION IS ONLY A SUMMARY OF CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS ASSOCIATED WITH THE ACQUISITION, OWNERSHIP AND DISPOSITION OF SHARES OF CLASS A-1 COMMON STOCK. EACH PROSPECTIVE INVESTOR IN OUR SECURITIES IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF SHARES OF CLASS A-1 COMMON STOCK, INCLUDING THE APPLICABILITY AND EFFECT OF ANY UNITED STATES FEDERAL NON-INCOME, STATE, LOCAL, OR NON-U.S. TAX LAWS AND TAX TREATIES.

U.S. Holders

This section applies to you if you are a “U.S. holder.” A U.S. holder is a beneficial owner of our shares of Class A-1 common stock who or that is, for U.S. federal income tax purposes:

• an individual who is a citizen or resident of the United States;

• a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; or

• an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

• a trust, if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons (as defined in the Code) have authority to control all substantial decisions of the trust or (ii) it has a valid election in effect under Treasury regulations to be treated as a U.S. person.

Taxation of Distributions. We do not expect to pay any distributions on our Class A-1 common stock in the foreseeable future. However, in the event we do make distributions in cash or other property on our Class A-1 common stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the U.S. holder’s adjusted tax basis in its shares of Class A-1 common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of the shares of Class A-1 common stock and will be treated as described under “U.S. Holders—Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A-1 common stock” below.

Dividends we pay to a U.S. holder that is taxable as a corporation generally will qualify for the dividends received deduction if the requisite holding period is satisfied. With certain exceptions (including, but not limited to, dividends treated as investment income for purposes of investment interest deduction limitations), and provided certain holding period requirements are met, dividends we pay to a non-corporate U.S. holder may constitute “qualified dividends” that will be subject to tax at the maximum tax rate accorded to long-term capital gains. If the holding period requirements are not satisfied, then a corporation may not be able to qualify for the

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dividends received deduction and would have taxable income equal to the entire dividend amount, and non-corporate holders may be subject to tax on such dividend at regular ordinary income tax rates instead of the preferential rate that applies to qualified dividend income.

Gain or Loss on Sale, Taxable Exchange or Other Taxable Disposition of Class A-1 common stock. Upon a sale or other taxable disposition of shares of Class A-1 common stock, a U.S. holder generally will recognize capital gain or loss in an amount equal to the difference between (i) the amount of cash and the fair market value of any other property received by the holder and (ii) the U.S. holder’s adjusted tax basis in the shares of Class A-1 common stock disposed of. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. holder’s holding period for the shares so disposed of exceeds one year. Long-term capital gains recognized by non-corporate U.S. holders will generally be eligible to be taxed at reduced rates. If the holding period requirements are not satisfied, any gain on a sale or taxable disposition of the shares would be subject to short-term capital gain treatment and would be taxed at regular ordinary income tax rates. The deductibility of capital losses is subject to limitations.

Information Reporting and Backup Withholding. Certain U.S. holders will be subject to information reporting with respect to the payment of dividends on our Class A-1 common stock and the payment of proceeds on the sale or other disposition of our Class A-1 common stock, and backup withholding may apply unless the U.S. holder provides proof of an applicable exemption or a correct taxpayer identification number and otherwise complies with applicable requirements of the backup withholding rules.

Any amounts withheld under the backup withholding rules generally should be allowed as a refund or a credit against a U.S. holder’s U.S. federal income tax liability provided the required information is timely furnished to the IRS. U.S. holders are urged to consult their own tax advisers regarding the application of backup withholding in their particular circumstances and the availability of and procedure for obtaining an exemption from backup withholding under current Treasury regulations.

Non-U.S. Holders

This section applies to you if you are a “Non-U.S. holder.” As used herein, the term “Non-U.S. holder” means a beneficial owner of Class A-1 common stock who or that is for U.S. federal income tax purposes:

• a non-resident alien individual (other than certain former citizens and residents of the U.S. subject to U.S. tax as expatriates);

• a foreign corporation or

• an estate or trust that is not a U.S. holder;

but generally does not include an individual who is present in the U.S. for 183 days or more in the taxable year of disposition. If you are such an individual, you should consult your tax advisor regarding the U.S. federal income tax consequences of the acquisition, ownership or sale or other disposition of shares of Class A-1 common stock.

Taxation of Distributions. We do not expect to pay any distributions on our Class A-1 common stock in the foreseeable future. However, in the event we do make distributions of cash or other property on our Class A-1 common stock, such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that will be applied against and reduce (but not below zero) the Non-U.S. holder’s adjusted tax basis in its Class A-1 common stock. Any remaining excess will be treated as capital gain from the sale or exchange of such Class A-1 common stock (see “Non-U.S. Holders—Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A-1 common stock”). Subject to the withholding requirements under FATCA (as defined below) and with respect to effectively connected income, each of which is discussed below, any dividend made to a Non-U.S. holder on our Class A-1 common stock generally will be subject to U.S. withholding tax at a rate

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of 30% of the gross amount of the dividend unless an applicable income tax treaty provides for a lower rate. To receive the benefit of a reduced treaty rate, a Non-U.S. holder must provide the applicable withholding agent with an IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable or successor form) certifying qualification for the reduced rate.

Dividends paid to a Non-U.S. holder that are effectively connected with a trade or business conducted by the Non-U.S. holder in the United States (and, to the extent provided in an applicable income tax treaty, are treated as attributable to a permanent establishment maintained by the Non-U.S. holder in the United States) generally will be taxed on a net income basis at the rates and in the manner generally applicable to U.S. holders, unless an applicable income tax treaty provides otherwise. Such effectively connected dividends will not be subject to U.S. withholding tax if the Non-U.S. holder satisfies certain certification requirements by providing the applicable withholding agent with a properly executed IRS Form W-8ECI certifying eligibility for exemption. If the Non-U.S. holder is a corporation for U.S. federal income tax purposes, it may also be subject to a branch profits tax (at a 30% rate or such lower rate as specified by an applicable income tax treaty) on its effectively connected earnings and profits (as adjusted for certain items), which will include effectively connected dividends.

Gain on Sale, Taxable Exchange or Other Taxable Disposition of Class A-1 common stock. Subject to the discussion below under “Non-U.S. Holders—Information Reporting and Backup Withholding,” a Non-U.S. holder generally will not be subject to U.S. federal income or withholding tax on any gain realized upon the sale or other disposition of our Class A-1 common stock unless:

• the gain is effectively connected with the conduct of a trade or business by the Non-U.S. holder within the United States (and, to the extent provided in an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by the Non-U.S. holder in the United States); or

• our Class A-1 common stock constitutes a United States real property interest by reason of our status as a United States real property holding corporation (“USRPHC”) for U.S. federal income tax purposes and as a result such gain is treated as effectively connected with a trade or business conducted by the Non-U.S. holder in the United States.

A Non-U.S. holder whose gain is described in the first bullet point above or, subject to the exceptions described in the next paragraph, the second bullet point above, generally will be taxed on a net income basis at the rates and in the manner generally applicable to United States persons (as defined under the Code) unless an applicable income tax treaty provides otherwise. If the Non-U.S. holder is a corporation for U.S. federal income tax purposes whose gain is described in the first bullet point above, then such gain would also be included in its effectively connected earnings and profits (as adjusted for certain items), which may be subject to a branch profits tax (at a 30% rate or such lower rate as specified by an applicable income tax treaty).

With respect to the second bullet point above, generally, a corporation is a USRPHC if the fair market value of its “United States real property interests” equals 50% or more of the sum of the fair market value of (a) its worldwide real property interests and (b) its other assets used or held for use in a trade or business. The tax relating to dispositions of stock in a USRPHC does not apply to a non-U.S. holder whose holdings, actual and constructive, amount to 5% or less of our Class A-1 common stock at all times during the shorter of the five-year period ending on the date of disposition of our common stock and the non-U.S. holder’s holding period for our Class A-1 common stock, provided that our Class A-1 common stock is regularly traded on an established securities market. No assurance can be provided that our Class A-1 common stock will be regularly traded on an established securities market at all times for purposes of the rules described above. We believe we have not been and currently are not, and do not anticipate becoming, a USRPHC. Because the determination of whether we are a USRPHC depends, however, on the fair market value of our U.S. real property interests relative to the fair market value of our non-U.S. real property interests and our other business assets, there can be no assurance we have not been or currently are not a U.S. real property holding corporation or will not become one in the future.

Non-U.S. holders should consult their tax advisors with respect to the application of the foregoing rules to their ownership and disposition of our Class A-1 common stock.

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Information Reporting and Backup Withholding. Any dividends paid to a Non-U.S. holder must be reported annually to the IRS and to the Non-U.S. holder. Copies of these information returns may be made available to the tax authorities in the country in which the Non-U.S. holder resides or is established. Payments of dividends to a Non-U.S. holder generally will not be subject to backup withholding if the Non-U.S. holder establishes an exemption by properly certifying its non-U.S. status on an IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable or successor form).

Payments of the proceeds from a sale or other disposition by a Non-U.S. holder of our Class A-1 common stock effected by or through a U.S. office of a broker generally will be subject to information reporting and backup withholding (at the applicable rate) unless the Non-U.S. holder establishes an exemption by properly certifying its non-U.S. status on an IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable or successor form) and certain other conditions are met. Information reporting and backup withholding generally will not apply to any payment of the proceeds from a sale or other disposition of our Class A-1 common stock effected outside the United States by a non-U.S. office of a broker. However, unless such broker has documentary evidence in its records that the Non-U.S. holder is not a United States person and certain other conditions are met, or the Non-U.S. holder otherwise establishes an exemption, information reporting will generally apply to a payment of the proceeds of the disposition of our Class A-1 common stock effected outside the United States by such a broker if it has certain relationships within the United States.

Backup withholding is not an additional tax. Rather, the U.S. federal income tax liability (if any) of persons subject to backup withholding may be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained, provided that the required information is timely furnished to the IRS.

FATCA Withholding Taxes. Sections 1471 through 1474 of the Code, and Treasury regulations and administrative guidance issued thereunder (“FATCA”), impose a 30% withholding tax on any dividends paid on our Class A-1 common stock if paid to a “foreign financial institution” or a “non-financial foreign entity” (each as defined in the Code) (including, in some cases, when such foreign financial institution or non-financial foreign entity is acting as an intermediary), unless (i) in the case of a foreign financial institution, such institution enters into a qualifying agreement with the U.S. government to withhold on certain payments, and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are non-U.S. entities with U.S. owners), (ii) in the case of a non-financial foreign entity, such entity properly certifies that it does not have any “substantial United States owners” (as defined in the Code) or provides the applicable withholding agent with a proper certification identifying the direct and indirect substantial United States owners of the entity (in either case, generally on an IRS Form W-8BEN-E), or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules and provides appropriate documentation (such as an IRS Form W-8BEN-E). Accordingly, the entity through which our Class A-1 common stock is held will affect the determination of whether such withholding is required. Withholding imposed by FATCA may also apply to gross proceeds from the sale or other disposition of U.S. corporate stock (including our stock); although, under proposed Treasury regulations, no withholding would apply to such gross proceeds. Taxpayers may rely generally on these proposed Treasury regulations until they are revoked or final Treasury regulations are issued. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing these rules may be subject to different rules. Under certain circumstances, a holder might be eligible for refunds or credits of such taxes. Non-U.S. holders are encouraged to consult their own tax advisors regarding the effects of FATCA on an investment in our Class A-1 common stock.

HOLDERS OF OUR CLASS A-1 COMMON STOCK ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE APPLICABILITY AND EFFECT OF U.S. FEDERAL ESTATE AND GIFT TAX LAWS AND ANY STATE, LOCAL OR NON-U.S. TAX LAWS AND TAX TREATIES.

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UNDERWRITING (CONFLICTS OF INTEREST)

We, the selling stockholders and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are acting as the representatives of the underwriters.

Underwriters	Number of Shares
Goldman Sachs & Co. LLC
J.P. Morgan Securities LLC
Credit Suisse Securities (USA) LLC
Deutsche Bank Securities Inc.
TPG Capital BD, LLC
Raine Securities LLC
Total		12,000,000

The underwriters are committed to take and pay for all of the shares of Class A-1 common stock being offered by us and the selling stockholders, if any are taken, other than the shares of Class A-1 common stock covered by the option described below unless and until this option is exercised.

The underwriters have an option to buy up to an additional 320,237 shares of Class A-1 common stock from us and an option to buy up to an additional 1,479,763 shares of Class A-1 common stock from the selling stockholders to cover sales by the underwriters of a greater number of shares of Class A-1 common stock than the total number set forth in the table above. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares of Class A-1 common stock in approximately the same proportion as set forth in the table above.

The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by us and the selling stockholders. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase 1,800,000 additional shares of Class A-1 common stock.

Paid by us

	No Exercise	Full Exercise
Per share	$	$
Total	$	$

Paid by the selling stockholders

	No Exercise	Full Exercise
Per Share	$	$
Total	$	$

Shares sold by the underwriters to the public will initially be offered at the public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $                 per share from the public offering price. After the initial offering of the shares, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.

We and our officers, directors, and certain of our stockholders, including the selling stockholders, have agreed or will agree with the underwriters, subject to certain exceptions, not to dispose of or hedge any of their shares of Class A-1 common stock or securities convertible into or exchangeable for shares of Class A-1 common stock during the period from the date of this prospectus continuing through 60 days after the date of the final prospectus relating to this offering, except with the prior written consent of Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as the representatives of the underwriters. This agreement does not apply to any existing employee benefit plans. See “Shares Available for Future Sale” for a discussion of certain transfer restrictions.

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Our Class A-1 common stock is listed on the NYSE under the symbol “ACEL.”

In connection with the offering, the underwriters may purchase and sell shares of Class A-1 common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering, and a short position represents the amount of such sales that have not been covered by subsequent purchases. A “covered short position” is a short position that is not greater than the amount of additional shares for which the underwriters’ option described above may be exercised. The underwriters may cover any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market.

In determining the source of shares to cover the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option described above. “Naked” short sales are any short sales that create a short position greater than the amount of additional shares for which the option described above may be exercised. The underwriters must cover any such naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of our common stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on the NYSE, in the over-the-counter market or otherwise.

We estimate that the total expenses of the offering, excluding underwriting discounts and commissions, payable by us and the selling stockholders will be approximately $1,000,000. We have agreed to reimburse the underwriter for expenses relating to the clearance of this offering with the Financial Industry Regulatory Authority, Inc. in an amount up to $25,000.

We and the selling stockholders have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the underwriters and their respective affiliates have provided, and may in the future provide, a variety of these services to us and to persons and entities with relationships with us, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate

132

to assets, securities and/or instruments of us (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with us. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

Conflicts of Interest

An affiliate of TPG Capital BD, LLC, an underwriter in this offering, is a selling stockholder in this offering. As a result of the foregoing relationship, TPG Capital BD, LLC is deemed to have a “conflict of interest” within the meaning of FINRA Rule 5121. In addition, Gordon Rubenstein, one of our directors and a selling stockholder, is an employee of The Raine Group LLC. Raine Securities LLC, an underwriter in this offering, is a controlled affiliate of The Raine Group LLC. As a result of the foregoing relationship, Raine Securities LLC is also deemed to have a “conflict of interest” within the meaning of FINRA Rule 5121. Accordingly, this offering will be made in compliance with the applicable provisions of FINRA Rule 5121. Pursuant to that rule, the appointment of a qualified independent underwriter is not necessary in connection with this offering. In accordance with FINRA Rule 5121(c), no sales of the shares will be made to any discretionary account over which TPG Capital BD, LLC or Raine Securities LLC exercises discretion without the prior specific written approval of the account holder.

Selling Restrictions

European Economic Area and the United Kingdom

In relation to each Member State of the European Economic Area and the United Kingdom (each a “Relevant State”), no shares of common stock (the “Shares”) have been offered or will be offered pursuant to the offering to the public in that Relevant State prior to the publication of a prospectus in relation to the Shares which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation), except that offers of Shares may be made to the public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:

(a) to any legal entity which is a qualified investor as defined under the Prospectus Regulation;

(b) to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the Representatives for any such offer; or

(c) in any other circumstances falling within Article 1(4) of the Prospectus Regulation,

provided that no such offer of Shares shall require the Company or any Representative to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.

For the purposes of this provision, the expression an “offer to the public” in relation to any Shares in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to purchase or subscribe for any Shares, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129.

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United Kingdom

Each Underwriter has represented and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (as amended, the “FSMA”)) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to the company or the selling stockholders; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

Canada

The shares of common stock may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations. Any resale of the shares of common stock must be made in accordance with an exemption form, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Hong Kong

The shares of common stock may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32 of the Laws of Hong Kong) (“Companies (Winding Up and Miscellaneous Provisions) Ordinance”) or which do not constitute an invitation to the public within the meaning of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“Securities and Futures Ordinance”), or (ii) to “professional investors” as defined in the Securities and Futures Ordinance and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance, and no advertisement, invitation or document relating to the shares of common stock may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of common stock which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” in Hong Kong as defined in the Securities and Futures Ordinance and any rules made thereunder.

Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined under Section 4A of the Securities and Futures

134

Act, Chapter 289 of Singapore (the “SFA”)) under Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to conditions set forth in the SFA.

Where the shares of common stock are subscribed or purchased under Section 275 of the SFA by a relevant person that is a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor, the securities (as defined in Section 239(1) of the SFA) of that corporation shall not be transferable for 6 months after that corporation has acquired the shares under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer in that corporation’s securities pursuant to Section 275(1A) of the SFA, (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore (“Regulation 32”).

Where the shares of common stock are subscribed or purchased under Section 275 of the SFA by a relevant person that is a trust (where the trustee is not an accredited investor (as defined in Section 4A of the SFA)) whose sole purpose is to hold investments and each beneficiary of the trust is an accredited investor, the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferable for 6 months after that trust has acquired the shares under Section 275 of the SFA except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person (as defined in Section 275(2) of the SFA), (2) where such transfer arises from an offer that is made on terms that such rights or interest are acquired at a consideration of not less than $200,000 (or its equivalent in a foreign currency) for each transaction (whether such amount is to be paid for in cash or by exchange of securities or other assets), (3) where no consideration is or will be given for the transfer, (4) where the transfer is by operation of law, (5) as specified in Section 276(7) of the SFA, or (6) as specified in Regulation 32.

Singapore Securities and Futures Act Product Classification — Solely for the purposes of its obligations pursuant to Sections 309B(1)(a) and 309B(1)(c) of the SFA, the Company has determined, and hereby notifies all relevant persons (as defined in Section 309A of the SFA) that the common shares are “prescribed capital markets products” (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice of the Sale of Investment products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

Japan

The securities have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended), or the FIEA. The securities may not be offered or sold, directly or indirectly, in Japan or to or for the benefit of any resident of Japan (including any person resident in Japan or any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale, directly or indirectly, in Japan or to or for the benefit of any resident of Japan, except pursuant to an exemption from the registration requirements of the FIEA and otherwise in compliance with any relevant laws and regulations of Japan.

Switzerland

This prospectus is not intended to constitute an offer or solicitation to purchase or invest in the shares. The shares may not be publicly offered, directly or indirectly, in Switzerland within the meaning of the Swiss Financial Services Act (“FinSA”) and no application has or will be made to admit the shares to trading on any trading venue (exchange or multilateral trading facility) in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the shares constitutes a prospectus pursuant to the FinSA, and neither this prospectus nor any other offering or marketing material relating to the shares may be publicly distributed or otherwise made publicly available in Switzerland.

135

LEGAL MATTERS

Fenwick & West LLP has passed upon the validity of the Class A-1 common stock offered by this prospectus and certain other legal matters related to this prospectus. Certain legal matters in connection with this offering will be passed upon for the underwriters by Weil, Gotshal & Manges LLP.

EXPERTS

The consolidated financial statements of Accel Entertainment, Inc. and subsidiaries as of December 31, 2019 and 2018, and for each of the years in the three-year period ended December 31, 2019, have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. The audit report of KPMG LLP covering the consolidated financial statements of Accel Entertainment, Inc. and subsidiaries contains explanatory paragraphs that state (1) the Company has changed its method of accounting for revenue from contracts with customers and related costs as of January 1, 2019 due to the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, and (2) the Company consummated a merger on November 20, 2019, which has been accounted for as a reverse recapitalization.

The consolidated financial statements of Grand River Jackpot, LLC and Subsidiary as of and for the year ended December 31, 2018 have been audited by RSM US LLP, independent auditors, as stated in their report thereon which report expresses an unqualified opinion, included herein. Such consolidated financial statements have been included herein in reliance upon such report and upon the authority of such firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. This prospectus is part of a registration statement that we have filed on Form S-1, including exhibits, under the Securities Act of 1933, as amended, with respect to the common stock offered by this prospectus. This prospectus is part of a registration statement, but does not contain all of the information included in the registration statement or the exhibits. Our SEC filings are available to the public on the internet at a website maintained by the SEC located at http://www.sec.gov.

We will provide, without charge, upon written request or oral request, a copy of any or all of the documents that are exhibits to the registration statement. You may request a copy of these documents by writing or telephoning us at:

Accel Entertainment, Inc.

140 Tower Drive

Burr Ridge, Illinois 60527

(630) 972 -2235

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INDEX TO CONSOLIDATED FINANCIAL INFORMATION

	Page
Accel Entertainment, Inc.—Audited Financial Statements
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Statements of Operations for the years ended December 31, 2019, December 31, 2018 and December 31, 2017		F-3
Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018		F-4
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2019, December 31, 2018 and December 31, 2017		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2019, December 31, 2018 and December 31, 2017		F-6
Notes to Consolidated Financial Statements		F-8
Grand River Jackpot, LLC—Unaudited Financial Statements
Consolidated Balance Sheets as of June 30, 2019 (Unaudited) and December 31, 2018		F-43
Consolidated Statements of Operations for the six months ended June 30, 2019 (Unaudited) and June 30, 2018		F-44
Consolidated Statements of Members’ Deficit for the six months ended June 30, 2019 (Unaudited) and June 30, 2018		F-45
Consolidated Statements of Cash Flows for the six months ended June 30, 2019 (Unaudited) and June 30, 2018		F-46
Notes to Consolidated Financial Statements		F-47
Grand River Jackpot, LLC—Audited Financial Statements
Report of Independent Registered Public Accounting Firm		F-52
Consolidated Balance Sheet as of December 31, 2018		F-53
Consolidated Statement of Operations for the fiscal year ended December 31, 2018		F-54
Consolidated Statements of Members’ Deficit for the fiscal year ended December 31, 2018		F-55
Consolidated Statements of Cash Flows for the fiscal year ended December 31, 2018		F-56
Notes to Consolidated Financial Statements		F-57
Accel Entertainment, Inc.—Unaudited Pro Forma Condensed Combined Financial Information
Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2019		F-64
Unaudited Pro Forma Condensed Combined Statement of Operations for the six months ended June 30, 2019		F-65
Notes to the Unaudited Pro Forma Condensed Combined Financial Information		F-76
Accel Entertainment, Inc.—Unaudited Financial Statements
Condensed Consolidated Statements of Operations (Unaudited) for the three and six months ended June 30, 2020 and 2019		F-80
Condensed Consolidated Balance Sheets at June 30, 2020 (Unaudited) and December 31, 2019		F-81
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three and six months ended June 30, 2020 and 2019		F-82
Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2020 and 2019		F-83
Notes to the Condensed Consolidated Financial Statements (Unaudited)		F-84

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

Accel Entertainment, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Accel Entertainment, Inc. and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for revenue from contracts with customers and related costs as of January 1, 2019 due to the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers.

Reverse Recapitalization

As discussed in Note 3 to the consolidated financial statements, the Company consummated a merger on November 20, 2019, which has been accounted for as a reverse recapitalization. The Company’s common stock was adjusted retroactively to give effect for the exchange ratio.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 2019.

Chicago, Illinois

March 13, 2020

F-2

PART I – FINANCIAL INFORMATION

ACCEL ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)	Years ended December 31,
	2019			2018		2017
Revenues:
Net video gaming	$	410,636		$	321,711	$	240,235
Amusement		5,912			4,199		3,422
ATM fees and other revenue		7,837			6,083		4,778
Total net revenues		424,385			331,993		248,435
Operating expenses:
Video gaming expenses		271,999			210,507		157,010
General and administrative		75,028			58,157		45,364
Depreciation and amortization of property and equipment		26,398			20,782		16,768
Amortization of route and customer acquisition costs and location contracts acquired		17,975			14,681		9,792
Other expenses, net		19,649			2,997		1,331
Total operating expenses		411,049			307,124		230,265
Operating income		13,336			24,869		18,170
Interest expense		12,860			9,644		8,105
Loss on debt extinguishment		1,141			—		—
(Loss) income before income tax expense		(665	)		15,225		10,065
Income tax expense		5,199			4,422		1,754
Net (loss) income	$	(5,864	)	$	10,803	$	8,311
Net (loss) income per common share:
Basic (1)	$	(0.09	)	$	0.19	$	0.15
Diluted (1)		(0.09	)		0.17		0.14
Weighted average number of shares outstanding:
Basic (1)		61,850			57,621		56,321
Diluted (1)		61,850			62,182		59,408

(1) Per share and share amounts have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 3.

The accompanying notes are an integral part of these consolidated financial statements

F-3

ACCEL ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)	December 31,
	2019			2018
Assets
Current assets:
Cash	$	125,403		$	92,229
Prepaid expenses		4,151			2,538
Income taxes receivable		3,907			2,102
Investment in convertible notes (current)		11,000			—
Other current assets		7,034			5,142
Total current assets		151,495			102,011
Property and equipment, net		119,201			92,442
Other assets:
Route and customer acquisition costs, net		17,399			13,994
Location contracts acquired, net		166,783			126,038
Goodwill		34,511			—
Investment in convertible note, less current portion		19,000			—
Other assets		928			689
		238,621			140,721
Total assets	$	509,317		$	335,174
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of debt	$	15,000		$	62,500
Current maturities of capital lease		—			531
Current portion of route and customer acquisition costs payable		1,700			1,821
Accrued location gaming expense		1,323			1,132
Accrued state gaming expense		7,119			4,929
Accounts payable and other accrued expenses		19,511			12,413
Current portion of consideration payable		10,293			2,556
Total current liabilities		54,946			85,882
Long-term liabilities:
Debt, net of current maturities		334,692			168,895
Route and customer acquisition costs payable, less current portion		4,752			5,364
Consideration payable, less current portion		16,426			9,020
Deferred income tax liability		12,976			8,895
Total long-term liabilities		368,846			192,174
Stockholders’ equity (1):
Preferred Stock, par value of $0.0001; 1,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2019 and December 31, 2018		—			—
Class A-1 Common Stock, par value $0.0001; 250,000,000 shares authorized; 76,637,470 shares issued and outstanding at December 31, 2019; 58,491,280 shares issued and outstanding at December 31, 2018		8			6
Class A-2 Common Stock, par value $0.0001; 10,000,000 shares authorized; 4,999,999 shares issued and outstanding at December 31, 2019; no shares issued and outstanding at December 31, 2018		1			—
Treasury stock, at cost		—			(5,832	)
Additional paid-in capital		105,986			80,146
Accumulated deficit		(20,470	)		(17,202	)
Total stockholders’ equity		85,525			57,118
Total liabilities and equity	$	509,317		$	335,174

(1) Equity amounts have been retroactively restated to give effect to the reverse capitalization that is discussed in Note 3.

The accompanying notes are an integral part of these consolidated financial statements

F-4

ACCEL ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except shares)	Class A-1 Common Stock (1)				Class A-2 Common Stock				Additional Paid-In Capital (1)			Treasury Stock						Note Receivable, Stockholder			Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount					Shares			Amount
Balance, January 1, 2017		54,133,885	$	5		—	$	—	$	60,667			(96,273	)	$	(217	)	$	—		$	(36,316	)	$	24,139
Repurchase of common stock		—		—		—		—		—			(32,658	)		(124	)		—			—			(124	)
Exercise of common stock options		1,122,256		—		—		—		1,351			17,206			29			—			—			1,380
Exercise of warrants		118,601		—		—		—		16			79,067			189			—			—			205
Issuance of common stock pursuant to acquisition of business		2,521,815		1		—		—		10,670			32,658			123			—			—			10,794
Issuance of note receivable and shares		562,838		—		—		—		2,293			—			—			(3,268	)		—			(975	)
Stock option compensation		—		—		—		—		804			—			—			—			—			804
Net income		—		—		—		—		—			—			—			—			8,311			8,311
Balance, December 31, 2017		58,459,396	$	6		—	$	—	$	75,801			—		$	—		$	(3,268	)	$	(28,005	)	$	44,534
Repurchase of common and preferred stock		—		—		—		—		—			(694,726	)		(3,343	)		—			—			(3,343	)
Exercise of common stock options		31,885		—		—		—		(782	)		252,981			1,178			—			—			396
Receipt of stock previously issued pursuant to acquisition into treasury		—		—		—		—		—			(67,998	)		(399	)		—			—			(399	)
Reclassification of contingent stock consideration		—		—		—		—		4,674						—			—			—			4,674
Settlement of note receivable issued		—		—		—		—		—			(802,137	)		(3,268	)		3,268			—			—
Stock option compensation		—		—		—		—		453						—			—			—			453
Net income		—		—		—		—		—						—			—			10,803			10,803
Balance, December 31, 2018		58,491,281	$	6		—	$	—	$	80,146			(1,311,880	)	$	(5,832	)	$	—		$	(17,202	)	$	57,118
Exercise of common stock options		342,139		—		—		—		(4,299	)		1,244,725			7,524			—			—			3,225
Exercise of warrants		3,229,295		—		—		—		3,165			46,409			227			—			—			3,392
Employee stock option compensation		—		—		—		—		2,236						—			—			—			2,236
Contributed capital, professional service fees paid by shareholder		—		—		—		—		2,891						—			—			—			2,891
Effect of reverse recapitalization:
Shares exchanged for withholding on stock options and shares repurchased		—		—		—		—		—			(906,128	)		(9,331	)		—			—			(9,331	)
Net equity infusion from reverse recapitalization		14,574,755		2		4,999,999		1		21,847			926,874			7,412			—			—			29,262
Cumulative transition adjustment for adoption of Topic 606, net of taxes		—		—		—		—		—						—			—			2,596			2,596
Net loss		—		—		—		—		—						—			—			(5,864	)		(5,864	)
Balance, December 31, 2019		76,637,470	$	8		4,999,999	$	1	$	105,986			—		$	—		$	—		$	(20,470	)	$	85,525

(1) See Note 3 for reverse recapitalization effects herein.

The accompanying notes are an integral part of these consolidated financial statements

F-5

ACCEL ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
	Year Ended 31,
(In thousands)	2019			2018			2017
Cash flows from operating activities:
Net (loss) income	$	(5,864	)	$	10,803		$	8,311
Non-cash items included in net (loss) income:
Depreciation and amortization of property and equipment		26,398			20,782			16,768
Amortization of route and customer acquisition costs and location contracts acquired		17,975			14,681			9,792
Amortization of debt issuance costs		655			394			284
Contributed capital, professional service fees paid by shareholder		2,891			—			—
Stock option compensation		2,236			453			804
Loss (gain) on disposal of property and equipment		100			61			338
Loss on write-off of route and customer acquisition costs and route and customer acquisition costs payable		342			516			395
Loss on debt extinguishment		1,141			—			—
Remeasurement of contingent consideration		6,723			852			—
Accretion of interest on route and customer acquisition costs payable, contingent consideration, and contingent stock consideration		1,623			912			695
Deferred income taxes		4,081			4,300			1,519
Changes in operating assets and liabilities, net of acquisition of businesses:
Prepaid expenses and other current assets		(3,507	)		(491	)		(3,825	)
Income taxes receivable		(1,804	)		(1,436	)		(667	)
Route and customer acquisition costs		(5,438	)		(3,719	)		(2,778	)
Route and customer acquisition costs payable		(1,342	)		(956	)		(1,354	)
Accounts payable and accrued expenses		(405	)		(2,649	)		3,222
Consideration payable		—			(196	)		—
Other assets		(240	)		36			(407	)
Net cash provided by operating activities		45,565			44,343			33,097
Cash flows from investing activities:
Purchases of property and equipment		(20,796	)		(23,246	)		(23,626	)
Proceeds from the sale of property and equipment		121			1,173			259
Payments for location contracts acquired		—			(80	)		(2,374	)
Purchase of investment in convertible notes		(30,000	)		—			—
Business and asset acquisitions, net of cash acquired		(100,857	)		(51,394	)		(45,129	)
Net cash used in investing activities		(151,532	)		(73,547	)		(70,870	)
Cash flows from financing activities:
Proceeds from term loan		240,000			46,250			—
Payments on term loan		(115,625	)		(11,625	)		(9,000	)
Proceeds from delayed draw term loans		169,000			75,000			60,000
Payments on delayed draw term loans		(159,000	)		(59,000	)		(9,000	)
Net proceeds from line of credit		(8,500	)		3,000			18,500
Payments for debt issuance costs		(9,374	)		(533	)		—
Payments for repurchase of common shares		—			(3,343	)		(123	)
Proceeds from exercise of stock options and warrants		3,583			396			1,584
Payments on consideration payable		(2,321	)		(814	)		(351	)
Payments on capital lease obligation		(531	)		(3,276	)		(2,729	)
Net increase in outstanding checks in excess of bank balance		—			67			200
Proceeds from capital infusion in reverse recapitalization		27,030			—			—
Tax withholding on share-based payments		(5,121	)		—			—
Net cash provided by financing activities		139,141			46,122			59,081
Net increase in cash		33,174			16,918			21,308
Cash:
Beginning of year		92,229			75,311			54,003
End of year	$	125,403		$	92,229		$	75,311

F-6

ACCEL ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)	2019			2018			2017
Supplemental disclosures of cash flow information:
Cash payments for:
Interest, net of amount of capitalized	$	12,024		$	8,719		$	6,224
Income taxes paid	$	1,759		$	1,594		$	—
Supplemental schedules of noncash investing and financing activities:
Purchases of property and equipment in accounts payable and accrued liabilities	$	11,501		$	2,243		$	1,050
Reclassification of contingent stock consideration from liabilities to equity	$	—		$	2,575		$	890
Acquisition of businesses and assets:
Total identifiable net assets acquired	$	119,178		$	63,745		$	65,119
Less cash acquired		(8,861	)		(3,633	)		(4,926	)
Less contingent consideration		(7,216	)		(5,350	)		(595	)
Less promissory note		(2,244	)		(3,368	)		—
Less common stock consideration		—			—			(10,794	)
Less contingent stock consideration		—			—			(3,675	)
Cash purchase price	$	100,857		$	51,394		$	45,129

The accompanying notes are an integral part of these consolidated financial statements

F-7

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1. Description of Business

Accel Entertainment, Inc. and its subsidiaries (“the Company”) wholly owned subsidiary, Accel Entertainment Gaming LLC, is a terminal operator licensed by the State of Illinois Gaming Board since March 15, 2012. Its terminal operator license allows the Company to install and operate video gaming terminals in licensed video gaming locations throughout the State of Illinois as approved by individual municipalities. The Company also operates redemption terminals, which also function as automated teller machines (“ATMs”) at its licensed video gaming locations, and amusement equipment at certain locations. The Company is subject to various federal, state and local laws and regulations in addition to gaming regulations. The terminal operator license, which is not transferable or assignable, requires compliance with applicable regulations and the license is renewable annually unless sooner cancelled or terminated.

The Company operates 10,499 and 7,649 video gaming terminals across 2,312 and 1,686 locations in the State of Illinois as of December 31, 2019 and 2018, respectively.

On November 20, 2019, TPG Pace Holdings Corp., (“TPG Holdings”) entered into a Transaction Agreement with each of the shareholders of Accel Entertainment, Inc. (“Accel”). Pursuant to the Transaction Agreement and in connection therewith, TPG Holdings acquired, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock from the Accel shareholders. In connection with the closing of the transaction, TPG Holdings changed its name to Accel Entertainment, Inc. For more information on this transaction, see Note 3.

The Company is an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) following the consummation of the merger of TPG Pace Holding Corp. and Accel Entertainment, Inc. The Company has elected to use this extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act and as a result of this election, its financial statements may not be comparable to companies that comply with public company effective dates. The Company will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following June 30, 2022, (b) in which Accel has total annual gross revenue of at least $1.0 billion or (c) in which Accel is deemed to be a large accelerated filer, which means the market value of Class A-1 Shares that is held by non-affiliates exceeds $700 million as of the last business day of the prior second fiscal quarter, and (ii) the date on which Accel has issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Note 2. Summary of Significant Accounting Policies

Basis of presentation and preparation: The consolidated financial statements and accompanying notes were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Adopted accounting pronouncements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the existing revenue recognition and creates a new topic for Revenue from Contracts with Customers. The guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance also substantially revises required interim and annual disclosures. The Company, as an Emerging Growth Company (“EGC”), elected to use the non-public

F-8

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

effective date and adopted the standard in the fourth quarter of 2019 for the annual period ended December 31, 2019. The Company also elected the modified retrospective adoption approach and applied the standard to all contracts open as of January 1, 2019. The Company’s quarterly financial statement disclosure for the first nine months of 2019 reflect the previous accounting standard of FASB ASC 605, Revenue Recognition, and will not be restated for the adoption of Topic 606. The cumulative impact of the new revenue standard for fiscal year 2019 was recorded in the fourth quarter and reflects the adjustment as if the Company adopted the standard as of January 1, 2019. The timing and amount of revenue recognized by the Company did not change upon the adoption of the new standard, however the Company’s accounting for route acquisition costs was impacted. ASC 340-40, Other Assets and Deferred Costs—Contracts With Customers (“ASC 340-40”), issued in conjunction with ASU 2014-09, provides updated guidance around accounting for the incremental costs of obtaining a contract with a customer and for the costs incurred to fulfill a contract with a customer. ASC 340-40 states that an entity should amortize contract cost assets “on a systemic basis that is consistent with the transfer to the customer of the good or services to which the asset relates,” which typically corresponds to the period in which revenue will be recognized. The Company chose straight-line amortization of the contracts as it felt that best depicted when revenue would be recognized and when customers are visiting the gaming establishments. When determining the appropriate amortization period under ASC 340-40, the Company evaluated the impact of any renewal clauses that are likely to be exercised. The Company focused on whether commissions paid for renewals were commensurate with commissions paid on the original contract. The Company determined the renewal commissions were not commensurate and the amortization period should include expected renewals. As such, the period over which route and customer acquisition costs are amortized was extended to include expected renewals which resulted in an increase to the average life to 12.4 years. The Company recorded a cumulative effect adjustment, net of taxes, to accumulated deficit of $2.6 million relating to the decreased in accumulated amortization of route acquisition costs. In addition, the Company’s current year amortization expense decreased by $1.1 million.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU No. 2017-01 requires entities to use a screen test to determine when an integrated set of assets and activities is not a business or if the integrated set of assets and activities needs to be further evaluated against the framework. The Company adopted ASU No. 2017-01 on January 1, 2019.

Use of estimates: The preparation of consolidated financial statements requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the consolidated financial statements and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates used by the Company include, among other things, the useful lives for depreciable and amortizable assets, income tax provisions, the evaluation of the future realization of deferred tax assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with business acquisitions, the initial selection of useful lives for depreciable and amortizable assets in conjunction with business acquisitions, contingencies, and the expected term of share-based compensation awards, stock price volatility and estimated stock prices prior to the reverse recapitalization discussed in Note 3 when computing share-based compensation expense. Actual results may differ from those estimates.

Segment information: The Company operates as a single operating segment. The Company’s chief operating decision maker (“CODM”) is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM assesses the Company’s performance

F-9

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

and allocates resources based on consolidated results, and this is the only discrete financial information that is regularly reviewed by the CODM.

Cash: Cash includes bank deposit accounts; uncollected cash in the Company’s video gaming terminals, ATMs, and redemption terminals; and cash in Company vaults.

The Company’s policy is to limit the amount of credit exposure to any one financial institution. The Company maintains its cash in accounts which may at times exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. The Company has not experienced any losses in such accounts.

Convertible notes: At acquisition, an entity shall classify debt securities as trading, available-for-sale, or held-to-maturity. While the Company has no the intention of selling the notes, it cannot classify them as held-to-maturity due to the conversion feature. Therefore, the Company has classified its investment in convertible notes as available for sale.

Property and equipment: Property and equipment are stated at cost or fair value at the date of acquisition. Maintenance and repairs are charged to expense as incurred. Major additions, replacements and improvements are capitalized. Spare parts are included in other current assets when acquired and are expensed when used to repair equipment. Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video game terminals and equipment	7
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3 - 5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15 - 29

Leasehold improvements are amortized over the shorter of the useful life or the lease.

Development costs directly associated with the acquisition, development and construction of a project are capitalized as a cost of the project during the periods in which activities necessary to prepare the property for its intended use are in progress. Interest costs associated with major construction projects are capitalized as part of the cost of the constructed assets. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using the weighted-average cost of borrowing. Capitalization of interest ceases when the project (or discernible portions of the project) is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

Concentration of credit risk: The Company’s operations are centralized primarily in the State of Illinois. Should there be favorable or unfavorable changes to the Illinois Gaming Act there may be an impact on the Company’s results of operations. The Company has high concentrations of locations within certain municipalities in Illinois which could impact the Company if these municipalities change their gaming laws.

Fair value of financial instruments: The Company’s financial instruments consist principally of cash, convertibles notes, accounts payable, contingent consideration, and bank indebtedness.

F-10

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

The carrying amount of cash, accounts payable and short-term borrowings approximates fair value because of the short-term maturity of these instruments. The Company estimates the fair value of its convertible notes using a binomial lattice model in which a convertible instrument is split into two separate components: a cash-only (debt) component and an equity component. The Company estimates the fair value of its debt using level two and level three inputs by discounting the future cash flows using current interest rates at which it could obtain similar borrowings in consideration of the estimated enterprise value of the Company.

Contingent consideration, which is recorded within consideration payable on the accompanying consolidated balance sheets, is measured at fair value on a recurring basis based on Level 3 inputs. The fair value recorded at December 31, 2019 and 2018 was determined using a discounted cash flow analysis. Refer to consideration payable below for disclosure of unobservable Level 3 inputs used.

Revenue recognition: The Company generates revenues in the State of Illinois from the following types of services: Video gaming terminals, Amusements and ATMs. Revenue is disaggregated by type of revenue and is presented on the face of the consolidated statements of operations.

Video gaming terminal revenue is the net cash from gaming activities, which is the difference between gaming wins and losses. Video gaming terminal revenue includes the amounts earned by the licensed video gaming locations and is recognized at the time of gaming play. Additionally, taxes and administrative expenses due to the State of Illinois are recorded as video gaming terminal revenue and video gaming expenses.

Amusement revenue represents amounts collected from machines (e.g. dart boards, digital jukeboxes, pool tables, etc.) operated at various locations and is recognized at the time the machine is used.

ATM fees and other revenue represents fees charged for the withdrawal of funds from the Company’s redemption terminals and stand-alone ATM machines and is recognized at the time of the transaction.

The Company determined that in a gaming environment, whenever a customer’s money has been accepted by a machine, the Company has an obligation (an implied contract) to provide the customer access to the game and honor the outcome of the game (in the case of video gaming terminals). The Company determined that the implied contract is entered into between the Company and customers satisfies the requirements of a contract under the new revenue standard, as (i) the contract is a legally enforceable contract with the customer, (ii) the arrangement identifies the rights of the parties, (iii) the contract has commercial substance, and (iv) the cash is received upfront from the customer so its collectability is probable. The gaming service is a single performance obligation in each implied contract with the customer. The Company applies the portfolio approach of all wins and losses by Video Gaming Terminals (“VGTs”) daily to determine the total transaction price of the portfolio of implied contracts. The Company recognizes revenue when the single performance obligation is satisfied, which is at the completion of each game.

Route and customer acquisition costs: The Company’s route and customer acquisition costs consist of fees paid at the inception of contracts entered into with third parties and licensed video gaming establishments throughout the State of Illinois which allow the Company to install and operate video gaming terminals. The route and customer acquisition costs and route and customer acquisition costs payable are recorded at the net present value of the future payments using a discount rate equal to the Company’s incremental borrowing rate associated with its long-term debt. Route and customer acquisition costs are amortized on a straight-line basis beginning on the date the location goes live and amortized over the life of the contract, which upon adoption of Topic 606, includes expected renewals. The Company records the accretion of interest on route and customer acquisitions

F-11

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

costs payable in the consolidated statements of operations as a component of interest expense. For locations that close prior to the end of the contractual term, the Company writes-off the net book value of the route and customer acquisition cost and route and customer acquisition cost payable and records a gain or loss in the consolidated statements of operations as a component of other expenses, net. The Company’s route and customer acquisition costs also consists of prepaid commission costs to our internal sales force of employees. The commissions paid to internal sales employees are subsequently expensed once the respective licensed video gaming location goes live and the commission is earned by the employee.

Business acquisitions: The Company evaluates the inputs, processes and outputs of each business acquisition to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and amortized over the useful life of the acquired assets. The Company accounts for acquisitions using the acquisition method and records the cost of the businesses acquired among tangible and recognized intangible assets and liabilities based upon their estimated fair values as of the acquisition date. Recognized intangibles primarily include the value of location contracts. The Company estimates the fair value of the business acquired using a combination of the cost and income approaches, depending on the specific assets or liabilities acquired. The Company estimates the value of property and equipment and other current assets and liabilities acquired based on their cost, which approximates fair value at acquisition.

Location contracts acquired: Location contracts acquired are accounted for as intangible assets and consist of expected cash flows to be generated from location contracts acquired through business and asset acquisitions. Location contracts acquired are amortized on a straight-line basis over the expected useful life of 10 years.

Goodwill: Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets acquired when accounted for using the purchase method of accounting. Goodwill is not amortized, but reviewed for impairment annually, as of October 1st, and whenever events or changes in circumstances indicate that the carrying value of the goodwill may not be recoverable. The Company compares the fair value of the reporting unit to its carrying value. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, the Company would record an impairment loss equal to the difference.

Consideration payable: Consideration payable consists of amounts payable related to certain business acquisitions as well as contingent consideration for future location performance related to certain business acquisitions (see Note 10). Consideration payable, exclusive of contingent consideration, is discounted using the Company’s incremental borrowing rate associated with its long-term debt. The contingent consideration is measured at fair value on a recurring basis. The changes in the fair value of contingent consideration are recognized within the Company’s consolidated statements of operations as other expenses, net.

Impairment of long-lived assets: Long-lived assets, which includes property and equipment, net and other assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. Impairment of the assets is measured by a comparison of the carrying amount of the asset to future undiscounted cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount of which the carrying amount of the asset exceeds the fair value of the asset. There were no indicators of impairment of long-lived assets in 2019, 2018, or 2017.

Contingent stock consideration: Contingent stock, which is provided as consideration in business acquisitions, is valued based on the fair value of stock issued. The contingent stock consideration is discounted using the

F-12

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

Company’s weighted average cost of capital and the accretion of interest is recorded in the consolidated statements of operations as a component of interest expense.

Stock-based compensation: The Company grants common stock options to certain employees and officers. Stock option compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as general and administrative expense over the employee’s requisite service period.

Income taxes: The Company is organized as a C-corporation and is taxable at the federal and state level. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the book basis of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of the deferred tax asset, will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in the tax laws and rates as of the date of enactment.

The Company follows ASC Topic 740, Income Taxes, for accounting for uncertainty in income taxes. The consolidated financial statements reflect expected future tax consequences of uncertain tax positions presuming the taxing authorities’ full knowledge of the position and all relevant facts. The Company files tax returns in all appropriate jurisdictions, which includes a federal tax return and three state returns. Open tax years for the federal and state returns are 2016 to 2018, which statutes expire in 2020 to 2022, respectively. When and if applicable, potential interest and penalty costs are accrued as incurred with expenses recognized in general and administrative expenses in the consolidated statements of operations.

Comprehensive income (loss): Comprehensive income (loss) is a measure of net income (loss) and all other changes in equity that result from transactions other than transactions with stockholders. Management has determined that net income (loss) is the Company’s only component of comprehensive income (loss). Accordingly, there is no difference between net income (loss) and comprehensive income (loss).

Earnings (loss) per share: The Company determines earnings per share in accordance with the authoritative guidance in ASC Topic 260, Earnings Per Share. The Company computes basic earnings per share by dividing net income (loss) by the weighted average number of shares outstanding for the applicable period. Diluted earnings per share are computed in the same manner as basic earnings per share, except that the number of shares is increased to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase would be anti-dilutive. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that the Company has not yet recognized are assumed to be used to repurchase shares.

Debt issuance costs: Debt issuance costs are capitalized and amortized on a straight-line basis, which approximates the effective interest method, over the contractual terms of the related loans and are presented as an offset to the related loans.

Reverse recapitalization expenses. Legal fees and other costs that were determined to be direct and incremental to the reverse recapitalization were recorded to equity as additional paid-in capital. Other fees associated with the reverse recapitalization that were not direct and incremental were recorded to other expenses, net on the consolidated statements of operations.

F-13

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies (Continued)

Advertising costs: Advertising costs are primarily comprised of marketing expenses, which are recorded within general and administrative expense within the accompanying consolidated statements of operations. Advertising costs were $4.7 million, $3.0 million, and $2.8 million for the years ended December 31, 2019, 2018, and 2017, respectively.

Recent accounting pronouncements: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. In July 2018, the FASB also issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method allowing the standard to be applied at the adoption date. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for the Company’s fiscal year beginning after December 15, 2020, including interim periods within that fiscal year, unless the Company disqualifies as an emerging growth company, in which case earlier adoption may be required. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is assessing impact of the standard on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which intends to simplify the guidance by removing certain exceptions to the general principles and clarifying or amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Although the Company is currently evaluating the impact of the adoption of ASU 2019-12, the Company does not expect it to have a material impact on its consolidated financial statements.

Note 3. Reverse Recapitalization

As discussed in Note 1, on November 20, 2019, Accel Entertainment, Inc., consummated a business combination pursuant to the Transaction Agreement, which has been accounted for as a reverse recapitalization. Pursuant to the Transaction Agreement, TPG Holdings Corp. acquired, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock of Accel Entertainment, Inc. In connection with reverse recapitalization, TPG Pace Holdings Corp. changed its name to Accel Entertainment, Inc.

The consideration paid to holders of Accel stock in connection with the reverse recapitalization and subject to the terms and conditions of the Transaction Agreement, consisted of a mix of consideration comprised of cash consideration equal to the number of shares of Accel stock for which such holder of Accel stock made a cash election multiplied by $177 per share (the “Purchase Price”) and share consideration comprised of a number of Class A-1 Shares equal to the number of shares of Accel Stock for which such holder of Accel Stock did not make a cash election multiplied by an exchange ratio calculated by dividing the Purchase Price by $10.30, which was the closing price of the common stock of TPG Pace Holdings Corp. on November 20, 2019. In addition, each holder of Accel stock that made a cash election with respect to less than 70% of its shares of Accel stock received its pro rata share, with such pro rata share determined with reference to a number of shares equal to 70% of such holder’s shares of Accel Stock less the number of shares of Accel stock with respect to which such holder made a cash election, of 2,444,444 2019 Warrants, subject to the conditions set forth in a warrant agreement and 3,000,000 Class A-2 Shares, subject to the conditions set forth in a restricted stock agreement.

F-14

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 3. Reverse Recapitalization (Continued)

In connection with the reverse recapitalization, TPG Pace Holdings and its affiliates converted 7,500,000 of Class A-1 Shares, 4,888,889 2019 Warrants subject to the conditions set forth in the New Pace Warrant Agreement and 2,000,000 Class A-2 Shares, subject to the conditions set forth in a restricted stock agreement.

As part of an Investment Private Placement, certain accredited investors (as defined by Rule 501 of Regulation D) agreed to subscribe for and purchase and Pace agreed to issue and sell to such investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million. The proceeds from the Investment Private Placement was used to fund a portion of the cash consideration required in the reverse recapitalization.

In connection with the reverse recapitalization, Accel repurchased approximately 36,157 shares of its stock from certain employees, directors and officers at a repurchase price of $177 per share in order to facilitate (i) the repayment of existing loans to Accel’s executive officers, (ii) the exercise of vested options and (iii) funding any resulting tax obligations from the exercise of such vested options.

In accounting for the reverse recapitalization, the net equity infusion from the reverse recapitalization was $29.3 million as shown in the table below (in thousands):

	Amount
TPG Holdings Corp cash balance, November 19, 2019	$	429,952
Less redemption of Accel shares prior to reverse recapitalization		(413,733	)
Cash balance prior to backstop equity financing		16,219
Plus funds from Investment Private Placement		48,038
Cash balance prior to consummation of the reverse recapitalization		64,257
Less adjustments to equity infusion:
Payment for sponsor loan		(4,000	)
Transaction costs related to the reverse recapitalization, net of tax		(31,005	)
Net equity infusion prior to stock issuance		29,252
Impact of stock issued in reverse recapitalization		10
Net equity infusion from reverse recapitalization		29,262
Less impact from conversion of treasury stock and issuance of warrants		(7,415	)
Net impact to additional paid-in-capital from reverse recapitalization	$	21,847

F-15

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 3. Reverse Recapitalization (Continued)

Capitalization Adjustments

The table below summarizes the number of shares of Accel issued upon consummation of the reverse recapitalization consisting of (i) the number of shares of Accel stock outstanding immediately before the reverse recapitalization along with the impact of the exchange ratio.

Accel Capital Stock—pre reverse recapitalization	Number of Shares
Class A Common Stock		472,773
Class B Common Stock		662,228
Class C Preferred Stock		1,530,779
Class D Preferred Stock		944,925
Total Shares of Accel Stock on November 20, 2019		3,610,705
Exchange ratio		17.188531
Effect of exchange ratio to convert Accel stock to A-1 Common Stock		62,062,715
Shares issued in reverse recapitalization		14,574,755
Total A-1 Common Stock		76,637,470

Immediately after the reverse recapitalization, there were 76,637,470 Class A-1 Shares, 4,999,999 Class A-2 Shares, and 22,333,308 warrants to purchase Class A-1 Share issued and outstanding. Upon the closing, the Company’s Class A-1 Shares and warrants began trading on the New York Stock Exchange.

Note 4. Investment in Convertible Note

On July 19, 2019, the Company entered into an agreement to purchase up to $30.0 million in convertible promissory notes that bear interest at 3% per annum from another terminal operator. The Company has the option of converting the notes to common stock of the terminal operator prior to the maturity date. At closing, the Company purchased a $5.0 million note which is subordinated to the terminal operator’s credit facility and matures six months following the satisfaction of administrative conditions.

On October 11, 2019, the Company purchased an additional $25.0 million note which is also subordinated to the terminal operator’s credit facility and, beginning on July 1, 2020, the balance of this note, if not previously converted, will be payable in equal $1,000,000 monthly installments until all principal has been repaid in full.

The carrying amount of the investment in the convertible notes approximates the fair value, in all material respects, as of December 31, 2019. For more information on how the Company determined the fair value of the convertible note, see Note 11.

F-16

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 5. Property and Equipment

Property and equipment consists of the following at December 31 (in thousands):

	2019			2018
Video game terminals and equipment	$	166,850		$	126,043
Amusement and other equipment		16,417			12,539
Office equipment and furniture		1,540			1,827
Computer equipment and software		8,715			5,092
Leasehold improvements		44			44
Vehicles		9,304			7,174
Buildings and improvements		12,075			9,365
Land		911			883
Construction in progress		768			1,339
Total property and equipment		216,624			164,306
Less accumulated depreciation and amortization		(97,423	)		(71,864	)
Property and equipment, net	$	119,201		$	92,442

Depreciation and amortization of property and equipment amounted to $26.4 million, $20.8 million and $16.8 million during the years ended December 31, 2019, 2018 and 2017, respectively.

Note 6. 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 due monthly. Gross payments due, based on the number of live locations, are approximately $7.4 million and $8.2 million as of December 31, 2019 and 2018, 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 $6.5 million and $7.2 million as of December 31, 2019 and 2018, respectively, of which approximately $1.7 million and $1.8 million is included in current liabilities in the accompanying consolidated balance sheets as of December 31, 2019 and 2018, respectively. The route and customer acquisition cost asset is comprised of payments made on the contracts of $18.7 million and $18.8 million as of December 31, 2019 and 2018, 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 $2.2 million and $2.6 million as of December 31, 2019 and 2018, respectively.

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

	2019			2018
Cost	$	28,501		$	27,726
Accumulated amortization		(11,102	)		(13,732	)
Route and customer acquisition costs, net	$	17,399		$	13,994

Amortization expense of route and customer acquisition costs was $1.7 million, $3.9 million and $3.3 million for the years ended December 31, 2019, 2018 and 2017, respectively. As previously mentioned, the Company’s current year amortization expense decreased by $1.1 million due to the adoption of ASC Topic 606 as the amortization period over which route and customer acquisition costs was extended to include expected renewals.

F-17

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 7. Location Contracts Acquired

Location contract assets acquired in business acquisitions are recorded at acquisition at fair value based on an income approach. Location contracts acquired consist of the following at December 31, 2019 and 2018 (in thousands):

	2019			2018
Cost	$	204,353		$	147,341
Accumulated amortization		(37,570	)		(21,302	)
Location contracts acquired, net	$	166,783		$	126,038

Each asset is amortized over the expected useful life of 10 years. Estimated amortization expense related to location contracts acquired for the next five years and thereafter is as follows:

Year ending December 31:
2020	$	20,475
2021		20,475
2022		20,475
2023		20,475
2024		20,267
Thereafter		64,615
Total	$	166,783

Amortization expense of location contracts acquired was $16.2 million, $10.8 million and $6.5 million, during the years ended December 31, 2019, 2018 and 2017, respectively.

Note 8. Goodwill

On September 16, 2019, the Company acquired Grand River Jackpot which was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill of $34.5 million as of December 31, 2019, of which $27.3 million is deductible for tax purposes. See Note 10 for more information on how the amount of goodwill was calculated.

The Company had no goodwill prior to the Grand River Jackpot acquisition.

Given the very short timeframe between the initial recording of the goodwill and the Company’s annual impairment test on October 1, 2019, the Company did not perform a full valuation by a third party to determine the fair value of its goodwill. Instead the Company assessed qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of its goodwill is less than its carrying amount. In performing this assessment, the Company considered such factors as its historical performance, its growth opportunities in existing markets; new markets and new products in determining whether the goodwill was impaired. The Company also referenced its forecasts of revenue, operating income, and capital expenditures and concluded the carrying value of its goodwill was not impaired as of October 1, 2019.

F-18

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9. Debt

The Company’s debt as of December 31, consisted of the following (in thousands):

	2019			2018
New Credit Facility:
Revolving credit facility	$	58,500		$	—
Term Loan		240,000			—
Delayed Draw Term Loan (DDTL)		60,000			—
Prior Credit Facility:
Line of credit		—			50,000
Contract draw loan		—			67,000
Term loans		—			115,625
Total debt		358,500			232,625
Less: Debt issuance costs		(8,808	)		(1,230	)
Total debt, net of debt issuance costs		349,692			231,395
Less: Current maturities		(15,000	)		(62,500	)
Total debt, net of current maturities	$	334,692		$	168,895

New Senior Secured Credit Facility

On November 13, 2019, in order to refinance its prior credit facility, for working capital and other general purposes from time to time, the Company entered into a credit agreement (the “Credit Agreement”) as borrower, the Company and its wholly-owned domestic subsidiaries, as a guarantor, the banks, financial institutions and other lending institutions from time to time party thereto, as lenders, the other parties from time to time party thereto and Capital One, National Association, as administrative agent (in such capacity, the “Agent”), collateral agent, issuing bank and swingline lender, providing for a:

• $100.0 million revolving credit facility, including a letter of credit facility with a $10.0 million sublimit and a swing line facility with a $10.0 million sublimit,

• $240.0 million initial term loan facility and

• $125.0 million additional term loan facility.

As of December 31, 2019, there remained approximately $106.5 million of availability under the Credit Agreement.

The obligations under the Credit Agreement are guaranteed by the Company and its wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”). The obligations under the Credit Agreement are secured by substantially all of assets of the Guarantors, subject to certain exceptions. Certain future-formed or acquired wholly owned domestic subsidiaries of the Company will also be required to guarantee the Credit Agreement and grant a security interest in substantially all of its assets (subject to certain exceptions) to secure the obligations under the Credit Agreement.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at a rate per annum equal to either (a) the adjusted LIBOR rate (“LIBOR”) (which cannot be less than zero) for interest periods of 1, 2, 3 or 6 months (or if consented to by (i) each applicable Lender, 12 months or any period shorter than 1 month or (ii) the Agent, a shorter period necessary to ensure that the end of the relevant interest period would coincide with any

F-19

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9. Debt (Continued)

required amortization payment ) plus the applicable LIBOR margin or (b) the alternative base rate (“ABR”) plus the applicable ABR margin. ABR is a fluctuating rate per annum equal to the highest of (i) the Federal Funds Effective Rate plus 1/2 of 1.0%, (ii) the prime rate announced from time to time by Capital One, National Association and (iii) LIBOR for a 1-month Interest Period on such day plus 1.0%. The Credit Agreement also includes provisions for determining a replacement rate when LIBOR is no longer available. As of December 31, 2019, the weighted-average interest rate was approximately 4.45%.

Interest is payable quarterly in arrears for ABR loans, at the end of the applicable interest period for LIBOR loans (but not less frequently than quarterly) and upon the prepayment or maturity of the underlying loans. The Company is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the revolving credit facility and the additional term loan facility. Additionally, the Company is required to pay an upfront fee with respect to any funded additional term loans.

The applicable LIBOR and ABR margins and the commitment fee rate are calculated based upon the first lien net leverage ratio of the Company and its restricted subsidiaries on a consolidated basis, as defined in the Credit Agreement. Until the delivery of the initial financial statements under the Credit Agreement, the revolving loans and term loans bear interest, at the option of the Company, at either (a) ABR plus a margin of 1.25% or (b) LIBOR plus a margin of 2.25%.

The additional term loan facility is available for borrowings until November 13, 2020. Each of the revolving loans and the term loans mature on November 13, 2024.

The term loans and, once drawn, the additional term loans will amortize at an annual rate equal to approximately 5.00% per annum. Upon the consummation of certain non-ordinary course asset sales, the Company may be required to apply the net cash proceeds thereof to prepay outstanding term loans and additional term loans. The loans under the Credit Agreement may be prepaid without premium or penalty, subject to customary LIBOR “breakage” costs.

The Credit Agreement contains certain customary affirmative and negative covenants and events of default, and requires the Company and certain of its affiliates obligated under the Credit Agreement to make customary representations and warranties in connection with credit extensions thereunder.

In addition, the Credit Agreement requires the Company to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of consolidated EBITDA to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after the Closing Date and determined on the basis of the four most recently ended fiscal quarters of the Company for which financial statements have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights.

If an event of default (as such term is defined in the Credit Agreement) occurs, the lenders would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto.

The Company was in compliance with all debt covenants as of December 31, 2019.

The Company incurred $8.8 million of debt issuance costs related to the New Senior Secured Credit Facility, which will be amortized over the life of the Facility.

F-20

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9. Debt (Continued)

Prior Credit Facility

On December 8, 2015, the Company entered into an Amended and Restated Loan and Security Agreement with a syndicated group of banks. Under this agreement term loan availability was a $50,000,000, contract draw loan availability was $40,000,000, and revolving line of credit availability was $35,000,000. Interest applicable on the term loan, contract draw loan, and revolving line of credit was payable on unpaid balance at the variable per annum LIBOR plus an applicable margin, as defined, ranging from 2.00% to 3.25% depending on the ratio of the Company’s Secured Debt to EBITDA, as defined. On November 15, 2016, the Company entered into a Second Amended and Restated Loan and Security Agreement (“Second Amendment”) with most of the same syndicated group of banks which provided for a total loan facility of $210,000,000 and includes term loan availability, contract draw availability, and line of credit availability. On April 10, 2018, the Company entered into a Third Amended and Restated Loan and Security Agreement (“Third Amendment”) with most of the same syndicated group of banks in prior loan agreements, and increased the loan facility from $210,000,000 to $300,000,000. The Third Amendment extended the agreement maturity date from November 2021 to April 2023.

Under the Second Amendment, interest applicable on all facilities was payable monthly on unpaid balances at the variable per annum LIBOR rate plus an applicable margin, as defined, ranging from 1.95% to 3.00% depending on the ratio of the Company’s Secured Debt to EBITDA, as defined. An unused line fee of 0.30% was payable monthly on the difference between the total availability and the average daily balance of the revolving line of credit and the contract loan draw outstanding.

Under the Third Amendment, interest on all credit facilities was payable monthly on unpaid balances at the variable per annum LIBOR rate (2.51% at December 31, 2018) plus an applicable margin, as defined, ranging from 1.70% to 2.50% depending on the ratio of the Company’s Secured Debt to EBITDA, as defined. As of December 31, 2018, the average interest rate was approximately 4.60%. An unused line fee of 0.25% was payable monthly on the difference between the total availability and the average daily balance of the line of credit and the contract draw loan outstanding.

The Third Amendment increased the term loan availability from $90,000,000 to $125,000,000 and required quarterly principal payments of $3,125,000 through March 31, 2020, $3,906,250 through March 31, 2022, $4,687,500 through March 31, 2023, and the remaining balance due upon maturity in April 2023.

The Third Amendment increased the contract draw availability from $65,000,000 to $90,000,000 and changed from a borrowing draw loan to a revolving facility whereby the Company could borrow and repay throughout the term of the agreement with no required loan repayments until maturity in April 2023.

The Third Amendment increased the maximum line of credit borrowings from $55,000,000 to $85,000,000 subject to a borrowing base which was defined as the sum of 90% of the Company’s vault cash outstanding, as defined; less payables owed to establishment owners, the State of Illinois and the Illinois Gaming Board. Payments could be made on demand at the Company’s election, and were only required if the balance exceeds the lesser of the total line of credit commitment of $85,000,000 or the revolving loan availability.

Additionally, the Company had the ability to utilize letters of credit.

The credit facilities were collateralized by substantially all assets of the Company and included defined financial covenants related to leverage, fixed charge and minimum EBITDA.

The Prior Credit Facility was paid off with the proceeds from the New Senior Secured Credit Facility. In connection with the extinguishment of the Prior Credit Facility, the Company recorded a loss from debt extinguishment of $1.1 million.

F-21

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 9. Debt (Continued)

The principal maturities of long-term debt as of December 31, 2019 are as follows (in thousands):

Year ending December 31:
2020	$	15,000
2021		15,000
2022		15,000
2023		15,000
2024		298,500
Total debt	$	358,500

The estimated fair value of the Company’s debt at December 31, 2019 approximated its carrying value as the debt facilities as of such date bore interest based on prevailing variable market rates and as such were categorized as a Level 2 in the fair value hierarchy as defined in Note 11.

The fair value of the Company’s debt at December 31, 2018 was estimated based on observable inputs such as the change in yield on comparable indices and unobservable inputs such as the enterprise value. The inputs used to determine the fair value were classified as Level 2 and Level 3 in the fair value hierarchy.

The carrying value and estimated fair value of our debt at December 31, was as follows (in thousands):

	2019		2018
Carrying value	$	349,692	$	231,395
Estimated Fair value		349,692		229,763

Note 10. Business and Asset Acquisitions

2019 Business Acquisitions

Grand River Jackpot

On August 26, 2019, the Company entered into an agreement to acquire all issued and outstanding membership interests in Grand River Jackpot, LLC and subsidiaries (“Grand River”), a terminal operator licensed by the State of Illinois Gaming Board. On September 16, 2019, the Company completed its acquisition of Grand River. Grand River had 2,009 VGTs in over 450 licensed establishments. The Company completed this transaction in order to expand its presence within the State of Illinois.

The acquisition aggregate purchase consideration transferred totaled $113.7 million, which included: i) a cash payment made at closing of $100.0 million; ii) a subsequent cash payment of approximately $6.6 million for a working capital adjustment and; iii) contingent purchase consideration with an estimated fair value of $7.1 million. The contingent consideration represents two installment payments that are to be paid, up to a maximum amount, as follows: i) $2.5 million within 30 days following the one-year anniversary of the acquisition closing date and; ii) $7.0 million within 30 days following the three-year anniversary of the acquisition closing date. These payments are subject to adjustment based on certain performance measures included within the purchase agreement. The estimated fair value was determined based on the Company’s expected probability of future payment, discounted using Grand River’s weighted average cost of capital. The cash payment made at closing and subsequent working capital adjustment payment were both funded with the Company’s existing credit facilities.

F-22

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10. Business and Asset Acquisitions (Continued)

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase price has been preliminarily allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values. The areas of the purchase price that are not yet finalized are primarily related to the valuation of location contracts, property and equipment, contingent consideration, and a final adjustment to working capital. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The Grand River acquisition resulted in recorded goodwill as a result of a higher consideration multiple paid relative to prior similar acquisitions driven by maturity and quality of the operations and industry, including workforce and corresponding synergies, and is amortizable for income tax purposes. Management plans to integrate the Grand River acquisition into its existing business structure, which is comprised of a single reporting unit.

The following table summarizes the fair value of consideration transferred and the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash paid	$	106,578
Contingent consideration		7,136
Total consideration	$	113,714
Cash	$	8,861
Location contracts acquired		53,200
Property and equipment:
Video game terminals and equipment		18,000
Land		28
Buildings		548
Vehicles		600
Goodwill		34,511
Total assets acquired		115,748
Accounts payable assumed		(532	)
Accrued expenses assumed		(1,502	)
Net assets acquired	$	113,714

The Company incurred $0.2 million in acquisition related costs that are included in other operating expenses within the consolidated statement of operations for the period ended December 31, 2019.

The results of operations for Grand River are included in the consolidated financial statements of the Company from the date of acquisition. Grand River’s acquired assets generated revenues and net income of $16.6 million and $1.2 million for the period from the acquisition date of September 16, 2019, through December 31, 2019.

2019 Asset Acquisition

On September 23, 2019, pursuant to the terms of an asset purchase agreement, the Company purchased from Illinois Gaming Systems, LLC (“IGS”) terminal use agreements and equipment representing the operations of 139 video game terminals in 29 licensed establishments. The Company has accounted for this transaction as an asset acquisition. The purchase consideration consisted of: i) cash payment of $2.4 million paid at closing and; ii) note payable of $2.3 million issued at closing which is recorded in consideration payables. The asset acquisition

F-23

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10. Business and Asset Acquisitions (Continued)

costs were allocated to the following assets: i) video game terminals and equipment totaling $1.7 million and; ii) location contracts totaling $3.0 million. The note payable bears interest of 5% and is due in full on March 23, 2020.

2018 Business Acquisitions

The following table summarizes the consideration paid and the fair values of the tangible and intangible assets acquired at the acquisition dates for the Company’s 2018 business acquisitions (in thousands):

	Quad B		Skyhigh		G3		Mike’s Amusement		Family Amusement		Total
Cash paid at closing	$	610	$	9,268	$	36,500	$	3,500	$	1,512	$	51,390
Contingent consideration payable		—		4,324		1,026		—		—		5,350
Promissory note		—		—		—		—		3,368		3,368
Due to seller		—		618		3,019		—		—		3,637
Total Consideration	$	610	$	14,210	$	40,545	$	3,500	$	4,880	$	63,745
Cash	$	—	$	1,126	$	2,507	$	—	$	—	$	3,633
Video game terminals and equipment		—		506		3,009		—		—		3,515
Amusement and other equipment		472		59		204		420		300		1,455
Location contracts acquired		138		12,519		34,825		3,080		4,580		55,142
Total fair value of net assets acquired		610		14,210		40,545		3,500		4,880		63,745

Quad B

On September 1, 2018, the Company acquired certain assets of B.B.B.B., Inc. (“Quad B”), an Illinois amusement operator. The Company acquired 61 locations that are or are expected to become operational. Quad B’s acquired assets generated revenues and net income of $0.1 million and $0.1 million, respectively, for the period from the acquisition date of September 1, 2018, through December 31, 2018. Quad B’s acquired assets generated revenues and net income of $0.3 million and $0.1 million, respectively, for the year ended December 31, 2019.

Skyhigh Gaming

On August 1, 2018, the Company acquired certain assets of Skyhigh Gaming, LLC (“Skyhigh”), an Illinois licensed terminal operator. The Company initially acquired 23 locations that are or are expected to become operational.

The Company has a contingent consideration payable related to certain locations, as defined, in the acquisition agreement placed in operation during five years after the acquisition date (“the installment period”). The Company will pay Skyhigh 18.44% of the adjusted net terminal income, related to locations in operation during five years after the acquisition date. Payments will be made on a monthly basis for the first two years and every three months for the latter three years, through July 2023. The agreement also provides for a final payment upon the expiration of the installment period equal to 1.75 times the adjusted and defined net terminal income generated by the locations in the twelve-month period ending on the final payment date. The fair value of contingent consideration due as of December 31, 2019 and 2018 were $4.7 million and $4.5 million, respectively. The fair value of contingent consideration is included in the consideration payable on the consolidated balance sheets at December 31, 2019 and 2018. The contingent consideration accrued is measured at fair value on a recurring basis. The maximum amount is determined based on the net terminal income for the related locations.

F-24

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10. Business and Asset Acquisitions (Continued)

Skyhigh’s acquired assets generated revenues and net income of $3.9 million and $1.1 million, respectively, for the period from the acquisition date of August 1, 2018, through December 31, 2018. Skyhigh’s acquired assets generated revenues and net income of $9.3 million and $2.2 million, respectively, for the year ended December 31, 2019.

G3 Gaming

On October 16, 2018, the Company acquired certain assets of G3 Gaming, LLC (“G3”), an Illinois licensed terminal operator. The Company initially acquired 87 locations that are or are expected to become operational.

The Company has contingent consideration payable related to locations placed in operation during the three years after the acquisition date whereby the Company will pay G3 a specified percent of the monthly terminal operator revenue less video gaming terminal fees for pending locations, recently added locations, and for a specified group of target establishments through 2022. The fair value of contingent consideration due as of December 31, 2019 and 2018 were $3.1 million and $1.0 million, respectively. The maximum amount is determined based on the net terminal income for the related locations.

G3’s acquired assets generated revenues and net income of $4.3 million and $0.8 million, respectively, for the period from the acquisition date of October 16, 2018, through December 31, 2018. G3’s acquired assets generated revenues and net income of $21.8 million and $3.3 million, respectively, for the year ended December 31, 2019.

Mike’s Amusements

On October 16, 2018, the Company acquired certain assets of Mike’s Amusements, Inc. (“Mike’s Amusements”), an Illinois amusement operator. The Company initially acquired 73 locations that are or are expected to become operational.

Mike’s Amusement’s acquired assets generated revenues and net income of $0.2 million and $0.1 million, respectively, for the period from the acquisition date of October 16, 2018, through December 31, 2018. Mike’s Amusement’s acquired assets generated revenues and net income of $1.0 million and $0.4 million, respectively, for the year ended December 31, 2019.

Family Amusement

On October 31, 2018, the Company entered into an agreement to acquire certain assets of Family Amusement, Inc. (“Family Amusement”), an Illinois amusement operator. The Company initially acquired 139 locations that are or are expected to become operational. Family Amusement’s acquired assets generated revenues and net income of $0.1 million and $0.1 million, respectively, for the period from the acquisition date of October 31, 2018, ending on December 31, 2018. Family Amusement’s acquired assets generated revenues and net income of $0.4 million and $0.2 million, respectively, for the year ended December 31, 2019.

The Company entered into a promissory note in connection with the acquisition. The promissory note provides for three annual installments of $0.4 million from 2019 through 2021, one installment of $0.7 million in 2022, and one installment of $2.1 million in 2023. The first installment was paid upon signing of the promissory note and each subsequent installment shall be paid on or before the anniversary date of the signing of the promissory note. The fair value of the consideration due as of December 31, 2019 and 2018 was $3.1 million and

F-25

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10. Business and Asset Acquisitions (Continued)

$3.4 million, respectively. The consideration is included in the consideration payable on the consolidated balance sheets at December 31, 2019 and 2018. The Company and Family Amusement had a pre-existing relationship prior to the business acquisition. Under that pre-existing relationship the Company had route and customer acquisition costs payable to Family Amusement. As a result of the business acquisition, the pre-existing route and customer acquisition payables to Family Amusement were settled and cost and accumulated amortization of the existing Family Amusement route and customer acquisition cost assets was disposed, and a $0.1 million reduction in amortization of route and customer acquisition costs and location contracts acquired was recorded.

2017 and prior Business Acquisitions

Fair Share Gaming

On July 1, 2017, the Company acquired certain assets and assumed certain liabilities of Fair Share Gaming, LLC (“Fair Share”), an Illinois licensed terminal operator. The Company initially acquired 125 locations that are or will become operational.

The following table summarizes the consideration paid and the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash paid at closing	$	48,000
Issuance of common stock to seller		10,794
Contingent stock consideration		3,675
Due to seller		2,055
Contingent consideration		595
Total consideration	$	65,119
Cash	$	4,926
Video game terminals and equipment		6,363
Vehicles		126
Amusement and other equipment		1,148
Location contracts acquired		52,716
Total assets acquired		65,279
Accrued expenses assumed		(160	)
Net assets acquired	$	65,119

The Company has a contingent consideration payable related to certain locations, as defined in the acquisition agreement, in operation one year after the acquisition date. The Company will pay Fair Share half of the Company’s share of revenue after the state taxes based on the number of locations expected to be in operation one year after the acquisition date. On the one-year anniversary of the date the location goes live, monthly payments commence for a period of two years. The fair value of contingent consideration due as of December 31, 2019 and December 31, 2018 was $2.0 million and $1.0 million, respectively. The remaining contingent consideration is included in the consideration payable on the consolidated balance sheets. The contingent consideration accrued is measured at fair value on a recurring basis. The maximum amount is determined based on the net terminal income for the related locations.

The purchase agreement provided for $15 million of the purchase price to be paid through the issuance of Class A Common Stock in the Company. The purchase agreement allowed for an adjustment to the $15 million

F-26

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10. Business and Asset Acquisitions (Continued)

issuance of common stock to the seller fifteen months after the date of acquisition predicated on the estimated value of the Company at September 30, 2018. The fair value of the common stock issued on the acquisition date was $10.8 million. The difference between the $15 million provided for in the purchase agreement and the fair value of the common stock issued was discounted and $3.7 million was recorded as contingent stock consideration at the acquisition date. The adjustment was determined based on the difference between estimated Accel Value, as defined, at the acquisition date and actual Accel Value, as defined, as of September 30, 2018. As a result of this adjustment, 3,956 shares of Common Stock A were received back from Fair Share and placed into treasury during the year ended December 31, 2018.

Fair Share’s acquired assets generated revenues and net income of $19.0 million and $3.3 million, respectively, for the period from the acquisition date of July 1, 2017, through December 31, 2017. Fair Share’s acquired assets generated revenues and net income of $40.8 million and $7.0 million, respectively, for the year ended December 31, 2018. Fair Share’s acquired assets generated revenues and net income of $42.8 million and $7.8 million, respectively, for the year ended December 31, 2019.

Abraham

On June 1, 2016, the Company acquired certain assets and assumed certain liabilities of Abraham Gaming, LLC (“Abraham”), an Illinois licensed terminal operator. The Company initially acquired 138 locations that are or are expected to become operational.

The Company has a contingent consideration payable related to certain locations in operation two years after these locations go live. The Company will make one payment to Abraham for half of the Company’s share of revenue after the state taxes related to locations in operation within 10 business days after determining the amount owed related to the two years of operations. The fair value of contingent consideration due as of December 31, 2019 and 2018, was $0.1 million and $0.2 million, respectively. The remaining contingent consideration is included in the consideration payable on the consolidated balance sheets. The contingent consideration accrued is measured at fair value on a recurring basis. The maximum amount is determined based on the net terminal income for the related locations.

TAV Gaming

On December 30, 2014, the Company acquired certain assets and assumed certain liabilities of TAV Gaming, Inc. (“TAV”), an Illinois licensed terminal operator.

The total purchase consideration payable to TAV is subject to earnouts based on actual locations placed in operation and the performance thereof. The Company initially acquired 32 locations that were or would become operational. Consideration payable due to TAV in relation to the acquisition was $4.0 million and $1.4 million at December 31, 2019 and 2018, respectively, which is included in consideration payable in the accompanying consolidated balance sheets. The Company makes monthly payments of principal and interest due through December 30, 2024.

Pro Forma Results

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the years ended December 31, 2019, 2018 and 2017 as if the acquisitions of Grand River, Quad B, Skyhigh, G3, Mike’s Amusements, Family Amusement and Fair Share Gaming, had occurred as of the beginning

F-27

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 10. Business and Asset Acquisitions (Continued)

of the fiscal year prior to the fiscal year of acquisition, after giving effect to certain purchase accounting adjustments. These amounts are based on available financial information of the acquirees prior to the acquisition dates and are not necessarily indicative of what Company’s operating results would have been had the acquisitions actually taken place at the beginning of the fiscal year prior to the fiscal year of acquisition. This unaudited pro forma information for the years ended December 31, does not project revenues and income before income tax expense post acquisition (in thousands).

	2019			2018		2017
Revenues	$	466,466		$	409,142	$	467,676
Net (loss) income		(2,598	)		16,098		26,535

Consideration Payable

The Company has a contingent consideration payable related to certain locations, as defined, in the respective acquisition agreement which are placed into operation during a specified period after the acquisition date. The fair value of contingent consideration is included in the consideration payable on the consolidated balance sheets as of December 31, 2019 and 2018. The contingent consideration accrued is measured at fair value on a recurring basis.

Current and long-term portions of consideration payable consist of the following at December 31 (in thousands) :

	2019				2018
	Current		Long- Term		Current		Long- Term
TAV	$	490	$	3,497	$	194	$	1,232
Abraham		55		—		207		—
Fair Share Gaming		1,057		899		1,027		—
Family Amusement		293		2,815		357		3,011
Skyhigh		763		3,948		550		3,971
G3		2,952		154		221		806
Grand River		2,304		5,113		—		—
IGS		2,379		—		—		—
Total	$	10,293	$	16,426	$	2,556	$	9,020

Note 11. Fair Value Measurements

ASC Topic 820, “Fair Value Measurements and Disclosures,” establishes a framework for measuring fair value and the corresponding disclosure requirements around fair value measurements. This topic applies to all financial instruments that are being measured and reported on a fair value basis.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the various methods including market, income and cost approaches are used. Based on these approaches, certain assumptions are utilized that the market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. Valuation techniques are utilized that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in

F-28

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 11. Fair Value Measurements (Continued)

the valuation techniques, it is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3: Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

Convertible promissory notes

In valuing it’s convertible promissory notes, the Company utilized a binomial lattice model in which a convertible instrument is split into two separate components: a cash-only (debt) component and an equity component. The binomial lattice trees are constructed using a methodology that assigns up and downward movement factors and probabilities based on rates of return, volatility, and time. It allows for the optional conversion features of the convertible promissory notes to be captured by determining whether conversion or continuing to hold is the most economically advantageous to the holder. Upon conversion, future values in the equity component are subject to only the risk-free rate, while the cash-only component associated with continuing to hold the debt instrument is subject to the selected risk-adjusted discount rate. Solving backwards through the trees associated with the equity component and the trees associated with the debt component yields an aggregate discounted value for each. The sum of these values yields the indicated fair value of the convertible promissory notes.

The discount rate is the risk-adjusted discount rate that is implied by the rate that allows the discounted cash flows with all terms and conditions modeled to equal the total cash consideration. As such, after modeling the features of convertible promissory notes as of the issuance date using the lattice model framework outlined above, the Company solved for the discount rate that resulted in a value for the note equal to the total cash consideration. The valuation of the Company’s convertible promissory notes is considered to be a Level 3 fair value measurement as the significant inputs are unobservable and require significant judgment or estimation.

Contingent consideration

The following tables summarize the Company’s liabilities that are measured at fair value on a recurring basis (in thousands):

			Fair Value Measurement at Reporting Date Using
	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	17,327	$	—	$	—	$	17,327

F-29

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 11. Fair Value Measurements (Continued)

			Fair Value Measurement at Reporting Date Using
	December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	6,782	$	—	$	—	$	6,782

The Company uses a discounted cash flow analysis to determine the value of contingent consideration upon acquisition and updates this estimate on a recurring basis. The significant assumptions in the Company’s cash flow analysis includes the probability adjusted projected revenues after state taxes, a discount rate as applicable to each acquisition, and the estimated number of locations that “go live” with the Company during the contingent consideration period. A hypothetical 1% increase in the applicable discount rate would decrease other expenses, net by approximately $0.2 million while a hypothetical 1% decrease in the applicable discount rate would increase other expenses, net by approximately $0.2 million.

The following table provides a roll-forward of the fair value of recurring Level 3 fair value measurements for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019			2018			2017
Liabilities:
Contingent consideration:
Beginning of year balance	$	6,782		$	785		$	190
Issuance of contingent consideration in connection with acquisitions		7,216			5,350			595
Payment of contingent consideration		(1,658	)		(387	)		—
Additional accruals included in earnings		4,987			1,034			—
Ending balance	$	17,327		$	6,782		$	785

Changes in the fair value of contingent consideration liabilities are classified within other expenses, net on the accompanying consolidated statements of operations.

Note 12. Stockholders’ Equity

As discussed in Notes 1 and 3, on November 20, 2019, the Company, consummated a reverse recapitalization pursuant to the Transaction Agreement, which has been accounted for as a reverse recapitalization. Pursuant to the Certificate of Incorporation as amended on November 20, 2019 and as a result of the reverse recapitalization, the Company has retrospectively adjusted the shares issued and outstanding prior to November 20, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted. Pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, the Company authorized and has available for issuance the following shares and classes of capital stock, each with a par value of $0.0001 per share: i) 1,000,000 shares of preferred stock; ii) 250,000,000 shares of Class A-1 Common Stock, ii) 10,000,000 shares of Class A-2 Common Stock.

Class A-1 Common Stock

The holders of the Class A-1 Common Stock are entitled to one vote for each share. The holders of Class A-1 Common Stock are entitled to receive dividends or other distributions when and if declared from time to time and share equally on a per share basis in such dividends and distributions subject to such rights of the holders of preferred stock.

F-30

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 12. Stockholders’ Equity (Continued)

Class A-2 Common Stock

The holders of the Class A-2 Common Stock do not have voting rights and are not entitled to receive or participate in any dividends or distributions when and if declared from time to time.

As discussed in Note 3, 5,000,000 shares of Class A-2 Common Stock were issued with other consideration prior to the reverse recapitalization, subject to the conditions set forth in a restricted stock agreement, which sets forth the terms upon which the Class A-2 Shares will be exchanged for an equal number of validly issued, fully paid and non-assessable Class A-1 Shares. The exchange of Class A-2 Shares for Class A-1 Shares will be subject to the terms and conditions set forth in the Restricted Stock Agreement, with such exchanges occurring in three separate tranches upon the satisfaction of the following triggers:

• Tranche I, equal to 1,666,666 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the EBITDA for the last twelve months (“LTM EBITDA”) of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2021, March 31, 2022 or June 30, 2022 equals or exceeds $132 million or (ii) the closing sale price of Class A-1 Shares on the New York Stock Exchange (“NYSE”) equals or exceeds $12.00 for at least twenty trading days in any consecutive thirty trading day period;

• Tranche II, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $152 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $14.00 for at least twenty trading days in any consecutive thirty trading day period; and

• Tranche III, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $172 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $16.00 for at least twenty trading days in any consecutive thirty trading day period.

The LTM EBITDA thresholds will be reasonably adjusted by the independent directors of the board of the Company (the “Board”) from time to time to take into account the anticipated effect of any acquisitions or dispositions that exceed certain thresholds and are otherwise materially different from certain forecasts.

Notwithstanding the foregoing, Class A-2 Shares, if not previously exchanged for Class A-1 Shares pursuant to the triggers described above, will be exchanged for an equal number of Class A-1 Shares immediately prior to the consummation of a transaction or series of related transactions that would result in a third party or group (as defined in or under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becoming the beneficial owner of, directly or indirectly, more than fifty percent of the total voting power of the equity securities of the Company, or more than fifty percent of the consolidated net revenues, net income or total assets (including equity securities of its subsidiaries) of the Company, provided that the satisfaction of the conditions set forth in the aforementioned triggers cannot be determined at such time.

The Restricted Stock Agreement further provides that holders of Class A-2 Shares are not required to exchange such shares for Class A-1 Shares if, (x) prior to giving effect to exchanges pursuant to the triggers described above, such holder beneficially owns less than 4.99% of the issued and outstanding Class A-1 Shares, and (y) after giving effect to the exchanges pursuant to the triggers described above, such holder would beneficially own in excess of 4.99% of the issued and outstanding Class A-1 Shares. However, notwithstanding the limitation

F-31

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 12. Stockholders’ Equity (Continued)

described in the previous sentence, if and when a holder of Class A-2 Shares has obtained all required gaming approvals from the applicable gaming authorities permitting such holder to beneficially own Class A-1 Shares in excess of 4.99%, then the Class A-2 Shares held by such holder which are subject to exchange shall immediately be exchanged for Class A-1 Shares without regard to the limitation.

On January 14, 2020, the market condition for the conversion of Tranche I was satisfied. Accordingly, 1,666,666 Class A-2 shares were converted into Class A-1 shares.

Warrants

On January 31, 2013, the Company issued 253,575 warrants to certain individual shareholders as compensation for providing a personal guaranty for a revolving loan agreement. The warrants granted their holders the right to purchase the Company’s Class A-1 Common Shares at the price of $17.80 per share anytime from January 31, 2013 through January 30, 2020. The warrants were classified as an equity instrument. As of December 31, 2019, and 2018, there were 0 and 190,575 shares of warrants outstanding. During the year ended December 31, 2019, 190,575 warrants were exercised prior to the reverse recapitalization for proceeds of $3,392,235. During the year ended December 31, 2017, 11,500 warrants were exercised for proceeds of $204,700.

As discussed in Note 3, 7,333,326 warrants to purchase shares of Class A-1 Common Stock were issued with other consideration prior to the reverse recapitalization (the “2019 Warrants”). As a part of the reverse recapitalization, 2,444,437 2019 warrants were canceled and reissued under the same terms and conditions to Accel legacy shareholders. Each warrant expires five years from issuance and entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding warrants, at any time 30 days after the consummation of the reverse recapitalization.

The 2019 Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the 2019 Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the 2019 Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the 2019 Warrant Agreement.

In 2017, 15,000,000 warrants to purchase shares of Class A-1 Common Stock were issued in connection with the formation of TPG Pace Holdings (“Public Warrants”). Each warrant expires five years from issuance and entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding warrants, at any time 30 days after the consummation of the reverse recapitalization.

The Public Warrants may be redeemed for cash at the option of the Company, at any time while they are exercisable and prior to their expiration, at the price of $0.01 per Public Warrant, provided that the last sales price of the Class A-1 Stock reported has been at least $18.00 per share, on each of twenty (20) trading days within the thirty (30) trading-day period ending on the third Business Day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

F-32

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 12. Stockholders’ Equity (Continued)

The Public Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the Public Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the Public Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

Redemption Date	Fair Market Value of Class A-1 shares
(period to expiration of the New Accel Warrants)	$10		$11		$12		$13		$14		$15		$16		$17		$18
57 months		0.257		0.277		0.294		0.310		0.324		0.337		0.348		0.358		0.365
54 months		0.252		0.272		0.291		0.307		0.322		0.335		0.347		0.357		0.365
51 months		0.246		0.268		0.287		0.304		0.320		0.333		0.346		0.357		0.365
48 months		0.241		0.263		0.283		0.301		0.317		0.332		0.344		0.356		0.365
45 months		0.235		0.258		0.279		0.298		0.315		0.330		0.343		0.356		0.365
42 months		0.228		0.252		0.274		0.294		0.312		0.328		0.342		0.355		0.364
39 months		0.221		0.246		0.269		0.290		0.309		0.325		0.340		0.354		0.364
36 months		0.213		0.239		0.263		0.285		0.305		0.323		0.339		0.353		0.364
33 months		0.205		0.232		0.257		0.280		0.301		0.320		0.337		0.352		0.364
30 months		0.196		0.224		0.250		0.274		0.297		0.316		0.335		0.351		0.364
27 months		0.185		0.214		0.242		0.268		0.291		0.313		0.332		0.350		0.364
24 months		0.173		0.204		0.233		0.260		0.285		0.308		0.329		0.348		0.364
21 months		0.161		0.193		0.223		0.252		0.279		0.304		0.326		0.347		0.364
18 months		0.146		0.179		0.211		0.242		0.271		0.298		0.322		0.345		0.363
15 months		0.130		0.164		0.197		0.230		0.262		0.291		0.317		0.342		0.363
12 months		0.111		0.146		0.181		0.216		0.250		0.282		0.312		0.339		0.363
9 months		0.090		0.125		0.162		0.199		0.237		0.272		0.305		0.336		0.362
6 months		0.065		0.099		0.137		0.178		0.219		0.259		0.296		0.331		0.362
3 months		0.034		0.065		0.104		0.150		0.197		0.243		0.286		0.326		0.361
0 months		—		—		0.042		0.115		0.179		0.233		0.281		0.323		0.361

The exact Fair Market Value and Redemption Date (as defined) may not be set forth in the table above, in which case, if the Fair Market Value is between two values in the table or the Redemption Date is between two redemption dates in the table, the number of Class A-1 Stock to be issued for each 2019 Warrant redeemed will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower Fair Market Values and the earlier and later redemption dates, as applicable, based on a 365-day year.

At December 31, 2019 and 2018, the Company has reserved Class A-1 Common Stock for future issuance in relation to the following:

	2019		2018
Class A-1 Common Stock warrants issued and outstanding		22,333,308		3,275,704
Class A-1 Common Stock options issued and outstanding		2,376,700		5,622,557
Conversion of Class A-2 Common Stock		4,999,999		—
Class A-1 Common Stock reserved for issuance		29,710,007		8,898,261

F-33

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 13. Video Gaming Terminal Fees

In accordance with the Illinois Video Gaming Act, a 33% tax on net terminal income, as defined, is payable to the State of Illinois Gaming Board. Effective July 2019, the Illinois tax on net terminal income increased to 33% from 30%. Through July 2018, a 0.7275% administrative fee was payable to a third-party at the direction of the State of Illinois Gaming Board (the “Administrative Fee”). Effective July 2018, the administrative fee increased to 0.8513%. Video gaming terminal fees, which consist of the tax and administrative fee, amounted to $133.2 million, $99.1 million and $73.8 million for the years ended December 31, 2019, 2018 and 2017, respectively. The net terminal income remaining is split “50/50” between the Company and the licensed video gaming location and amounted to $138.8 million, $111.4 million and $83.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. The video gaming terminal fee, administrative fee and the licensed video game location net terminal income share are recorded in video gaming expenses in the accompanying consolidated statements of operations.

Note 14. Employee Benefit Plans

401(k) Plan

The Company maintains a 401(k)-benefit plan for all employees with at least three months of service and 21 years of age. The Company may elect to make a discretionary matching contribution to the Plan. Participants vest 20% a year after the first 2 years of employment and are fully vested after 6 years of employment according to the discretionary plan. During February 2017, the Company added an employer match of 50% of the participants’ contribution up to 5% of their compensation. Participants are fully vested after one year of employment. The Company incurred 401(k)-benefit plan expense of approximately $0.6 million, $0.5 million and $0.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Incentive Compensation Plan

Included in certain employee agreements are provisions for bonuses, which are determined at the discretion of management. Bonus expense amounted to $2.1 million, $1.8 million and $1.6 million for the years ended December 31, 2019, 2018 and 2017, respectively. Accrued bonuses amounted to $1.7 million at December 31, 2019 and 2018.

Note 15. Stock-based Compensation

The Company grants various types of stock-based awards including stock options. Stock compensation awards granted are valued on the date of grant and are expensed over the required service period.

Grant of Options

The Company previously adopted the 2011 Equity Incentive Plan of Accel Entertainment, Inc., and in 2016 the Company adopted the 2016 Equity Incentive Plan of Accel Entertainment, Inc., (collectively, “the Plans”). Under the Plans, the aggregate number of shares of common stock that may be issued or transferred pursuant to options or restricted stock awards under the Plans will not exceed ten percent of the outstanding shares of the Company. Options generally vest over a three to five-year period. The exercise price of stock options shall not be less than 100% of the fair market value per share of common stock on the grant date. The term of the options are a maximum of 10 years from the grant date.

The Company uses the Black-Scholes formula to estimate the fair value of its share-based payments. The volatility assumption used in the Black-Scholes formula is based on the volatility of comparable public companies. The Company determined the share price at grant date used in the Black-Scholes formula based on an internal valuation model.

F-34

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 15. Stock-based Compensation (Continued)

The fair value assigned to each option is estimated on the date of grant using a Black-Scholes-based option valuation model. The expected term of each option granted represents the period of time that each option granted is expected to be outstanding. The risk-free rate for periods within the contractual life of the unit is based on U.S. Treasury yields in effect at the time of grant.

The following assumptions were used in the option valuation model for options granted during the years ended December 31,:

	2019*	2018	2017
Expected approximate volatility	None%	35%	35%
Expected dividends	None	None	None
Expected term (in years)	None	3-5	5
Risk-free rate	None%	2.41% - 2.62%	1.81% - 2.18%
Stock price	None	$4 - $5	$3 - $4

* there were no options granted in 2019

A summary of the options granted and the range in vesting periods based on specific provisions within the option agreements during the years ended December 31, are as follows:

	2019		2018		2017
Options granted		—		108,288		612,771
Vesting period (in years)		—		3 - 5		5

The following table sets forth of the activities of the Company’s vested stock options for the years ended December 31, 2019, 2018 and 2017, as restated to give effect for the reverse recapitalization discussed in Note 3.

Outstanding options	Shares			Weighted Average Grant Date Fair Value		Weighted Average Exercise Price
Outstanding at January 1, 2017		4,512,952		$	0.60	$	1.75
Granted		612,771			1.27		3.72
Exercised		(867,024	)		0.59		1.62
Forfeited/expired		(135,789	)		0.96		2.73
Outstanding at December 31, 2017		4,122,910			0.69		2.03
Granted		108,288			1.73		5.10
Exercised		(284,642	)		0.40		1.15
Forfeited/expired		(114,132	)		1.03		2.96
Outstanding at December 31, 2018		3,832,424			0.73		2.16
Granted		—			—		—
Exercised		(2,590,274	)		0.62		1.84
Forfeited/expired		(13,751	)		0.77		2.33
Outstanding at December 31, 2019		1,228,399			0.96		2.91

F-35

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 15. Stock-based Compensation (Continued)

A summary of the status of the activities of the Company’s nonvested stock options for the years ended December 31, 2019, 2018 and 2017, as restated to give effect for the reverse recapitalization discussed in Note 3.

Nonvested options	Shares			Weighted Average Grant Date Fair Value
Nonvested at January 1, 2017		3,639,156		$	0.60
Granted		612,771			1.27
Vested		(1,380,566	)		0.60
Forfeited		(135,789	)		0.96
Nonvested at December 31, 2017		2,735,572			0.73
Granted		108,288			1.73
Vested		(1,032,910	)		0.62
Forfeited		(101,361	)		1.07
Nonvested at December 31, 2018		1,709,589			0.82
Granted		—			—
Vested		(547,537	)		0.85
Forfeited		(13,751	)		0.77
Nonvested at December 31, 2019		1,148,301			0.95

Total stock compensation expense recognized during the years ended December 31, 2019, 2018 and 2017, was $2.2 million, $0.5 million and $0.8 million, respectively. As of December 31, 2019, and 2018, a total of 80,098 and 1,137,176 options with a weighted-average remaining contractual term of 1.9 and 3.2 years, respectively, granted to key employees were vested. The fair value of options that vested through 2019, 2018 and 2017 was $1.2 million, $0.6 million, and $0.8 million, respectively. As of December 31, 2019, and 2018, there was approximately $0.9 million and $0.9 million, respectively, of unrecognized compensation expense related to time-vesting awards, which is expected to be recognized through 2021. As of December 31, 2019, and 2018, the weighted-average exercise price of the non-vested awards was $2.86 and $2.52, respectively. As of December 31, 2019, and 2018, the weighted-average remaining contractual term of the vested awards was 1.9 and 3.2 years, respectively. As of December 31, 2019, and 2018, the weighted-average remaining contractual term of the outstanding awards was 2.7 and 2.8 years, respectively. The total intrinsic value of options that were exercised during the years ended December 31, 2019, 2018 and 2017 was approximately $20.7 million, $4.4 million and $1.7 million, respectively.

During the years ended December 31, 2019, 2018 and 2017, the Company recognized excess tax (expense) benefits from stock-based compensation of $(0.1) million, $1.0 million, and $0.1 million, respectively, within income tax expense in the consolidated statements of operations and within cash flows from operating activities on the consolidated statements of cash flows. Excess tax benefits reflect the total realized value of the Company’s tax deductions from individual stock option exercise transactions and the vesting of restricted stock awards in excess of the deferred tax assets that were previously recorded.

Note 16. Income Taxes

Prior to the consummation of the reverse recapitalization, TPG Pace Holding Corp. was registered in the Cayman Islands. On November 20, 2019 TPG Pace Holding Corp. effected a deregistration as an exempted company in the Cayman Islands under the Cayman Islands Companies Law (2018 Revision), and a domestication as a

F-36

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16. Income Taxes (Continued)

corporation incorporated under the laws of the State of Delaware under Section 388 of the DGCL, pursuant to which the Company’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. This domestication was analyzed under the applicable tax laws and it was determined that there were no significant tax implications associated with the domestication.

The Company recognized income tax expense of $5.2 million, $4.4 million and $1.8 million during the years ended December 31, 2019, 2018 and 2017, respectively, which consists of the following (in thousands):

	2019			2018			2017
Current provision
Federal	$	(85	)	$	(100	)	$	173
State		43			222			62
Total current provision		(42	)		122			235
Deferred provision
Federal		3,740			3,256			955
State		1,501			1,044			564
Total deferred provision		5,241			4,300			1,519
Total income tax expense	$	5,199		$	4,422		$	1,754

A reconciliation of the “expected” income taxes computed by applying the federal statutory income tax rate to the total expense is as follows (in thousands):

	2019			2018			2017
Computed “expected” tax (benefit) expense	$	(139	)	$	3,197		$	3,422
Increase (decrease) in income taxes resulting from:
State income taxes		1,535			1,219			2
Return-to-provision		49			—			—
Permanent items		4,054			(264	)		190
Enacted rate change		—			—			(1,755	)
Other		(300	)		270			(105	)
Total income tax expense	$	5,199		$	4,422		$	1,754

F-37

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 16. Income Taxes (Continued)

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act tax reform legislation. This legislation makes significant changes in U.S. tax law including reduction in the corporate tax rates, changes to net operating loss carryforwards and carrybacks, and a repeal of the corporate alternative minimum tax. The legislation reduced the U.S. corporate tax rate from 35% to 21%. As a result of the enacted law, the Company revalued deferred tax assets and liabilities at the new rate. This revaluation resulted in a benefit of $1.8 million to 2017 income tax expense in continuing operations and a corresponding reduction in the deferred tax liability. The other provisions of the Tax Cuts and Jobs Act did not have a material impact on the consolidated financial statements. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows at December 31, 2019 and 2018 (in thousands):

	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	6,633		$	4,192
Location contracts acquired		4,699			1,887
Other		260			1,032
		11,592			7,111
Deferred tax liabilities:
Property and equipment		24,568			16,006
	$	(12,976	)	$	(8,895	)

The Company assesses the realizability of the deferred tax assets at each balance sheet date based on actual and forecasted operating results in order to determine the proper amount, if any, required for a valuation allowance. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. As of December 31, 2019, the Company is in a net deferred tax liability position and is in a three-year cumulative income position. As such, it is the Company’s belief that it is more likely than not that its deferred tax assets will be realized.

As of December 31, 2019, and 2018, the Company has not recorded a liability for unrecognized tax benefits.

The following table summarizes carryforwards of net operating losses as of December 31, 2019 and 2018 (in thousands):

	2019				2018
	Amount		Expiration		Amount		Expiration
Federal net operating losses	$	27,873		2033 - 2039	$	17,942		2031 - 2038
State net operating losses		14,454		2024 - 2031		5,655		2023 - 2030

The Company also has credit carryforwards of approximately $0.5 million and $0.3 million for the years ended December 31, 2019 and 2018, which are expected to be fully utilized in 2021.

Note 17. Commitments and Contingencies

The Company leases office space under agreements expiring at various dates from May 2019 through December 2021. Total rent expense under these leases approximated $0.3 million, $0.3 million and $0.4 million for the

F-38

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 17. Commitments and Contingencies (Continued)

years ended December 31, 2019, 2018 and 2017, respectively. The Company recognizes rent expense on a straight-line basis over the life of the leases. Rent expense is recorded in general and administrative expense in the accompanying consolidated statements of operations.

Future minimum payments under these leases are as follows (in thousands):

Years ending December 31:
2020	$	273
2021		142
2022		104
2023		65
2024		—
Total	$	584

The Company has certain earnouts in periods for future location performance related to certain business acquisitions (see discussion in Note 10).

The Company has certain employment agreements that call for salaries and potential severance upon termination.

Lawsuits and claims are filed against the Company from time to time in the ordinary course of business, including related to employment of professional and non-compete clauses and agreements. Other than settled matters explained as follows, these actions are in various stages, and no judgments or decisions have been rendered. Management, after reviewing matters with legal counsel, believes that the outcome of such matters will not have a material adverse effect on the Company’s financial position or results of operations.

Accel has been involved in a series of related litigated matters stemming from claims that Accel wrongly contracted with 10 different licensed establishments (the “Defendant Establishments”) in 2012 in violation of the contractual rights held by J&J Ventures Gaming, LLC (“J&J”), as further described below.

On August 21, 2012, one of the Company’s operating subsidiaries entered into certain agreements with Jason Rowell (“Rowell”), a member of Action Gaming LLC (“Action Gaming”), which was an unlicensed terminal operator that had exclusive rights to place and operate VGTs within a number of establishments, including the Defendant Establishments. Under agreements with Rowell, the Company agreed to pay him for each licensed establishment which decided to enter into exclusive location agreements with the Company. In late August and early September 2012, each of the Defendant Establishments signed separate location agreements with the Company, purporting to grant it the exclusive right to operate VGTs in those establishments. Separately, on August 24, 2012, Action Gaming sold and assigned its rights to all its location agreements to J&J, including its exclusive rights with the Defendant Establishments (the “J&J Assigned Agreements”). At the time of the assignment of such rights to J&J, the Defendant Establishments were not yet licensed by the Illinois Gaming Board (“IGB”).

Action Gaming, J&J, and other parties, collectively, the Plaintiffs, filed a complaint against the Company, Rowell, and other parties in the Circuit Court of Cook County (the “Circuit Court”), on August 31, 2012, as amended on November 1, 2012, December 19, 2012, and October 3, 2013, alleging, among other things, that the Company aided and abetted Rowell in breaches of his fiduciary duties and contractual obligations with Action Gaming and tortiously interfered with Action Gaming’s contracts with Rowell and agreements assigned to J&J. The complaint seeks damages and injunctive and equitable relief. On January 24, 2018, the Company filed a

F-39

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 17. Commitments and Contingencies (Continued)

motion to dismiss for lack of subject matter jurisdiction, as further described below. On May 14, 2018, the Circuit Court denied the Company’s motion to dismiss and granted a stay to the case, pending a ruling from the IGB on the validity of the J&J Assigned Agreements.

From 2013 to 2015, the Plaintiffs filed additional claims, including J&J Ventures Gaming, LLC et al. v. Wild, Inc. (“Wild”), in various circuit courts seeking declaratory judgements with a number of establishments, including each of the Defendant Establishments, requesting declarations that, among other things, J&J held the exclusive right to operate VGTs at each of the Defendant Establishments as a result of the J&J Assigned Agreements. The Company was granted leave to intervene in all of the declaratory judgments. The circuit courts found that the J&J Assigned Agreements were valid because each of the underlying location agreements were between an unlicensed establishment and an unlicensed terminal operator, and therefore did not constitute use agreements that were otherwise precluded from assignment under the IGB’s regulations. Upon the Company’s appeal, the Illinois Appellate Court, Fifth District (the “District Court”), vacated the circuit courts’ judgments and dismissed the appeals, holding that the IGB had exclusive jurisdiction over the matter that formed the basis of the parties’ claims, and declined to consider the merits of the parties’ disputes. On September 22, 2016, and after the IGB intervened, the Supreme Court of Illinois issued a judgment in Wild, affirming the District Court’s decision vacating the circuit courts’ judgments for lack of subject matter jurisdiction and dismissing the appeals, determining that the IGB has exclusive jurisdiction to decide the validity and enforceability of VGT use agreements.

Between May 2017 and September 2017, both the Company and J&J filed petitions with the IGB seeking adjudication of the rights of the parties and the validity of the use agreements. Those petitions have been fully briefed and remain pending. There is no indication as to when the IGB will rule on the petitions. The Company does not have a present estimate regarding the potential damages, if any, that could potentially be awarded in this litigation and, accordingly, have established no reserves relating to such matters. There are also petitions pending with the IGB which could lead to the Company obtaining new locations.

On October 7, 2019, the Company filed a lawsuit in the Circuit Court of Cook County against Jason Rowell and other parties related to Mr. Rowell’s breaches of his non-compete agreement with the Company. The Company alleged that Mr. Rowell and a competitor were working together to interfere with the Company’s customer relationships. That lawsuit, which seeks equitable relief and legal damages, has not yet been served. On November 7, 2019, Mr. Rowell filed a lawsuit in the Circuit Court of Cook County against the Company alleging that he had not received certain equity interests in the Company to which he was allegedly entitled under his agreement. The Company intends to defend itself against the allegations. The Company does not have a present estimate regarding the potential damages, nor does it believe any payment of damages is probable, and, accordingly, has established no reserves relating to these matters.

During 2017, the Company entered into a settlement agreement with Illinois Gold Rush, Inc. (“Illinois Gold Rush”), related to a 2013 business acquisition completed by the Company with Illinois Gold Rush. As a result of the settlement, the Company paid $3.5 million, issued 32,745 additional shares of Class A Common Stock, acquired 4 locations and the Company issued a stockholder note receivable of $3.3 million based on the value of the underlying collateral. During the year ended December 31, 2018 the note receivable matured, and was settled and 46,667 shares of Class A Common Stock were placed into treasury. As a result of the settlement agreement the Company decreased its location contract asset and Class A Common Stock $1.0 million during 2017 for the fair value of the shares outstanding prior to the settlement agreement.

F-40

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 17. Commitments and Contingencies (Continued)

During the year ended December 31, 2018, the Company entered into a settlement agreement regarding breach of contract with Family Amusements (see discussion in Note 10). Additionally, during the year ended December 31, 2018, the Company entered into settlement agreements related to breach of contract and employment matters for a total of $0.4 million, which was recorded within general and administrative expenses on the consolidated income statement.

On July 2, 2019, Illinois Gaming Investors, LLC filed a lawsuit against the Company. The lawsuit alleges that a current employee of the Company violated his non-competition agreement with Illinois Gaming Investors, LLC, and together with the Company, wrongfully solicited prohibited licensed video gaming locations. The lawsuit on its face seeks damages of $10,000,000. The parties are engaging in discovery. The Company is in the process of defending this lawsuit, and has not accrued any amounts as losses related to this suit are not probable or reasonably estimable.

On July 16, 2019, Clairvest commenced litigation with respect to the June 13, 2019 transaction agreement between TPG Pace Holdings Corp. and the Company. On August 20, 2019, Clairvest filed a request for voluntary dismissal related to such litigation.

Note 18. Related-Party Transactions

From time to time the Company entered into stock buy-back and cashless option conversion transactions in exchange for non-recourse stockholder notes for certain officers and employees of the Company. As of December 31, 2018, stockholder notes receivable balance was $1,462,779. Prior to the reverse recapitalization described in Note 3, these balances were paid in full to the Company.

As of December 31, 2018, an officer and shareholder owed the Company $0.5 million for federal taxes paid by the Company on the shareholder’s behalf. This balance was recorded within other current assets on the consolidated balance sheets. In October 2019, this balance was paid in full to the Company.

Subsequent to the Company’s acquisition of Fair Share and G3, the sellers became employees of the Company. Consideration payable to the Fair Share seller was $2.0 million and $1.0 million as of December 31, 2019 and 2018. Payments to the Fair Share seller under the acquisition agreement were $0.9 million and $0 during the years ended December 31, 2019 and 2018. Consideration payable to the G3 sellers was $3.1 million and $1.0 million as of December 31, 2019 and 2018. Payments to the G3 seller under the acquisition agreement were $0.4 million and $0 during the years ended December 31, 2019 and 2018. Subsequent to the Fair Share acquisition, the seller of Fair Share joined the Company’s Board of Directors.

The Company engaged Much Shelist, P.C. (“Much Shelist”), as its legal counsel for general legal and business matters. An attorney at Much Shelist is a related party to management of the Company. For the years ending December 31, 2019, 2018, and 2017, Accel paid Much Shelist $0.6 million, $0.3 million, and $0.6 million, respectively. These payments were included in general and administrative expenses within the consolidated statements of operations, however, $0.2 million of the amounts paid in the fourth quarter of 2019 were recorded to additional paid-in capital as these costs were determined to be direct and incremental for the reverse recapitalization discussed in Note 3.

The Raine Group, which employs a Director of the Company, Gordon Rubenstein, provided investment banking services and assisted the Company in the negotiations and consummation of the reverse recapitalization. The Company paid $11 million to the Raine Group in 2019.

F-41

Accel Entertainment, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 18. Related-Party Transactions (Continued)

Throughout the third quarter of 2019, one of the Company’s Class A Common Stockholders made payments on behalf of the Company directly to the Company’s independent registered public accounting firm for services rendered to the Company during the same period totaling $2.9 million. Such amounts are included as a component of other expenses, net in the Company’s consolidated statements of operations and contributed capital in the consolidated statement of stockholders’ equity.

Note 19. Earnings Per Share

Pursuant to the Certificate of Incorporation as amended on November 20, 2019 and as a result of the reverse recapitalization, the Company has retrospectively adjusted the weighted average shares outstanding prior to November 20, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted.

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of Class A-1 shares outstanding during the period. Diluted EPS is computed based on the weighted average number of shares plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options, stockholder notes receivable, warrants and Class A-2 common stock for Class A-1 common stock.

The components of basic and diluted EPS were as follows (in thousands, except per share amounts):

	2019			2018		2017
Net (loss) income	$	(5,864	)	$	10,803	$	8,311
Basic weighted average outstanding shares of common stock		61,850			57,621		56,321
Dilutive effect of stock-based awards for common stock		—			1,605		666
Dilutive effect of stockholder notes receivable for common stock		—			407		53
Dilutive effect of warrants for common stock		—			2,549		2,368
Diluted weighted average outstanding shares of common stock		61,850			62,182		59,408
Earnings (loss) per share:
Basic	$	(0.09	)	$	0.19	$	0.15
Diluted	$	(0.09	)	$	0.17	$	0.14

Since the Company was in a net loss position for the year ended December 31, 2019, there is no difference between basic and dilutive weighted average common stock outstanding.

Anti-dilutive stock-based awards, Class A-2 shares, and warrants excluded from the calculations of diluted EPS were 28,561,724, 439,167, and 629,960 for the years ended December 31, 2019, 2018 and 2017, respectively.

Note 20. Subsequent Events

On January 14, 2020, the market condition for the conversion of Tranche I of the Class A-2 shares was satisfied. Accordingly, 1,666,666 Class A-2 shares were converted into Class A-1 shares.

F-42

Grand River Jackpot, LLC and Subsidiary

Consolidated Balance Sheets

June 30, 2019 and December 31 2018

	(Unaudited) June 30, 2019			December 31, 2018
Assets
Current assets:
Cash	$	10,634,920		$	9,830,118
Receivables		79,693			185,843
Inventories		326,961			271,928
Prepaid expenses and other assets		380,837			458,989
Total current assets		11,422,411			10,746,878
Property and equipment:
Land and land improvements		74,737			86,237
Building and building improvements		901,774			1,005,274
Furniture and equipment		45,754,866			42,994,883
Vehicles		1,583,539			1,458,235
		48,314,916			45,544,629
Less accumulated depreciation		37,671,249			35,498,475
Net property and equipment		10,643,667			10,046,154
Intangible contract rights and noncompete agreements, net of accumulated amortization		2,612,417			3,245,037
	$	24,678,495		$	24,038,069
Liabilities and Members’ (Deficit)
Current liabilities:
Current maturities of long-term debt	$	548,480		$	1,500,000
Current maturities of long-term debt for intangible contract rights		46,168			112,822
Accounts payable		1,964,097			1,152,674
Related party accounts payable		608,961			509,313
Accrued expenses		2,970,166			2,537,855
Total current liabilities		6,137,872			5,812,664
Long-term debt, less current maturities, net		48,603,418			48,042,818
Long-term debt for intangible contract rights, less current maturities		108,825			108,825
Other long-term related party payable		4,980,362			4,594,768
		53,692,605			52,746,411
Commitments and contingencies (Note 6)
Members’ (deficit)		(35,151,982	)		(34,521,006	)
	$	24,678,495		$	24,038,069

See notes to consolidated financial statements.

F-43

Grand River Jackpot, LLC and Subsidiary

Consolidated Statements of Operations (Unaudited)

Six-Months Ended June 30, 2019 and 2018

	2019			2018
Net revenue:
Gaming—video gaming terminals	$	29,458,013		$	27,898,382
Amusement		357,809			348,476
ATM fee income		436,637			382,971
		30,252,459			28,629,829
Expenses:
Salaries and wages		2,235,919			2,019,813
Payroll taxes		183,400			163,612
Employee benefits		218,082			253,429
Personnel costs		2,637,401			2,436,854
Earnout commissions		725,973			909,063
Gaming taxes		8,837,492			8,369,603
Video gaming terminal fees		10,482,079			9,909,649
Amusement		33,322			26,121
Supplies		115,667			110,152
Advertising		171,882			108,821
Contractual services		201,382			224,372
Taxes and license fees		64,037			65,953
Auto fuel and licenses		116,468			121,122
Travel		47,465			35,158
Repairs and maintenance		413,928			300,787
Rent		10,818			6,818
Insurance		156,234			134,421
Utilities and telephone		324,916			317,115
Legal and professional fees		293,895			179,135
Related party management service fee		99,648			99,648
Amortization of intangible assets		916,566			1,246,615
Depreciation		2,297,421			3,664,724
Gain on sale of property and equipment		(62,335	)		(731	)
Other		52,236			52,468
Other operating expenses		25,299,094			25,881,014
Operating income		2,315,964			311,961
Other (expense):
Amortization of debt issuance costs		(60,600	)		(60,600	)
Interest		(2,886,340	)		(2,777,516	)
		(2,946,940	)		(2,838,116	)
Net (loss)	$	(630,976	)	$	(2,526,155	)

See notes to consolidated financial statements.

F-44 

Grand River Jackpot, LLC and Subsidiary

Consolidated Statements of Members’ (Deficit) (Unaudited)

Six-Months Ended June 30, 2019 and 2018

Balance, December 31, 2017	$	(30,128,790	)
Net (loss)		(2,526,155	)
Balance, June 30, 2018	$	(32,654,945	)
Balance, December 31, 2018	$	(34,521,006	)
Net (loss)		(630,976	)
Balance, June 30, 2019	$	(35,151,982	)

See notes to consolidated financial statements.

F-45 

Grand River Jackpot, LLC and Subsidiary

Consolidated Statements of Cash Flows (Unaudited)

Six-Months Ended June 30, 2019 and 2018

	2019			2018
Cash flows from operating activities:
Net loss	$	(630,976	)	$	(2,526,155	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		2,297,421			3,664,724
Amortization		977,166			1,307,215
(Gain) on sale of property and equipment		(62,335	)		(731	)
Changes in working capital components:
Receivables		106,150			15,056
Inventories and prepaid expenses		23,119			124,077
Accounts and related party payables and accrued expenses		583,932			(82,665	)
Long-term payable for related party earnout		385,594			563,852
Net cash provided by operating activities		3,680,071			3,065,373
Cash flows from investing activities:
Purchase of property and equipment		(2,107,792	)		(1,279,273	)
Proceeds from sales of property and equipment		34,643			21,409
Purchase of intangible contract rights		(283,946	)		(203,613	)
Net cash used in investing activities		(2,357,095	)		(1,461,477	)
Cash flows from financing activities:
Proceeds from borrowings on long-term debt		500,000			500,000
Principal payments on long-term debt		(1,018,174	)		(1,326,070	)
Net cash used in financing activities		(518,174	)		(826,070	)
Net increase in cash		804,802			777,826
Cash:
Beginning		9,830,118			9,372,403
Ending	$	10,634,920		$	10,150,229
Supplemental disclosure of cash flow information, cash paid for interest	$	2,951,033		$	2,777,216
Supplemental disclosure of noncash investing and financing activities, accounts payable incurred for purchases of property and equipment	$	1,425,586		$	3,945

See notes to consolidated financial statements.

F-46 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Nature of Business and Significant Accounting Policies

Nature of business: Grand River Jackpot, LLC (Company) is a limited liability company formed under the laws of the state of Illinois. The purpose of the Company is to operate and invest in entities that operate video gaming terminals (VGTs) within the state of Illinois. The state of Illinois legalized the use of video gaming terminals at licensed locations including bars, restaurants, truck stops and fraternal and veterans’ organizations in July 2009.

Grand River Jackpot, LLC owns 100% of the membership interest in Grand River Amusements, LLC. The purpose of Grand River Amusements, LLC is to operate an amusement company in Illinois.

GRE-Illinois, LLC (GRE-IL) was formed in March 2010 and owns an 80% interest in the Company with the minority interest of 20% owned by Grand Enterprises, LLC.

GRE Funding Company, LLC (Fund Co.) was formed in 2016 and owns 100% of the membership interest in GRE-IL. Great River Entertainment, LLC (GRE) owns 100% of the membership interest in Fund Co.

Significant accounting policies:

Principles of consolidation: The Company’s consolidated financial statements include its subsidiary, Grand River Amusements, LLC. All material intercompany accounts and transactions have been eliminated.

Basis of presentation: The consolidated interim financial statements for June 30, 2019 and 2018, are unaudited, and in the opinion of management, contain all adjustments necessary for a fair presentation of the consolidated interim financial statements. Such adjustments consist solely of normal recurring items. Interim results are not necessarily indicative of results for a full year or any subsequent interim period. The consolidated interim financial statements and notes are prepared in accordance with accounting principles generally accepted in U.S. GAAP and do not contain certain information included in the annual consolidated financial statements and accompanying notes of the Company. These consolidated interim financial statements should be read in conjunction with the annual financial statements and accompanying notes for the year ended December 31, 2018.

Accounting estimates: The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the estimated useful lives of property and equipment and intangible contract rights.

Concentration of credit risk: The Company maintains cash deposit accounts at financial institutions, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Property and equipment: Property and equipment is stated at cost. Depreciation is computed using straight-line methods based on estimated useful lives which range from 3 to 40 years.

Intangible contract rights and noncompete agreements: Intangible contract rights allow the Company exclusive rights to place video gaming machines (VGTs) in licensed establishments. Contract rights are being amortized using the straight-line method over the terms of the contracts. Contract terms currently range from 1 to 10 years. The majority of noncompete agreements are being amortized using the same method and terms as the intangible contract rights.

F-47 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Nature of Business and Significant Accounting Policies (Continued)

The Company evaluates its intangible contract rights and noncompete agreements for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. This analysis is performed by comparing carrying values of these assets to the current and expected future undiscounted cash flows expected to be generated by these assets. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance, and may differ from actual cash flows. If such analysis indicates the carrying value of these assets is not recoverable and the fair value of the assets is less than their carrying value, the assets will be written down to their estimated fair value in the period in which this determination is made. The Company completed an evaluation of these assets for the six months ended June 30, 2019 and 2018 and determined there was no impairment of their carrying value.

Minority member earnout commissions: Under the Amended and Restated Operating Agreement dated October 31, 2016 the minority member is entitled to earnout commissions ranging from 1 to 10.5% of the gross revenue from video gaming terminals operated by the Company related to locations contributed by the minority member up to a maximum of $162,500 per quarter with any excess carried forward to quarters for which actual calculations do not exceed the maximum. The total earnout commissions expense under this agreement was $325,000 for both of the six months ended June 30, 2019 and 2018.

Deferred financing fees: Deferred financing fees represent the Company’s share of lender fees, professional fees and closing costs incurred by Fund Co. when Fund Co. refinanced their Senior Debt in October 2016. The Company’s share of these costs was determined based on the percent of proceeds from Senior Debt they received from Fund Co. to pay off the Company’s first and second lien credit agreements. These costs are netted with long-term debt and are being amortized over the terms of that agreement using the straight-line method.

Long-term related party payable: As part of the Amended and Restated Operating Agreement, the majority member (GRE-Illinois, LLC) is entitled to earnout commissions of 10.5% of gross revenue from video gaming terminals operated by the Company related to locations obtained through one asset purchase agreement. Total earnout commissions accrued as of June 30, 2019 and December 31, 2018 were $4,505,875 and $4,205,181, respectively, plus accrued interest at a rate of 4% of $474,487 and $389,587, respectively. Total earnout commissions expense under this agreement for the six months ended June 30, 2019 and 2018 was $300,694 and $494,899, respectively, and related interest expense was $84,900 and $68,953, respectively. As the Company’s former and current credit agreements have restrictions for payments to the majority member, the entire balance is shown as other long term related party payable on the consolidated balance sheet as of June 30, 2019 and December 31, 2018.

Revenue recognition: In accordance with gaming industry practice, gaming revenue from video gaming terminals is recognized as the net win from gaming activities, which is the difference between gaming wins and losses. Revenue from amusement and vending business are recognized at the time the related sale is made.

Advertising costs: Advertising costs are expensed as incurred. Total advertising costs expensed for the six months ended June 30, 2019 and 2018 were approximately $172,000 and $109,000, respectively.

Sales and W2G taxes: Taxes collected from customers and remitted to government agencies for specific revenue-producing transactions are recorded net with no effect on the consolidated statement of operations.

Income taxes: The Company has elected to be taxed as a limited liability company, which provides in lieu of corporation income taxes, the members separately account for their proportionate share of the Company’s income, deductions, losses and credits. Therefore, no provision or liability for income taxes has been included in the consolidated financial statements.

F-48 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Nature of Business and Significant Accounting Policies (Continued)

Management evaluated the Company’s tax positions and concluded the Company had taken no uncertain tax positions that require adjustment to the financial statements. With few exceptions, the Company is no longer subject to income tax examinations by the U.S. federal or state tax authorities for years before 2015.

Recent accounting guidance: In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of adoption of the new standard on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance, including industry specific guidance, when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. In August 2015, the FASB issued ASU 2015-14 which defers the effective date of ASU 2014-09 one year making it effective for annual reporting periods beginning after December 15, 2018 and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company will adopt the new guidance using the retrospective with cumulative effect transition method and apply the adjustment to the opening balance of retained earnings. The Company does not expect this adjustment to be material to the financial statements as a whole and is currently evaluating the impact of the new guidance on its financial statement disclosures.

Note 2. Intangibles

Intangible assets consist of the following:

	June 30, 2019			December 31, 2018
Contract rights and noncompete agreements	$	18,824,564		$	18,540,618
Less accumulated amortization		(16,212,147	)		(15,295,581	)
Balance	$	2,612,417		$	3,245,037

The amortization expense for the six-months ended June 30, 2019 and 2018 were $916,566 and $1,246,615, respectively.

Estimated future amortization expense is as follows:

Six months ending December 31, 2019	$	965,655
Years ending December 31:
2020		855,784
2021		253,301
2022		118,564
2023		104,330
Thereafter		314,783
	$	2,612,417

F-49 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 3. Long-Term Borrowings and Pledged Assets

Long-term debt as of December 31, 2018 and June 30, 2019 consists of the following:

	June 30, 2019			December 31, 2018
Related party financing agreement (A)	$	49,434,700		$	49,886,220
Less deferred financing fees		(282,802	)		(343,402	)
Less current maturities		(548,480	)		(1,500,000	)
	$	48,603,418		$	48,042,818

(A) The Company entered into a loan and security agreement with Fund Co. on October 31, 2016 under which they received proceeds of approximately $53,680,000. The principal and interest payments due on this agreement total $7,500,000 per year provided that such amount will be increased so that the minimum principal paid is not less than $1,500,000. Interest on the outstanding balance is variable and is at one-month LIBOR plus an applicable margin based on the current rates being charged on the Senior Debt. The actual rates as of June 30, 2019 and December 31, 2018 were 11.15% and 11.27%, respectively. Total interest paid on related party debt was approximately $2,798,000 and $2,700,000 for the six months ended of June 30, 2019 and June 30, 2018, respectively. The remaining outstanding balance plus any accrued interest is due on October 31, 2021.

The Company’s assets are pledged on the Senior Debt of Fund Co. and the Company is also listed as a guarantor along with Fund Co. and Fund Co.’s other subsidiaries. The outstanding balance of the Senior Debt of Fund Co. was $87,050,000 and $90,550,000 as of June 30, 2019 and December 31, 2018, respectively.

The scheduled maturities of long-term debt are as follows:

Six months ending December 31, 2019	$	548,480
Years ending December 31:
2020		1,500,000
2021		47,386,220
	$	49,434,700

Note 4. State Gaming Taxes and Video Gaming Terminal Fees

In accordance with the Illinois Video Gaming Act, the Company pays state gaming taxes equal to 30% on net terminal income and an administrative fee, which was 0.7275% and increased to 0.8513% in July 2018, to a third-party. The net remaining terminal income is split 50/50 between the Licensed Terminal Operator (the Company) and the Licensed Video Gaming Location. The total state gaming taxes incurred by the Company were approximately $8,837,000 and $8,370,000 for the six months ended June 30, 2019 and 2018, respectively. Total administrative fees were approximately $125,000 and $101,000 and total amounts paid to Licensed Locations were approximately $10,310,000 and $9,764,000 for the six months ended June 30, 2019 and 2018, respectively. These fees are included with video gaming terminal fees on the statements of operations for the six months ended June 30, 2019 and 2018.

F-50 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements (Unaudited)

Note 5. Employee Benefits

Retirement plan: GRE sponsors a qualified 401(k) profit sharing plan covering eligible employees of GRE and its subsidiaries. The Plan allows employee deferral contributions and also provides discretionary matching contributions equal to a percentage of employee deferral contributions and a discretionary nonelective contribution. The Company’s matching contributions totaled approximately $57,000 and $50,000 for the six months ended June 30, 2019 and 2018, respectively. There were no discretionary nonelective contributions for the six months ended June 30, 2019 and 2018.

Health insurance: As of January 1, 2018, GRE adopted a qualified employee health insurance plan covering all eligible employees of GRE and its subsidiaries. The plan, which is self-funded, requires contributions from the Company and its eligible employees and their dependents. Any unpaid claims or incurred but not reported claims are liabilities of GRE. Total contributions paid to GRE by the Company for the six months ended June 30, 2019 and 2018 were approximately $155,000 and $200,000, respectively.

The Company remits monthly contributions for health insurance to GRE and GRE pays the insurance claims.

Note 6. Contingencies

The Company is involved in certain claims and legal actions arising in the ordinary course of business. In the opinion of management, in consultation with its legal counsel, the ultimate disposition of these matters will fall within the limits of insurance and/or will not have a material effect on the Company’s future financial position or results of operations.

Note 7. Subsequent Events

On July 1, 2019 the Company borrowed $1,000,000 from Fund Co. In addition, effective July 1, 2019, the Illinois Gaming Board imposed an additional tax of 3% on net terminal income.

On August 26, 2019, GRE, GRE-IL and the Company entered into a purchase agreement with an unrelated third party to sell their membership interests in the Company for $109,500,000. GRE-IL received proceeds of approximately $100,000,000 upon the closing of the sale on September 16, 2019.

On August 26, 2019, GRE-IL and Grand Enterprises, LLC entered into an agreement whereby GRE-IL would purchase Grand Enterprises, LLC’s 20% membership interest in the Company contingent upon the sale of the Company to an unrelated third party.

The Company has evaluated all subsequent events through September 26, 2019, the date on which the financial statements were available to be issued.

F-51 

Independent Auditor’s Report

Board of Directors and Members

Grand River Jackpot, LLC

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of Grand River Jackpot, LLC and Subsidiary, which comprise the consolidated balance sheet as of December 31, 2018, the related consolidated statements of operations, members’ (deficit) and cash flows for the year then ended, and the related notes to consolidated financial statements (collectively, the financial statements).

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Grand River Jackpot, LLC and Subsidiary as of December 31, 2018, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ RSM US LLP

Davenport, Iowa

March 28, 2019

F-52 

Grand River Jackpot, LLC and Subsidiary

Consolidated Balance Sheet

December 31, 2018

Assets
Current assets:
Cash	$	9,830,118
Receivables		185,843
Inventories		271,928
Prepaid expenses and other assets		458,989
Total current assets		10,746,878
Property and equipment:
Land and land improvements		86,237
Building and building improvements		1,005,274
Furniture and equipment		42,994,883
Vehicles		1,458,235
		45,544,629
Less accumulated depreciation		35,498,475
Net property and equipment		10,046,154
Intangible contract rights and noncompete agreements, net of accumulated amortization		3,245,037
	$	24,038,069

Liabilities and Members’ Deficit
Current liabilities:
Current maturities of long-term debt	$	1,500,000
Current maturities of long-term debt for intangible contract rights		112,822
Accounts payable		1,152,674
Related party accounts payable		509,313
Accrued expenses		2,537,855
Total current liabilities		5,812,664
Long-term debt, less current maturities		48,042,818
Long-term debt for intangible contract rights, less current maturities		108,825
Other long-term related party payable		4,594,768
		52,746,411
Commitments and contingencies (Note 6)
Members’ deficit		(34,521,006	)
	$	24,038,069

See notes to consolidated financial statements.

F-53 

Grand River Jackpot, LLC and Subsidiary

Consolidated Statement of Operations

Year Ended December 31, 2018

Net revenue:
Gaming—video gaming terminals	$	54,754,771
Amusement		665,139
ATM fee income		769,753
		56,189,663
Expenses:
Salaries and wages		4,205,769
Payroll taxes		327,267
Employee benefits		451,764
Personnel costs		4,984,800
Earnout commissions		1,762,901
Gaming taxes		16,426,612
Video gaming terminal fees		19,478,481
Amusement		46,630
Supplies		211,498
Advertising		247,317
Contractual services		439,867
Taxes and license fees		100,869
Auto fuel and licenses		254,180
Travel		70,922
Repairs and maintenance		713,075
Rent		15,636
Insurance		269,791
Utilities and telephone		636,284
Legal and professional fees		559,367
Related party management service fee		199,296
Amortization of intangible assets		2,102,017
Depreciation		6,354,531
Gain on sale of property and equipment		(63,478	)
Other		102,794
Other operating expenses		49,928,590
Operating income		1,276,273
Other (expense):
Amortization of debt issuance costs		(121,200	)
Interest		(5,547,289	)
		(5,668,489	)
Net loss	$	(4,392,216	)

See notes to consolidated financial statements.

F-54 

Grand River Jackpot, LLC and Subsidiary

Consolidated Statement of Members’ Deficit

Year Ended December 31, 2018

Balance, December 31, 2017	$	(30,128,790	)
Net loss		(4,392,216	)
Balance, December 31, 2018	$	(34,521,006	)

See notes to consolidated financial statements.

F-55 

Grand River Jackpot, LLC and Subsidiary

Consolidated Statement of Cash Flows

Year Ended December 31, 2018

Cash flows from operating activities:
Net loss	$	(4,392,216	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		6,354,531
Amortization		2,223,217
Gain on sale of property and equipment		(63,478	)
Changes in working capital components:
Receivables		(110,342	)
Inventories and prepaid expenses		9,584
Accounts and related party payables and accrued expenses		562,374
Long-term payable for related party earnout		1,083,803
Net cash provided by operating activities		5,667,473
Cash flows from investing activities:
Purchase of property and equipment		(2,647,926	)
Proceeds from sales of property and equipment		95,286
Purchase of intangible contract rights		(672,980	)
Net cash used in investing activities		(3,225,620	)
Cash flows from financing activities:
Proceeds from borrowings on long-term debt		500,000
Principal payments on long-term debt		(2,484,138	)
Net cash used in financing activities		(1,984,138	)
Net increase in cash		457,715
Cash:
Beginning		9,372,403
Ending	$	9,830,118
Supplemental disclosure of cash flow information, cash paid for interest	$	5,620,410
Supplemental disclosures of noncash investing and financing activities:
Accounts payable incurred for purchases of property and equipment	$	666,136
Writeoff of intangible asset and related debt	$	392,000

See notes to consolidated financial statements.

F-56 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements

Note 1. Nature of Business and Significant Accounting Policies

Nature of business: Grand River Jackpot, LLC (Company) is a limited liability company formed under the laws of the state of Illinois. The purpose of the Company is to operate and invest in entities that operate video gaming terminals (VGTs) within the state of Illinois. The state of Illinois legalized the use of video gaming terminals at licensed locations including bars, restaurants, truck stops and fraternal and veterans’ organizations in July 2009.

Grand River Jackpot, LLC owns 100% of the membership interest in Grand River Amusements, LLC. The purpose of Grand River Amusements, LLC is to operate an amusement company in Illinois.

GRE-Illinois, LLC (GRE-IL) was formed in March 2010 and owns an 80% interest in the Company with the minority interest of 20% owned by Grand Enterprises, LLC.

GRE Funding Company, LLC (Fund Co.) was formed in 2016 and owns 100% of the membership interest in GRE-IL. Great River Entertainment, LLC (GRE) owns 100% of the membership interest in Fund Co.

Significant accounting policies:

Principles of consolidation: The Company’s consolidated financial statements include its subsidiary, Grand River Amusements, LLC. All material intercompany accounts and transactions have been eliminated.

Accounting estimates: The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the estimated useful lives of property and equipment and intangible contract rights.

Concentration of credit risk: The Company maintains cash deposit accounts at financial institutions, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Property and equipment: Property and equipment is stated at cost. Depreciation is computed using straight-line methods based on estimated useful lives which range from 3 to 40 years.

Intangible contract rights and noncompete agreements: Intangible contract rights allow the Company exclusive rights to place video gaming machines (VGTs) in licensed establishments. Contract rights are being amortized using the straight-line method over the terms of the contracts. Contract terms currently range from 1 to 10 years. The majority of noncompete agreements are being amortized using the same method and terms as the intangible contract rights.

The Company evaluates its intangible contract rights and noncompete agreements for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. This analysis is performed by comparing carrying values of these assets to the current and expected future undiscounted cash flows expected to be generated by these assets. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance, and may differ from actual cash flows. If such analysis indicates the carrying value of these assets is not recoverable and the fair value of the assets is less than their carrying value, the assets will be written down to their estimated fair value in the period in which this determination is made. The Company completed an evaluation of these assets for the year ended December 31, 2018 and determined there was no impairment of their carrying value.

F-57

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements

Note 1. Nature of Business and Significant Accounting Policies (Continued)

Minority member earnout commissions: Under the Amended and Restated Operating Agreement dated October 31, 2016 the minority member is entitled to earnout commissions ranging from 1 to 10.5% of the gross revenue from video gaming terminals operated by the Company related to locations contributed by the minority member up to a maximum of $162,500 per quarter with any excess carried forward to quarters for which actual calculations do not exceed the maximum. The total earnout commissions expense under this agreement was $650,000 for the year ended December 31, 2018.

Deferred financing fees: Deferred financing fees represent the Company’s share of lender fees, professional fees and closing costs incurred by Fund Co. when Fund Co. refinanced their Senior Debt in October 2016. The Company’s share of these costs was determined based on the percent of proceeds from Senior Debt they received from Fund Co. to pay off the Company’s first and second lien credit agreements. These costs are netted with long-term debt and are being amortized over the terms of that agreement using the straight-line method.

Long-term related party payable: As part of the Amended and Restated Operating Agreement, the majority member (GRE-Illinois, LLC) is entitled to earnout commissions of 10.5% of gross revenue from video gaming terminals operated by the Company related to locations obtained through one asset purchase agreement. Total earnout commissions accrued as of December 31, 2018 was $4,205,181, plus accrued interest at a rate of 4% of $389,587. Total earnout commissions expense under this agreement for the year ended December 31, 2018 was $935,233, and related interest expense was $148,570. As the Company’s former and current credit agreements have restrictions for payments to the majority member, the entire balance is shown as other long term related party payable on the consolidated balance sheet as of December 31, 2018.

Revenue recognition: In accordance with gaming industry practice, gaming revenue from video gaming terminals is recognized as the net win from gaming activities, which is the difference between gaming wins and losses. Revenue from amusement and vending business are recognized at the time the related sale is made.

Advertising costs: Advertising costs are expensed as incurred. Total advertising costs expensed for the year ended December 31, 2018 was approximately $247,000.

Sales and W2G taxes: Taxes collected from customers and remitted to government agencies for specific revenue-producing transactions are recorded net with no effect on the consolidated statement of operations.

Income taxes: The Company has elected to be taxed as a limited liability company, which provides in lieu of corporation income taxes, the members separately account for their proportionate share of the Company’s income, deductions, losses and credits. Therefore, no provision or liability for income taxes has been included in the consolidated financial statements.

Management evaluated the Company’s tax positions and concluded the Company had taken no uncertain tax positions that require adjustment to the financial statements. With few exceptions, the Company is no longer subject to income tax examinations by the U.S. federal or state tax authorities for years before 2015.

Recent accounting guidance: In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of adoption of the new standard on its consolidated financial statements.

F-58

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements

Note 1. Nature of Business and Significant Accounting Policies (Continued)

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance, including industry specific guidance, when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. In August 2015, the FASB issued ASU 2015-14 which defers the effective date of ASU 2014-09 one year making it effective for annual reporting periods beginning after December 15, 2018. The Company will adopt the new guidance using the retrospective with cumulative effect transition method and apply the adjustment to the opening balance of retained earnings as of January 1, 2019. The Company does not expect this adjustment to be material to the financial statements as a whole and is currently evaluating the impact of the new guidance on its financial statement disclosures.

Note 2. Intangibles

Intangible assets are summarized as follows:

	Contract Rights and Noncompete Agreements
Balance, December 31, 2017	$	5,066,074
Additions		672,980
Write-off		(392,000	)
Amortization		(2,102,017	)
Balance, December 31, 2018	$	3,245,037

Estimated future amortization expense is as follows:

Years ending December 31:
2019	$	1,713,860
2020		793,498
2021		235,535
2022		100,797
2023		86,563
Thereafter		314,784
	$	3,245,037

Note 3. Long-Term Borrowings and Pledged Assets

Long-term debt as of December 31, 2018 consists of the following:

Related party financing agreement (A)	$	49,886,220
Less deferred financing fees		343,402
Less current maturities		1,500,000
	$	48,042,818

(A) The Company entered into a loan and security agreement with Fund Co. on October 31, 2016 under which they received proceeds of approximately $53,680,000. The principal and interest payments due on this

F-59 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements

Note 3. Long-Term Borrowings and Pledged Assets (Continued)

agreement total $7,500,000 per year provided that such amount will be increased so that the minimum principal paid is not less than $1,500,000. Interest on the outstanding balance is variable and is at one-month LIBOR plus an applicable margin based on the current rates being charged on the Senior Debt. The actual rates as of December 31, 2018 were 11.27%. Total interest paid on related party debt was approximately $5,460,000 for the year ended December 31, 2018. The remaining outstanding balance plus any accrued interest is due on October 31, 2021.

The Company’s assets are pledged on the Senior Debt of Fund Co. and the Company is also listed as a guarantor along with Fund Co. and Fund Co.’s other subsidiaries. The outstanding balance of the Senior Debt of Fund Co. was $90,550,000 as of December 31, 2018.

The scheduled maturities of long-term debt are as follows:

Years ending December 31:
2019	$	1,500,000
2020		1,500,000
2021		46,886,220
	$	49,886,220

Long-term debt related to intangible contract rights as of December 31, 2018 is as follows:

Location contracts and noncompete agreement (1)	$	17,750
Location contracts (2)		8,750
Location contracts (3)		59,450
Location contracts (4)		28,186
Location contracts (5)		4,870
Location contracts (6)		102,641
		221,647
Less current maturities		112,822
	$	108,825

(1) Location contracts and noncompete: The Company entered into an agreement in the amount of $698,000 for the purchase of 18 VGT location contracts ($26,000 to $51,000 per contract). As part of the agreement they paid $25,000 upon closing. The remaining balance is being incurred at the designated rate per location contract included in the agreement as each location is activated and payments are being made in quarterly installments equal to 1/20th of the contract price. There were eight locations activated under this contract as of December 31, 2018. There is also an option to purchase up to five additional location contracts at prices ranging from $26,000 to $36,000 per contract. There was also a separate noncompete agreement included in this purchase whereby the Company must pay consideration of $20,000 per year in 20 equal quarterly installments. The balances owed on location contracts and the noncompete agreement was $17,750 as of December 31, 2018.

(2) Location contracts: The Company entered into an agreement in the amount of $1,080,000 for the purchase of 24 VGT location contracts ($40,000 or $45,000 per contract). As part of the agreement they paid $50,000 upon closing. The remaining balance is being incurred at the designated rate per location contract included in the agreement as each location is activated and payments are being made in either 12 or 20 equal quarterly installments of principal and interest at a rate of 8%. There were six locations activated under this agreement as of December 31, 2018.

F-60 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements

Note 3. Long-Term Borrowings and Pledged Assets (Continued)

(3) Location contracts: The Company entered into an agreement to purchase VGT location contracts from an individual at a price of $30,000 each. In order to qualify as a legitimate contract, the contract term must be at least three years. The Company is required to pay $1,000 per executed contract when delivered and then pay the remaining $29,000 per contract in 20 equal quarterly installments of $1,450. There were eight active locations under this agreement as of December 31, 2018.

(4) Location contracts: The Company entered into an agreement in the amount of $1,325,000 for the purchase of up to 50 VGT location contracts ($25,000 or $30,000 per contract). As part of the agreement they paid $120,000 upon closing. The remaining balance is being incurred at the designated rate per location contract included in the agreement as each location is activated and payments are made in 60 equal quarterly installments. There were ten locations activated under this agreement as of December 31, 2018. There is also an option for the seller to provide up to 50 additional location contracts at a price of $25,000 per contract if all locations are delivered within the time frame noted in the agreement.

(5) Location contracts: The Company entered into an agreement in the amount of $200,000 for the purchase of up to four VGT location contracts ($50,000 per contract). As part of the agreement they paid $5,000 upon closing. The remaining balance is being incurred at the designated rate per location contract as each location is activated and payments are made in 20 equal quarterly installments of $2,438. There was one location activated under this agreement as of December 31, 2018. There is also an option for the seller to provide up to five additional location contracts at a price of $30,000 per contract if all locations are delivered within the time frame noted in the agreement.

(6) Location contracts: The Company entered into an amended purchase agreement in May 2013 in the amount of $200,000 for the purchase of nine VGT location contracts. The agreement requires monthly payments of $2,209 including principal and interest at a rate of 6% and matures in May 2023. There were six locations activated under this agreement as of December 31, 2018. There is also an option for the seller to deliver additional contracts at a price of $25,000 per contract.

Other than as specifically noted above, the location contracts do not bear interest on the amounts owed after locations are activated.

The scheduled maturities of long-term debt related to intangible contract rights are as follows:

Years ending December 31:
2019	$	112,822
2020		47,871
2021		25,034
2022		25,038
2023		10,882
	$	221,647

Note 4. State Gaming Taxes and Video Gaming Terminal Fees

In accordance with the Illinois Video Gaming Act, the Company pays state gaming taxes equal to 30% on net terminal income and an administrative fee, which was 0.7275% and increased to 0.8513% in July 2018, to a third-party. The net remaining terminal income is split 50/50 between the Licensed Terminal Operator (the Company) and the Licensed Video Gaming Location. The total state gaming taxes incurred by the Company were approximately $16,427,000 for the year ended December 31, 2018. Total administrative fees were

F-61 

Grand River Jackpot, LLC and Subsidiary

Notes to Consolidated Financial Statements

Note 4. State Gaming Taxes and Video Gaming Terminal Fees (Continued)

approximately $213,000 and total amounts paid to Licensed Locations were approximately $19,170,000 for the year ended December 31, 2018. These fees are included with video gaming terminal fees on the statement of operations for the year ended December 31, 2018.

Note 5. Employee Benefits

Retirement plan: GRE sponsors a qualified 401(k) profit sharing plan covering eligible employees of GRE and its subsidiaries. The Plan allows employee deferral contributions and also provides discretionary matching contributions equal to a percentage of employee deferral contributions and a discretionary nonelective contribution. The Company’s matching contributions totaled approximately $96,000 for the year ended December 31, 2018. There were no discretionary nonelective contributions for the year ended December 31, 2018.

Health insurance: As of January 1, 2018, GRE adopted a qualified employee health insurance plan covering all eligible employees of GRE and its subsidiaries. The plan, which is self-funded, requires contributions from the Company and its eligible employees and their dependents. Any unpaid claims or incurred but not reported claims are liabilities of GRE. Total contributions paid to GRE by the Company for the year ended December 31, 2018 were approximately $351,000. The Company remits monthly contributions for health insurance to GRE and GRE pays the insurance claims.

Note 6. Contingencies

The Company is involved in certain claims and legal actions arising in the ordinary course of business. In the opinion of management, in consultation with its legal counsel, the ultimate disposition of these matters will fall within the limits of insurance and/or will not have a material effect on the Company’s future financial position or results of operations.

Note 7. Subsequent Events

The Company has evaluated all subsequent events through March 28, 2019, the date on which the financial statements were available to be issued.

F-62 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On November 20, 2019, Accel Entertainment, Inc., consummated a business combination pursuant to the Transaction Agreement, which has been accounted for as a reverse recapitalization. Prior to the reverse recapitalization, the Accel completed its acquisition of Grand River Jackpot on September 16, 2019. The following unaudited pro forma condensed combined financial information has been prepared in accordance with SEC Regulation S-X Article 11 for the year ended December 31, 2019. The unaudited pro forma condensed combined statements of operation for the year ended December 31, 2019 give pro forma effect to the reverse recapitalization as if it was completed on January 1, 2018.

The unaudited pro forma consolidated financial information does not include an unaudited pro forma consolidated balance sheet as of December 31, 2019 as the reverse recapitalization is already reflected in our historical audited consolidated balance sheet as of December 31, 2019 included elsewhere in this prospectus.

The unaudited pro forma consolidated statement of operations for the year ended December 31, 2019 was derived from and should be read in conjunction the historical audited consolidated financial statements of Accel Entertainment, Inc. as of and for the year ended December 31, 2019 and the accompanying notes included elsewhere in this prospectus. The foregoing historical financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). This information should be read together with the accompanying notes to the unaudited pro forma condensed combined statement of operations, the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information included elsewhere in this filing.

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the reverse recapitalization on November 20, 2019. It has been prepared for informational purposes only and is subject to a number of uncertainties and assumptions as described in the accompanying notes. The unaudited pro forma financial information does not purport to represent, and is not necessarily indicative of, what the actual financial condition of the combined company would have been had the reverse recapitalization taken place at an earlier date, nor is it indicative of the financial condition of the combined company as of any future date. The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give effect to pro forma events that are (1) directly attributable to the reverse recapitalization, (2) factually supportable and (3) with respect to the statement of operations, expected to have a continuing impact on the results of the combined company.

F-63

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2019

	Historical Accel Entertainment, Inc.			Pro Forma Adjustments				Pro Forma
Revenues:
Net video gaming	$	410,636		$	40,980		(3a)	$	451,616
Amusement		5,912			481		(3a)		6,393
ATM fees and other revenue		7,837			601		(3a)		8,438
Total net revenues		424,385			42,062				466,447
Operating expenses:
Video gaming expenses		271,999			27,870		(3a)		299,869
General and administrative		75,028			7,056		(3a)		82,084
Depreciation and amortization of property and equipment		26,398			3,244		(3a)		28,333
					(1,309	)	(3b)
Amortization of route and customer acquisition costs and location contracts acquired		17,975			1,253		(3a)		21,773
					2,545		(3c)
Other expenses, net		19,649			(115	)	(3a)		9,444
					462		(3d)
					(10,552	)	(3e)
Total operating expenses		411,049			30,454				441,503
Operating income		13,336			11,608				24,944
Interest expense		12,860			4,427		(3a)		17,965
					(4,427	)	(3f)
					5,105		(3g)
Loss on debt extinguishment		1,141			—				1,141
Loss before income tax expense		(665	)		6,503				5,838
Income tax expense		5,199			1,985		(3h)		7,184
Net loss	$	(5,864	)	$	4,518			$	(1,346	)
Net loss per common share—basic and diluted	($	0.09	)					$	(0.02	)
Weighted average number of shares outstanding—basic and diluted		61,850			14,787		(3i)		76,637

See accompanying notes to the unaudited pro forma condensed combined financial information.

F-64

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Six Months Ended June 30, 2019

									Assuming No Additional Redemptions					Assuming Maximum Redemptions
	Accel (Historical)		Pace (Historical)			Grand River (Note 2)			Pro Forma Adjustments			Pro Forma		Redemption Adjustments			Pro Forma
Revenues:
Net video gaming	$	195,168,399	$	—		$	29,458,013		$	—		$	224,626,412	$	—		$	224,626,412
Amusement		2,785,981		—			357,809			—			3,143,790		—			3,143,790
ATM fees and other revenue		3,737,275		—			436,637			—			4,173,912		—			4,173,912
Total net revenues		201,691,655		—			30,252,459			—			231,944,114		—			231,944,114
Operating expenses:
Video gaming expenses		127,703,073		—			20,045,544			—			147,748,617		—			147,748,617
General and administrative		33,600,191		—			4,687,063			—			38,287,254		—			38,287,254
Depreciation and amortization of property and equipment		12,141,013		—			2,297,421			(818,164	)(4aa)		13,620,270		—			13,620,270
Amortization of route and customer acquisition costs and location contracts acquired		8,926,713		—			916,566			1,287,601	(4bb)		11,130,880		—			11,130,880
Professional fees, formation costs and other expenses		—		4,575,958			—			—			4,575,958		—			4,575,958
Other operating expenses		1,345,716		—			(10,099	)		—			1,335,617		—			1,335,617
Total operating expenses		183,716,706		4,575,958			27,936,495			469,437			216,698,596		—			216,698,596
Operating income (loss)		17,974,949		(4,575,958	)		2,315,964			(469,437	)		15,245,518		—			15,245,518
Interest expense (income)		6,202,560		(5,105,671	)		2,946,940			5,105,671	(4cc)		8,289,789		628,658	(4gg)		8,918,447
										(859,711	)(4dd)
Income (loss) before income tax expense		11,772,389		529,713			(630,976	)		(5,575,108	)		6,955,729		(628,658	)		6,327,072
Income tax expense		3,449,599		—			—			(72,211	)(4ee)		3,377,388		188,597	(4hh)		3,565,986
Net income (loss)	$	8,322,790	$	529,713		$	(630,976	)	$	(5,502,897	)	$	3,578,341	$	(817,255	)	$	2,761,086
Net income per share of stock — basic	$	2.47	$	0.01								$	0.04				$	0.04
Net income per share of stock — diluted	$	2.32	$	0.01								$	0.04				$	0.04
Weighted average shares of stock outstanding — basic		3,368,298		56,250,000						24,217,044	(4ff)		83,835,342		13,217,044	(4ff)		72,835,342
Weighted average shares of stock outstanding — diluted		3,592,061		56,250,000						23,993,281	(4ff)		83,835,342		12,993,281	(4ff)		72,835,342

See accompanying notes to the unaudited pro forma condensed combined financial information.

F-65

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

Note 1. Basis of Pro Forma Presentation

Overview

The unaudited pro forma condensed combined financial statements have been prepared assuming the Business Combination is accounted for as reverse recapitalization in accordance with GAAP. Under this method of accounting, Pace will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Accel issuing stock for the net assets of Pace, accompanied by a recapitalization. The net assets of Pace will be stated at historical cost, with no goodwill or other intangible assets recorded. All direct costs of the Business Combination will be recorded as an offset to additional-paid-in-capital, consistent with the accounting for a reverse recapitalization.

On September 17, 2019, Accel completed the acquisition of 100% of the outstanding membership interests of Grand River. The acquisition of Grand River by Accel was accounted for as a business combination under ASC Topic 805, Business Combinations (“ASC 805”) and Accel, as the accounting acquirer, recorded the assets acquired and liabilities assumed at fair value on a preliminary basis.

The acquisition method of accounting uses the fair value concepts defined in ASC Topic 820, Fair Value Measurements (“ASC 820”). In general, ASC 805 requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date by Accel.

ASC 820 defines fair value, establishes a framework for measuring fair value, and sets forth a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to develop the fair value measurements. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for a non-financial asset assume the highest and best use by these market participants. Many of these fair value measurements can be highly subjective, and it is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

Under ASC 805, acquisition-related transaction costs are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred, or if related to the issuance of debt, capitalized as debt issuance costs. Acquisition-related transaction costs expected to be incurred as part of the business combination and the other related transactions include estimated fees related to advisory, legal and accounting fees.

The pro forma adjustments represent management’s estimates based on information available as of the date of the condensed combined financial statements and do not reflect possible adjustments related to restructuring or integration activities that have yet to be determined or transaction or other costs following the business combination that are not expected to have a continuing impact. Further, one-time transaction-related expenses anticipated to be incurred prior to, or concurrently with the consummation of the business combination are not included in the unaudited pro forma condensed combined statements of operations.

Description of Business Combination

Pursuant to and in connection with the Transaction Agreement, the following transactions will occur:

• the Stock Purchase, including the Business Combination Private Placement;

• the Merger;

• the Pace Domestication;

F-66

• the Sponsor Transactions;

• the distribution by Pace Sponsor to Pace Sponsor Members of all of Pace Sponsor’s Class A-1 Shares, Class A-2 Shares and remaining Private Placement Warrants;

• the Director Class F Share Exchange; and

• the Investment Private Placement.

The combined pro forma financial information was prepared assuming the aggregate consideration for the Business Combination will be approximately $651.2 million, amounts payable in the form of $350.0 million in cash, and newly issued Class A-1 Shares valued at $10.25 per share, for presentation purposes.

The following presents the aggregate consideration assuming no additional redemptions and assuming maximum redemptions:

	Pro Forma Assuming No Additional Redemptions		Pro Forma Assuming Maximum Redemptions
Shares transferred at closing		29,385,934		29,385,934
Value per share(1)	$	10.25	$	10.25
Total share consideration	$	301,222,294	$	301,222,294
Plus: Cash consideration(2)		350,000,000		350,000,000
Total consideration at closing	$	651,222,294	$	651,222,294

(1) For illustrative purposes, based on the balance of the Trust Account of approximately $427,988,915 as of June 30, 2019 after September 20, 2019 redemptions, the estimated per share redemption price would have been approximately $10.25.

(2) The voting and economic interest of Pace shareholders set forth in this proxy statement/prospectus assume the Sellers make aggregate Cash Elections of $350,000,000.

Note 2. Reclassifications

As described in Note 1, Accel completed its acquisition of Grand River on September 17, 2019. These unaudited pro forma condensed combined financial statements incorporate the financial statements of Grand River as of and for the six months ended June 30, 2019 and for the year ended December 31, 2018. As part of preparing these unaudited pro forma condensed combined financial statements, certain reclassifications of Grand River’s historical financial statements were made to align to Accel’s financial statement presentation as detailed below.

F-67

Grand River Jackpot, LLC and Subsidiary

Unaudited Consolidated Balance Sheet

As of June 30, 2019

	Grand River			Presentation Adjustments			Grand River (as adjusted)
Current assets:
Cash	$	10,634,920		$	—		$	10,634,920
Receivables		79,693			(79,693	)(2a)		—
Inventories		326,961			(326,961	)(2a)		—
Prepaid expenses		—			380,837	(2b)		380,837
Prepaid expenses and other assets		380,837			(380,837	)(2b)		—
Other current assets		—			406,654	(2a)		406,654
Total current assets		11,422,411			—			11,422,411
Property and equipment:
Land and land improvements		74,737			(74,737	)(2c)		—
Building and building improvements		901,774			(901,774	)(2c)		—
Furniture and equipment		45,754,866			(45,754,866	)(2c)		—
Vehicles		1,583,539			(1,583,539	)(2c)		—
		48,314,916			(48,314,916	)		—
Less accumulated depreciation		(37,671,249	)		37,671,249	(2c)		—
Net property and equipment		10,643,667			(10,643,667	)		—
Property and equipment, net		—			10,643,667	(2c)		10,643,667
Location contracts acquired, net		—			2,612,417	(2d)		2,612,417
Intangible contract rights and noncompete agreements, net of accumulated amortization		2,612,417			(2,612,417	)(2d)		—
		24,678,495			—			24,678,495
Liabilities and Members’ (Deficit)
Current liabilities:
Current maturities of long-term debt		548,480						548,480
Current portion of consideration payable		—			46,168	(2e)		46,168
Current maturities of long-term debt for intangible contract rights		46,168			(46,168	)(2e)		—
Accounts payable		1,964,097						1,964,097
Related party accounts payable		608,961						608,961
Accrued expenses		2,970,166						2,970,166
Total current liabilities		6,137,872			—			6,137,872
Long-term debt, less current maturities, net		48,603,418						48,603,418
Consideration payable, less current portion		—			108,825	(2f)		108,825
Long-term debt for intangible contract rights, less current maturities		108,825			(108,825	)(2f)		—
Other long-term related party payable		4,980,362						4,980,362
		53,692,605			—			53,692,605
Members’ (deficit)		(35,151,982	)		—			(35,151,982	)
		24,678,495			—			24,678,495

F-68

Grand River Jackpot, LLC and Subsidiary

Unaudited Consolidated Statement of Operations

For the Six Months Ended June 30, 2019

	Grand River			Presentation Adjustments			Grand River (as adjusted)
Net revenue:
Gaming — video gaming terminals	$	29,458,013		$	—		$	29,458,013
Amusement		357,809			—			357,809
ATM fee income		436,637			—			436,637
		30,252,459			—			30,252,459
Expenses:
Salaries and wages		2,235,919			(2,235,919	)(2g)		—
Payroll taxes		183,400			(183,400	)(2g)		—
Employee benefits		218,082			(218,082	)(2g)		—
Personnel costs		2,637,401			(2,637,401	)(2g)		—
Video gaming expenses		—			20,045,544	(2h)		20,045,544
General and administrative		—			4,687,063	(2g)		4,687,063
Earnout commissions		725,973			(725,973	)(2h)		—
Gaming taxes		8,837,492			(8,837,492	)(2h)		—
Video gaming terminals fees		10,482,079			(10,482,079	)(2h)		—
Amusement		33,322			(33,322	)(2g)		—
Supplies		115,667			(115,667	)(2g)		—
Advertising		171,882			(171,882	)(2g)		—
Contractual services		201,382			(201,382	)(2g)		—
Taxes and license fees		64,037			(64,037	)(2g)		—
Auto fuel and licenses		116,468			(116,468	)(2g)		—
Travel		47,465			(47,465	)(2g)		—
Repair and maintenance		413,928			(413,928	)(2g)		—
Rent		10,818			(10,818	)(2g)		—
Insurance		156,234			(156,234	)(2g)		—
Utilities and telephone		324,916			(324,916	)(2g)		—
Legal and professional fees		293,895			(293,895	)(2g)		—
Related party management service fee		99,648			(99,648	)(2g)		—
Amortization of intangible assets		916,566			(916,566	)(2i)		—
Amortization of route and customer acquisition costs and location contracts acquired		—			916,566	(2i)		916,566
Depreciation		2,297,421			(2,297,421	)(2j)		—
Depreciation and amortization of property and equipment		—			2,297,421	(2j)		2,297,421
Gain on sale of property and equipment		(62,335	)		62,335	(2k)		—
Other		52,236			(62,335	)(2k)		(10,099	)
Other operating expenses		25,299,094			2,637,401			27,936,495
Operating income		2,315,964			—			2,315,964
Other:
Amortization of debt issuance costs		60,600			(60,600	)(2I)		—
Interest		2,886,340			60,600	(2I)		2,946,940
		2,946,940			—			2,946,940
Net (loss)	$	(630,976	)	$	—		$	(630,976	)

F-69

Grand River Jackpot, LLC and Subsidiary

Unaudited Consolidated Statement of Operations

For the Year Ended December 31, 2018

	Grand River			Presentation Adjustments			Grand River (as adjusted)
Net revenue:
Gaming — video gaming terminals	$	54,754,771		$	—		$	54,754,771
Amusement		665,139			—			665,139
ATM fee income		769,753			—			769,753
		56,189,663			—			56,189,663
Expenses:
Salaries and wages		4,205,769			(4,205,769	)(2g)		—
Payroll taxes		327,267			(327,267	)(2g)		—
Employee benefits		451,764			(451,764	)(2g)		—
Personnel costs		4,984,800			(4,984,800	)(2g)		—
Video gaming expenses		—			37,667,994	(2h)		37,667,994
General and administrative		—			8,749,532	(2g)		8,749,532
Earnout commissions		1,762,901			(1,762,901	)(2h)		—
Gaming taxes		16,426,612			(16,426,612	)(2h)		—
Video gaming terminals fees		19,478,481			(19,478,481	)(2h)		—
Amusement		46,630			(46,630	)(2g)		—
Supplies		211,498			(211,498	)(2g)		—
Advertising		247,317			(247,317	)(2g)		—
Contractual services		439,867			(439,867	)(2g)		—
Taxes and license fees		100,869			(100,869	)(2g)		—
Auto fuel and licenses		254,180			(254,180	)(2g)		—
Travel		70,922			(70,922	)(2g)		—
Repair and maintenance		713,075			(713,075	)(2g)		—
Rent		15,636			(15,636	)(2g)		—
Insurance		269,791			(269,791	)(2g)		—
Utilities and telephone		636,284			(636,284	)(2g)		—
Legal and professional fees		559,367			(559,367	)(2g)		—
Related party management service fee		199,296			(199,296	)(2g)		—
Amortization of intangible assets		2,102,017			(2,102,017	)(2i)		—
Amortization of route and customer acquisition costs and location contracts acquired		—			2,102,017	(2i)		2,102,017
Depreciation		6,354,531			(6,354,531	)(2j)		—
Depreciation and amortization of property and equipment		—			6,354,531	(2j)		6,354,531
Gain on sale of property and equipment		(63,478	)		63,478	(2k)		—
Other		102,794			(63,478	)(2k)		39,316
Other operating expenses		49,928,590			4,984,800			54,913,390
Operating income		1,276,273			—			1,276,273
Other:
Amortization of debt issuance costs		121,200			(121,200	)(2l)		—
Interest		5,547,289			121,200	(2l)		5,668,489
		5,668,489			—			5,668,489
Net (loss)	$	(4,392,216	)	$	—		$	(4,392,216	)

F-70

Reclassification of Grand River’s Consolidated Balance Sheet

(a) Other current assets — $79,693 in receivables and $326,961 in inventories were reclassified to “Other current assets.”

(b) Prepaid expenses — $380,837 in prepaid expenses and other assets was reclassified to “Prepaid expenses.”

(c) Property and equipment, net — Net property and equipment, consisting of $74,737 in land and land improvements, $901,774 in building and building improvements, $45,754,866 in furniture and equipment, $1,583,539 in vehicles, and $37,671,249 in accumulated depreciation were reclassified to “Property and equipment, net.”

(d) Location contracts acquired, net — $2,612,417 in intangible contract rights and noncompete agreements, net of accumulated amortization was reclassified to “Location contracts acquired, net.”

(e) Current portion of consideration payable — $46,168 in current maturities of long-term debt for intangible contract rights was reclassified to “Current portion of consideration payable.”

(f) Consideration payable, less current portion — $108,825 in long-term debt for intangible contract rights, less current maturities was reclassified to “Consideration payable, less current portion.”

Reclassification of Grand River’s Consolidated Statements of Operations

(g) General and administrative — For the six months ended June 30, 2019, $4,687,063 was reclassified to “General and administrative” from salaries and wages, payroll taxes, employee benefits, amusement, supplies, advertising, contractual services, taxes and license fees, auto fuel and licenses, travel, repair and maintenance, rent, insurance, utilities and telephone, legal and professional fees, and related party management service fees. For the year ended December 31, 2018, $8,749,532 was reclassified to “General and administrative” from salaries and wages, payroll taxes, employee benefits, amusement, supplies, advertising, contractual services, taxes and license fees, auto fuel and licenses, travel, repair and maintenance, rent, insurance, utilities and telephone, legal and professional fees, and related party management service fees.

(h) Video gaming expenses — For the six months ended June 30, 2019, $20,045,544 was reclassified to “Video gaming expenses” from earnout commissions, gaming taxes, and video gaming terminals fees. For the year ended December 31, 2018, $37,667,994 was reclassified to “Video gaming expenses” from earnout commissions, gaming taxes, and video gaming terminals fees.

(i) Amortization of route and customer acquisition costs and location contracts acquired — For the six months ended June 30, 2019, $916,566 in amortization of intangible assets was reclassified to “Amortization of route and customer acquisition costs and location contracts acquired.” For the year ended December 31, 2018, $2,102,017 in amortization of intangible assets was reclassified to “Amortization of route and customer acquisition costs and location contracts acquired.”

(j) Depreciation and amortization of property and equipment — For the six months ended June 30, 2019, $2,297,421 in depreciation was reclassified to “Depreciation and amortization of property and equipment.” For the year ended December 31, 2018, $6,354,531 in depreciation was reclassified to “Depreciation and amortization of property and equipment.”

(k) Other operating expenses — For the six months ended June 30, 2019, $62,335 in gain on sale of property and equipment was reclassified to “Other operating expenses.” For the year ended December 31, 2018, $63,478 in gain on sale of property and equipment was reclassified to “Other operating expenses.”

(l) Interest — For the six months ended June 30, 2019, $60,600 in amortization of debt issuance costs was reclassified to “Interest.” For the year ended December 31, 2018, $121,200 in amortization of debt issuance costs was reclassified to “Interest.”

F-71

Note 3. Preliminary Allocation of Purchase Price

On September 17, 2019, Accel announced that it had completed its acquisition of 100% of the outstanding membership interests of Grand River for approximately $100 million in cash. Grand River is a terminal operator in Illinois with over 1,800 VGTs in over 450 licensed establishments.

The total consideration transferred, $108.6 million, includes the amount paid to Grand River’s members plus additional working capital and contingent consideration. The total purchase consideration for the business combination has been allocated to the assets acquired and liabilities assumed for purposes of the unaudited pro forma condensed combined financial information based on their estimated fair values with the excess recorded as goodwill.

The purchase consideration was preliminarily allocated as follows:

Purchase Price
Cash consideration	$	100,000,000
Working capital adjustment		1,337,111
Contingent consideration		7,292,000
	$	108,629,111
Purchase Price Allocation
Cash and cash equivalents	$	10,634,920
Prepaid expenses		380,837
Other current assets		406,654
Goodwill		46,465,931
Property and equipment, net		21,176,000
Location contracts acquired		52,900,000
Total assets	$	131,964,342
Accounts payable		1,964,097
Other accrued expenses		2,970,166
Consideration payable		154,993
Deferred tax liability		18,245,975
Total liabilities	$	23,335,231
Total Preliminary Fair Value of Net Assets Acquired	$	108,629,111

Any increase or decrease in the fair value of the assets acquired and liabilities assumed, as compared to the information shown herein, could also change the portion of the purchase consideration allocable to goodwill and could impact the operating results of Grand River following the business combination due to differences in the allocation of the purchase consideration, depreciation and amortization related to some of these assets and liabilities.

Note 4. Unaudited Pro Forma Adjustments

The pro forma adjustments to the unaudited pro forma condensed combined balance sheet as of June 30, 2019 consist of the following:

(a) Represents release of cash held in the Trust Account that becomes available to fund the Business Combination.

(b) Close out of the equity of Accel, which is replaced by Class A-1 shares, Class A-2 shares, and estimated cash consideration of $350.0 million in connection with the Business Combination.

F-72

(c) To record payment of deferred underwriters’ fees from the Pace IPO, payable at the consummation of the Business Combination.

(d) Represents an adjustment to record the payment of estimated costs related to the Business Combination, which are nonrecurring.

(e) Issuance and sale of 4,696,675 Class A-1 Shares at a purchase price of $10.22 per share, or an aggregate of approximately $48 million, in the Investment Private Placement.

(f) Represents actual redemption of 3,247,267 Public Shares on September 20, 2019 at the estimated per share redemption of $10.25 as of June 30, 2019, which is equal to $33.3 million. Actual shares were redeemed at a per share price of $10.29 resulting in a redemption payment of $33.4 million.

(g) Represents the preliminary net adjustment to cash in connection with the acquisition of Grand River.

Cash consideration transferred	$	(100,000,000	)
Proceeds of new borrowings, net of issuance fees		99,400,000
Estimated working capital adjustment		(1,337,111	)
Unaudited pro forma adjustment	$	(1,937,111	)

(h) Represents the elimination of historical property and equipment, net of $10.6 million and recognition of new property and equipment of $21.2 million resulting from the Grand River acquisition.

(i) Represents the elimination of historical location contracts acquired, net of $2.6 million and recognition of new location contracts acquired of $52.9 million resulting from the Grand River acquisition.

(j) Represents the recognition of goodwill as a result of the Grand River acquisition.

(k) Represents the extinguishment of Grand River’s existing debt of $49.2 million, which includes a current portion of $0.5 million and unamortized debt issuance costs of $0.3 million.

(l) Represents contingent consideration payable to Grand River members based on the preliminary purchase price allocation.

(m) Represents the extinguishment of Grand River’s related party payable of $5.6 million, which includes a current portion of $0.6 million.

(n) Represents the estimated adjustment for deferred tax taxes as result of tax impact from changes in assets and liabilities due to the acquisition of Grand River.

(o) Represents the reclassification of the redeemable portion of the Public Shares to permanent equity and conversion of Public Shares to Class A-1 Shares in connection with the Pace Domestication.

(p) Represents the conversion of Founder Shares to Class F Shares in connection with the Pace Domestication.

(q) Surrender of 1,250,000 Class F Shares and exchange of 10,000,000 Class F Shares for 8,000,000 Class A-1 Shares and 2,000,000 Class A-2 Shares in the Class F Share Exchange.

(r) Elimination of historical retained earnings of Pace.

(s) Elimination of historical equity of Grand River.

(t) Represents the maximum redemption of 11,000,000 Public Shares at the estimated per share redemption of $10.25, which is equal to $112.8 million, being the balance of the Trust Account as of June 30, 2019, divided by 41,752,733 Public Shares held by Pace public shareholders after September 20, 2019 redemption.

(u) Represents additional net debt of $30.0 million cash proceeds from the issuance of the new financing to fund the maximum redemptions as part of the Business Combination.

F-73

The pro forma adjustments to the unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2019 and for the year ended December 31, 2018 consist of the following:

(aa) Represents the elimination of historical depreciation expense of Grand River, and recognition of depreciation expense in connection with fair value of property and equipment. The adjustment in depreciation is based on the estimated fair value and Accel’s historical useful lives of 7 years to 35 years and is calculated using the straight-line method. Grand River’s historic useful lives ranged between 3 to 40 years.

	Six Months Ended June 30, 2019			Year Ended December 31, 2018
Estimated preliminary depreciation expense on property and equipment	$	1,479,257		$	2,958,514
Less: historical depreciation expense		(2,297,421	)		(6,354,531	)
Unaudited pro forma adjustment	$	(818,164	)	$	(3,396,017	)

(bb) Represents the elimination of historical amortization expense of Grand River, and recognition of amortization expense in connection with fair value of intangibles related to location contracts acquired. The fair value of identifiable intangible asset is determined using the “income approach”. Amortization expense of fair value intangibles is calculated using the straight-line method over the estimated remaining useful lives of 12 years.

	Six Months Ended June 30, 2019			Year Ended December 31, 2018
Estimated preliminary amortization expense on intangible assets	$	2,204,167		$	4,408,333
Less: historical amortization expense		(916,566	)		(2,102,017	)
Unaudited pro forma adjustment	$	1,287,601		$	2,306,316

(cc) Elimination of interest income on the Trust Account. There is no related tax impact.

(dd) Interest expense on the proceeds from the credit facilities drawn used to finance the acquisition of Grand River and the reversal of interest expense on historical Grand River debt.

	Six Months Ended June 30, 2019			Year Ended December 31, 2018
Estimated preliminary interest expense on additional borrowings, including amortization of debt issuance costs	$	2,087,229		$	4,192,257
Less: historical interest expense and amortization of debt issuance costs		(2,946,940	)		(5,668,489	)
Unaudited pro forma adjustment	$	(859,711	)	$	(1,476,232	)

(ee) Represents the net impact on income taxes resulting from an income tax benefit attributable to application of the statutory tax rate of 30% for the periods presented. The tax impacts of the Business Combination were estimated on the applicable law in effect on June 30, 2019, inclusive of the effects of the Tax Act.

(ff) As the Business Combination is being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the Pace Shares issuable relating to the Business Combination have been outstanding for the entire period presented.

F-74

Weighted average Pace Shares outstanding — basic and diluted is calculated as follows:

	Assuming No Additional Redemptions		Assuming Maximum Redemptions
Pace Public Shareholders		41,752,733		30,752,733
Pace Initial Shareholders		7,500,000		7,500,000
Private Placement Investors		4,696,675		4,696,675
Donor-Advised Fund		500,000		500,000
Accel Shareholders		29,385,934		29,385,934
Pro Forma Shares Outstanding — Basic & Diluted		83,835,342		72,835,342

(gg) Represents additional interest and amortization of debt issuance costs of $0.6 million and $1.3 million for the six months ended June 30, 2019 and year ended December 31, 2018, respectively, associated with the additional debt drawn to fund maximum redemptions in connection with the Business Combination as described in note 4(u) above as if the debt had been issued as of the earliest period presented.

(hh) Represents tax provision adjustment for additional debt as described in note 4(u) at a statutory rate of 30.0% related to the operating adjustments for the for the periods presented. The tax impacts of the Business Combination were estimated on the applicable laws in effect for the periods presented, inclusive of the effects of the Tax Act.

F-75

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

Note 1. Basis of Pro Forma Presentation

Overview

The business combination was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, TPG Pace Holdings Corp. was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the business combination was treated as the equivalent of Accel Entertainment Inc. issuing stock for the net assets of TPG Pace Holdings Corp., accompanied by a recapitalization.

On September 17, 2019, Accel completed the acquisition of 100% of the outstanding membership interests of Grand River. The acquisition of Grand River by Accel was accounted for as a business combination under ASC Topic 805, Business Combinations (“ASC 805”) and Accel, as the accounting acquirer, recorded the assets acquired and liabilities assumed at fair value on a preliminary basis.

The acquisition method of accounting uses the fair value concepts defined in ASC Topic 820, Fair Value Measurements (“ASC 820”). In general, ASC 805 requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date by Accel.

ASC 820 defines fair value, establishes a framework for measuring fair value, and sets forth a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to develop the fair value measurements. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for a non-financial asset assume the highest and best use by these market participants. Many of these fair value measurements can be highly subjective, and it is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

Under ASC 805, acquisition-related transaction costs are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred, or if related to the issuance of debt, capitalized as debt issuance costs. Acquisition-related transaction costs expected to be incurred as part of the business combination and the other related transactions include estimated fees related to advisory, legal and accounting fees.

The pro forma adjustments represent management’s estimates based on information available as of the date of the condensed combined financial statements and do not reflect possible adjustments related to restructuring or integration activities that have yet to be determined or transaction or other costs following the reverse recapitalization that are not expected to have a continuing impact. Further, one-time transaction-related expenses anticipated to be incurred prior to, or concurrently with the consummation of the reverse recapitalization are not included in the unaudited pro forma condensed combined statements of operations.

Description of Reverse Recapitalization

Pursuant to the Transaction Agreement, TPG Holdings Corp. acquired, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock of Accel Entertainment, Inc. In connection with reverse recapitalization, TPG Pace Holdings Corp. changed its name to Accel Entertainment, Inc.

The consideration paid to holders of Accel stock in connection with the reverse recapitalization and subject to the terms and conditions of the Transaction Agreement, consisted of a mix of consideration comprised of cash consideration equal to the number of shares of Accel stock for which such holder of Accel stock made a cash

F-76

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

Note 1. Basis of Pro Forma Presentation (Continued)

election multiplied by $177 per share (the “Purchase Price”) and share consideration comprised of a number of Class A-1 Shares equal to the number of shares of Accel Stock for which such holder of Accel Stock did not make a cash election multiplied by an exchange ratio calculated by dividing the Purchase Price by $10.30, which was the closing price of the common stock of TPG Pace Holdings Corp. on November 20, 2019. In addition, each holder of Accel stock that made a cash election with respect to less than 70% of its shares of Accel stock received its pro rata share, with such pro rata share determined with reference to a number of shares equal to 70% of such holder’s shares of Accel Stock less the number of shares of Accel stock with respect to which such holder made a cash election, of 2,444,444 2019 Warrants, subject to the conditions set forth in a warrant agreement and 3,000,000 Class A-2 Shares, subject to the conditions set forth in a restricted stock agreement.

In connection with the reverse recapitalization, TPG Pace Holdings and its affiliates converted 7,500,000 of Class A-1 Shares, 4,888,889 2019 Warrants subject to the conditions set forth in the New Pace Warrant Agreement and 2,000,000 Class A-2 Shares, subject to the conditions set forth in a restricted stock agreement.

As part of an Investment Private Placement, certain accredited investors (as defined by Rule 501 of Regulation D) agreed to subscribe for and purchase and Pace agreed to issue and sell to such investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million. The proceeds from the Investment Private Placement was used to fund a portion of the cash consideration required in the reverse recapitalization.

In connection with the reverse recapitalization, Accel repurchased approximately 36,157 shares of its stock from certain employees, directors and officers at a repurchase price of $177 per share in order to facilitate (i) the repayment of existing loans to Accel’s executive officers, (ii) the exercise of vested options and (iii) funding any resulting tax obligations from the exercise of such vested options.

Note 2. Preliminary Allocation of Purchase Price

On September 16, 2019, Accel Entertainment Inc. completed its acquisition of 100% of the outstanding membership interests of Grand River for approximately $100 million in cash. Grand River is a terminal operator in Illinois with over 2,009 VGTs in over 450 licensed establishments.

The acquisition aggregate purchase consideration transferred totaled $113.7 million, which included: i) a cash payment made at closing of $100.0 million; ii) a subsequent cash payment of approximately $6.6 million for a working capital adjustment and; iii) contingent purchase consideration with an estimated fair value of $7.1 million. The total purchase consideration for the business combination has been allocated to the assets acquired and liabilities assumed based on their estimated fair values with the excess recorded as goodwill. Refer to the preliminary purchase price within Accel Entertainment Inc.’s December 31, 2019 financial statements included elsewhere in this filing.

Note 3. Unaudited Pro Forma Adjustments

The pro forma adjustments to the unaudited pro forma condensed combined statements of operation for the year ended December 31, 2019 consist of the following:

(a) Reflects the recognition of pre-combination activities of Grand River.

(b) Represents the elimination of historical depreciation expense of Grand River, and recognition of depreciation expense in connection with fair value of property and equipment through September 16, 2019. The adjustment in depreciation is based on the estimated fair value and Accel Entertainment Inc.’s historical

F-77

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

Note 3. Unaudited Pro Forma Adjustments (Continued)

useful lives of 3 years to 29 years and is calculated using the straight-line method. Grand River’s historic useful lives ranged between 3 to 40 years.

	Year Ended December 31, 2019
Depreciation expense on property and equipment	$	1,935
Less: historical depreciation expense		(3,244	)
Unaudited pro forma adjustment	$	(1,309	)

(c) Represents the elimination of historical amortization expense of Grand River, and recognition of amortization expense in connection with fair value of intangibles related to location contracts acquired through September 16, 2019. The fair value of identifiable intangible asset is determined using the “income approach.” Amortization expense of fair value intangibles is calculated using the straight-line method over the estimated remaining useful lives of 10 years.

	Year Ended December 31, 2019
Amortization expense on intangible assets	$	3,798
Less: historical amortization expense		(1,253	)
Unaudited pro forma adjustment	$	2,545

(d) Represents the increase in operating expenses recorded in the Pace historical unaudited consolidated statement of operations prior to the reverser recapitalization.

(e) Represents the elimination of non-recurring transaction costs.

(f) Represents the reversal of historical interest expense incurred prior to September 16, 2019 on extinguished Grand River debt.

(g) In conjunction with the closing of the reverse recapitalization, Accel entered into a credit agreement on November 13, 2019 to refinance Accel’s existing financing arrangement. The new financing arrangement includes draw at close amounts, net of issuance costs, of $48.7 million in the revolving credit facility, $234.0 million in the initial term loan facility, and $58.5 million in the additional term loan facility, with total outstanding borrowings totalling $341.2 million, net of issuance costs of $8.8 million. The revolving loans and term loans bear interest at LIBOR plus a margin of 2.25%. The following represents the adjustment to record the interest expense on the refinanced debt as if the debt was borrowed on January 1, 2018, including amortization of debt issuance costs, and the subsequent removal of Accel’s interest expense related to the old debt instruments.

	Year Ended December 31, 2019
Interest expense on refinancing arrangement, including amortization of debt issuance costs	$	17,965
Less: Accel interest expense on historic financing arrangements		(12,860	)
Unaudited net pro forma adjustment	$	5,105

F-78 

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

Note 3. Unaudited Pro Forma Adjustments (Continued)

(h) Represents the net impact on income taxes resulting from an income tax benefit attributable to application of the effective tax rate of 28.51% for December 31, 2019. The pro forma adjustment tax impacts were estimated on the applicable law in effect on December 31, 2019, inclusive of the effects of the Tax Act.

	Year Ended December 31, 2019
Tax impact on Grand River acquisition	$	433
Tax impact on removal of Accel interest expense on refinanced loans and non-reoccurring transaction costs	$	6,674
Tax impact on addition of interest expense on refinanced loans		(5,122	)
Unaudited pro forma adjustment	$	1,985

(i) As the reverse recapitalization is being reflected as if it had occurred at January 1, 2019, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the TPG Pace Holding Inc. shares issued relating to the reverse recapitalization have been outstanding for the entire period presented.

Weighted average Pace Shares outstanding—basic and diluted is calculated as follows:

	Number of shares
Pace Public Shareholders		18,813
Pace Initial Shareholders		7,500
Private Placement Investors		4,696
Donor-Advised Fund		500
Accel Shareholders		45,128
Pro Forma Shares Outstanding—Basic & Diluted		76,637

F-79 

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Revenues:
Net video gaming	$	—		$	100,994	$	101,575		$	195,169
Amusement		260			1,348		1,952			2,786
ATM fees and other revenue		119			1,925		2,080			3,737
Total net revenues		379			104,267		105,607			201,692
Operating expenses:
Video gaming expenses		—			66,082		67,980			127,703
General and administrative		10,451			17,476		33,919			33,600
Depreciation and amortization of property and equipment		5,071			6,100		9,938			12,141
Amortization of route and customer acquisition costs and location contracts acquired		5,565			4,624		11,130			8,927
Other expenses, net		3,132			730		4,336			1,346
Total operating expenses		24,219			95,012		127,303			183,717
Operating (loss) income		(23,840	)		9,255		(21,696	)		17,975
Interest expense, net		2,489			3,156		6,738			6,203
(Loss) income before income tax (benefit) expense		(26,329	)		6,099		(28,434	)		11,772
Income tax (benefit) expense		(5,055	)		1,771		(5,194	)		3,449
Net (loss) income	$	(21,274	)	$	4,328	$	(23,240	)	$	8,323
Net (loss) income per common share:
Basic (1)	$	(0.27	)	$	0.07	$	(0.30	)	$	0.14
Diluted (1)		(0.27	)		0.07		(0.30	)		0.13
Weighted average number of shares outstanding:
Basic (1)		78,317			58,605		78,161			57,896
Diluted (1)		78,317			61,904		78,161			61,742

(1) Per share and share amounts for 2019 have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 1.

The accompanying notes are an integral part of these condensed consolidated financial statements

F-80

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)	June 30, 2020			December 31, 2019
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	148,834		$	125,403
Prepaid expenses		3,443			4,151
Income taxes receivable		3,907			3,907
Investment in convertible notes (current)		17,000			11,000
Other current assets		6,637			7,034
Total current assets		179,821			151,495
Property and equipment, net		123,759			119,201
Other assets:
Route and customer acquisition costs, net		16,460			17,399
Location contracts acquired, net		156,624			166,783
Goodwill		34,511			34,511
Investment in convertible notes, less current portion		13,000			19,000
Other assets		1,101			928
		221,696			238,621
Total assets	$	525,276		$	509,317
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of debt	$	18,250		$	15,000
Current portion of route and customer acquisition costs payable		1,675			1,700
Accrued location gaming expense		—			1,323
Accrued state gaming expense		—			7,119
Accounts payable and other accrued expenses		27,278			19,511
Current portion of consideration payable		3,272			10,293
Total current liabilities		50,475			54,946
Long-term liabilities:
Debt, net of current maturities		380,740			334,692
Route and customer acquisition costs payable, less current portion		4,708			4,752
Consideration payable, less current portion		16,541			16,426
Deferred income tax liability		7,781			12,976
Total long-term liabilities		409,770			368,846
Stockholders’ equity :
Preferred Stock, par value of $0.0001; 1,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2020 and December 31, 2019		—			—
Class A-1 Common Stock, par value $0.0001; 250,000,000 shares authorized; 78,382,405 shares issued and outstanding at June 30, 2020; 76,637,470 shares issued and outstanding at December 31, 2019		8			8
Class A-2 Common Stock, par value $0.0001; 10,000,000 shares authorized; 3,403,363 shares issued and outstanding at June 30, 2020; 4,999,999 shares issued and outstanding at December 31, 2019		1			1
Additional paid-in capital		108,732			105,986
Accumulated deficit		(43,710	)		(20,470	)
Total stockholders’ equity		65,031			85,525
Total liabilities and equity	$	525,276		$	509,317

The accompanying notes are an integral part of these condensed consolidated financial statements

F-81

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except shares)	Class A-1 Common Stock				Class A-2 Common Stock					Additional Paid-In Capital		Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount		Shares			Amount
Balance, January 1, 2020		76,637,470	$	8		4,999,999		$	1	$	105,986	$	(20,470	)	$	85,525
Conversion of Class A-2 Common Stock to Class A-1 Common Stock		1,596,636		—		(1,596,636	)		—		—		—			—
Stock-based compensation		—		—		—			—		1,060		—			1,060
Net loss		—		—		—			—		—		(1,966	)		(1,966	)
Balance, March 31, 2020		78,234,106		8		3,403,363			1		107,046		(22,436	)		84,619
Exercise of common stock options		148,299		—		—			—		359		—			359
Stock-based compensation		—		—		—			—		1,327		—			1,327
Net loss		—		—		—			—		—		(21,274	)		(21,274	)
Balance, June 30, 2020		78,382,405	$	8		3,403,363		$	1	$	108,732	$	(43,710	)	$	65,031

(In thousands, except shares)	Class A-1 Common Stock (1)				Additional Paid-In Capital (1)		Treasury Stock (1)						Accumulated Deficit			Total Stockholders’ Equity
	Shares		Amount				Shares			Amount
Balance, January 1, 2019		58,491,281	$	6	$	80,146		(1,311,880	)	$	(5,832	)	$	(17,202	)	$	57,118
Exercise of warrants		495,030		—		334		46,409			227			—			561
Employee stock option compensation		—		—		128		—			—			—			128
Net income		—		—		—		—			—			3,995			3,995
March 31, 2019		58,986,311		6		80,608		(1,265,471	)		(5,605	)		(13,207	)		61,802
Exercise of common stock options		—		—		—		284,608			84			—			84
Exercise of warrants		1,164,093		—		1,205		—			—			—			1,205
Employee stock option compensation		—		—		128		—			—			—			128
Net income		—		—		—		—			—			4,328			4,328
Balance, June 30, 2019		60,150,404	$	6	$	81,941		(980,863	)	$	(5,521	)	$	(8,879	)	$	67,547

(1) Share amounts for 2019 have been retroactively restated to give effect to the reverse capitalization that is discussed in Note 1.

The accompanying notes are an integral part of these condensed consolidated financial statements

F-82

ACCEL ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(In thousands)	2020			2019
Cash flows from operating activities:
Net (loss) income	$	(23,240	)	$	8,323
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization of property and equipment		9,938			12,141
Amortization of route and customer acquisition costs and location contracts acquired		11,130			8,927
Amortization of debt issuance costs		936			333
Stock-based compensation		2,387			256
Loss (gain) on disposal of property and equipment		93			(47	)
Net loss on write-off of route and customer acquisition costs and route and customer acquisition costs payable		611			171
Remeasurement of contingent consideration		(2,432	)		227
Payments on consideration payable		(1,548	)		—
Accretion of interest on route and customer acquisition costs payable, contingent consideration, and contingent stock consideration		1,078			255
Deferred income taxes		(5,195	)		—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		1,105			(3,360	)
Income taxes receivable		—			(1,050	)
Route and customer acquisition costs		(585	)		(1,271	)
Route and customer acquisition costs payable		(69	)		(714	)
Accounts payable and accrued expenses		(11,319	)		1,973
Other assets		(174	)		(81	)
Net cash (used in) provided by operating activities		(17,284	)		26,083
Cash flows from investing activities:
Purchases of property and equipment		(4,123	)		(10,600	)
Proceeds from the sale of property and equipment		121			52
Net cash used in investing activities		(4,002	)		(10,548	)
Cash flows from financing activities:
Payments on term loan		(6,000	)		(3,125	)
Proceeds from delayed draw term loans		65,000			10,750
Payments on delayed draw term loans		(2,313	)		(4,750	)
Net payments on line of credit		(8,000	)		(12,000	)
Payments for debt issuance costs		(325	)		—
Proceeds from exercise of stock options and warrants		359			1,851
Payments on consideration payable		(4,004	)		(452	)
Payments on capital lease obligation		—			(531	)
Net cash provided by (used in) financing activities		44,717			(8,257	)
Net increase in cash and cash equivalents		23,431			7,278
Cash and cash equivalents:
Beginning of period		125,403			92,229
End of period	$	148,834		$	99,507
Supplemental disclosures of cash flow information:
Cash payments for:
Interest, net of amount of capitalized	$	6,678		$	5,263
Income taxes	$	—		$	1,759
Supplemental schedules of noncash investing and financing activities:
Purchases of property and equipment in accounts payable and accrued liabilities	$	10,586		$	2,186

The accompanying notes are an integral part of these condensed consolidated financial statements

F-83

ACCEL ENTERTAINMENT, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Description of Business

Accel Entertainment, Inc.’s (and together with its subsidiaries, the “Company”) wholly owned subsidiary, Accel Entertainment Gaming LLC, is a terminal operator licensed by the State of Illinois Gaming Board since March 15, 2012. Its terminal operator license allows the Company to install and operate video gaming terminals in licensed video gaming locations throughout the State of Illinois as approved by individual municipalities. The Company also operates redemption terminals, which also function as automated teller machines (“ATMs”) at its licensed video gaming locations, and amusement equipment at certain locations. The Company is subject to various federal, state and local laws and regulations in addition to gaming regulations. The terminal operator license, which is not transferable or assignable, requires compliance with applicable regulations and the license is renewable annually unless sooner cancelled or terminated.

The Company operates 11,108 and 8,082 video gaming terminals across 2,335 and 1,762 locations in the State of Illinois as of June 30, 2020 and 2019, respectively.

On November 20, 2019, the Company consummated a business combination which was accounted for as a reverse recapitalization. For more details on the reverse recapitalization, see Note 3 to the Company’s Consolidated Financial Statements as presented in its Annual Report on Form 10-K for the year ended December 31, 2019. As a result of the reverse recapitalization, all references to numbers of common shares and per common share data for 2019 in these condensed consolidated financial statements and related notes have been retroactively adjusted to account for the effect of the reverse recapitalization.

The Company is an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) following the consummation of the reverse recapitalization. The Company has elected to use this extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act and as a result of this election, its financial statements may not be comparable to companies that comply with public company effective dates. The Company will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following June 30, 2022, (b) in which Accel has total annual gross revenue of at least $1.0 billion or (c) in which Accel is deemed to be a large accelerated filer, which means the market value of Class A-1 Shares that is held by non-affiliates exceeds $700 million as of the last business day of the prior second fiscal quarter, and (ii) the date on which Accel has issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Impact of COVID-19 on the Condensed Consolidated Financial Statements

In response to the COVID-19 outbreak, the Illinois Gaming Board (“IGB”) made the decision to shut down all video gaming terminals (“VGTs”) across the State of Illinois starting at 9:00 p.m. on March 16, 2020 and ultimately extended the shutdown through June 30, 2020. The temporary shutdown of Illinois video gaming impacted all of the gaming days during the three months ended June 30, 2020 and 106 of the 182 gaming days (or 58% of gaming days) during the six months ended June 30, 2020. In light of these events and their effect on the Company’s employees and licensed establishment partners, the Company took action to position the Company to help mitigate the effects of the temporary cessation of operations by, among other things, furloughing approximately 90% of its employees and deferring certain payments to major vendors. Additionally, members of the Company’s senior management decided to voluntarily forgo their base salaries until the resumption of video gaming operations. Beginning in early June, the Company started reinstating employees from furlough in anticipation of resuming operations on July 1, 2020.

As a result of these developments, the Company’s revenues, results of operations and cash flows have been materially affected, and the Company expects it to continue for at least as long as COVID-19 is a threat to the

F-84

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

public health. The situation is rapidly changing and additional impacts to the business may arise that the Company is not aware of currently.

The Company incurred non-recurring, one-time expenses of $1.3 million and $1.9 million for the three and six months ended June 30, 2020, respectively, for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown. These costs are included within other expenses, net. The Company also spent $1.4 million in capital costs related to the purchase of IGB-mandated spacers for its VGTs to promote social distancing requirements within the gaming area and incurred operating expenses of $0.3 million related to cleaning, disinfecting and sanitizing supplies.

As part of the Company’s analysis of the financial reporting impacts of the COVID-19 outbreak, and corollary response in the State of Illinois, including the temporary shutdown of our gaming operations, the Company evaluated its goodwill and long-lived assets for potential impairment triggers as of June 30, 2020. As a result of this analysis, no impairment losses were recorded. The Company will continue to monitor its assets for potential impairment losses in future periods. While the IGB has announced the resumption of all video gaming activities effective July 1, 2020, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events. If this were to occur, the Company could recognize impairment losses which could be material.

The Company also engaged a 3rd party valuation firm to assist in determining the fair value of its investment in convertible notes as of June 30, 2020. The valuation concluded that the carrying amount of the investment in the convertible notes approximates the fair value in all material respects, as of June 30, 2020.

Note 2. Summary of Significant Accounting Policies

Basis of presentation and preparation: The condensed consolidated financial statements and accompanying notes were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements include the accounts of the Company and of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the dates and periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. In preparing our condensed consolidated financial statements, we applied the same significant accounting policies as described in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Any significant changes to those accounting policies are discussed below. Interim results are not necessarily indicative of results for a full year.

Adopted accounting pronouncements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-19”), Revenue from Contracts with Customers (Topic 606), which amends the existing revenue recognition guidance and creates a new topic for Revenue from Contracts with Customers. The guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance also substantially revises required interim and annual disclosures. The Company, as an emerging growth company, elected to use

F-85

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

the non-public effective date and adopted the standard in the fourth quarter of 2019 for the annual period ended December 31, 2019. The Company also elected the modified retrospective adoption approach and applied the standard to all contracts open as of January 1, 2019. The Company’s quarterly financial statements and disclosure for the first six months of 2019 reflect the previous accounting standard of FASB Accounting Standards Codification (“ASC”) 605, Revenue Recognition, and will not be restated for the adoption of Topic 606. The cumulative impact of the new revenue standard for fiscal year 2019 was recorded in the fourth quarter of 2019 and reflects the adjustment as if the Company adopted the standard as of January 1, 2019. The timing and amount of revenue recognized by the Company did not change upon the adoption of the new standard, however the Company’s accounting for route acquisition costs was impacted. ASC 340-40, Other Assets and Deferred Costs—Contracts With Customers (“ASC 340-40”), issued in conjunction with ASU 2014-09, provides updated guidance around accounting for the incremental costs of obtaining a contract with a customer and for the costs incurred to fulfill a contract with a customer. ASC 340-40 states that an entity should amortize contract cost assets “on a systemic basis that is consistent with the transfer to the customer of the good or services to which the asset relates,” which typically corresponds to the period in which revenue will be recognized. The Company chose straight-line amortization of the contracts as it felt that best depicted when revenue would be recognized and when customers are visiting the gaming establishments. When determining the appropriate amortization period under ASC 340-40, the Company evaluated the impact of any renewal clauses that are likely to be exercised. The Company focused on whether commissions paid for renewals were commensurate with commissions paid on the original contract. The Company determined the renewal commissions were not commensurate and the amortization period should include expected renewals. As such, the period over which route and customer acquisition costs are amortized was extended to include expected renewals which resulted in an increase to the average life to 12.4 years.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which intends to simplify the guidance by removing certain exceptions to the general principles and clarifying or amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company early adopted the new standard in Q2 2020 (effective January 1, 2020) on a prospective basis. The adoption of the new standard will not have a material impact on the Company’s full year effective tax rate.

Use of estimates: The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates used by the Company include, among other things, the useful lives for depreciable and amortizable assets, income tax provisions, the evaluation of the future realization of deferred tax assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with business acquisitions, the selection of useful lives for depreciable and amortizable assets in conjunction with business acquisitions, the valuation of level 3 investments, contingencies, and the expected term of share-based compensation awards and stock price volatility when computing share-based compensation expense. The Company also estimated stock prices prior to the reverse recapitalization discussed in Note 1 when computing share-based compensation expense. Actual results may differ from those estimates.

Change in estimate: During the first quarter of 2020, the Company conducted a review of its estimate of depreciable lives for its video gaming terminals and equipment. As a result of this review, the Company extended the useful lives of its video gaming terminals and equipment from 7 to 10 years as the equipment is lasting longer than originally estimated. The Company has many video gaming terminals and equipment that were purchased

F-86

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

when the Company started operations that are still being used today. The impact of this change in estimate for the three and six months ended June 30, 2020, was as follows (in thousands):

	Three months ended June 30, 2020		Six months ended June 30, 2020
Decrease to depreciation expense	$	1,898	$	4,511
Decrease to net loss	$	1,533	$	3,687
Decrease to loss per share	$	0.02	$	0.05

Segment information: The Company operates as a single operating segment. The Company’s chief operating decision maker (“CODM”) is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM assesses the Company’s performance and allocates resources based on consolidated results, and this is the only discrete financial information that is regularly reviewed by the CODM.

Cash and cash equivalents: Cash and cash equivalents include bank deposit accounts; term bank deposit accounts; uncollected cash in the Company’s video gaming terminals, ATMs, and redemption terminals; and cash in Company vaults.

The Company’s policy is to limit the amount of credit exposure to any one financial institution. The Company maintains its cash in accounts which may at times exceed Federal Deposit Insurance Corporation insured limits. The Company has not experienced any losses in such accounts.

Property and equipment: Property and equipment are stated at cost or fair value at the date of acquisition. Maintenance and repairs are charged to expense as incurred. Major additions, replacements and improvements are capitalized. Spare parts are included in other current assets when acquired and are expensed when used to repair equipment. Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video gaming terminals and equipment	10
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3-5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15-29

Leasehold improvements are amortized over the shorter of the useful life or the lease.

Development costs directly associated with the acquisition, development and construction of a project are capitalized as a cost of the project during the periods in which activities necessary to prepare the property for its intended use are in progress. Interest costs associated with major construction projects are capitalized as part of the cost of the constructed assets. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using the weighted-average cost of borrowing. Capitalization of interest ceases when the project (or discernible portions of the project) is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

F-87

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Stock-based compensation: The Company grants common stock options and/or restricted stock units to certain employees and officers. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as general and administrative expense over the employee’s requisite service period.

Recent accounting pronouncements: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. In July 2018, the FASB also issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method allowing the standard to be applied at the adoption date. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for the Company’s fiscal year beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, unless the Company disqualifies as an emerging growth company, in which case earlier adoption may be required. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is assessing impact of the standard on its condensed consolidated financial statements.

Note 3. Investment in Convertible Notes

On July 19, 2019, the Company entered into an agreement to purchase up to $30.0 million in convertible promissory notes from another terminal operator that bear interest at 3% per annum. The Company has the option of converting the notes to common stock of the terminal operator prior to the maturity date. At closing, the Company purchased a $5.0 million note which is subordinated to the terminal operator’s credit facility and matures six months following the satisfaction of administrative conditions.

On October 11, 2019, the Company purchased an additional $25.0 million note which is also subordinated to the terminal operator’s credit facility and, beginning on July 1, 2020, the balance of this note, if not previously converted, will be payable in equal $1,000,000 monthly installments until all principal has been repaid in full.

On July 30, 2020, the Company and the terminal operator entered into an amendment to the original note agreement. See Note 17 for further information.

The carrying amount of the investment in the convertible notes approximates the fair value, in all material respects, as of June 30, 2020. For more information on how the Company determined the fair value of the convertible notes, see Note 10.

F-88

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Note 4. Property and Equipment

Property and equipment consists of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Video game terminals and equipment	$	176,453		$	166,850
Amusement and other equipment		19,115			16,417
Office equipment and furniture		1,590			1,540
Computer equipment and software		9,405			8,715
Leasehold improvements		1,507			44
Vehicles		10,254			9,304
Buildings and improvements		10,757			12,075
Land		911			911
Construction in progress		1,025			768
Total property and equipment		231,017			216,624
Less accumulated depreciation and amortization		(107,258	)		(97,423	)
Property and equipment, net	$	123,759		$	119,201

Depreciation and amortization of property and equipment amounted to $5.1 million and $9.9 million for the three and six months ended June 30, 2020, respectively. In comparison, depreciation and amortization of property and equipment amounted to $6.1 million and $12.1 million for the three and six months ended June 30, 2019, respectively

Note 5. 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 due monthly. Gross payments due, based on the number of live locations, are approximately $6.8 million and $7.4 million as of June 30, 2020 and December 31, 2019, 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 $6.4 million and $6.5 million as of June 30, 2020 and December 31, 2019, respectively, of which approximately $1.7 million and $1.7 million is included in current liabilities in the accompanying condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively. The route and customer acquisition cost asset is comprised of payments made on the contracts of $18.6 million and $18.7 million as of June 30, 2020 and December 31, 2019, 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 $2.1 million and $2.2 million as of June 30, 2020 and December 31, 2019, respectively.

Route and customer acquisition costs consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Cost	$	28,167		$	28,501
Accumulated amortization		(11,707	)		(11,102	)
Route and customer acquisition costs, net	$	16,460		$	17,399

F-89

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Amortization expense of route and customer acquisition costs was $0.5 million and $0.9 million for the three and six months ended June 30, 2020, respectively. In comparison, amortization expense of route and customer acquisition costs was $0.6 million and $1.3 million for the three and six months ended June 30, 2019, respectively. As previously mentioned, the Company’s current year amortization expense is lower due to the adoption of ASC Topic 606 as the amortization period over which route and customer acquisition costs was extended to include expected renewals.

Note 6. Location Contracts Acquired

Location contract assets acquired in business acquisitions are recorded at acquisition at fair value based on an income approach. Location contracts acquired consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Cost	$	204,353		$	204,353
Accumulated amortization		(47,729	)		(37,570	)
Location contracts acquired, net	$	156,624		$	166,783

Amortization expense of location contracts acquired was $5.1 million and $10.2 million, during the three and six months ended June 30, 2020, respectively. In comparison, amortization expense of location contracts acquired was $4.0 million and $7.6 million, during the three and six months ended June 30, 2019, respectively.

Note 7. Goodwill

On September 16, 2019, the Company acquired Grand River Jackpot which was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill of $34.5 million as of June 30, 2020 and December 31, 2019, of which $28.7 million is deductible for tax purposes.

As previously discussed in Note 1, the Company evaluated its goodwill for potential impairment triggers as of June 30, 2020. As a result of this analysis, no impairment losses were recorded.

Note 8. Debt

The Company’s debt as of June 30, 2020 and December 31, 2019, consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
2019 Senior Secured Credit Facility:
Revolving credit facility	$	50,500		$	58,500
Term Loan		234,000			240,000
Delayed Draw Term Loan (DDTL)		122,688			60,000
Total debt		407,188			358,500
Less: Debt issuance costs		(8,198	)		(8,808	)
Total debt, net of debt issuance costs		398,990			349,692
Less: Current maturities		(18,250	)		(15,000	)
Total debt, net of current maturities	$	380,740		$	334,692

F-90

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

2019 Senior Secured Credit Facility

On November 13, 2019, in order to refinance its prior credit facility, for working capital and other general purposes from time to time, the Company entered into a credit agreement (the “Credit Agreement”) as borrower, the Company and its wholly-owned domestic subsidiaries, as a guarantor, the banks, financial institutions and other lending institutions from time to time party thereto, as lenders, the other parties from time to time party thereto and Capital One, National Association, as administrative agent (in such capacity, the “Agent”), collateral agent, issuing bank and swingline lender, providing for a:

• $100.0 million revolving credit facility, including a letter of credit facility with a $10.0 million sublimit and a swing line facility with a $10.0 million sublimit,

• $240.0 million initial term loan facility and

• $125.0 million additional term loan facility.

As a result of the COVID-19 pandemic and the temporary shutdown of its operations by the IGB, the Company borrowed $65 million on its delayed draw term loan in March 2020 to increase its cash position and help preserve its financial flexibility.

As of June 30, 2020, there remained approximately $49.5 million of availability under the Credit Agreement.

The obligations under the Credit Agreement are guaranteed by the Company and its wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”). The obligations under the Credit Agreement are secured by substantially all of assets of the Guarantors, subject to certain exceptions. Certain future-formed or acquired wholly-owned domestic subsidiaries of the Company will also be required to guarantee the Credit Agreement and grant a security interest in substantially all of its assets (subject to certain exceptions) to secure the obligations under the Credit Agreement.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at a rate per annum equal to either (a) the adjusted LIBOR rate (“LIBOR”) (which cannot be less than zero) for interest periods of 1, 2, 3 or 6 months (or if consented to by (i) each applicable Lender, 12 months or any period shorter than 1 month or (ii) the Agent, a shorter period necessary to ensure that the end of the relevant interest period would coincide with any required amortization payment ) plus the applicable LIBOR margin or (b) the alternative base rate (“ABR”) plus the applicable ABR margin. ABR is a fluctuating rate per annum equal to the highest of (i) the Federal Funds Effective Rate plus 1/2 of 1.0%, (ii) the prime rate announced from time to time by Capital One, National Association and (iii) LIBOR for a 1-month Interest Period on such day plus 1.0%. The Credit Agreement also includes provisions for determining a replacement rate when LIBOR is no longer available. As of June 30, 2020, the weighted-average interest rate was approximately 3.3%.

Interest is payable quarterly in arrears for ABR loans, at the end of the applicable interest period for LIBOR loans (but not less frequently than quarterly) and upon the prepayment or maturity of the underlying loans. The Company is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the revolving credit facility and the additional term loan facility. Additionally, the Company is required to pay an upfront fee with respect to any funded additional term loans.

The applicable LIBOR and ABR margins and the commitment fee rate are calculated based upon the first lien net leverage ratio of the Company and its restricted subsidiaries on a consolidated basis, as defined in the Credit Agreement. Until the delivery of the initial financial statements under the Credit Agreement, the revolving loans and term loans bear interest, at the option of the Company, at either (a) ABR plus a margin of 1.25% or (b) LIBOR plus a margin of 2.25%.

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The additional term loan facility is available for borrowings until November 13, 2020. Each of the revolving loans and the term loans mature on November 13, 2024.

The term loans and, once drawn, the additional term loans will amortize at an annual rate equal to approximately 5.00% per annum. Upon the consummation of certain non-ordinary course asset sales, the Company may be required to apply the net cash proceeds thereof to prepay outstanding term loans and additional term loans. The loans under the Credit Agreement may be prepaid without premium or penalty, subject to customary LIBOR “breakage” costs.

The Credit Agreement contains certain customary affirmative and negative covenants and events of default, and requires the Company and certain of its affiliates obligated under the Credit Agreement to make customary representations and warranties in connection with credit extensions thereunder.

In addition, the Credit Agreement requires the Company to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of consolidated EBITDA to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after the Closing Date and determined on the basis of the four most recently ended fiscal quarters of the Company for which financial statements have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights.

If an event of default (as such term is defined in the Credit Agreement) occurs, the lenders would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto.

The Company was in compliance with all debt covenants as of June 30, 2020. Given the Company’s assumptions about the future impact of COVID-19 on the gaming industry, which could be materially different due to the inherent uncertainties of future restrictions on the industry, the Company expects to remain in compliance with all debt covenants for the next 12 months. However, given the uncertainty of COVID-19 and the resulting potential impact to the gaming industry and our future assumptions, as well as to provide additional financial flexibility, the Company and the other parties thereto amended the Credit Agreement on August 4, 2020 to provide a waiver of financial covenant breach for the periods ended September 30, 2020 through March 31, 2021 of the First Lien Net Leverage Ratio and Fixed Charge Coverage Ratio (each as defined under the Credit Agreement).

Prior Credit Facility

The Company’s Prior Credit Facility was a senior secured first lien credit facility, as amended, that consisted of a $125.0 million term loan, a contract draw loan facility of $170.0 million and a revolving credit facility of $85.0 million. The Company’s prior credit facility was with a syndicated group of banks with CIBC Bank USA, as administrative agent for the lenders. Included in the revolving credit facility and contract draw loan were swing line sub-facilities of $5.0 million each.

The Prior Credit Facility was paid off with the proceeds from the 2019 Senior Secured Credit Facility.

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Notes to Condensed Consolidated Financial Statements — (Continued)

Note 9. Business and Asset Acquisitions

2019 Business Acquisition

Grand River Jackpot

On August 26, 2019, the Company entered into an agreement to acquire all issued and outstanding membership interests in Grand River Jackpot, LLC and subsidiaries (“Grand River”), a terminal operator licensed by the State of Illinois Gaming Board. On September 16, 2019, the Company completed its acquisition of Grand River. Grand River had 2,009 VGTs in over 450 licensed establishments. The Company completed this transaction in order to expand its presence within the State of Illinois.

The acquisition aggregate purchase consideration transferred totaled $113.7 million, which included: i) a cash payment made at closing of $100.0 million; ii) a subsequent cash payment of approximately $6.6 million for a working capital adjustment and; iii) contingent purchase consideration with an estimated fair value of $7.1 million. The contingent consideration represents two installment payments that are to be paid, up to a maximum amount, as follows: i) $2.5 million within 30 days following the one-year anniversary of the acquisition closing date and; ii) $7.0 million within 30 days following the three-year anniversary of the acquisition closing date. These payments are subject to adjustment based on certain performance measures included within the purchase agreement. The estimated fair value was determined based on the Company’s expected probability of future payment, discounted using Grand River’s weighted average cost of capital. The cash payment made at closing and subsequent working capital adjustment payment were both funded by the Company’s credit facilities. In light of the temporary suspension of gaming by the IGB due to the COVID-19 pandemic, the Company reversed its contingent liability for the previously mentioned $2.5 million installment payment due 30 days following the one-year anniversary of the acquisition closing date in the first quarter of 2020 as it is unlikely the performance measures for the period will be reached.

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase price has been allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The Company’s purchase price allocation was finalized in the first quarter of 2020 and the Grand River acquisition resulted in goodwill of $34.5 million as a result of a higher consideration multiple paid relative to prior similar acquisitions driven by maturity and quality of the operations and industry, including workforce and corresponding synergies, and is amortizable for income tax purposes.

The condensed consolidated statements of operations include $12.3 million of revenue and $0.8 million of net income attributable to operations of Grand River for the six months ended June 30, 2020.

2019 Asset Acquisition

On September 23, 2019, pursuant to the terms of an asset purchase agreement, the Company purchased from Illinois Gaming Systems, LLC (“IGS”) terminal use agreements and equipment representing the operations of 139 video game terminals in 29 licensed establishments. The Company has accounted for this transaction as an asset acquisition. The purchase consideration consisted of: i) cash payment of $2.4 million paid at closing and; ii) note payable of $2.3 million issued at closing which was recorded in consideration payable. The asset acquisition costs were allocated to the following assets: i) video game terminals and equipment totaling $1.7 million and; ii) location contracts totaling $3.0 million. The note payable bore interest at 5% and was paid in full in March 2020.

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Pro Forma Results

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three and six months ended June 30, 2019 as if the acquisition of Grand River had occurred as of January 1, 2018, after giving effect to certain purchase accounting adjustments. These amounts are based on available financial information of the acquiree prior to the acquisition date and are not necessarily indicative of what Company’s operating results would have been had the acquisition actually taken place as of January 1, 2019. This unaudited pro forma information does not project revenues and net income post acquisition (in thousands).

	Three months ended June 30, 2019		Six months ended June 30, 2019
Revenues	$	119,427	$	231,902
Net income		5,542		10,711

Consideration Payable

The Company has a contingent consideration payable related to certain locations, as defined, in the respective acquisition agreement which are placed into operation during a specified period after the acquisition date. The fair value of contingent consideration is included in the consideration payable on the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019. The contingent consideration accrued is measured at fair value on a recurring basis.

Current and long-term portions of consideration payable consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020				December 31, 2019
	Current		Long-Term		Current		Long-Term
TAV	$	494	$	3,546	$	490	$	3,497
Abraham		26		—		55		—
Fair Share Gaming		1,221		474		1,057		899
Family Amusement		395		2,787		293		2,815
Skyhigh		762		4,212		763		3,948
G3		294		99		2,952		154
Grand River		—		5,423		2,304		5,113
IGS		80		—		2,379		—
Total	$	3,272	$	16,541	$	10,293	$	16,426

Note 10. Fair Value Measurements

ASC Topic 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and the corresponding disclosure requirements around fair value measurements. This topic applies to all financial instruments that are being measured and reported on a fair value basis.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the various methods including market, income and cost approaches are used. Based on these approaches, certain assumptions are utilized that the market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market

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corroborated, or generally unobservable inputs. Valuation techniques are utilized that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, it is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3: Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

Convertible promissory notes

In valuing it’s convertible promissory notes at June 30, 2020 and December 31, 2019, the Company utilized a binomial lattice model in which a convertible instrument is split into two separate components: a cash-only (debt) component and an equity component. The binomial lattice trees are constructed using a methodology that assigns up and downward movement factors and probabilities based on rates of return, volatility, and time. It allows for the optional conversion features of the convertible promissory notes to be captured by determining whether conversion or continuing to hold is the most economically advantageous to the holder. Upon conversion, future values in the equity component are subject to only the risk-free rate, while the cash-only component associated with continuing to hold the debt instrument is subject to the selected risk-adjusted discount rate. Solving backwards through the trees associated with the equity component and the trees associated with the debt component yields an aggregate discounted value for each. The sum of these values yields the indicated fair value of the convertible promissory notes.

The discount rate is the risk-adjusted discount rate that is implied by the rate that allows the discounted cash flows with all terms and conditions modeled to equal the total cash consideration. As such, after modeling the features of convertible promissory notes as of the issuance date using the lattice model framework outlined above, the Company solved for the discount rate that resulted in a value for the note equal to the total cash consideration. The valuation of the Company’s convertible promissory notes is considered to be a Level 3 fair value measurement as the significant inputs are unobservable and require significant judgment or estimation.

For interim periods, the Company evaluates the underlying assumptions used in the latest valuation and determines whether there have been any significant changes to those assumptions based on current events to determine if a revaluation is necessary. Based on the economic impacts of COVID-19, the Company engaged a 3rd party valuation firm to assist in determining the fair value of its investment in convertible notes as of June 30, 2020. The valuation concluded that the carrying amount of the investment in the convertible notes approximates the fair value in all material respects, as of June 30, 2020.

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Notes to Condensed Consolidated Financial Statements — (Continued)

Contingent consideration

The following tables summarize the Company’s liabilities that are measured at fair value on a recurring basis (in thousands):

			Fair Value Measurement at Reporting Date Using
	June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	12,591	$	—	$	—	$	12,591

			Fair Value Measurement at Reporting Date Using
	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	17,327	$	—	$	—	$	17,327

The Company uses a discounted cash flow analysis to determine the value of contingent consideration upon acquisition and updates this estimate on a recurring basis. The significant assumptions in the Company’s cash flow analysis includes the probability adjusted projected revenues after state taxes, a discount rate as applicable to each acquisition, and the estimated number of locations that “go live” with the Company during the contingent consideration period. A hypothetical 1% increase in the applicable discount rate would decrease other expenses, net by approximately $0.2 million while a hypothetical 1% decrease in the applicable discount rate would increase other expenses, net by approximately $0.2 million.

Changes in the fair value of contingent consideration liabilities are classified within other expenses, net on the accompanying condensed consolidated statements of operations.

Note 11. Stockholders’ Equity

As discussed in Note 1, on November 20, 2019, the Company, consummated a reverse recapitalization. Pursuant to the Certificate of Incorporation as amended on November 20, 2019 and as a result of the reverse recapitalization, the Company has retrospectively adjusted the shares issued and outstanding prior to November 20, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted. Pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, the Company authorized and has available for issuance the following shares and classes of capital stock, each with a par value of $0.0001 per share: i) 1,000,000 shares of preferred stock; ii) 250,000,000 shares of Class A-1 Common Stock, ii) 10,000,000 shares of Class A-2 Common Stock.

Class A-1 Common Stock

The holders of the Class A-1 Common Stock are entitled to one vote for each share. The holders of Class A-1 Common Stock are entitled to receive dividends or other distributions when and if declared from time to time and share equally on a per share basis in such dividends and distributions subject to such rights of the holders of preferred stock.

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Class A-2 Common Stock

The holders of the Class A-2 Common Stock do not have voting rights and are not entitled to receive or participate in any dividends or distributions when and if declared from time to time.

5,000,000 shares of Class A-2 Common Stock were issued with other consideration in conjunction with the reverse recapitalization, subject to the conditions set forth in a restricted stock agreement, which sets forth the terms upon which the Class A-2 Shares will be exchanged for an equal number of validly issued, fully paid and non-assessable Class A-1 Shares. The exchange of Class A-2 Shares for Class A-1 Shares will be subject to the terms and conditions set forth in the Restricted Stock Agreement, with such exchanges occurring in three separate tranches upon the satisfaction of the following triggers:

• Tranche I, equal to 1,666,666 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the EBITDA for the last twelve months (“LTM EBITDA”) of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2021, March 31, 2022 or June 30, 2022 equals or exceeds $132 million or (ii) the closing sale price of Class A-1 Shares on the New York Stock Exchange (“NYSE”) equals or exceeds $12.00 for at least twenty trading days in any consecutive thirty trading day period;

• Tranche II, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $152 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $14.00 for at least twenty trading days in any consecutive thirty trading day period; and

• Tranche III, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $172 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $16.00 for at least twenty trading days in any consecutive thirty trading day period.

The Restricted Stock Agreement further provides that holders of Class A-2 Shares are not required to exchange such shares for Class A-1 Shares if, (x) prior to giving effect to exchanges pursuant to the triggers described above, such holder beneficially owns less than 4.99% of the issued and outstanding Class A-1 Shares, and (y) after giving effect to the exchanges pursuant to the triggers described above, such holder would beneficially own in excess of 4.99% of the issued and outstanding Class A-1 Shares. However, notwithstanding the limitation described in the previous sentence, if and when a holder of Class A-2 Shares has obtained all required gaming approvals from the applicable gaming authorities permitting such holder to beneficially own Class A-1 Shares in excess of 4.99%, then the Class A-2 Shares held by such holder which are subject to exchange shall immediately be exchanged for Class A-1 Shares without regard to the limitation.

On January 14, 2020, the market condition for the conversion of Tranche I was satisfied. However, as discussed above, no shareholder is permitted to own more than 4.99% of the issued and outstanding Class A-1 Shares after the conversion unless obtaining required gaming approvals from the applicable gaming authorities. In connection with the conversion, no gaming approvals were obtained. As a result, only 1,596,636 of the 1,666,667 Class A-2 shares were converted into Class A-1 shares.

Warrants

On January 31, 2013, the Company issued 253,575 warrants to certain individual shareholders as compensation for providing a personal guaranty for a revolving loan agreement. The warrants granted their

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Notes to Condensed Consolidated Financial Statements — (Continued)

holders the right to purchase the Company’s Class A-1 Common Shares at the price of $17.80 per share anytime from January 31, 2013 through January 30, 2020. The warrants were classified as an equity instrument. As of June 30, 2020 and 2019, there were 0 and 91,350 warrants outstanding. All warrants were exercised prior to the reverse recapitalization.

7,333,326 warrants to purchase shares of Class A-1 Common Stock were issued with other consideration prior to the reverse recapitalization (the “2019 Warrants”). As a part of the reverse recapitalization, 2,444,437 2019 Warrants were canceled and reissued under the same terms and conditions to Accel legacy shareholders. Each warrant expires five years from issuance and entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding warrants, at any time 30 days after the consummation of the reverse recapitalization.

The 2019 Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the 2019 Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the 2019 Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the 2019 Warrant Agreement.

In 2017, 15,000,000 warrants to purchase shares of Class A-1 Common Stock were issued (“Public Warrants”). Each warrant expires five years from issuance and entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding warrants, at any time 30 days after the consummation of the reverse recapitalization.

The Public Warrants may be redeemed for cash at the option of the Company, at any time while they are exercisable and prior to their expiration, at the price of $0.01 per Public Warrant, provided that the last sales price of the Class A-1 Stock reported has been at least $18.00 per share, on each of twenty (20) trading days within the thirty (30) trading-day period ending on the third Business Day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

The Public Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the Public Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the Public Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has

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Notes to Condensed Consolidated Financial Statements — (Continued)

been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

Redemption Date	Fair Market Value of Class A-1 shares
(period to expiration of the New Accel Warrants)	$10		$11		$12		$13		$14		$15		$16		$17		$18
57 months		0.257		0.277		0.294		0.310		0.324		0.337		0.348		0.358		0.365
54 months		0.252		0.272		0.291		0.307		0.322		0.335		0.347		0.357		0.365
51 months		0.246		0.268		0.287		0.304		0.320		0.333		0.346		0.357		0.365
48 months		0.241		0.263		0.283		0.301		0.317		0.332		0.344		0.356		0.365
45 months		0.235		0.258		0.279		0.298		0.315		0.330		0.343		0.356		0.365
42 months		0.228		0.252		0.274		0.294		0.312		0.328		0.342		0.355		0.364
39 months		0.221		0.246		0.269		0.290		0.309		0.325		0.340		0.354		0.364
36 months		0.213		0.239		0.263		0.285		0.305		0.323		0.339		0.353		0.364
33 months		0.205		0.232		0.257		0.280		0.301		0.320		0.337		0.352		0.364
30 months		0.196		0.224		0.250		0.274		0.297		0.316		0.335		0.351		0.364
27 months		0.185		0.214		0.242		0.268		0.291		0.313		0.332		0.350		0.364
24 months		0.173		0.204		0.233		0.260		0.285		0.308		0.329		0.348		0.364
21 months		0.161		0.193		0.223		0.252		0.279		0.304		0.326		0.347		0.364
18 months		0.146		0.179		0.211		0.242		0.271		0.298		0.322		0.345		0.363
15 months		0.130		0.164		0.197		0.230		0.262		0.291		0.317		0.342		0.363
12 months		0.111		0.146		0.181		0.216		0.250		0.282		0.312		0.339		0.363
9 months		0.090		0.125		0.162		0.199		0.237		0.272		0.305		0.336		0.362
6 months		0.065		0.099		0.137		0.178		0.219		0.259		0.296		0.331		0.362
3 months		0.034		0.065		0.104		0.150		0.197		0.243		0.286		0.326		0.361
0 months		—		—		0.042		0.115		0.179		0.233		0.281		0.323		0.361

The exact Fair Market Value and Redemption Date (as defined) may not be set forth in the table above, in which case, if the Fair Market Value is between two values in the table or the Redemption Date is between two redemption dates in the table, the number of Class A-1 Stock to be issued for each Public Warrant redeemed will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower Fair Market Values and the earlier and later redemption dates, as applicable, based on a 365-day year.

On June 16, 2020, the Company announced that it would redeem all of the outstanding Public Warrants to purchase shares of the Company’s Class A-1 common stock, that were originally issued under the Warrant Agreement, at a redemption exchange rate equal to 0.250 shares of Class A-1 Common Stock per Public Warrant that remain outstanding at 5:00 p.m. New York City time on July 16, 2020. The 2019 Warrants to purchase Class A-1 Common Stock are not subject to this redemption. See Note 17 for further information on the redemption.

Note 12. Stock-based Compensation

The Company grants various types of stock-based awards. Stock compensation awards granted are valued on the date of grant and are expensed over the required service period. The Company previously adopted the 2011 Equity Incentive Plan of Accel Entertainment, Inc., and the 2016 Equity Incentive Plan of Accel Entertainment, Inc.

In conjunction with the closing of the reverse recapitalization, the Accel Entertainment, Inc. Long Term Incentive Plan (the “LTIP”) was adopted. The LTIP provides for grants of a variety of awards to employees and

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Notes to Condensed Consolidated Financial Statements — (Continued)

non-employees for providing services to the Company, including, but not limited to: incentive stock options qualified as such under U.S. federal income tax laws, stock options that do not qualify as incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, cash incentive awards, and other stock-based awards. The Company has reserved, and in January 2020 registered, a total of 6,000,000 shares of Class A-1 common stock for issuance pursuant to the LTIP, subject to certain adjustments set forth therein. The term of any options to be granted are for a maximum of 10 years from the grant date. The exercise price of stock options shall not be less than 100% of the fair market value per share of common stock on the grant date.

Under the LTIP, the Company granted 1.2 million options to eligible officers and employees of the Company during the first quarter of 2020, which shall vest over a period of 5 years. No additional options were granted during the second quarter of 2020. During the six months ended June 30, 2020, the Company also issued 1.3 million restricted stock units (“RSUs”) to board of directors and certain employees, which shall vest over a period of 5 years for employees and a period of 6 months to 1 year for board of directors. The estimated grant date fair value of the options and RSUs granted during six months ended June 30, 2020 totaled $20.2 million.

Stock-based compensation expense, which pertains to the Company’s stock options and other equity awards, was $1.3 million and $2.4 million for the three and six months ended June 30, 2020, respectively. In comparison, stock-based compensation expense was $0.1 million and $0.3 million for the three and six months ended June 30, 2019, respectively. Stock-based compensation expense is included within general and administrative expenses in the condensed consolidated statements of operations.

Note 13. Income Taxes

The Company recognized an income tax benefit of $5.1 million and $5.2 million during the three and six months ended June 30, 2020, respectively. In comparison, the Company recognized income tax expense of $1.8 million and $3.4 million during the three and six months ended June 30, 2019, respectively.

The Company calculates its (benefit from) provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate to its year-to-date pretax book income or loss. The effective tax rate (income taxes as a percentage of income before income taxes) was 19.2% and 18.3% for the three and six months ended June 30, 2020, respectively. In comparison, the effective tax rate was 29.0% and 29.3% for the three and six months ended June 30, 2019, respectively. The Company’s effective income tax rate can vary from period to period depending on, among other factors, the business mix of our earnings; the amount of permanent tax adjustments and discrete items. The tax rate in 2020 is also impacted by the forecast of a net loss for the year, but has unfavorable permanent tax adjustments which are causing the expected tax rate to decrease, year over year for the three and six months ended June 30, 2020.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law and authorizes more than $2 trillion to battle COVID-19 and its economic effects, including immediate cash relief for individual citizens, loan programs for small business, support for hospitals and other medical providers, and various types of economic relief for impacted businesses and industries. The Company believes it is eligible for certain credits of the relief programs under the CARES Act and is in the process of gathering the required information. The Company will continue to monitor the situation and evaluate any additional future legislation.

Note 14. Commitments and Contingencies

Lawsuits and claims are filed against the Company from time to time in the ordinary course of business, including related to, employee matters, employment of professional and non-compete clauses and agreements.

F-100

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

Other than settled matters explained as follows, these actions are in various stages, and no judgments or decisions have been rendered. Management, after reviewing matters with legal counsel, believes that the outcome of such matters will not have a material adverse effect on the Company’s financial position or results of operations.

Accel has been involved in a series of related litigated matters stemming from claims that Accel wrongly contracted with 10 different licensed establishments (the “Defendant Establishments”) in 2012 in violation of the contractual rights held by J&J Ventures Gaming, LLC (“J&J”), as further described below.

On August 21, 2012, one of the Company’s operating subsidiaries entered into certain agreements with Jason Rowell (“Rowell”), a member of Action Gaming LLC (“Action Gaming”), which was an unlicensed terminal operator that had exclusive rights to place and operate VGTs within a number of establishments, including the Defendant Establishments. Under agreements with Rowell, the Company agreed to pay him for each licensed establishment which decided to enter into exclusive location agreements with the Company. In late August and early September 2012, each of the Defendant Establishments signed separate location agreements with the Company, purporting to grant it the exclusive right to operate VGTs in those establishments. Separately, on August 24, 2012, Action Gaming sold and assigned its rights to all its location agreements to J&J, including its exclusive rights with the Defendant Establishments (the “J&J Assigned Agreements”). At the time of the assignment of such rights to J&J, the Defendant Establishments were not yet licensed by the Illinois Gaming Board (“IGB”).

Action Gaming, J&J, and other parties, collectively, the Plaintiffs, filed a complaint against the Company, Rowell, and other parties in the Circuit Court of Cook County (the “Circuit Court”), on August 31, 2012, as amended on November 1, 2012, December 19, 2012, and October 3, 2013, alleging, among other things, that the Company aided and abetted Rowell in breaches of his fiduciary duties and contractual obligations with Action Gaming and tortiously interfered with Action Gaming’s contracts with Rowell and agreements assigned to J&J. The complaint seeks damages and injunctive and equitable relief. On January 24, 2018, the Company filed a motion to dismiss for lack of subject matter jurisdiction, as further described below. On May 14, 2018, the Circuit Court denied the Company’s motion to dismiss and granted a stay to the case, pending a ruling from the IGB on the validity of the J&J Assigned Agreements.

From 2013 to 2015, the Plaintiffs filed additional claims, including J&J Ventures Gaming, LLC et al. v. Wild, Inc. (“Wild”), in various circuit courts seeking declaratory judgements with a number of establishments, including each of the Defendant Establishments, requesting declarations that, among other things, J&J held the exclusive right to operate VGTs at each of the Defendant Establishments as a result of the J&J Assigned Agreements. The Company was granted leave to intervene in all of the declaratory judgments. The circuit courts found that the J&J Assigned Agreements were valid because each of the underlying location agreements were between an unlicensed establishment and an unlicensed terminal operator, and therefore did not constitute use agreements that were otherwise precluded from assignment under the IGB’s regulations. Upon the Company’s appeal, the Illinois Appellate Court, Fifth District (the “District Court”), vacated the circuit courts’ judgments and dismissed the appeals, holding that the IGB had exclusive jurisdiction over the matter that formed the basis of the parties’ claims, and declined to consider the merits of the parties’ disputes. On September 22, 2016, and after the IGB intervened, the Supreme Court of Illinois issued a judgment in Wild, affirming the District Court’s decision vacating the circuit courts’ judgments for lack of subject matter jurisdiction and dismissing the appeals, determining that the IGB has exclusive jurisdiction to decide the validity and enforceability of VGT use agreements.

Between May 2017 and September 2017, both the Company and J&J filed petitions with the IGB seeking adjudication of the rights of the parties and the validity of the use agreements. Those petitions have been fully

F-101

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

briefed and remain pending. There is no indication as to when the IGB will rule on the petitions. The Company does not have a present estimate regarding the potential damages, if any, that could potentially be awarded in this litigation and, accordingly, have established no reserves relating to such matters. There are also petitions pending with the IGB which could lead to the Company obtaining new locations.

On October 7, 2019, the Company filed a lawsuit in the Circuit Court of Cook County against Jason Rowell and other parties related to Mr. Rowell’s breaches of his non-compete agreement with the Company. The Company alleged that Mr. Rowell and a competitor were working together to interfere with the Company’s customer relationships. That lawsuit, which seeks equitable relief and legal damages, has not yet been served. On November 7, 2019, Mr. Rowell filed a lawsuit in the Circuit Court of Cook County against the Company alleging that he had not received certain equity interests in the Company to which he was allegedly entitled under his agreement. The Company intends to defend itself against the allegations. The Company does not have a present estimate regarding the potential damages, nor does it believe any payment of damages is probable, and, accordingly, has established no reserves relating to these matters.

On July 2, 2019, Illinois Gaming Investors, LLC filed a lawsuit against the Company. The lawsuit alleges that a current employee of the Company violated his non-competition agreement with Illinois Gaming Investors, LLC, and together with the Company, wrongfully solicited prohibited licensed video gaming locations. The lawsuit on its face seeks damages of $10,000,000. The parties are engaging in discovery. The Company is in the process of defending this lawsuit, and has not accrued any amounts as losses related to this suit are not probable or reasonably estimable.

Note 15. Related-Party Transactions

Subsequent to the Company’s acquisition of certain assets of Fair Share Gaming, LLC (“Fair Share”) and G3 Gaming, LLC (“G3”), the sellers became employees of the Company. Consideration payable to the Fair Share seller was $1.7 million and $2.0 million as of June 30, 2020 and December 31, 2019, respectively. Payments to the Fair Share seller under the acquisition agreement were $0.2 million and $0.4 million during the six months ended June 30, 2020 and 2019, respectively. Consideration payable to the G3 sellers was $0.4 million and $3.1 million as of June 30, 2020 and December 31, 2019, respectively. Payments to the G3 seller under the acquisition agreement were $2.5 million during the six months ended June 30, 2020. There were no payments to the G3 seller during the six months ended June 30, 2019. Subsequent to the Fair Share acquisition, the seller of Fair Share joined the Company’s Board of Directors.

The Company engaged Much Shelist, P.C. (“Much Shelist”), as its legal counsel for general legal and business matters. An attorney at Much Shelist is a related party to management of the Company. For the six months ended June 30, 2020 and 2019, Accel paid Much Shelist $0.1 million, and $0.2 million, respectively. These payments were included in general and administrative expenses within the condensed consolidated statements of operations.

Note 16. Earnings Per Share

As a result of the previously mentioned reverse recapitalization in Note 1, the Company has retrospectively adjusted the weighted average shares outstanding for the three and six months ended June 30, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted.

F-102

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

The components of basic and diluted earning per share (“EPS”) were as follows for the three and six months ended June 30 (in thousands, except per share amounts):

	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Net (loss) income	$	(21,274	)	$	4,328	$	(23,240	)	$	8,323
Basic weighted average outstanding shares of common stock		78,317			58,605		78,161			57,896
Dilutive effect of stock-based awards for common stock		—			1,120		—			1,117
Dilutive effect of stockholder notes receivable for common stock		—			917		—			948
Dilutive effect of warrants for common stock		—			1,263		—			1,781
Diluted weighted average outstanding shares of common stock		78,317			61,904		78,161			61,742
Earnings (loss) per share:
Basic	$	(0.27	)	$	0.07	$	(0.30	)	$	0.14
Diluted	$	(0.27	)	$	0.07	$	(0.30	)	$	0.13

Since the Company was in a net loss position for the three and six months ended June 30, 2020, there is no difference between basic and dilutive weighted average common stock outstanding.

Anti-dilutive stock-based awards, Class A-2 shares, and warrants excluded from the calculations of diluted EPS were 5,401,791, and 5,715,823 for the three and six months ended June 30, 2020, respectively.

Note 17. Subsequent Events

On July 14, 2020, the Company announced that it had commenced an exchange offer (the “Offer”) to all holders of its outstanding warrants to receive 0.250 shares of Class A-1 Common Stock in exchange for each warrant tendered pursuant to the Offer. The Offer will be open until 11:59 p.m., Eastern Standard Time, on August 11, 2020, or such later time and date to which the Company may extend. On July 16, 2020, the Company consummated the redemption of its Public Warrants. The Company exchanged each Public Warrant for 0.250 shares of the Company’s Class A-1 Common Stock and issued 3,784,416 shares of its Class A-1 Common Stock in exchange for the Public Warrants at settlement of the redemption.

On July 22, 2020, the Company received written notice from the New York Stock Exchange (the “NYSE”) that the NYSE suspended trading in, and has determined to commence proceedings to delist, the Company’s Public Warrants to purchase shares of the Company’s Class A-1 Common Stock (ticker symbol ACEL.WS) from the NYSE. The delisting is a result of the failure to of the Public Warrants to comply with the continued listing standard set forth in Section 802.01D of the NYSE Listed Company Manual which requires the Company to maintain at least 100 public holders of a listed security.

On July, 22, 2020 (the “Closing Date”), the Company completed its previously announced acquisition of Tom’s Amusement Company, Inc., a southeastern U.S. amusement operator and Master Licensee in the state of Georgia. The total purchase price was approximately $3.6 million, of which the Company paid $2.1 million in cash at closing. The remaining $1.5 million of contingent consideration payables are to be paid in cash on the 18-month and 24-month anniversaries of the Closing Date. The amount of each payment is $750,000 multiplied by a performance ratio. In addition, the Georgia Lottery Corporation approved Accel’s operating subsidiary, Bulldog Gaming, LLC, as a Master Licensee.

On July 30, 2020, the Company and the terminal operator entered into the Omnibus Amendment (the “Amendment”) to the original agreement to purchase convertible promissory notes from another terminal

F-103

Accel Entertainment, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements — (Continued)

operator. The Amendment, among other things, extends the maturity date of the $5.0 million convertible note and the beginning of the payback period for the $25.0 million convertible note until December 31, 2020.

On August 4, 2020, the Company and the other parties thereto entered into Amendment No. 1 to its Credit Agreement. The amendment, among other things, provides a waiver of financial covenant breach for the periods ended September 30, 2020 through March 31, 2021 of the First Lien Net Leverage Ratio and Fixed Charge Coverage Ratio (each as defined under the Credit Agreement).

F-104

8,000,000 Shares of Class A-1 Common Stock

4,000,000 Shares of Class A-1 Common Stock

Offered by the Selling Stockholders

PROSPECTUS

                , 2020

Joint Book-Running Managers

Goldman Sachs & Co. LLC	J.P. Morgan
Credit Suisse	Deutsche Bank Securities

Co-Managers

TPG Capital BD, LLC The Raine Group

You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. You should not assume that the information contained or incorporated by reference in this prospectus is accurate as of any date other than the date of this prospectus. We are not making an offer of these securities in any state where the offer is not permitted.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth the estimated expenses to be borne by the registrant in connection with the issuance and distribution of the shares of common stock being registered hereby.

Securities and Exchange Commission registration fee	$	14,093.57
FINRA filing fee		27,513.50
Accounting fees and expenses		475,000.00
Legal fees and expenses		400,000.00
Transfer agent and registrar fees and expenses		25,000.00
Financial printing and miscellaneous expenses		75,000.00
Total	$	1,016,607.07

Item 14. Indemnification of Directors and Officers.

Section 145 of the DGCL, as amended, authorizes us to indemnify any director or officer under certain prescribed circumstances and subject to certain limitations against certain costs and expenses, including attorney’s fees actually and reasonably incurred in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative, to which a person is a party by reason of being one of our directors or officers if it is determined that such person acted in accordance with the applicable standard of conduct set forth in such statutory provisions.

Our Amended and Restated Certificate of Incorporation provides that our officers and directors are indemnified by us to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended. In addition, our Amended and Restated Certificate of Incorporation provides that our directors will not be personally liable for monetary damages to us or our stockholders for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from their actions as directors.

Our Bylaws permit us to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification. We have purchased a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors. In addition, we have entered into indemnification agreements with each of our officers and directors, a form of which is filed as an exhibit in this registration statement. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

II-1

Item 15. Recent Sales of Unregistered Securities.

The following list sets forth information as to all securities of Pace and the Company sold in the last three years which were not registered under the Securities Act. The descriptions of issuances of Pace and the Company are historical and have not been adjusted to give effect to the Business Combination.

Since January 2017, Pace and the Company have issued the following unregistered securities.

Founder Ordinary Shares

On February 22, 2017, Initial Pace Sponsor purchased an aggregate of 11,500,000 Founder Ordinary Shares from Pace for an aggregate purchase price of $25,000, or approximately $0.002 per share. On June 19, 2017, Initial Pace Sponsor transferred 40,000 Founder Ordinary Shares to the Initial Pace Holders at their original purchase price. On August 14, 2017, Initial Pace Sponsor forfeited 250,000 Founder Ordinary Shares on the expiration of the underwriters’ over-allotment option.

In connection with the Business Combination, the Initial Pace Sponsor received 7,800,000 shares of Class A-1 common stock and 2,000,000 shares of Class A-2 common stock pursuant to the Sponsor Share Exchange.

Pace Private Placement Warrants

Simultaneously with the closing of the Pace IPO, Pace completed the private sale of an aggregate of 7,333,333 Pace Private Placement Warrants, each exercisable to purchase one Pace Public Share for $11.50 per share, to Initial Pace Sponsor, at a price of $1.50 per Pace Private Placement Warrant, generating proceeds, before expenses, of $11,000,000. For a description of the Pace Private Placement Warrants, see the section entitled “Description of Capital Stock—Warrants—Pace Private Placement Warrants” beginning on page 108.

Investment Private Placement

On the date of the consummation of the Business Combination, Pace consummated the issuance and sale of 4,696,675 shares of Class A-1 common stock for aggregate consideration of approximately $48 million in connection with the Investment Private Placement pursuant to Subscription Agreements with the PIPE Investors. TPG Holdings III, L.P. assigned a portion of its rights to purchase shares of Class A-1 common stock in the Investment Private Placement to certain employees of Pace. The proceeds from the Investment Private Placement were used to fund a portion of the cash consideration required to effect the Business Combination. A description of the rights, preferences and privileges of the Class A-1 common stock is included in the section entitled “Description of Capital Stock —Common Stock—Class A-1 common stock” beginning on page 101.

Business Combination Private Placement

On the closing date of the Business Combination, the Business Combination Private Placement Sellers received, in exchange for their shares of Accel Stock, shares of Class A-1 common stock, Business Combination Private Placement Warrants and shares of Class A-2 common stock issued pursuant to a private placement and not registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act, in each case, in an amount calculated pursuant to the Transaction Agreement. A description of the rights, preferences and privileges of the Class A-1 common stock, the Business Combination Private Placement Warrants and Class A-2 common stock is included in the section entitled “Description of Capital Stock” beginning on page 101.

The sales of the above securities by the Company were deemed to be exempt from registration under the Securities Act, in reliance on Section 4(a)(2) of the Securities Act, in transactions by an issuer not involving a public offering

II-2

Item 16. Exhibits and Financial Statements.

Exhibit Number	Description
1.1*	Form of Underwriting Agreement
2.1**	Transaction Agreement, dated as of June 13, 2019, by and among TPG Pace Holdings Corp., the Sellers, David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein) as Shareholder Representatives (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K dated June 13, 2019).
2.2**	Amendment No. 1 to Transaction Agreement, dated as of July 22, 2019, by and among TPG Pace Holdings Corp., the Sellers, David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein) as Shareholder Representatives (incorporated by reference to Exhibit 2.2 to the Current Report on Form 8-K dated November 26, 2019).
2.3**	Amendment No. 2 to Transaction Agreement, dated as of October 3, 2019, by and among TPG Pace Holdings Corp., the Sellers, David W. Ruttenberg and John S. Bakalar (as successor to Gordon Rubenstein) as Shareholder Representatives (incorporated by reference to Exhibit 2.3 to the Current Report on Form 8-K dated November 26, 2019).
3.1**	Amended and Restated Certificate of Incorporation of Accel Entertainment, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K dated November 26, 2019).
3.2**	Amended and Restated Bylaws of Accel Entertainment, Inc. (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K dated November 26, 2019).
3.3**	Amendment No. 1 to the Bylaws of Accel Entertainment, Inc (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K dated May 6, 2020).
4.1**	Warrant Agreement, dated as of June 27, 2017, between TPG Pace Holdings Corp. and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K filed with the SEC on June 30, 2017).
4.2**	Form of Pace Warrant Certificate (incorporated by reference to Exhibit 4.3 to the registration statement on Form S-1 filed with the SEC on June 30, 2017.
4.3**	Warrant Agreement, dated as of November 20, 2019 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K dated November 26, 2019).
4.4**	Form of Subscription Agreement with General Investors (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated June 13, 2019).
4.5**	Form of Subscription Agreement with Pace Affiliate (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated June 13, 2019).
5.1*	Opinion of Fenwick & West LLP.
10.1+**	Membership Interest Purchase Agreement, by and among GRE-Illinois, LLC, Great River Entertainment, LLC, Grand River Jackpot, LLC and Accel Entertainment Gaming, LLC, dated as of August 26, 2019 (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K dated November 26, 2019).
10.2**	Credit Agreement, by and among New Pace LLC, the Company, Capital One, National Association and the other parties thereto, dated as of November 13, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 13, 2019).

II-3

Exhibit Number	Description
10.2(A)**	Amendment No.1 to the Credit Agreement, by and among the Registrant, Capital One, National Association and the other parties thereto, dated November 13, 2019 (incorporated by reference to Exhibit 10.9(A) to the Company’s Current Report on Form 8-K dated August 6, 2020).
10.3**	Form of Indemnity Agreement (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K filed with the SEC on November 20, 2019).
10.4**	Form of Director Letter Agreements (incorporated by reference to Annex H to the proxy statement/prospectus on Form S-4/A filed with the SEC on October 24, 2019).
10.5**	Pace Sponsor Support Agreement, dated as of June 13, 2019, by and among TPG Pace II Sponsor, LLC, TPG Pace Holdings Corp. and the Shareholder Representatives (incorporated by reference to Annex E to the proxy statement/prospectus on Form S-4/A filed with the SEC on October 24, 2019).
10.6**	Amendment No. 1 to Pace Sponsor Support Agreement, dated as of July 22, 2019, by and among TPG Pace II Sponsor, LLC, TPG Pace Holdings Corp. and the Shareholder Representatives (incorporated by reference to Annex E-1 to the proxy statement/prospectus on Form S-4/A filed with the SEC on October 24, 2019).
10.7†**	Amended and Restated Executive Employment Agreement, dated July 15, 2020, by and between Accel Entertainment, Inc., and Andrew Rubenstein (incorporated by reference to Exhibit 10.10(A) to the Current Report on Form 8-K filed with the SEC on July 20, 2020).
10.8†**	Amended and Restated Executive Employment Agreement, dated July 16, 2020, by and between Accel Entertainment, Inc., and Brian Carroll (incorporated by reference to Exhibit 10.12(A) to the Current Report on Form 8-K filed with the SEC on July 20, 2020).
10.9†**	Amended and Restated Executive Employment Agreement, dated July 16, 2020, by and between Accel Entertainment, Inc., and Derek Harmer (incorporated by reference to Exhibit 10.11(A) to the Current Report on Form 8-K filed with the SEC on July 20, 2020).
10.10**	Form of Support Agreement (incorporated by reference to Annex P to the proxy statement/prospectus on Form S-4/A filed with the SEC on October 24, 2019).
10.11**	Letter Agreement among TPG Pace Holdings Corp. and its officers, directors and TPG Pace II Sponsor, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on June 30, 2017)
10.12†**	Form of Company Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.13 to the Current Report on Form 8-K filed with the SEC on March 4, 2020).
10.13†**	Form of Company Stock Option Award Agreement (incorporated by reference to Exhibit 10.14 to the Current Report on Form 8-K filed with the SEC on March 4, 2020).
10.14†**	Advisor Agreement, dated February 28, 2020, by and between Gordon Rubenstein and the Company (incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K filed with the SEC on March 4, 2020).
10.15†**	Employment Agreement by and between Accel Entertainment Gaming, LLC and Mark Phelan, dated as of May 1, 2017 (Incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019).
10.16†**	Executive Employment Agreement by and between Accel Entertainment, Inc. and Michael Marino, dated as of March 8, 2020 (Incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019).

II-4

Exhibit Number	Description
10.17†**	Executive Employment Agreement by and between Accel Entertainment, Inc. and Ryan Hammer, dated as of March 6, 2020 (Incorporated by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019).
10.18†**	Accel Entertainment, Inc. Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated November 26, 2019).
10.19†**	Accel Entertainment, Inc. 2011 Equity Incentive Plan (incorporated by reference to Exhibit 4.4 to the registration statement on Form S-8 filed with the SEC on January 24, 2020).
10.20†**	Accel Entertainment, Inc. 2016 Equity Incentive Plan (incorporated by reference to Exhibit 4.5 to the registration statement on Form S-8 filed with the SEC on January 24, 2020).
10.21**	Restricted Stock Agreement, dated as of November 20, 2019 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K dated November 26, 2019).
10.22**	Registration Rights Agreement, dated as of November 20, 2019 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K dated November 26, 2019).
10.23**	Nominating and Support Agreement, dated November 6, 2019 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on November 6, 2019).
10.24**	Mutual Support Agreement, dated November 6, 2019 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed with the SEC on November 6, 2019).
10.25**	Tender and Exchange Agreement, dated June 18, 2020, by and among the Company and the holders of Private Placement Warrants party thereto (incorporated by reference to Exhibit 10.19 to the Quarterly Report on Form 10-Q filed with the SEC on August 6, 2020).
21.1*	Subsidiaries of the Company.
23.1*	Consent of KPMG LLP, independent registered public accounting firm for Accel Entertainment, Inc.
23.2*	Consent of RSM US LLP, independent auditor for Grand River Jackpot, LLC.
23.3*	Consent of Fenwick & West LLP (included in Exhibit 5.1).
24.1**	Power of Attorney (incorporated by reference to Exhibit 24.1 of the Company’s Registration Statement Form S-1 filed with the SEC on February 19, 2020)
24.2*	Power of Attorney
101.INS	Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Previously filed.

† Indicates management contract or compensation plan or agreement.

+ Certain information has been excluded from this exhibit because it is not material and would likely cause competitive harm to the registrant if publicly disclosed.

II-5

Item 17. Undertakings.

The undersigned registrant, hereby undertakes:

(a) To provide to the underwriter at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions referenced in Item 14 of this registration statement, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Burr Ridge, State of Illinois, on this 21st day of September, 2020.

Accel Entertainment, Inc.
By:	/s/ Derek Harmer
	Name:	Derek Harmer
	Title:	General Counsel, Chief Compliance Officer and Secretary

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons on behalf of the Registrant, Accel Entertainment, Inc., in the capacities and on the date indicated.

Name	Title	Date
*  Andrew Rubenstein	Chief Executive Officer, President and Director (Principal Executive Officer)	September 21, 2020
*  Brian Carroll	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	September 21, 2020
*  Karl Peterson	Director	September 21, 2020
*  Gordon Rubenstein	Director	September 21, 2020
*  Kathleen Philips	Director	September 21, 2020
*  David W. Ruttenberg	Director	September 21, 2020
*  Eden Godsoe	Director	September 21, 2020
*  Kenneth B. Rotman	Director	September 21, 2020
/s/ Dee Robinson  Dee Robinson	Director	September 21, 2020

By:	/s/ Derek Harmer
	Attorney-in-Fact

II-7

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Investment in Convertible Note

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Investments, Debt and Equity Securities [Abstract]

Investment in Convertibles Note

Note 3. Investment in Convertible Notes

On July 19, 2019, the Company entered into an agreement to purchase up to $30.0 million in convertible promissory notes from another terminal operator that bear interest at 3% per annum. The Company has the option of converting the notes to common stock of the terminal operator prior to the maturity date. At closing, the Company purchased a $5.0 million note which is subordinated to the terminal operator’s credit facility and matures six months following the satisfaction of administrative conditions.

On October 11, 2019, the Company purchased an additional $25.0 million note which is also subordinated to the terminal operator’s credit facility and, beginning on July 1, 2020, the balance of this note, if not previously converted, will be payable in equal $1,000,000 monthly installments until all principal has been repaid in full.

On July 30, 2020, the Company and the terminal operator entered into an amendment to the original note agreement. See Note 17 for further information.

The carrying amount of the investment in the convertible notes approximates the fair value, in all material respects, as of June 30, 2020. For more information on how the Company determined the fair value of the convertible notes, see Note 10.

Note 4. Investment in Convertible Note

On July 19, 2019, the Company entered into an agreement to purchase up to $30.0 million in convertible promissory notes that bear interest at 3% per annum from another terminal operator. The Company has the option of converting the notes to common stock of the terminal operator prior to the maturity date. At closing, the Company purchased a $5.0 million note which is subordinated to the terminal operator’s credit facility and matures six months following the satisfaction of administrative conditions.

On October 11, 2019, the Company purchased an additional $25.0 million note which is also subordinated to the terminal operator’s credit facility and, beginning on July 1, 2020, the balance of this note, if not previously converted, will be payable in equal $1,000,000 monthly installments until all principal has been repaid in full.

The carrying amount of the investment in the convertible notes approximates the fair value, in all material respects, as of December 31, 2019. For more information on how the Company determined the fair value of the convertible note, see Note 11.

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Property and Equipment

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Property, Plant and Equipment [Abstract]

Property and Equipment

Note 4. Property and Equipment

Property and equipment consists of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Video game terminals and equipment	$	176,453		$	166,850
Amusement and other equipment		19,115			16,417
Office equipment and furniture		1,590			1,540
Computer equipment and software		9,405			8,715
Leasehold improvements		1,507			44
Vehicles		10,254			9,304
Buildings and improvements		10,757			12,075
Land		911			911
Construction in progress		1,025			768
Total property and equipment		231,017			216,624
Less accumulated depreciation and amortization		(107,258	)		(97,423	)
Property and equipment, net	$	123,759		$	119,201

Depreciation and amortization of property and equipment amounted to $5.1 million and $9.9 million for the three and six months ended June 30, 2020, respectively. In comparison, depreciation and amortization of property and equipment amounted to $6.1 million and $12.1 million for the three and six months ended June 30, 2019, respectively

Note 5. Property and Equipment

Property and equipment consists of the following at December 31 (in thousands):

	2019			2018
Video game terminals and equipment	$	166,850		$	126,043
Amusement and other equipment		16,417			12,539
Office equipment and furniture		1,540			1,827
Computer equipment and software		8,715			5,092
Leasehold improvements		44			44
Vehicles		9,304			7,174
Buildings and improvements		12,075			9,365
Land		911			883
Construction in progress		768			1,339
Total property and equipment		216,624			164,306
Less accumulated depreciation and amortization		(97,423	)		(71,864	)
Property and equipment, net	$	119,201		$	92,442

Depreciation and amortization of property and equipment amounted to $26.4 million, $20.8 million and $16.8 million during the years ended December 31, 2019, 2018 and 2017, respectively.

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Route and Customer Acquisition Costs

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Route and Customer Acquisition Costs

Note 5. 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 due monthly. Gross payments due, based on the number of live locations, are approximately $6.8 million and $7.4 million as of June 30, 2020 and December 31, 2019, 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 $6.4 million and $6.5 million as of June 30, 2020 and December 31, 2019, respectively, of which approximately $1.7 million and $1.7 million is included in current liabilities in the accompanying condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, respectively. The route and customer acquisition cost asset is comprised of payments made on the contracts of $18.6 million and $18.7 million as of June 30, 2020 and December 31, 2019, 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 $2.1 million and $2.2 million as of June 30, 2020 and December 31, 2019, respectively.

Route and customer acquisition costs consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Cost	$	28,167		$	28,501
Accumulated amortization		(11,707	)		(11,102	)
Route and customer acquisition costs, net	$	16,460		$	17,399

Amortization expense of route and customer acquisition costs was $0.5 million and $0.9 million for the three and six months ended June 30, 2020, respectively. In comparison, amortization expense of route and customer acquisition costs was $0.6 million and $1.3 million for the three and six months ended June 30, 2019, respectively. As previously mentioned, the Company’s current year amortization expense is lower due to the adoption of ASC Topic 606 as the amortization period over which route and customer acquisition costs was extended to include expected renewals.

Note 6. 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 due monthly. Gross payments due, based on the number of live locations, are approximately $7.4 million and $8.2 million as of December 31, 2019 and 2018, 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 $6.5 million and $7.2 million as of December 31, 2019 and 2018, respectively, of which approximately $1.7 million and $1.8 million is included in current liabilities in the accompanying consolidated balance sheets as of December 31, 2019 and 2018, respectively. The route and customer acquisition cost asset is comprised of payments made on the contracts of $18.7 million and $18.8 million as of December 31, 2019 and 2018, 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 $2.2 million and $2.6 million as of December 31, 2019 and 2018, respectively.

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

	2019			2018
Cost	$	28,501		$	27,726
Accumulated amortization		(11,102	)		(13,732	)
Route and customer acquisition costs, net	$	17,399		$	13,994

Amortization expense of route and customer acquisition costs was $1.7 million, $3.9 million and $3.3 million for the years ended December 31, 2019, 2018 and 2017, respectively. As previously mentioned, the Company’s current year amortization expense decreased by $1.1 million due to the adoption of ASC Topic 606 as the amortization period over which route and customer acquisition costs was extended to include expected renewals.

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Location Contracts Acquired

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Location Contracts Acquired

Note 6. Location Contracts Acquired

Location contract assets acquired in business acquisitions are recorded at acquisition at fair value based on an income approach. Location contracts acquired consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Cost	$	204,353		$	204,353
Accumulated amortization		(47,729	)		(37,570	)
Location contracts acquired, net	$	156,624		$	166,783

Amortization expense of location contracts acquired was $5.1 million and $10.2 million, during the three and six months ended June 30, 2020, respectively. In comparison, amortization expense of location contracts acquired was $4.0 million and $7.6 million, during the three and six months ended June 30, 2019, respectively.

Note 7. Location Contracts Acquired

Location contract assets acquired in business acquisitions are recorded at acquisition at fair value based on an income approach. Location contracts acquired consist of the following at December 31, 2019 and 2018 (in thousands):

	2019			2018
Cost	$	204,353		$	147,341
Accumulated amortization		(37,570	)		(21,302	)
Location contracts acquired, net	$	166,783		$	126,038

Each asset is amortized over the expected useful life of 10 years. Estimated amortization expense related to location contracts acquired for the next five years and thereafter is as follows:

Year ending December 31:
2020	$	20,475
2021		20,475
2022		20,475
2023		20,475
2024		20,267
Thereafter		64,615
Total	$	166,783

Amortization expense of location contracts acquired was $16.2 million, $10.8 million and $6.5 million, during the years ended December 31, 2019, 2018 and 2017, respectively.

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Goodwill

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

On September 16, 2019, the Company acquired Grand River Jackpot which was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill of $34.5 million as of June 30, 2020 and December 31, 2019, of which $28.7 million is deductible for tax purposes.

As previously discussed in Note 1, the Company evaluated its goodwill for potential impairment triggers as of June 30, 2020. As a result of this analysis, no impairment losses were recorded.

Note 8. Goodwill

On September 16, 2019, the Company acquired Grand River Jackpot which was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill of $34.5 million as of December 31, 2019, of which $27.3 million is deductible for tax purposes. See Note 10 for more information on how the amount of goodwill was calculated.

The Company had no goodwill prior to the Grand River Jackpot acquisition.

Given the very short timeframe between the initial recording of the goodwill and the Company’s annual impairment test on October 1, 2019, the Company did not perform a full valuation by a third party to determine the fair value of its goodwill. Instead the Company assessed qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of its goodwill is less than its carrying amount. In performing this assessment, the Company considered such factors as its historical performance, its growth opportunities in existing markets; new markets and new products in determining whether the goodwill was impaired. The Company also referenced its forecasts of revenue, operating income, and capital expenditures and concluded the carrying value of its goodwill was not impaired as of October 1, 2019.

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Debt

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Debt Disclosure [Abstract]

Debt

Debt

The Company’s debt as of June 30, 2020 and December 31, 2019, consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
2019 Senior Secured Credit Facility:
Revolving credit facility	$	50,500		$	58,500
Term Loan		234,000			240,000
Delayed Draw Term Loan (DDTL)		122,688			60,000
Total debt		407,188			358,500
Less: Debt issuance costs		(8,198	)		(8,808	)
Total debt, net of debt issuance costs		398,990			349,692
Less: Current maturities		(18,250	)		(15,000	)
Total debt, net of current maturities	$	380,740		$	334,692

2019 Senior Secured Credit Facility

On November 13, 2019, in order to refinance its prior credit facility, for working capital and other general purposes from time to time, the Company entered into a credit agreement (the “Credit Agreement”) as borrower, the Company and its wholly-owned domestic subsidiaries, as a guarantor, the banks, financial institutions and other lending institutions from time to time party thereto, as lenders, the other parties from time to time party thereto and Capital One, National Association, as administrative agent (in such capacity, the “Agent”), collateral agent, issuing bank and swingline lender, providing for a:

• $100.0 million revolving credit facility, including a letter of credit facility with a $10.0 million sublimit and a swing line facility with a $10.0 million sublimit,

• $240.0 million initial term loan facility and

• $125.0 million additional term loan facility.

As a result of the COVID-19 pandemic and the temporary shutdown of its operations by the IGB, the Company borrowed $65 million on its delayed draw term loan in March 2020 to increase its cash position and help preserve its financial flexibility.

As of June 30, 2020, there remained approximately $49.5 million of availability under the Credit Agreement.

The obligations under the Credit Agreement are guaranteed by the Company and its wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”). The obligations under the Credit Agreement are secured by substantially all of assets of the Guarantors, subject to certain exceptions. Certain future-formed or acquired wholly-owned domestic subsidiaries of the Company will also be required to guarantee the Credit Agreement and grant a security interest in substantially all of its assets (subject to certain exceptions) to secure the obligations under the Credit Agreement.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at a rate per annum equal to either (a) the adjusted LIBOR rate (“LIBOR”) (which cannot be less than zero) for interest periods of 1, 2, 3 or 6 months (or if consented to by (i) each applicable Lender, 12 months or any period shorter than 1 month or (ii) the Agent, a shorter period necessary to ensure that the end of the relevant interest period would coincide with any required amortization payment ) plus the applicable LIBOR margin or (b) the alternative base rate (“ABR”) plus the applicable ABR margin. ABR is a fluctuating rate per annum equal to the highest of (i) the Federal Funds Effective Rate plus 1/2 of 1.0%, (ii) the prime rate announced from time to time by Capital One, National Association and (iii) LIBOR for a 1-month Interest Period on such day plus 1.0%. The Credit Agreement also includes provisions for determining a replacement rate when LIBOR is no longer available. As of June 30, 2020, the weighted-average interest rate was approximately 3.3%.

Interest is payable quarterly in arrears for ABR loans, at the end of the applicable interest period for LIBOR loans (but not less frequently than quarterly) and upon the prepayment or maturity of the underlying loans. The Company is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the revolving credit facility and the additional term loan facility. Additionally, the Company is required to pay an upfront fee with respect to any funded additional term loans.

The applicable LIBOR and ABR margins and the commitment fee rate are calculated based upon the first lien net leverage ratio of the Company and its restricted subsidiaries on a consolidated basis, as defined in the Credit Agreement. Until the delivery of the initial financial statements under the Credit Agreement, the revolving loans and term loans bear interest, at the option of the Company, at either (a) ABR plus a margin of 1.25% or (b) LIBOR plus a margin of 2.25%.

The additional term loan facility is available for borrowings until November 13, 2020. Each of the revolving loans and the term loans mature on November 13, 2024.

The term loans and, once drawn, the additional term loans will amortize at an annual rate equal to approximately 5.00% per annum. Upon the consummation of certain non-ordinary course asset sales, the Company may be required to apply the net cash proceeds thereof to prepay outstanding term loans and additional term loans. The loans under the Credit Agreement may be prepaid without premium or penalty, subject to customary LIBOR “breakage” costs.

The Credit Agreement contains certain customary affirmative and negative covenants and events of default, and requires the Company and certain of its affiliates obligated under the Credit Agreement to make customary representations and warranties in connection with credit extensions thereunder.

In addition, the Credit Agreement requires the Company to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of consolidated EBITDA to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after the Closing Date and determined on the basis of the four most recently ended fiscal quarters of the Company for which financial statements have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights.

If an event of default (as such term is defined in the Credit Agreement) occurs, the lenders would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto.

The Company was in compliance with all debt covenants as of June 30, 2020. Given the Company’s assumptions about the future impact of COVID-19 on the gaming industry, which could be materially different due to the inherent uncertainties of future restrictions on the industry, the Company expects to remain in compliance with all debt covenants for the next 12 months. However, given the uncertainty of COVID-19 and the resulting potential impact to the gaming industry and our future assumptions, as well as to provide additional financial flexibility, the Company and the other parties thereto amended the Credit Agreement on August 4, 2020 to provide a waiver of financial covenant breach for the periods ended September 30, 2020 through March 31, 2021 of the First Lien Net Leverage Ratio and Fixed Charge Coverage Ratio (each as defined under the Credit Agreement).

Prior Credit Facility

The Company’s Prior Credit Facility was a senior secured first lien credit facility, as amended, that consisted of a $125.0 million term loan, a contract draw loan facility of $170.0 million and a revolving credit facility of $85.0 million. The Company’s prior credit facility was with a syndicated group of banks with CIBC Bank USA, as administrative agent for the lenders. Included in the revolving credit facility and contract draw loan were swing line sub-facilities of $5.0 million each.

The Prior Credit Facility was paid off with the proceeds from the 2019 Senior Secured Credit Facility.

Debt

The Company’s debt as of December 31, consisted of the following (in thousands):

	2019			2018
New Credit Facility:
Revolving credit facility	$	58,500		$	—
Term Loan		240,000			—
Delayed Draw Term Loan (DDTL)		60,000			—
Prior Credit Facility:
Line of credit		—			50,000
Contract draw loan		—			67,000
Term loans		—			115,625
Total debt		358,500			232,625
Less: Debt issuance costs		(8,808	)		(1,230	)
Total debt, net of debt issuance costs		349,692			231,395
Less: Current maturities		(15,000	)		(62,500	)
Total debt, net of current maturities	$	334,692		$	168,895

New Senior Secured Credit Facility

On November 13, 2019, in order to refinance its prior credit facility, for working capital and other general purposes from time to time, the Company entered into a credit agreement (the “Credit Agreement”) as borrower, the Company and its wholly-owned domestic subsidiaries, as a guarantor, the banks, financial institutions and other lending institutions from time to time party thereto, as lenders, the other parties from time to time party thereto and Capital One, National Association, as administrative agent (in such capacity, the “Agent”), collateral agent, issuing bank and swingline lender, providing for a:

• $100.0 million revolving credit facility, including a letter of credit facility with a $10.0 million sublimit and a swing line facility with a $10.0 million sublimit,

• $240.0 million initial term loan facility and

• $125.0 million additional term loan facility.

As of December 31, 2019, there remained approximately $106.5 million of availability under the Credit Agreement.

The obligations under the Credit Agreement are guaranteed by the Company and its wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”). The obligations under the Credit Agreement are secured by substantially all of assets of the Guarantors, subject to certain exceptions. Certain future-formed or acquired wholly owned domestic subsidiaries of the Company will also be required to guarantee the Credit Agreement and grant a security interest in substantially all of its assets (subject to certain exceptions) to secure the obligations under the Credit Agreement.

Borrowings under the Credit Agreement bear interest, at the Company’s option, at a rate per annum equal to either (a) the adjusted LIBOR rate (“LIBOR”) (which cannot be less than zero) for interest periods of 1, 2, 3 or 6 months (or if consented to by (i) each applicable Lender, 12 months or any period shorter than 1 month or (ii) the Agent, a shorter period necessary to ensure that the end of the relevant interest period would coincide with any

required amortization payment ) plus the applicable LIBOR margin or (b) the alternative base rate (“ABR”) plus the applicable ABR margin. ABR is a fluctuating rate per annum equal to the highest of (i) the Federal Funds Effective Rate plus 1/2 of 1.0%, (ii) the prime rate announced from time to time by Capital One, National Association and (iii) LIBOR for a 1-month Interest Period on such day plus 1.0%. The Credit Agreement also includes provisions for determining a replacement rate when LIBOR is no longer available. As of December 31, 2019, the weighted-average interest rate was approximately 4.45%.

Interest is payable quarterly in arrears for ABR loans, at the end of the applicable interest period for LIBOR loans (but not less frequently than quarterly) and upon the prepayment or maturity of the underlying loans. The Company is required to pay a commitment fee quarterly in arrears in respect of unused commitments under the revolving credit facility and the additional term loan facility. Additionally, the Company is required to pay an upfront fee with respect to any funded additional term loans.

The applicable LIBOR and ABR margins and the commitment fee rate are calculated based upon the first lien net leverage ratio of the Company and its restricted subsidiaries on a consolidated basis, as defined in the Credit Agreement. Until the delivery of the initial financial statements under the Credit Agreement, the revolving loans and term loans bear interest, at the option of the Company, at either (a) ABR plus a margin of 1.25% or (b) LIBOR plus a margin of 2.25%.

The additional term loan facility is available for borrowings until November 13, 2020. Each of the revolving loans and the term loans mature on November 13, 2024.

The term loans and, once drawn, the additional term loans will amortize at an annual rate equal to approximately 5.00% per annum. Upon the consummation of certain non-ordinary course asset sales, the Company may be required to apply the net cash proceeds thereof to prepay outstanding term loans and additional term loans. The loans under the Credit Agreement may be prepaid without premium or penalty, subject to customary LIBOR “breakage” costs.

The Credit Agreement contains certain customary affirmative and negative covenants and events of default, and requires the Company and certain of its affiliates obligated under the Credit Agreement to make customary representations and warranties in connection with credit extensions thereunder.

In addition, the Credit Agreement requires the Company to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of consolidated EBITDA to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after the Closing Date and determined on the basis of the four most recently ended fiscal quarters of the Company for which financial statements have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights.

If an event of default (as such term is defined in the Credit Agreement) occurs, the lenders would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement, termination of the lenders’ commitments thereunder, foreclosure on collateral, and all other remedial actions available to a secured creditor. The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto.

The Company was in compliance with all debt covenants as of December 31, 2019.

The Company incurred $8.8 million of debt issuance costs related to the New Senior Secured Credit Facility, which will be amortized over the life of the Facility.

Prior Credit Facility

On December 8, 2015, the Company entered into an Amended and Restated Loan and Security Agreement with a syndicated group of banks. Under this agreement term loan availability was a $50,000,000, contract draw loan availability was $40,000,000, and revolving line of credit availability was $35,000,000. Interest applicable on the term loan, contract draw loan, and revolving line of credit was payable on unpaid balance at the variable per annum LIBOR plus an applicable margin, as defined, ranging from 2.00% to 3.25% depending on the ratio of the Company’s Secured Debt to EBITDA, as defined. On November 15, 2016, the Company entered into a Second Amended and Restated Loan and Security Agreement (“Second Amendment”) with most of the same syndicated group of banks which provided for a total loan facility of $210,000,000 and includes term loan availability, contract draw availability, and line of credit availability. On April 10, 2018, the Company entered into a Third Amended and Restated Loan and Security Agreement (“Third Amendment”) with most of the same syndicated group of banks in prior loan agreements, and increased the loan facility from $210,000,000 to $300,000,000. The Third Amendment extended the agreement maturity date from November 2021 to April 2023.

Under the Second Amendment, interest applicable on all facilities was payable monthly on unpaid balances at the variable per annum LIBOR rate plus an applicable margin, as defined, ranging from 1.95% to 3.00% depending on the ratio of the Company’s Secured Debt to EBITDA, as defined. An unused line fee of 0.30% was payable monthly on the difference between the total availability and the average daily balance of the revolving line of credit and the contract loan draw outstanding.

Under the Third Amendment, interest on all credit facilities was payable monthly on unpaid balances at the variable per annum LIBOR rate (2.51% at December 31, 2018) plus an applicable margin, as defined, ranging from 1.70% to 2.50% depending on the ratio of the Company’s Secured Debt to EBITDA, as defined. As of December 31, 2018, the average interest rate was approximately 4.60%. An unused line fee of 0.25% was payable monthly on the difference between the total availability and the average daily balance of the line of credit and the contract draw loan outstanding.

The Third Amendment increased the term loan availability from $90,000,000 to $125,000,000 and required quarterly principal payments of $3,125,000 through March 31, 2020, $3,906,250 through March 31, 2022, $4,687,500 through March 31, 2023, and the remaining balance due upon maturity in April 2023.

The Third Amendment increased the contract draw availability from $65,000,000 to $90,000,000 and changed from a borrowing draw loan to a revolving facility whereby the Company could borrow and repay throughout the term of the agreement with no required loan repayments until maturity in April 2023.

The Third Amendment increased the maximum line of credit borrowings from $55,000,000 to $85,000,000 subject to a borrowing base which was defined as the sum of 90% of the Company’s vault cash outstanding, as defined; less payables owed to establishment owners, the State of Illinois and the Illinois Gaming Board. Payments could be made on demand at the Company’s election, and were only required if the balance exceeds the lesser of the total line of credit commitment of $85,000,000 or the revolving loan availability.

Additionally, the Company had the ability to utilize letters of credit.

The credit facilities were collateralized by substantially all assets of the Company and included defined financial covenants related to leverage, fixed charge and minimum EBITDA.

The Prior Credit Facility was paid off with the proceeds from the New Senior Secured Credit Facility. In connection with the extinguishment of the Prior Credit Facility, the Company recorded a loss from debt extinguishment of $1.1 million.

The principal maturities of long-term debt as of December 31, 2019 are as follows (in thousands):

Year ending December 31:
2020	$	15,000
2021		15,000
2022		15,000
2023		15,000
2024		298,500
Total debt	$	358,500

The estimated fair value of the Company’s debt at December 31, 2019 approximated its carrying value as the debt facilities as of such date bore interest based on prevailing variable market rates and as such were categorized as a Level 2 in the fair value hierarchy as defined in Note 11.

The fair value of the Company’s debt at December 31, 2018 was estimated based on observable inputs such as the change in yield on comparable indices and unobservable inputs such as the enterprise value. The inputs used to determine the fair value were classified as Level 2 and Level 3 in the fair value hierarchy.

The carrying value and estimated fair value of our debt at December 31, was as follows (in thousands):

	2019		2018
Carrying value	$	349,692	$	231,395
Estimated Fair value		349,692		229,763

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Business and Asset Acquisitions

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Business Combinations [Abstract]

Business and Asset Acquisitions

Business and Asset Acquisitions

2019 Business Acquisition

Grand River Jackpot

On August 26, 2019, the Company entered into an agreement to acquire all issued and outstanding membership interests in Grand River Jackpot, LLC and subsidiaries (“Grand River”), a terminal operator licensed by the State of Illinois Gaming Board. On September 16, 2019, the Company completed its acquisition of Grand River. Grand River had 2,009 VGTs in over 450 licensed establishments. The Company completed this transaction in order to expand its presence within the State of Illinois.

The acquisition aggregate purchase consideration transferred totaled $113.7 million, which included: i) a cash payment made at closing of $100.0 million; ii) a subsequent cash payment of approximately $6.6 million for a working capital adjustment and; iii) contingent purchase consideration with an estimated fair value of $7.1 million. The contingent consideration represents two installment payments that are to be paid, up to a maximum amount, as follows: i) $2.5 million within 30 days following the one-year anniversary of the acquisition closing date and; ii) $7.0 million within 30 days following the three-year anniversary of the acquisition closing date. These payments are subject to adjustment based on certain performance measures included within the purchase agreement. The estimated fair value was determined based on the Company’s expected probability of future payment, discounted using Grand River’s weighted average cost of capital. The cash payment made at closing and subsequent working capital adjustment payment were both funded by the Company’s credit facilities. In light of the temporary suspension of gaming by the IGB due to the COVID-19 pandemic, the Company reversed its contingent liability for the previously mentioned $2.5 million installment payment due 30 days following the one-year anniversary of the acquisition closing date in the first quarter of 2020 as it is unlikely the performance measures for the period will be reached.

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase price has been allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The Company’s purchase price allocation was finalized in the first quarter of 2020 and the Grand River acquisition resulted in goodwill of $34.5 million as a result of a higher consideration multiple paid relative to prior similar acquisitions driven by maturity and quality of the operations and industry, including workforce and corresponding synergies, and is amortizable for income tax purposes.

The condensed consolidated statements of operations include $12.3 million of revenue and $0.8 million of net income attributable to operations of Grand River for the six months ended June 30, 2020.

2019 Asset Acquisition

On September 23, 2019, pursuant to the terms of an asset purchase agreement, the Company purchased from Illinois Gaming Systems, LLC (“IGS”) terminal use agreements and equipment representing the operations of 139 video game terminals in 29 licensed establishments. The Company has accounted for this transaction as an asset acquisition. The purchase consideration consisted of: i) cash payment of $2.4 million paid at closing and; ii) note payable of $2.3 million issued at closing which was recorded in consideration payable. The asset acquisition costs were allocated to the following assets: i) video game terminals and equipment totaling $1.7 million and; ii) location contracts totaling $3.0 million. The note payable bore interest at 5% and was paid in full in March 2020.

Pro Forma Results

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three and six months ended June 30, 2019 as if the acquisition of Grand River had occurred as of January 1, 2018, after giving effect to certain purchase accounting adjustments. These amounts are based on available financial information of the acquiree prior to the acquisition date and are not necessarily indicative of what Company’s operating results would have been had the acquisition actually taken place as of January 1, 2019. This unaudited pro forma information does not project revenues and net income post acquisition (in thousands).

	Three months ended June 30, 2019		Six months ended June 30, 2019
Revenues	$	119,427	$	231,902
Net income		5,542		10,711

Consideration Payable

The Company has a contingent consideration payable related to certain locations, as defined, in the respective acquisition agreement which are placed into operation during a specified period after the acquisition date. The fair value of contingent consideration is included in the consideration payable on the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019. The contingent consideration accrued is measured at fair value on a recurring basis.

Current and long-term portions of consideration payable consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020				December 31, 2019
	Current		Long-Term		Current		Long-Term
TAV	$	494	$	3,546	$	490	$	3,497
Abraham		26		—		55		—
Fair Share Gaming		1,221		474		1,057		899
Family Amusement		395		2,787		293		2,815
Skyhigh		762		4,212		763		3,948
G3		294		99		2,952		154
Grand River		—		5,423		2,304		5,113
IGS		80		—		2,379		—
Total	$	3,272	$	16,541	$	10,293	$	16,426

Reverse Recapitalization

As discussed in Note 1, on November 20, 2019, Accel Entertainment, Inc., consummated a business combination pursuant to the Transaction Agreement, which has been accounted for as a reverse recapitalization. Pursuant to the Transaction Agreement, TPG Holdings Corp. acquired, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock of Accel Entertainment, Inc. In connection with reverse recapitalization, TPG Pace Holdings Corp. changed its name to Accel Entertainment, Inc.

The consideration paid to holders of Accel stock in connection with the reverse recapitalization and subject to the terms and conditions of the Transaction Agreement, consisted of a mix of consideration comprised of cash consideration equal to the number of shares of Accel stock for which such holder of Accel stock made a cash election multiplied by $177 per share (the “Purchase Price”) and share consideration comprised of a number of Class A-1 Shares equal to the number of shares of Accel Stock for which such holder of Accel Stock did not make a cash election multiplied by an exchange ratio calculated by dividing the Purchase Price by $10.30, which was the closing price of the common stock of TPG Pace Holdings Corp. on November 20, 2019. In addition, each holder of Accel stock that made a cash election with respect to less than 70% of its shares of Accel stock received its pro rata share, with such pro rata share determined with reference to a number of shares equal to 70% of such holder’s shares of Accel Stock less the number of shares of Accel stock with respect to which such holder made a cash election, of 2,444,444 2019 Warrants, subject to the conditions set forth in a warrant agreement and 3,000,000 Class A-2 Shares, subject to the conditions set forth in a restricted stock agreement.

In connection with the reverse recapitalization, TPG Pace Holdings and its affiliates converted 7,500,000 of Class A-1 Shares, 4,888,889 2019 Warrants subject to the conditions set forth in the New Pace Warrant Agreement and 2,000,000 Class A-2 Shares, subject to the conditions set forth in a restricted stock agreement.

As part of an Investment Private Placement, certain accredited investors (as defined by Rule 501 of Regulation D) agreed to subscribe for and purchase and Pace agreed to issue and sell to such investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million. The proceeds from the Investment Private Placement was used to fund a portion of the cash consideration required in the reverse recapitalization.

In connection with the reverse recapitalization, Accel repurchased approximately 36,157 shares of its stock from certain employees, directors and officers at a repurchase price of $177 per share in order to facilitate (i) the repayment of existing loans to Accel’s executive officers, (ii) the exercise of vested options and (iii) funding any resulting tax obligations from the exercise of such vested options.

In accounting for the reverse recapitalization, the net equity infusion from the reverse recapitalization was $29.3 million as shown in the table below (in thousands):

	Amount
TPG Holdings Corp cash balance, November 19, 2019	$	429,952
Less redemption of Accel shares prior to reverse recapitalization		(413,733	)
Cash balance prior to backstop equity financing		16,219
Plus funds from Investment Private Placement		48,038
Cash balance prior to consummation of the reverse recapitalization		64,257
Less adjustments to equity infusion:
Payment for sponsor loan		(4,000	)
Transaction costs related to the reverse recapitalization, net of tax		(31,005	)
Net equity infusion prior to stock issuance		29,252
Impact of stock issued in reverse recapitalization		10
Net equity infusion from reverse recapitalization		29,262
Less impact from conversion of treasury stock and issuance of warrants		(7,415	)
Net impact to additional paid-in-capital from reverse recapitalization	$	21,847

Capitalization Adjustments

The table below summarizes the number of shares of Accel issued upon consummation of the reverse recapitalization consisting of (i) the number of shares of Accel stock outstanding immediately before the reverse recapitalization along with the impact of the exchange ratio.

Accel Capital Stock—pre reverse recapitalization	Number of Shares
Class A Common Stock		472,773
Class B Common Stock		662,228
Class C Preferred Stock		1,530,779
Class D Preferred Stock		944,925
Total Shares of Accel Stock on November 20, 2019		3,610,705
Exchange ratio		17.188531
Effect of exchange ratio to convert Accel stock to A-1 Common Stock		62,062,715
Shares issued in reverse recapitalization		14,574,755
Total A-1 Common Stock		76,637,470

Immediately after the reverse recapitalization, there were 76,637,470 Class A-1 Shares, 4,999,999 Class A-2 Shares, and 22,333,308 warrants to purchase Class A-1 Share issued and outstanding. Upon the closing, the Company’s Class A-1 Shares and warrants began trading on the New York Stock Exchange.

2019 Business Acquisitions

Grand River Jackpot

On August 26, 2019, the Company entered into an agreement to acquire all issued and outstanding membership interests in Grand River Jackpot, LLC and subsidiaries (“Grand River”), a terminal operator licensed by the State of Illinois Gaming Board. On September 16, 2019, the Company completed its acquisition of Grand River. Grand River had 2,009 VGTs in over 450 licensed establishments. The Company completed this transaction in order to expand its presence within the State of Illinois.

The acquisition aggregate purchase consideration transferred totaled $113.7 million, which included: i) a cash payment made at closing of $100.0 million; ii) a subsequent cash payment of approximately $6.6 million for a working capital adjustment and; iii) contingent purchase consideration with an estimated fair value of $7.1 million. The contingent consideration represents two installment payments that are to be paid, up to a maximum amount, as follows: i) $2.5 million within 30 days following the one-year anniversary of the acquisition closing date and; ii) $7.0 million within 30 days following the three-year anniversary of the acquisition closing date. These payments are subject to adjustment based on certain performance measures included within the purchase agreement. The estimated fair value was determined based on the Company’s expected probability of future payment, discounted using Grand River’s weighted average cost of capital. The cash payment made at closing and subsequent working capital adjustment payment were both funded with the Company’s existing credit facilities.

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase price has been preliminarily allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values. The areas of the purchase price that are not yet finalized are primarily related to the valuation of location contracts, property and equipment, contingent consideration, and a final adjustment to working capital. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The Grand River acquisition resulted in recorded goodwill as a result of a higher consideration multiple paid relative to prior similar acquisitions driven by maturity and quality of the operations and industry, including workforce and corresponding synergies, and is amortizable for income tax purposes. Management plans to integrate the Grand River acquisition into its existing business structure, which is comprised of a single reporting unit.

The following table summarizes the fair value of consideration transferred and the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash paid	$	106,578
Contingent consideration		7,136
Total consideration	$	113,714
Cash	$	8,861
Location contracts acquired		53,200
Property and equipment:
Video game terminals and equipment		18,000
Land		28
Buildings		548
Vehicles		600
Goodwill		34,511
Total assets acquired		115,748
Accounts payable assumed		(532	)
Accrued expenses assumed		(1,502	)
Net assets acquired	$	113,714

The Company incurred $0.2 million in acquisition related costs that are included in other operating expenses within the consolidated statement of operations for the period ended December 31, 2019.

The results of operations for Grand River are included in the consolidated financial statements of the Company from the date of acquisition. Grand River’s acquired assets generated revenues and net income of $16.6 million and $1.2 million for the period from the acquisition date of September 16, 2019, through December 31, 2019.

2019 Asset Acquisition

On September 23, 2019, pursuant to the terms of an asset purchase agreement, the Company purchased from Illinois Gaming Systems, LLC (“IGS”) terminal use agreements and equipment representing the operations of 139 video game terminals in 29 licensed establishments. The Company has accounted for this transaction as an asset acquisition. The purchase consideration consisted of: i) cash payment of $2.4 million paid at closing and; ii) note payable of $2.3 million issued at closing which is recorded in consideration payables. The asset acquisition

costs were allocated to the following assets: i) video game terminals and equipment totaling $1.7 million and; ii) location contracts totaling $3.0 million. The note payable bears interest of 5% and is due in full on March 23, 2020.

2018 Business Acquisitions

The following table summarizes the consideration paid and the fair values of the tangible and intangible assets acquired at the acquisition dates for the Company’s 2018 business acquisitions (in thousands):

	Quad B		Skyhigh		G3		Mike’s Amusement		Family Amusement		Total
Cash paid at closing	$	610	$	9,268	$	36,500	$	3,500	$	1,512	$	51,390
Contingent consideration payable		—		4,324		1,026		—		—		5,350
Promissory note		—		—		—		—		3,368		3,368
Due to seller		—		618		3,019		—		—		3,637
Total Consideration	$	610	$	14,210	$	40,545	$	3,500	$	4,880	$	63,745
Cash	$	—	$	1,126	$	2,507	$	—	$	—	$	3,633
Video game terminals and equipment		—		506		3,009		—		—		3,515
Amusement and other equipment		472		59		204		420		300		1,455
Location contracts acquired		138		12,519		34,825		3,080		4,580		55,142
Total fair value of net assets acquired		610		14,210		40,545		3,500		4,880		63,745

Quad B

On September 1, 2018, the Company acquired certain assets of B.B.B.B., Inc. (“Quad B”), an Illinois amusement operator. The Company acquired 61 locations that are or are expected to become operational. Quad B’s acquired assets generated revenues and net income of $0.1 million and $0.1 million, respectively, for the period from the acquisition date of September 1, 2018, through December 31, 2018. Quad B’s acquired assets generated revenues and net income of $0.3 million and $0.1 million, respectively, for the year ended December 31, 2019.

Skyhigh Gaming

On August 1, 2018, the Company acquired certain assets of Skyhigh Gaming, LLC (“Skyhigh”), an Illinois licensed terminal operator. The Company initially acquired 23 locations that are or are expected to become operational.

The Company has a contingent consideration payable related to certain locations, as defined, in the acquisition agreement placed in operation during five years after the acquisition date (“the installment period”). The Company will pay Skyhigh 18.44% of the adjusted net terminal income, related to locations in operation during five years after the acquisition date. Payments will be made on a monthly basis for the first two years and every three months for the latter three years, through July 2023. The agreement also provides for a final payment upon the expiration of the installment period equal to 1.75 times the adjusted and defined net terminal income generated by the locations in the twelve-month period ending on the final payment date. The fair value of contingent consideration due as of December 31, 2019 and 2018 were $4.7 million and $4.5 million, respectively. The fair value of contingent consideration is included in the consideration payable on the consolidated balance sheets at December 31, 2019 and 2018. The contingent consideration accrued is measured at fair value on a recurring basis. The maximum amount is determined based on the net terminal income for the related locations.

Skyhigh’s acquired assets generated revenues and net income of $3.9 million and $1.1 million, respectively, for the period from the acquisition date of August 1, 2018, through December 31, 2018. Skyhigh’s acquired assets generated revenues and net income of $9.3 million and $2.2 million, respectively, for the year ended December 31, 2019.

G3 Gaming

On October 16, 2018, the Company acquired certain assets of G3 Gaming, LLC (“G3”), an Illinois licensed terminal operator. The Company initially acquired 87 locations that are or are expected to become operational.

The Company has contingent consideration payable related to locations placed in operation during the three years after the acquisition date whereby the Company will pay G3 a specified percent of the monthly terminal operator revenue less video gaming terminal fees for pending locations, recently added locations, and for a specified group of target establishments through 2022. The fair value of contingent consideration due as of December 31, 2019 and 2018 were $3.1 million and $1.0 million, respectively. The maximum amount is determined based on the net terminal income for the related locations.

G3’s acquired assets generated revenues and net income of $4.3 million and $0.8 million, respectively, for the period from the acquisition date of October 16, 2018, through December 31, 2018. G3’s acquired assets generated revenues and net income of $21.8 million and $3.3 million, respectively, for the year ended December 31, 2019.

Mike’s Amusements

On October 16, 2018, the Company acquired certain assets of Mike’s Amusements, Inc. (“Mike’s Amusements”), an Illinois amusement operator. The Company initially acquired 73 locations that are or are expected to become operational.

Mike’s Amusement’s acquired assets generated revenues and net income of $0.2 million and $0.1 million, respectively, for the period from the acquisition date of October 16, 2018, through December 31, 2018. Mike’s Amusement’s acquired assets generated revenues and net income of $1.0 million and $0.4 million, respectively, for the year ended December 31, 2019.

Family Amusement

On October 31, 2018, the Company entered into an agreement to acquire certain assets of Family Amusement, Inc. (“Family Amusement”), an Illinois amusement operator. The Company initially acquired 139 locations that are or are expected to become operational. Family Amusement’s acquired assets generated revenues and net income of $0.1 million and $0.1 million, respectively, for the period from the acquisition date of October 31, 2018, ending on December 31, 2018. Family Amusement’s acquired assets generated revenues and net income of $0.4 million and $0.2 million, respectively, for the year ended December 31, 2019.

The Company entered into a promissory note in connection with the acquisition. The promissory note provides for three annual installments of $0.4 million from 2019 through 2021, one installment of $0.7 million in 2022, and one installment of $2.1 million in 2023. The first installment was paid upon signing of the promissory note and each subsequent installment shall be paid on or before the anniversary date of the signing of the promissory note. The fair value of the consideration due as of December 31, 2019 and 2018 was $3.1 million and

$3.4 million, respectively. The consideration is included in the consideration payable on the consolidated balance sheets at December 31, 2019 and 2018. The Company and Family Amusement had a pre-existing relationship prior to the business acquisition. Under that pre-existing relationship the Company had route and customer acquisition costs payable to Family Amusement. As a result of the business acquisition, the pre-existing route and customer acquisition payables to Family Amusement were settled and cost and accumulated amortization of the existing Family Amusement route and customer acquisition cost assets was disposed, and a $0.1 million reduction in amortization of route and customer acquisition costs and location contracts acquired was recorded.

2017 and prior Business Acquisitions

Fair Share Gaming

On July 1, 2017, the Company acquired certain assets and assumed certain liabilities of Fair Share Gaming, LLC (“Fair Share”), an Illinois licensed terminal operator. The Company initially acquired 125 locations that are or will become operational.

The following table summarizes the consideration paid and the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash paid at closing	$	48,000
Issuance of common stock to seller		10,794
Contingent stock consideration		3,675
Due to seller		2,055
Contingent consideration		595
Total consideration	$	65,119
Cash	$	4,926
Video game terminals and equipment		6,363
Vehicles		126
Amusement and other equipment		1,148
Location contracts acquired		52,716
Total assets acquired		65,279
Accrued expenses assumed		(160	)
Net assets acquired	$	65,119

The Company has a contingent consideration payable related to certain locations, as defined in the acquisition agreement, in operation one year after the acquisition date. The Company will pay Fair Share half of the Company’s share of revenue after the state taxes based on the number of locations expected to be in operation one year after the acquisition date. On the one-year anniversary of the date the location goes live, monthly payments commence for a period of two years. The fair value of contingent consideration due as of December 31, 2019 and December 31, 2018 was $2.0 million and $1.0 million, respectively. The remaining contingent consideration is included in the consideration payable on the consolidated balance sheets. The contingent consideration accrued is measured at fair value on a recurring basis. The maximum amount is determined based on the net terminal income for the related locations.

The purchase agreement provided for $15 million of the purchase price to be paid through the issuance of Class A Common Stock in the Company. The purchase agreement allowed for an adjustment to the $15 million

issuance of common stock to the seller fifteen months after the date of acquisition predicated on the estimated value of the Company at September 30, 2018. The fair value of the common stock issued on the acquisition date was $10.8 million. The difference between the $15 million provided for in the purchase agreement and the fair value of the common stock issued was discounted and $3.7 million was recorded as contingent stock consideration at the acquisition date. The adjustment was determined based on the difference between estimated Accel Value, as defined, at the acquisition date and actual Accel Value, as defined, as of September 30, 2018. As a result of this adjustment, 3,956 shares of Common Stock A were received back from Fair Share and placed into treasury during the year ended December 31, 2018.

Fair Share’s acquired assets generated revenues and net income of $19.0 million and $3.3 million, respectively, for the period from the acquisition date of July 1, 2017, through December 31, 2017. Fair Share’s acquired assets generated revenues and net income of $40.8 million and $7.0 million, respectively, for the year ended December 31, 2018. Fair Share’s acquired assets generated revenues and net income of $42.8 million and $7.8 million, respectively, for the year ended December 31, 2019.

Abraham

On June 1, 2016, the Company acquired certain assets and assumed certain liabilities of Abraham Gaming, LLC (“Abraham”), an Illinois licensed terminal operator. The Company initially acquired 138 locations that are or are expected to become operational.

The Company has a contingent consideration payable related to certain locations in operation two years after these locations go live. The Company will make one payment to Abraham for half of the Company’s share of revenue after the state taxes related to locations in operation within 10 business days after determining the amount owed related to the two years of operations. The fair value of contingent consideration due as of December 31, 2019 and 2018, was $0.1 million and $0.2 million, respectively. The remaining contingent consideration is included in the consideration payable on the consolidated balance sheets. The contingent consideration accrued is measured at fair value on a recurring basis. The maximum amount is determined based on the net terminal income for the related locations.

TAV Gaming

On December 30, 2014, the Company acquired certain assets and assumed certain liabilities of TAV Gaming, Inc. (“TAV”), an Illinois licensed terminal operator.

The total purchase consideration payable to TAV is subject to earnouts based on actual locations placed in operation and the performance thereof. The Company initially acquired 32 locations that were or would become operational. Consideration payable due to TAV in relation to the acquisition was $4.0 million and $1.4 million at December 31, 2019 and 2018, respectively, which is included in consideration payable in the accompanying consolidated balance sheets. The Company makes monthly payments of principal and interest due through December 30, 2024.

Pro Forma Results

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the years ended December 31, 2019, 2018 and 2017 as if the acquisitions of Grand River, Quad B, Skyhigh, G3, Mike’s Amusements, Family Amusement and Fair Share Gaming, had occurred as of the beginning

of the fiscal year prior to the fiscal year of acquisition, after giving effect to certain purchase accounting adjustments. These amounts are based on available financial information of the acquirees prior to the acquisition dates and are not necessarily indicative of what Company’s operating results would have been had the acquisitions actually taken place at the beginning of the fiscal year prior to the fiscal year of acquisition. This unaudited pro forma information for the years ended December 31, does not project revenues and income before income tax expense post acquisition (in thousands).

	2019			2018		2017
Revenues	$	466,466		$	409,142	$	467,676
Net (loss) income		(2,598	)		16,098		26,535

Consideration Payable

The Company has a contingent consideration payable related to certain locations, as defined, in the respective acquisition agreement which are placed into operation during a specified period after the acquisition date. The fair value of contingent consideration is included in the consideration payable on the consolidated balance sheets as of December 31, 2019 and 2018. The contingent consideration accrued is measured at fair value on a recurring basis.

Current and long-term portions of consideration payable consist of the following at December 31 (in thousands) :

	2019				2018
	Current		Long- Term		Current		Long- Term
TAV	$	490	$	3,497	$	194	$	1,232
Abraham		55		—		207		—
Fair Share Gaming		1,057		899		1,027		—
Family Amusement		293		2,815		357		3,011
Skyhigh		763		3,948		550		3,971
G3		2,952		154		221		806
Grand River		2,304		5,113		—		—
IGS		2,379		—		—		—
Total	$	10,293	$	16,426	$	2,556	$	9,020

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Fair Value Measurements

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

ASC Topic 820, Fair Value Measurements and Disclosures, establishes a framework for measuring fair value and the corresponding disclosure requirements around fair value measurements. This topic applies to all financial instruments that are being measured and reported on a fair value basis.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the various methods including market, income and cost approaches are used. Based on these approaches, certain assumptions are utilized that the market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market

corroborated, or generally unobservable inputs. Valuation techniques are utilized that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, it is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3: Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

Convertible promissory notes

In valuing it’s convertible promissory notes at June 30, 2020 and December 31, 2019, the Company utilized a binomial lattice model in which a convertible instrument is split into two separate components: a cash-only (debt) component and an equity component. The binomial lattice trees are constructed using a methodology that assigns up and downward movement factors and probabilities based on rates of return, volatility, and time. It allows for the optional conversion features of the convertible promissory notes to be captured by determining whether conversion or continuing to hold is the most economically advantageous to the holder. Upon conversion, future values in the equity component are subject to only the risk-free rate, while the cash-only component associated with continuing to hold the debt instrument is subject to the selected risk-adjusted discount rate. Solving backwards through the trees associated with the equity component and the trees associated with the debt component yields an aggregate discounted value for each. The sum of these values yields the indicated fair value of the convertible promissory notes.

The discount rate is the risk-adjusted discount rate that is implied by the rate that allows the discounted cash flows with all terms and conditions modeled to equal the total cash consideration. As such, after modeling the features of convertible promissory notes as of the issuance date using the lattice model framework outlined above, the Company solved for the discount rate that resulted in a value for the note equal to the total cash consideration. The valuation of the Company’s convertible promissory notes is considered to be a Level 3 fair value measurement as the significant inputs are unobservable and require significant judgment or estimation.

For interim periods, the Company evaluates the underlying assumptions used in the latest valuation and determines whether there have been any significant changes to those assumptions based on current events to determine if a revaluation is necessary. Based on the economic impacts of COVID-19, the Company engaged a 3rd party valuation firm to assist in determining the fair value of its investment in convertible notes as of June 30, 2020. The valuation concluded that the carrying amount of the investment in the convertible notes approximates the fair value in all material respects, as of June 30, 2020.

Contingent consideration

The following tables summarize the Company’s liabilities that are measured at fair value on a recurring basis (in thousands):

			Fair Value Measurement at Reporting Date Using
	June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	12,591	$	—	$	—	$	12,591

			Fair Value Measurement at Reporting Date Using
	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	17,327	$	—	$	—	$	17,327

The Company uses a discounted cash flow analysis to determine the value of contingent consideration upon acquisition and updates this estimate on a recurring basis. The significant assumptions in the Company’s cash flow analysis includes the probability adjusted projected revenues after state taxes, a discount rate as applicable to each acquisition, and the estimated number of locations that “go live” with the Company during the contingent consideration period. A hypothetical 1% increase in the applicable discount rate would decrease other expenses, net by approximately $0.2 million while a hypothetical 1% decrease in the applicable discount rate would increase other expenses, net by approximately $0.2 million.

Changes in the fair value of contingent consideration liabilities are classified within other expenses, net on the accompanying condensed consolidated statements of operations.

Fair Value Measurements

ASC Topic 820, “Fair Value Measurements and Disclosures,” establishes a framework for measuring fair value and the corresponding disclosure requirements around fair value measurements. This topic applies to all financial instruments that are being measured and reported on a fair value basis.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the various methods including market, income and cost approaches are used. Based on these approaches, certain assumptions are utilized that the market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable inputs. Valuation techniques are utilized that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in

the valuation techniques, it is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

Level 1: Valuations for assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 1 also includes U.S. Treasury and federal agency securities and federal agency mortgage-backed securities, which are traded by dealers or brokers in active markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

Level 3: Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer, or broker traded transactions. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

Convertible promissory notes

In valuing it’s convertible promissory notes, the Company utilized a binomial lattice model in which a convertible instrument is split into two separate components: a cash-only (debt) component and an equity component. The binomial lattice trees are constructed using a methodology that assigns up and downward movement factors and probabilities based on rates of return, volatility, and time. It allows for the optional conversion features of the convertible promissory notes to be captured by determining whether conversion or continuing to hold is the most economically advantageous to the holder. Upon conversion, future values in the equity component are subject to only the risk-free rate, while the cash-only component associated with continuing to hold the debt instrument is subject to the selected risk-adjusted discount rate. Solving backwards through the trees associated with the equity component and the trees associated with the debt component yields an aggregate discounted value for each. The sum of these values yields the indicated fair value of the convertible promissory notes.

The discount rate is the risk-adjusted discount rate that is implied by the rate that allows the discounted cash flows with all terms and conditions modeled to equal the total cash consideration. As such, after modeling the features of convertible promissory notes as of the issuance date using the lattice model framework outlined above, the Company solved for the discount rate that resulted in a value for the note equal to the total cash consideration. The valuation of the Company’s convertible promissory notes is considered to be a Level 3 fair value measurement as the significant inputs are unobservable and require significant judgment or estimation.

Contingent consideration

The following tables summarize the Company’s liabilities that are measured at fair value on a recurring basis (in thousands):

			Fair Value Measurement at Reporting Date Using
	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	17,327	$	—	$	—	$	17,327

			Fair Value Measurement at Reporting Date Using
	December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	6,782	$	—	$	—	$	6,782

The Company uses a discounted cash flow analysis to determine the value of contingent consideration upon acquisition and updates this estimate on a recurring basis. The significant assumptions in the Company’s cash flow analysis includes the probability adjusted projected revenues after state taxes, a discount rate as applicable to each acquisition, and the estimated number of locations that “go live” with the Company during the contingent consideration period. A hypothetical 1% increase in the applicable discount rate would decrease other expenses, net by approximately $0.2 million while a hypothetical 1% decrease in the applicable discount rate would increase other expenses, net by approximately $0.2 million.

The following table provides a roll-forward of the fair value of recurring Level 3 fair value measurements for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019			2018			2017
Liabilities:
Contingent consideration:
Beginning of year balance	$	6,782		$	785		$	190
Issuance of contingent consideration in connection with acquisitions		7,216			5,350			595
Payment of contingent consideration		(1,658	)		(387	)		—
Additional accruals included in earnings		4,987			1,034			—
Ending balance	$	17,327		$	6,782		$	785

Changes in the fair value of contingent consideration liabilities are classified within other expenses, net on the accompanying consolidated statements of operations.

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Stockholders' Equity

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

As discussed in Note 1, on November 20, 2019, the Company, consummated a reverse recapitalization. Pursuant to the Certificate of Incorporation as amended on November 20, 2019 and as a result of the reverse recapitalization, the Company has retrospectively adjusted the shares issued and outstanding prior to November 20, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted. Pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, the Company authorized and has available for issuance the following shares and classes of capital stock, each with a par value of $0.0001 per share: i) 1,000,000 shares of preferred stock; ii) 250,000,000 shares of Class A-1 Common Stock, ii) 10,000,000 shares of Class A-2 Common Stock.

Class A-1 Common Stock

The holders of the Class A-1 Common Stock are entitled to one vote for each share. The holders of Class A-1 Common Stock are entitled to receive dividends or other distributions when and if declared from time to time and share equally on a per share basis in such dividends and distributions subject to such rights of the holders of preferred stock.

Class A-2 Common Stock

The holders of the Class A-2 Common Stock do not have voting rights and are not entitled to receive or participate in any dividends or distributions when and if declared from time to time.

5,000,000 shares of Class A-2 Common Stock were issued with other consideration in conjunction with the reverse recapitalization, subject to the conditions set forth in a restricted stock agreement, which sets forth the terms upon which the Class A-2 Shares will be exchanged for an equal number of validly issued, fully paid and non-assessable Class A-1 Shares. The exchange of Class A-2 Shares for Class A-1 Shares will be subject to the terms and conditions set forth in the Restricted Stock Agreement, with such exchanges occurring in three separate tranches upon the satisfaction of the following triggers:

• Tranche I, equal to 1,666,666 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the EBITDA for the last twelve months (“LTM EBITDA”) of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2021, March 31, 2022 or June 30, 2022 equals or exceeds $132 million or (ii) the closing sale price of Class A-1 Shares on the New York Stock Exchange (“NYSE”) equals or exceeds $12.00 for at least twenty trading days in any consecutive thirty trading day period;

• Tranche II, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $152 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $14.00 for at least twenty trading days in any consecutive thirty trading day period; and

• Tranche III, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $172 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $16.00 for at least twenty trading days in any consecutive thirty trading day period.

The Restricted Stock Agreement further provides that holders of Class A-2 Shares are not required to exchange such shares for Class A-1 Shares if, (x) prior to giving effect to exchanges pursuant to the triggers described above, such holder beneficially owns less than 4.99% of the issued and outstanding Class A-1 Shares, and (y) after giving effect to the exchanges pursuant to the triggers described above, such holder would beneficially own in excess of 4.99% of the issued and outstanding Class A-1 Shares. However, notwithstanding the limitation described in the previous sentence, if and when a holder of Class A-2 Shares has obtained all required gaming approvals from the applicable gaming authorities permitting such holder to beneficially own Class A-1 Shares in excess of 4.99%, then the Class A-2 Shares held by such holder which are subject to exchange shall immediately be exchanged for Class A-1 Shares without regard to the limitation.

On January 14, 2020, the market condition for the conversion of Tranche I was satisfied. However, as discussed above, no shareholder is permitted to own more than 4.99% of the issued and outstanding Class A-1 Shares after the conversion unless obtaining required gaming approvals from the applicable gaming authorities. In connection with the conversion, no gaming approvals were obtained. As a result, only 1,596,636 of the 1,666,667 Class A-2 shares were converted into Class A-1 shares.

Warrants

On January 31, 2013, the Company issued 253,575 warrants to certain individual shareholders as compensation for providing a personal guaranty for a revolving loan agreement. The warrants granted their

holders the right to purchase the Company’s Class A-1 Common Shares at the price of $17.80 per share anytime from January 31, 2013 through January 30, 2020. The warrants were classified as an equity instrument. As of June 30, 2020 and 2019, there were 0 and 91,350 warrants outstanding. All warrants were exercised prior to the reverse recapitalization.

7,333,326 warrants to purchase shares of Class A-1 Common Stock were issued with other consideration prior to the reverse recapitalization (the “2019 Warrants”). As a part of the reverse recapitalization, 2,444,437 2019 Warrants were canceled and reissued under the same terms and conditions to Accel legacy shareholders. Each warrant expires five years from issuance and entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding warrants, at any time 30 days after the consummation of the reverse recapitalization.

The 2019 Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the 2019 Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the 2019 Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the 2019 Warrant Agreement.

In 2017, 15,000,000 warrants to purchase shares of Class A-1 Common Stock were issued (“Public Warrants”). Each warrant expires five years from issuance and entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding warrants, at any time 30 days after the consummation of the reverse recapitalization.

The Public Warrants may be redeemed for cash at the option of the Company, at any time while they are exercisable and prior to their expiration, at the price of $0.01 per Public Warrant, provided that the last sales price of the Class A-1 Stock reported has been at least $18.00 per share, on each of twenty (20) trading days within the thirty (30) trading-day period ending on the third Business Day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

The Public Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the Public Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the Public Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has

been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

Redemption Date	Fair Market Value of Class A-1 shares
(period to expiration of the New Accel Warrants)	$10		$11		$12		$13		$14		$15		$16		$17		$18
57 months		0.257		0.277		0.294		0.310		0.324		0.337		0.348		0.358		0.365
54 months		0.252		0.272		0.291		0.307		0.322		0.335		0.347		0.357		0.365
51 months		0.246		0.268		0.287		0.304		0.320		0.333		0.346		0.357		0.365
48 months		0.241		0.263		0.283		0.301		0.317		0.332		0.344		0.356		0.365
45 months		0.235		0.258		0.279		0.298		0.315		0.330		0.343		0.356		0.365
42 months		0.228		0.252		0.274		0.294		0.312		0.328		0.342		0.355		0.364
39 months		0.221		0.246		0.269		0.290		0.309		0.325		0.340		0.354		0.364
36 months		0.213		0.239		0.263		0.285		0.305		0.323		0.339		0.353		0.364
33 months		0.205		0.232		0.257		0.280		0.301		0.320		0.337		0.352		0.364
30 months		0.196		0.224		0.250		0.274		0.297		0.316		0.335		0.351		0.364
27 months		0.185		0.214		0.242		0.268		0.291		0.313		0.332		0.350		0.364
24 months		0.173		0.204		0.233		0.260		0.285		0.308		0.329		0.348		0.364
21 months		0.161		0.193		0.223		0.252		0.279		0.304		0.326		0.347		0.364
18 months		0.146		0.179		0.211		0.242		0.271		0.298		0.322		0.345		0.363
15 months		0.130		0.164		0.197		0.230		0.262		0.291		0.317		0.342		0.363
12 months		0.111		0.146		0.181		0.216		0.250		0.282		0.312		0.339		0.363
9 months		0.090		0.125		0.162		0.199		0.237		0.272		0.305		0.336		0.362
6 months		0.065		0.099		0.137		0.178		0.219		0.259		0.296		0.331		0.362
3 months		0.034		0.065		0.104		0.150		0.197		0.243		0.286		0.326		0.361
0 months		—		—		0.042		0.115		0.179		0.233		0.281		0.323		0.361

The exact Fair Market Value and Redemption Date (as defined) may not be set forth in the table above, in which case, if the Fair Market Value is between two values in the table or the Redemption Date is between two redemption dates in the table, the number of Class A-1 Stock to be issued for each Public Warrant redeemed will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower Fair Market Values and the earlier and later redemption dates, as applicable, based on a 365-day year.

On June 16, 2020, the Company announced that it would redeem all of the outstanding Public Warrants to purchase shares of the Company’s Class A-1 common stock, that were originally issued under the Warrant Agreement, at a redemption exchange rate equal to 0.250 shares of Class A-1 Common Stock per Public Warrant that remain outstanding at 5:00 p.m. New York City time on July 16, 2020. The 2019 Warrants to purchase Class A-1 Common Stock are not subject to this redemption. See Note 17 for further information on the redemption.

Stockholders’ Equity

As discussed in Notes 1 and 3, on November 20, 2019, the Company, consummated a reverse recapitalization pursuant to the Transaction Agreement, which has been accounted for as a reverse recapitalization. Pursuant to the Certificate of Incorporation as amended on November 20, 2019 and as a result of the reverse recapitalization, the Company has retrospectively adjusted the shares issued and outstanding prior to November 20, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted. Pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, the Company authorized and has available for issuance the following shares and classes of capital stock, each with a par value of $0.0001 per share: i) 1,000,000 shares of preferred stock; ii) 250,000,000 shares of Class A-1 Common Stock, ii) 10,000,000 shares of Class A-2 Common Stock.

Class A-1 Common Stock

The holders of the Class A-1 Common Stock are entitled to one vote for each share. The holders of Class A-1 Common Stock are entitled to receive dividends or other distributions when and if declared from time to time and share equally on a per share basis in such dividends and distributions subject to such rights of the holders of preferred stock.

Class A-2 Common Stock

The holders of the Class A-2 Common Stock do not have voting rights and are not entitled to receive or participate in any dividends or distributions when and if declared from time to time.

As discussed in Note 3, 5,000,000 shares of Class A-2 Common Stock were issued with other consideration prior to the reverse recapitalization, subject to the conditions set forth in a restricted stock agreement, which sets forth the terms upon which the Class A-2 Shares will be exchanged for an equal number of validly issued, fully paid and non-assessable Class A-1 Shares. The exchange of Class A-2 Shares for Class A-1 Shares will be subject to the terms and conditions set forth in the Restricted Stock Agreement, with such exchanges occurring in three separate tranches upon the satisfaction of the following triggers:

• Tranche I, equal to 1,666,666 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the EBITDA for the last twelve months (“LTM EBITDA”) of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2021, March 31, 2022 or June 30, 2022 equals or exceeds $132 million or (ii) the closing sale price of Class A-1 Shares on the New York Stock Exchange (“NYSE”) equals or exceeds $12.00 for at least twenty trading days in any consecutive thirty trading day period;

• Tranche II, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2022, March 31, 2023 or June 30, 2023 equals or exceeds $152 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $14.00 for at least twenty trading days in any consecutive thirty trading day period; and

• Tranche III, equal to 1,666,667 Class A-2 Shares, will be exchanged for Class A-1 Shares if either (i) the LTM EBITDA of the Company (as determined pursuant to the Restricted Stock Agreement) as of December 31, 2023, March 31, 2024 or June 30, 2024 equals or exceeds $172 million or (ii) the closing sale price of Class A-1 Shares on the NYSE equals or exceeds $16.00 for at least twenty trading days in any consecutive thirty trading day period.

The LTM EBITDA thresholds will be reasonably adjusted by the independent directors of the board of the Company (the “Board”) from time to time to take into account the anticipated effect of any acquisitions or dispositions that exceed certain thresholds and are otherwise materially different from certain forecasts.

Notwithstanding the foregoing, Class A-2 Shares, if not previously exchanged for Class A-1 Shares pursuant to the triggers described above, will be exchanged for an equal number of Class A-1 Shares immediately prior to the consummation of a transaction or series of related transactions that would result in a third party or group (as defined in or under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becoming the beneficial owner of, directly or indirectly, more than fifty percent of the total voting power of the equity securities of the Company, or more than fifty percent of the consolidated net revenues, net income or total assets (including equity securities of its subsidiaries) of the Company, provided that the satisfaction of the conditions set forth in the aforementioned triggers cannot be determined at such time.

The Restricted Stock Agreement further provides that holders of Class A-2 Shares are not required to exchange such shares for Class A-1 Shares if, (x) prior to giving effect to exchanges pursuant to the triggers described above, such holder beneficially owns less than 4.99% of the issued and outstanding Class A-1 Shares, and (y) after giving effect to the exchanges pursuant to the triggers described above, such holder would beneficially own in excess of 4.99% of the issued and outstanding Class A-1 Shares. However, notwithstanding the limitation

described in the previous sentence, if and when a holder of Class A-2 Shares has obtained all required gaming approvals from the applicable gaming authorities permitting such holder to beneficially own Class A-1 Shares in excess of 4.99%, then the Class A-2 Shares held by such holder which are subject to exchange shall immediately be exchanged for Class A-1 Shares without regard to the limitation.

On January 14, 2020, the market condition for the conversion of Tranche I was satisfied. Accordingly, 1,666,666 Class A-2 shares were converted into Class A-1 shares.

Warrants

On January 31, 2013, the Company issued 253,575 warrants to certain individual shareholders as compensation for providing a personal guaranty for a revolving loan agreement. The warrants granted their holders the right to purchase the Company’s Class A-1 Common Shares at the price of $17.80 per share anytime from January 31, 2013 through January 30, 2020. The warrants were classified as an equity instrument. As of December 31, 2019, and 2018, there were 0 and 190,575 shares of warrants outstanding. During the year ended December 31, 2019, 190,575 warrants were exercised prior to the reverse recapitalization for proceeds of $3,392,235. During the year ended December 31, 2017, 11,500 warrants were exercised for proceeds of $204,700.

As discussed in Note 3, 7,333,326 warrants to purchase shares of Class A-1 Common Stock were issued with other consideration prior to the reverse recapitalization (the “2019 Warrants”). As a part of the reverse recapitalization, 2,444,437 2019 warrants were canceled and reissued under the same terms and conditions to Accel legacy shareholders. Each warrant expires five years from issuance and entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding warrants, at any time 30 days after the consummation of the reverse recapitalization.

The 2019 Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the 2019 Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the 2019 Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the 2019 Warrant Agreement.

In 2017, 15,000,000 warrants to purchase shares of Class A-1 Common Stock were issued in connection with the formation of TPG Pace Holdings (“Public Warrants”). Each warrant expires five years from issuance and entitles the holder to purchase one Class A-1 Share at an exercise price of $11.50 per share, subject to adjustments substantially similar to those applicable to the other outstanding warrants, at any time 30 days after the consummation of the reverse recapitalization.

The Public Warrants may be redeemed for cash at the option of the Company, at any time while they are exercisable and prior to their expiration, at the price of $0.01 per Public Warrant, provided that the last sales price of the Class A-1 Stock reported has been at least $18.00 per share, on each of twenty (20) trading days within the thirty (30) trading-day period ending on the third Business Day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

The Public Warrants may be redeemed, at the option of the Company, ninety (90) days after they are first exercisable and prior to their expiration, at a price equal to a number of Class A-1 Stock determined by reference to the table below, based on the redemption date (calculated for purposes of the table as the period to expiration of the Public Warrants) and the “Fair Market Value” (the “Alternative Redemption Price”) (as such terms are defined in the Public Warrant Agreement) provided that the last sales price of the Class A-1 Stock reported has been at least $10.00 per share, on the trading day prior to the date on which notice of the redemption is given, subject to certain terms of the Public Warrant Agreement.

Redemption Date	Fair Market Value of Class A-1 shares
(period to expiration of the New Accel Warrants)	$10		$11		$12		$13		$14		$15		$16		$17		$18
57 months		0.257		0.277		0.294		0.310		0.324		0.337		0.348		0.358		0.365
54 months		0.252		0.272		0.291		0.307		0.322		0.335		0.347		0.357		0.365
51 months		0.246		0.268		0.287		0.304		0.320		0.333		0.346		0.357		0.365
48 months		0.241		0.263		0.283		0.301		0.317		0.332		0.344		0.356		0.365
45 months		0.235		0.258		0.279		0.298		0.315		0.330		0.343		0.356		0.365
42 months		0.228		0.252		0.274		0.294		0.312		0.328		0.342		0.355		0.364
39 months		0.221		0.246		0.269		0.290		0.309		0.325		0.340		0.354		0.364
36 months		0.213		0.239		0.263		0.285		0.305		0.323		0.339		0.353		0.364
33 months		0.205		0.232		0.257		0.280		0.301		0.320		0.337		0.352		0.364
30 months		0.196		0.224		0.250		0.274		0.297		0.316		0.335		0.351		0.364
27 months		0.185		0.214		0.242		0.268		0.291		0.313		0.332		0.350		0.364
24 months		0.173		0.204		0.233		0.260		0.285		0.308		0.329		0.348		0.364
21 months		0.161		0.193		0.223		0.252		0.279		0.304		0.326		0.347		0.364
18 months		0.146		0.179		0.211		0.242		0.271		0.298		0.322		0.345		0.363
15 months		0.130		0.164		0.197		0.230		0.262		0.291		0.317		0.342		0.363
12 months		0.111		0.146		0.181		0.216		0.250		0.282		0.312		0.339		0.363
9 months		0.090		0.125		0.162		0.199		0.237		0.272		0.305		0.336		0.362
6 months		0.065		0.099		0.137		0.178		0.219		0.259		0.296		0.331		0.362
3 months		0.034		0.065		0.104		0.150		0.197		0.243		0.286		0.326		0.361
0 months		—		—		0.042		0.115		0.179		0.233		0.281		0.323		0.361

The exact Fair Market Value and Redemption Date (as defined) may not be set forth in the table above, in which case, if the Fair Market Value is between two values in the table or the Redemption Date is between two redemption dates in the table, the number of Class A-1 Stock to be issued for each 2019 Warrant redeemed will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower Fair Market Values and the earlier and later redemption dates, as applicable, based on a 365-day year.

At December 31, 2019 and 2018, the Company has reserved Class A-1 Common Stock for future issuance in relation to the following:

	2019		2018
Class A-1 Common Stock warrants issued and outstanding		22,333,308		3,275,704
Class A-1 Common Stock options issued and outstanding		2,376,700		5,622,557
Conversion of Class A-2 Common Stock		4,999,999		—
Class A-1 Common Stock reserved for issuance		29,710,007		8,898,261

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Video Gaming Terminal Fees

12 Months Ended

Dec. 31, 2019

Video Gaming Terminal Fees [Abstract]

Video Gaming Terminal Fees

Video Gaming Terminal Fees

In accordance with the Illinois Video Gaming Act, a 33% tax on net terminal income, as defined, is payable to the State of Illinois Gaming Board. Effective July 2019, the Illinois tax on net terminal income increased to 33% from 30%. Through July 2018, a 0.7275% administrative fee was payable to a third-party at the direction of the State of Illinois Gaming Board (the “Administrative Fee”). Effective July 2018, the administrative fee increased to 0.8513%. Video gaming terminal fees, which consist of the tax and administrative fee, amounted to $133.2 million, $99.1 million and $73.8 million for the years ended December 31, 2019, 2018 and 2017, respectively. The net terminal income remaining is split “50/50” between the Company and the licensed video gaming location and amounted to $138.8 million, $111.4 million and $83.2 million for the years ended December 31, 2019, 2018 and 2017, respectively. The video gaming terminal fee, administrative fee and the licensed video game location net terminal income share are recorded in video gaming expenses in the accompanying consolidated statements of operations.

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Cover Page	6 Months Ended
	Jun. 30, 2020
Cover page
Document Type	S-1
Amendment Flag	false
Entity Registrant Name	Accel Entertainment, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	98-1350261
Entity Address, Address Line One	140 Tower Drive
Entity Address, City or Town	Burr Ridge
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60527
City Area Code	630
Local Phone Number	972 -2235
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Central Index Key	0001698991

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2019

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

401(k) Plan

The Company maintains a 401(k)-benefit plan for all employees with at least three months of service and 21 years of age. The Company may elect to make a discretionary matching contribution to the Plan. Participants vest 20% a year after the first 2 years of employment and are fully vested after 6 years of employment according to the discretionary plan. During February 2017, the Company added an employer match of 50% of the participants’ contribution up to 5% of their compensation. Participants are fully vested after one year of employment. The Company incurred 401(k)-benefit plan expense of approximately $0.6 million, $0.5 million and $0.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Incentive Compensation Plan

Included in certain employee agreements are provisions for bonuses, which are determined at the discretion of management. Bonus expense amounted to $2.1 million, $1.8 million and $1.6 million for the years ended December 31, 2019, 2018 and 2017, respectively. Accrued bonuses amounted to $1.7 million at December 31, 2019 and 2018.

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Stock-based Compensation

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Stock-based Compensation

Stock-based Compensation

The Company grants various types of stock-based awards. Stock compensation awards granted are valued on the date of grant and are expensed over the required service period. The Company previously adopted the 2011 Equity Incentive Plan of Accel Entertainment, Inc., and the 2016 Equity Incentive Plan of Accel Entertainment, Inc.

In conjunction with the closing of the reverse recapitalization, the Accel Entertainment, Inc. Long Term Incentive Plan (the “LTIP”) was adopted. The LTIP provides for grants of a variety of awards to employees and

Under the LTIP, the Company granted 1.2 million options to eligible officers and employees of the Company during the first quarter of 2020, which shall vest over a period of 5 years. No additional options were granted during the second quarter of 2020. During the six months ended June 30, 2020, the Company also issued 1.3 million restricted stock units (“RSUs”) to board of directors and certain employees, which shall vest over a period of 5 years for employees and a period of 6 months to 1 year for board of directors. The estimated grant date fair value of the options and RSUs granted during six months ended June 30, 2020 totaled $20.2 million.

Stock-based compensation expense, which pertains to the Company’s stock options and other equity awards, was $1.3 million and $2.4 million for the three and six months ended June 30, 2020, respectively. In comparison, stock-based compensation expense was $0.1 million and $0.3 million for the three and six months ended June 30, 2019, respectively. Stock-based compensation expense is included within general and administrative expenses in the condensed consolidated statements of operations.

Stock-based Compensation

The Company grants various types of stock-based awards including stock options. Stock compensation awards granted are valued on the date of grant and are expensed over the required service period.

Grant of Options

The Company previously adopted the 2011 Equity Incentive Plan of Accel Entertainment, Inc., and in 2016 the Company adopted the 2016 Equity Incentive Plan of Accel Entertainment, Inc., (collectively, “the Plans”). Under the Plans, the aggregate number of shares of common stock that may be issued or transferred pursuant to options or restricted stock awards under the Plans will not exceed ten percent of the outstanding shares of the Company. Options generally vest over a three to five-year period. The exercise price of stock options shall not be less than 100% of the fair market value per share of common stock on the grant date. The term of the options are a maximum of 10 years from the grant date.

The Company uses the Black-Scholes formula to estimate the fair value of its share-based payments. The volatility assumption used in the Black-Scholes formula is based on the volatility of comparable public companies. The Company determined the share price at grant date used in the Black-Scholes formula based on an internal valuation model.

The fair value assigned to each option is estimated on the date of grant using a Black-Scholes-based option valuation model. The expected term of each option granted represents the period of time that each option granted is expected to be outstanding. The risk-free rate for periods within the contractual life of the unit is based on U.S. Treasury yields in effect at the time of grant.

The following assumptions were used in the option valuation model for options granted during the years ended December 31,:

	2019*	2018	2017
Expected approximate volatility	None%	35%	35%
Expected dividends	None	None	None
Expected term (in years)	None	3-5	5
Risk-free rate	None%	2.41% - 2.62%	1.81% - 2.18%
Stock price	None	$4 - $5	$3 - $4

* there were no options granted in 2019

A summary of the options granted and the range in vesting periods based on specific provisions within the option agreements during the years ended December 31, are as follows:

	2019		2018		2017
Options granted		—		108,288		612,771
Vesting period (in years)		—		3 - 5		5

The following table sets forth of the activities of the Company’s vested stock options for the years ended December 31, 2019, 2018 and 2017, as restated to give effect for the reverse recapitalization discussed in Note 3.

Outstanding options	Shares			Weighted Average Grant Date Fair Value		Weighted Average Exercise Price
Outstanding at January 1, 2017		4,512,952		$	0.60	$	1.75
Granted		612,771			1.27		3.72
Exercised		(867,024	)		0.59		1.62
Forfeited/expired		(135,789	)		0.96		2.73
Outstanding at December 31, 2017		4,122,910			0.69		2.03
Granted		108,288			1.73		5.10
Exercised		(284,642	)		0.40		1.15
Forfeited/expired		(114,132	)		1.03		2.96
Outstanding at December 31, 2018		3,832,424			0.73		2.16
Granted		—			—		—
Exercised		(2,590,274	)		0.62		1.84
Forfeited/expired		(13,751	)		0.77		2.33
Outstanding at December 31, 2019		1,228,399			0.96		2.91

A summary of the status of the activities of the Company’s nonvested stock options for the years ended December 31, 2019, 2018 and 2017, as restated to give effect for the reverse recapitalization discussed in Note 3.

Nonvested options	Shares			Weighted Average Grant Date Fair Value
Nonvested at January 1, 2017		3,639,156		$	0.60
Granted		612,771			1.27
Vested		(1,380,566	)		0.60
Forfeited		(135,789	)		0.96
Nonvested at December 31, 2017		2,735,572			0.73
Granted		108,288			1.73
Vested		(1,032,910	)		0.62
Forfeited		(101,361	)		1.07
Nonvested at December 31, 2018		1,709,589			0.82
Granted		—			—
Vested		(547,537	)		0.85
Forfeited		(13,751	)		0.77
Nonvested at December 31, 2019		1,148,301			0.95

Total stock compensation expense recognized during the years ended December 31, 2019, 2018 and 2017, was $2.2 million, $0.5 million and $0.8 million, respectively. As of December 31, 2019, and 2018, a total of 80,098 and 1,137,176 options with a weighted-average remaining contractual term of 1.9 and 3.2 years, respectively, granted to key employees were vested. The fair value of options that vested through 2019, 2018 and 2017 was $1.2 million, $0.6 million, and $0.8 million, respectively. As of December 31, 2019, and 2018, there was approximately $0.9 million and $0.9 million, respectively, of unrecognized compensation expense related to time-vesting awards, which is expected to be recognized through 2021. As of December 31, 2019, and 2018, the weighted-average exercise price of the non-vested awards was $2.86 and $2.52, respectively. As of December 31, 2019, and 2018, the weighted-average remaining contractual term of the vested awards was 1.9 and 3.2 years, respectively. As of December 31, 2019, and 2018, the weighted-average remaining contractual term of the outstanding awards was 2.7 and 2.8 years, respectively. The total intrinsic value of options that were exercised during the years ended December 31, 2019, 2018 and 2017 was approximately $20.7 million, $4.4 million and $1.7 million, respectively.

During the years ended December 31, 2019, 2018 and 2017, the Company recognized excess tax (expense) benefits from stock-based compensation of $(0.1) million, $1.0 million, and $0.1 million, respectively, within income tax expense in the consolidated statements of operations and within cash flows from operating activities on the consolidated statements of cash flows. Excess tax benefits reflect the total realized value of the Company’s tax deductions from individual stock option exercise transactions and the vesting of restricted stock awards in excess of the deferred tax assets that were previously recorded.

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Income Taxes

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company recognized an income tax benefit of $5.1 million and $5.2 million during the three and six months ended June 30, 2020, respectively. In comparison, the Company recognized income tax expense of $1.8 million and $3.4 million during the three and six months ended June 30, 2019, respectively.

The Company calculates its (benefit from) provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate to its year-to-date pretax book income or loss. The effective tax rate (income taxes as a percentage of income before income taxes) was 19.2% and 18.3% for the three and six months ended June 30, 2020, respectively. In comparison, the effective tax rate was 29.0% and 29.3% for the three and six months ended June 30, 2019, respectively. The Company’s effective income tax rate can vary from period to period depending on, among other factors, the business mix of our earnings; the amount of permanent tax adjustments and discrete items. The tax rate in 2020 is also impacted by the forecast of a net loss for the year, but has unfavorable permanent tax adjustments which are causing the expected tax rate to decrease, year over year for the three and six months ended June 30, 2020.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law and authorizes more than $2 trillion to battle COVID-19 and its economic effects, including immediate cash relief for individual citizens, loan programs for small business, support for hospitals and other medical providers, and various types of economic relief for impacted businesses and industries. The Company believes it is eligible for certain credits of the relief programs under the CARES Act and is in the process of gathering the required information. The Company will continue to monitor the situation and evaluate any additional future legislation.

Income Taxes

Prior to the consummation of the reverse recapitalization, TPG Pace Holding Corp. was registered in the Cayman Islands. On November 20, 2019 TPG Pace Holding Corp. effected a deregistration as an exempted company in the Cayman Islands under the Cayman Islands Companies Law (2018 Revision), and a domestication as a

corporation incorporated under the laws of the State of Delaware under Section 388 of the DGCL, pursuant to which the Company’s jurisdiction of incorporation will be changed from the Cayman Islands to the State of Delaware. This domestication was analyzed under the applicable tax laws and it was determined that there were no significant tax implications associated with the domestication.

The Company recognized income tax expense of $5.2 million, $4.4 million and $1.8 million during the years ended December 31, 2019, 2018 and 2017, respectively, which consists of the following (in thousands):

	2019			2018			2017
Current provision
Federal	$	(85	)	$	(100	)	$	173
State		43			222			62
Total current provision		(42	)		122			235
Deferred provision
Federal		3,740			3,256			955
State		1,501			1,044			564
Total deferred provision		5,241			4,300			1,519
Total income tax expense	$	5,199		$	4,422		$	1,754

A reconciliation of the “expected” income taxes computed by applying the federal statutory income tax rate to the total expense is as follows (in thousands):

	2019			2018			2017
Computed “expected” tax (benefit) expense	$	(139	)	$	3,197		$	3,422
Increase (decrease) in income taxes resulting from:
State income taxes		1,535			1,219			2
Return-to-provision		49			—			—
Permanent items		4,054			(264	)		190
Enacted rate change		—			—			(1,755	)
Other		(300	)		270			(105	)
Total income tax expense	$	5,199		$	4,422		$	1,754

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act tax reform legislation. This legislation makes significant changes in U.S. tax law including reduction in the corporate tax rates, changes to net operating loss carryforwards and carrybacks, and a repeal of the corporate alternative minimum tax. The legislation reduced the U.S. corporate tax rate from 35% to 21%. As a result of the enacted law, the Company revalued deferred tax assets and liabilities at the new rate. This revaluation resulted in a benefit of $1.8 million to 2017 income tax expense in continuing operations and a corresponding reduction in the deferred tax liability. The other provisions of the Tax Cuts and Jobs Act did not have a material impact on the consolidated financial statements. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows at December 31, 2019 and 2018 (in thousands):

	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	6,633		$	4,192
Location contracts acquired		4,699			1,887
Other		260			1,032
		11,592			7,111
Deferred tax liabilities:
Property and equipment		24,568			16,006
	$	(12,976	)	$	(8,895	)

The Company assesses the realizability of the deferred tax assets at each balance sheet date based on actual and forecasted operating results in order to determine the proper amount, if any, required for a valuation allowance. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. As of December 31, 2019, the Company is in a net deferred tax liability position and is in a three-year cumulative income position. As such, it is the Company’s belief that it is more likely than not that its deferred tax assets will be realized.

As of December 31, 2019, and 2018, the Company has not recorded a liability for unrecognized tax benefits.

The following table summarizes carryforwards of net operating losses as of December 31, 2019 and 2018 (in thousands):

	2019				2018
	Amount		Expiration		Amount		Expiration
Federal net operating losses	$	27,873		2033 - 2039	$	17,942		2031 - 2038
State net operating losses		14,454		2024 - 2031		5,655		2023 - 2030

The Company also has credit carryforwards of approximately $0.5 million and $0.3 million for the years ended December 31, 2019 and 2018, which are expected to be fully utilized in 2021.

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Commitments and Contingencies

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Lawsuits and claims are filed against the Company from time to time in the ordinary course of business, including related to, employee matters, employment of professional and non-compete clauses and agreements.

Other than settled matters explained as follows, these actions are in various stages, and no judgments or decisions have been rendered. Management, after reviewing matters with legal counsel, believes that the outcome of such matters will not have a material adverse effect on the Company’s financial position or results of operations.

Accel has been involved in a series of related litigated matters stemming from claims that Accel wrongly contracted with 10 different licensed establishments (the “Defendant Establishments”) in 2012 in violation of the contractual rights held by J&J Ventures Gaming, LLC (“J&J”), as further described below.

On August 21, 2012, one of the Company’s operating subsidiaries entered into certain agreements with Jason Rowell (“Rowell”), a member of Action Gaming LLC (“Action Gaming”), which was an unlicensed terminal operator that had exclusive rights to place and operate VGTs within a number of establishments, including the Defendant Establishments. Under agreements with Rowell, the Company agreed to pay him for each licensed establishment which decided to enter into exclusive location agreements with the Company. In late August and early September 2012, each of the Defendant Establishments signed separate location agreements with the Company, purporting to grant it the exclusive right to operate VGTs in those establishments. Separately, on August 24, 2012, Action Gaming sold and assigned its rights to all its location agreements to J&J, including its exclusive rights with the Defendant Establishments (the “J&J Assigned Agreements”). At the time of the assignment of such rights to J&J, the Defendant Establishments were not yet licensed by the Illinois Gaming Board (“IGB”).

Action Gaming, J&J, and other parties, collectively, the Plaintiffs, filed a complaint against the Company, Rowell, and other parties in the Circuit Court of Cook County (the “Circuit Court”), on August 31, 2012, as amended on November 1, 2012, December 19, 2012, and October 3, 2013, alleging, among other things, that the Company aided and abetted Rowell in breaches of his fiduciary duties and contractual obligations with Action Gaming and tortiously interfered with Action Gaming’s contracts with Rowell and agreements assigned to J&J. The complaint seeks damages and injunctive and equitable relief. On January 24, 2018, the Company filed a motion to dismiss for lack of subject matter jurisdiction, as further described below. On May 14, 2018, the Circuit Court denied the Company’s motion to dismiss and granted a stay to the case, pending a ruling from the IGB on the validity of the J&J Assigned Agreements.

From 2013 to 2015, the Plaintiffs filed additional claims, including J&J Ventures Gaming, LLC et al. v. Wild, Inc. (“Wild”), in various circuit courts seeking declaratory judgements with a number of establishments, including each of the Defendant Establishments, requesting declarations that, among other things, J&J held the exclusive right to operate VGTs at each of the Defendant Establishments as a result of the J&J Assigned Agreements. The Company was granted leave to intervene in all of the declaratory judgments. The circuit courts found that the J&J Assigned Agreements were valid because each of the underlying location agreements were between an unlicensed establishment and an unlicensed terminal operator, and therefore did not constitute use agreements that were otherwise precluded from assignment under the IGB’s regulations. Upon the Company’s appeal, the Illinois Appellate Court, Fifth District (the “District Court”), vacated the circuit courts’ judgments and dismissed the appeals, holding that the IGB had exclusive jurisdiction over the matter that formed the basis of the parties’ claims, and declined to consider the merits of the parties’ disputes. On September 22, 2016, and after the IGB intervened, the Supreme Court of Illinois issued a judgment in Wild, affirming the District Court’s decision vacating the circuit courts’ judgments for lack of subject matter jurisdiction and dismissing the appeals, determining that the IGB has exclusive jurisdiction to decide the validity and enforceability of VGT use agreements.

Between May 2017 and September 2017, both the Company and J&J filed petitions with the IGB seeking adjudication of the rights of the parties and the validity of the use agreements. Those petitions have been fully

briefed and remain pending. There is no indication as to when the IGB will rule on the petitions. The Company does not have a present estimate regarding the potential damages, if any, that could potentially be awarded in this litigation and, accordingly, have established no reserves relating to such matters. There are also petitions pending with the IGB which could lead to the Company obtaining new locations.

On October 7, 2019, the Company filed a lawsuit in the Circuit Court of Cook County against Jason Rowell and other parties related to Mr. Rowell’s breaches of his non-compete agreement with the Company. The Company alleged that Mr. Rowell and a competitor were working together to interfere with the Company’s customer relationships. That lawsuit, which seeks equitable relief and legal damages, has not yet been served. On November 7, 2019, Mr. Rowell filed a lawsuit in the Circuit Court of Cook County against the Company alleging that he had not received certain equity interests in the Company to which he was allegedly entitled under his agreement. The Company intends to defend itself against the allegations. The Company does not have a present estimate regarding the potential damages, nor does it believe any payment of damages is probable, and, accordingly, has established no reserves relating to these matters.

On July 2, 2019, Illinois Gaming Investors, LLC filed a lawsuit against the Company. The lawsuit alleges that a current employee of the Company violated his non-competition agreement with Illinois Gaming Investors, LLC, and together with the Company, wrongfully solicited prohibited licensed video gaming locations. The lawsuit on its face seeks damages of $10,000,000. The parties are engaging in discovery. The Company is in the process of defending this lawsuit, and has not accrued any amounts as losses related to this suit are not probable or reasonably estimable.

Commitments and Contingencies

The Company leases office space under agreements expiring at various dates from May 2019 through December 2021. Total rent expense under these leases approximated $0.3 million, $0.3 million and $0.4 million for the

years ended December 31, 2019, 2018 and 2017, respectively. The Company recognizes rent expense on a straight-line basis over the life of the leases. Rent expense is recorded in general and administrative expense in the accompanying consolidated statements of operations.

Future minimum payments under these leases are as follows (in thousands):

Years ending December 31:
2020	$	273
2021		142
2022		104
2023		65
2024		—
Total	$	584

The Company has certain earnouts in periods for future location performance related to certain business acquisitions (see discussion in Note 10).

The Company has certain employment agreements that call for salaries and potential severance upon termination.

Lawsuits and claims are filed against the Company from time to time in the ordinary course of business, including related to employment of professional and non-compete clauses and agreements. Other than settled matters explained as follows, these actions are in various stages, and no judgments or decisions have been rendered. Management, after reviewing matters with legal counsel, believes that the outcome of such matters will not have a material adverse effect on the Company’s financial position or results of operations.

Accel has been involved in a series of related litigated matters stemming from claims that Accel wrongly contracted with 10 different licensed establishments (the “Defendant Establishments”) in 2012 in violation of the contractual rights held by J&J Ventures Gaming, LLC (“J&J”), as further described below.

On August 21, 2012, one of the Company’s operating subsidiaries entered into certain agreements with Jason Rowell (“Rowell”), a member of Action Gaming LLC (“Action Gaming”), which was an unlicensed terminal operator that had exclusive rights to place and operate VGTs within a number of establishments, including the Defendant Establishments. Under agreements with Rowell, the Company agreed to pay him for each licensed establishment which decided to enter into exclusive location agreements with the Company. In late August and early September 2012, each of the Defendant Establishments signed separate location agreements with the Company, purporting to grant it the exclusive right to operate VGTs in those establishments. Separately, on August 24, 2012, Action Gaming sold and assigned its rights to all its location agreements to J&J, including its exclusive rights with the Defendant Establishments (the “J&J Assigned Agreements”). At the time of the assignment of such rights to J&J, the Defendant Establishments were not yet licensed by the Illinois Gaming Board (“IGB”).

Action Gaming, J&J, and other parties, collectively, the Plaintiffs, filed a complaint against the Company, Rowell, and other parties in the Circuit Court of Cook County (the “Circuit Court”), on August 31, 2012, as amended on November 1, 2012, December 19, 2012, and October 3, 2013, alleging, among other things, that the Company aided and abetted Rowell in breaches of his fiduciary duties and contractual obligations with Action Gaming and tortiously interfered with Action Gaming’s contracts with Rowell and agreements assigned to J&J. The complaint seeks damages and injunctive and equitable relief. On January 24, 2018, the Company filed a

motion to dismiss for lack of subject matter jurisdiction, as further described below. On May 14, 2018, the Circuit Court denied the Company’s motion to dismiss and granted a stay to the case, pending a ruling from the IGB on the validity of the J&J Assigned Agreements.

From 2013 to 2015, the Plaintiffs filed additional claims, including J&J Ventures Gaming, LLC et al. v. Wild, Inc. (“Wild”), in various circuit courts seeking declaratory judgements with a number of establishments, including each of the Defendant Establishments, requesting declarations that, among other things, J&J held the exclusive right to operate VGTs at each of the Defendant Establishments as a result of the J&J Assigned Agreements. The Company was granted leave to intervene in all of the declaratory judgments. The circuit courts found that the J&J Assigned Agreements were valid because each of the underlying location agreements were between an unlicensed establishment and an unlicensed terminal operator, and therefore did not constitute use agreements that were otherwise precluded from assignment under the IGB’s regulations. Upon the Company’s appeal, the Illinois Appellate Court, Fifth District (the “District Court”), vacated the circuit courts’ judgments and dismissed the appeals, holding that the IGB had exclusive jurisdiction over the matter that formed the basis of the parties’ claims, and declined to consider the merits of the parties’ disputes. On September 22, 2016, and after the IGB intervened, the Supreme Court of Illinois issued a judgment in Wild, affirming the District Court’s decision vacating the circuit courts’ judgments for lack of subject matter jurisdiction and dismissing the appeals, determining that the IGB has exclusive jurisdiction to decide the validity and enforceability of VGT use agreements.

Between May 2017 and September 2017, both the Company and J&J filed petitions with the IGB seeking adjudication of the rights of the parties and the validity of the use agreements. Those petitions have been fully briefed and remain pending. There is no indication as to when the IGB will rule on the petitions. The Company does not have a present estimate regarding the potential damages, if any, that could potentially be awarded in this litigation and, accordingly, have established no reserves relating to such matters. There are also petitions pending with the IGB which could lead to the Company obtaining new locations.

On October 7, 2019, the Company filed a lawsuit in the Circuit Court of Cook County against Jason Rowell and other parties related to Mr. Rowell’s breaches of his non-compete agreement with the Company. The Company alleged that Mr. Rowell and a competitor were working together to interfere with the Company’s customer relationships. That lawsuit, which seeks equitable relief and legal damages, has not yet been served. On November 7, 2019, Mr. Rowell filed a lawsuit in the Circuit Court of Cook County against the Company alleging that he had not received certain equity interests in the Company to which he was allegedly entitled under his agreement. The Company intends to defend itself against the allegations. The Company does not have a present estimate regarding the potential damages, nor does it believe any payment of damages is probable, and, accordingly, has established no reserves relating to these matters.

During 2017, the Company entered into a settlement agreement with Illinois Gold Rush, Inc. (“Illinois Gold Rush”), related to a 2013 business acquisition completed by the Company with Illinois Gold Rush. As a result of the settlement, the Company paid $3.5 million, issued 32,745 additional shares of Class A Common Stock, acquired 4 locations and the Company issued a stockholder note receivable of $3.3 million based on the value of the underlying collateral. During the year ended December 31, 2018 the note receivable matured, and was settled and 46,667 shares of Class A Common Stock were placed into treasury. As a result of the settlement agreement the Company decreased its location contract asset and Class A Common Stock $1.0 million during 2017 for the fair value of the shares outstanding prior to the settlement agreement.

During the year ended December 31, 2018, the Company entered into a settlement agreement regarding breach of contract with Family Amusements (see discussion in Note 10). Additionally, during the year ended December 31, 2018, the Company entered into settlement agreements related to breach of contract and employment matters for a total of $0.4 million, which was recorded within general and administrative expenses on the consolidated income statement.

On July 2, 2019, Illinois Gaming Investors, LLC filed a lawsuit against the Company. The lawsuit alleges that a current employee of the Company violated his non-competition agreement with Illinois Gaming Investors, LLC, and together with the Company, wrongfully solicited prohibited licensed video gaming locations. The lawsuit on its face seeks damages of $10,000,000. The parties are engaging in discovery. The Company is in the process of defending this lawsuit, and has not accrued any amounts as losses related to this suit are not probable or reasonably estimable.

On July 16, 2019, Clairvest commenced litigation with respect to the June 13, 2019 transaction agreement between TPG Pace Holdings Corp. and the Company. On August 20, 2019, Clairvest filed a request for voluntary dismissal related to such litigation.

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Related-Party Transactions

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Related Party Transactions [Abstract]

Related-Party Transactions

Related-Party Transactions

Subsequent to the Company’s acquisition of certain assets of Fair Share Gaming, LLC (“Fair Share”) and G3 Gaming, LLC (“G3”), the sellers became employees of the Company. Consideration payable to the Fair Share seller was $1.7 million and $2.0 million as of June 30, 2020 and December 31, 2019, respectively. Payments to the Fair Share seller under the acquisition agreement were $0.2 million and $0.4 million during the six months ended June 30, 2020 and 2019, respectively. Consideration payable to the G3 sellers was $0.4 million and $3.1 million as of June 30, 2020 and December 31, 2019, respectively. Payments to the G3 seller under the acquisition agreement were $2.5 million during the six months ended June 30, 2020. There were no payments to the G3 seller during the six months ended June 30, 2019. Subsequent to the Fair Share acquisition, the seller of Fair Share joined the Company’s Board of Directors.

The Company engaged Much Shelist, P.C. (“Much Shelist”), as its legal counsel for general legal and business matters. An attorney at Much Shelist is a related party to management of the Company. For the six months ended June 30, 2020 and 2019, Accel paid Much Shelist $0.1 million, and $0.2 million, respectively. These payments were included in general and administrative expenses within the condensed consolidated statements of operations.

Related-Party Transactions

From time to time the Company entered into stock buy-back and cashless option conversion transactions in exchange for non-recourse stockholder notes for certain officers and employees of the Company. As of December 31, 2018, stockholder notes receivable balance was $1,462,779. Prior to the reverse recapitalization described in Note 3, these balances were paid in full to the Company.

As of December 31, 2018, an officer and shareholder owed the Company $0.5 million for federal taxes paid by the Company on the shareholder’s behalf. This balance was recorded within other current assets on the consolidated balance sheets. In October 2019, this balance was paid in full to the Company.

Subsequent to the Company’s acquisition of Fair Share and G3, the sellers became employees of the Company. Consideration payable to the Fair Share seller was $2.0 million and $1.0 million as of December 31, 2019 and 2018. Payments to the Fair Share seller under the acquisition agreement were $0.9 million and $0 during the years ended December 31, 2019 and 2018. Consideration payable to the G3 sellers was $3.1 million and $1.0 million as of December 31, 2019 and 2018. Payments to the G3 seller under the acquisition agreement were $0.4 million and $0 during the years ended December 31, 2019 and 2018. Subsequent to the Fair Share acquisition, the seller of Fair Share joined the Company’s Board of Directors.

The Company engaged Much Shelist, P.C. (“Much Shelist”), as its legal counsel for general legal and business matters. An attorney at Much Shelist is a related party to management of the Company. For the years ending December 31, 2019, 2018, and 2017, Accel paid Much Shelist $0.6 million, $0.3 million, and $0.6 million, respectively. These payments were included in general and administrative expenses within the consolidated statements of operations, however, $0.2 million of the amounts paid in the fourth quarter of 2019 were recorded to additional paid-in capital as these costs were determined to be direct and incremental for the reverse recapitalization discussed in Note 3.

The Raine Group, which employs a Director of the Company, Gordon Rubenstein, provided investment banking services and assisted the Company in the negotiations and consummation of the reverse recapitalization. The Company paid $11 million to the Raine Group in 2019.

Throughout the third quarter of 2019, one of the Company’s Class A Common Stockholders made payments on behalf of the Company directly to the Company’s independent registered public accounting firm for services rendered to the Company during the same period totaling $2.9 million. Such amounts are included as a component of other expenses, net in the Company’s consolidated statements of operations and contributed capital in the consolidated statement of stockholders’ equity.

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Earnings Per Share

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

As a result of the previously mentioned reverse recapitalization in Note 1, the Company has retrospectively adjusted the weighted average shares outstanding for the three and six months ended June 30, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted.

The components of basic and diluted earning per share (“EPS”) were as follows for the three and six months ended June 30 (in thousands, except per share amounts):

	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Net (loss) income	$	(21,274	)	$	4,328	$	(23,240	)	$	8,323
Basic weighted average outstanding shares of common stock		78,317			58,605		78,161			57,896
Dilutive effect of stock-based awards for common stock		—			1,120		—			1,117
Dilutive effect of stockholder notes receivable for common stock		—			917		—			948
Dilutive effect of warrants for common stock		—			1,263		—			1,781
Diluted weighted average outstanding shares of common stock		78,317			61,904		78,161			61,742
Earnings (loss) per share:
Basic	$	(0.27	)	$	0.07	$	(0.30	)	$	0.14
Diluted	$	(0.27	)	$	0.07	$	(0.30	)	$	0.13

Since the Company was in a net loss position for the three and six months ended June 30, 2020, there is no difference between basic and dilutive weighted average common stock outstanding.

Anti-dilutive stock-based awards, Class A-2 shares, and warrants excluded from the calculations of diluted EPS were 5,401,791, and 5,715,823 for the three and six months ended June 30, 2020, respectively.

Earnings Per Share

Pursuant to the Certificate of Incorporation as amended on November 20, 2019 and as a result of the reverse recapitalization, the Company has retrospectively adjusted the weighted average shares outstanding prior to November 20, 2019 to give effect to the exchange ratio used to determine the number of Class A-1 shares of common stock into which they were converted.

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of Class A-1 shares outstanding during the period. Diluted EPS is computed based on the weighted average number of shares plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options, stockholder notes receivable, warrants and Class A-2 common stock for Class A-1 common stock.

The components of basic and diluted EPS were as follows (in thousands, except per share amounts):

	2019			2018		2017
Net (loss) income	$	(5,864	)	$	10,803	$	8,311
Basic weighted average outstanding shares of common stock		61,850			57,621		56,321
Dilutive effect of stock-based awards for common stock		—			1,605		666
Dilutive effect of stockholder notes receivable for common stock		—			407		53
Dilutive effect of warrants for common stock		—			2,549		2,368
Diluted weighted average outstanding shares of common stock		61,850			62,182		59,408
Earnings (loss) per share:
Basic	$	(0.09	)	$	0.19	$	0.15
Diluted	$	(0.09	)	$	0.17	$	0.14

Since the Company was in a net loss position for the year ended December 31, 2019, there is no difference between basic and dilutive weighted average common stock outstanding.

Anti-dilutive stock-based awards, Class A-2 shares, and warrants excluded from the calculations of diluted EPS were 28,561,724, 439,167, and 629,960 for the years ended December 31, 2019, 2018 and 2017, respectively.

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Subsequent Events

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On July 14, 2020, the Company announced that it had commenced an exchange offer (the “Offer”) to all holders of its outstanding warrants to receive 0.250 shares of Class A-1 Common Stock in exchange for each warrant tendered pursuant to the Offer. The Offer will be open until 11:59 p.m., Eastern Standard Time, on August 11, 2020, or such later time and date to which the Company may extend. On July 16, 2020, the Company consummated the redemption of its Public Warrants. The Company exchanged each Public Warrant for 0.250 shares of the Company’s Class A-1 Common Stock and issued 3,784,416 shares of its Class A-1 Common Stock in exchange for the Public Warrants at settlement of the redemption.

On July 22, 2020, the Company received written notice from the New York Stock Exchange (the “NYSE”) that the NYSE suspended trading in, and has determined to commence proceedings to delist, the Company’s Public Warrants to purchase shares of the Company’s Class A-1 Common Stock (ticker symbol ACEL.WS) from the NYSE. The delisting is a result of the failure to of the Public Warrants to comply with the continued listing standard set forth in Section 802.01D of the NYSE Listed Company Manual which requires the Company to maintain at least 100 public holders of a listed security.

On July, 22, 2020 (the “Closing Date”), the Company completed its previously announced acquisition of Tom’s Amusement Company, Inc., a southeastern U.S. amusement operator and Master Licensee in the state of Georgia. The total purchase price was approximately $3.6 million, of which the Company paid $2.1 million in cash at closing. The remaining $1.5 million of contingent consideration payables are to be paid in cash on the 18-month and 24-month anniversaries of the Closing Date. The amount of each payment is $750,000 multiplied by a performance ratio. In addition, the Georgia Lottery Corporation approved Accel’s operating subsidiary, Bulldog Gaming, LLC, as a Master Licensee.

On July 30, 2020, the Company and the terminal operator entered into the Omnibus Amendment (the “Amendment”) to the original agreement to purchase convertible promissory notes from another terminal

operator. The Amendment, among other things, extends the maturity date of the $5.0 million convertible note and the beginning of the payback period for the $25.0 million convertible note until December 31, 2020.

On August 4, 2020, the Company and the other parties thereto entered into Amendment No. 1 to its Credit Agreement. The amendment, among other things, provides a waiver of financial covenant breach for the periods ended September 30, 2020 through March 31, 2021 of the First Lien Net Leverage Ratio and Fixed Charge Coverage Ratio (each as defined under the Credit Agreement).

Subsequent Events

On January 14, 2020, the market condition for the conversion of Tranche I of the Class A-2 shares was satisfied. Accordingly, 1,666,666 Class A-2 shares were converted into Class A-1 shares.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Accounting Policies [Abstract]

Basis of presentation and preparation

Basis of presentation and preparation: The condensed consolidated financial statements and accompanying notes were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements include the accounts of the Company and of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the dates and periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. In preparing our condensed consolidated financial statements, we applied the same significant accounting policies as described in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Any significant changes to those accounting policies are discussed below. Interim results are not necessarily indicative of results for a full year.

Basis of presentation and preparation: The consolidated financial statements and accompanying notes were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Adopted accounting pronouncements / Recent accounting pronouncements

Adopted accounting pronouncements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-19”), Revenue from Contracts with Customers (Topic 606), which amends the existing revenue recognition guidance and creates a new topic for Revenue from Contracts with Customers. The guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance also substantially revises required interim and annual disclosures. The Company, as an emerging growth company, elected to use

the non-public effective date and adopted the standard in the fourth quarter of 2019 for the annual period ended December 31, 2019. The Company also elected the modified retrospective adoption approach and applied the standard to all contracts open as of January 1, 2019. The Company’s quarterly financial statements and disclosure for the first six months of 2019 reflect the previous accounting standard of FASB Accounting Standards Codification (“ASC”) 605, Revenue Recognition, and will not be restated for the adoption of Topic 606. The cumulative impact of the new revenue standard for fiscal year 2019 was recorded in the fourth quarter of 2019 and reflects the adjustment as if the Company adopted the standard as of January 1, 2019. The timing and amount of revenue recognized by the Company did not change upon the adoption of the new standard, however the Company’s accounting for route acquisition costs was impacted. ASC 340-40, Other Assets and Deferred Costs—Contracts With Customers (“ASC 340-40”), issued in conjunction with ASU 2014-09, provides updated guidance around accounting for the incremental costs of obtaining a contract with a customer and for the costs incurred to fulfill a contract with a customer. ASC 340-40 states that an entity should amortize contract cost assets “on a systemic basis that is consistent with the transfer to the customer of the good or services to which the asset relates,” which typically corresponds to the period in which revenue will be recognized. The Company chose straight-line amortization of the contracts as it felt that best depicted when revenue would be recognized and when customers are visiting the gaming establishments. When determining the appropriate amortization period under ASC 340-40, the Company evaluated the impact of any renewal clauses that are likely to be exercised. The Company focused on whether commissions paid for renewals were commensurate with commissions paid on the original contract. The Company determined the renewal commissions were not commensurate and the amortization period should include expected renewals. As such, the period over which route and customer acquisition costs are amortized was extended to include expected renewals which resulted in an increase to the average life to 12.4 years.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which intends to simplify the guidance by removing certain exceptions to the general principles and clarifying or amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company early adopted the new standard in Q2 2020 (effective January 1, 2020) on a prospective basis. The adoption of the new standard will not have a material impact on the Company’s full year effective tax rate.

Recent accounting pronouncements: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. In July 2018, the FASB also issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method allowing the standard to be applied at the adoption date. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for the Company’s fiscal year beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, unless the Company disqualifies as an emerging growth company, in which case earlier adoption may be required. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is assessing impact of the standard on its condensed consolidated financial statements.

Adopted accounting pronouncements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the existing revenue recognition and creates a new topic for Revenue from Contracts with Customers. The guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance also substantially revises required interim and annual disclosures. The Company, as an Emerging Growth Company (“EGC”), elected to use the non-public

effective date and adopted the standard in the fourth quarter of 2019 for the annual period ended December 31, 2019. The Company also elected the modified retrospective adoption approach and applied the standard to all contracts open as of January 1, 2019. The Company’s quarterly financial statement disclosure for the first nine months of 2019 reflect the previous accounting standard of FASB ASC 605, Revenue Recognition, and will not be restated for the adoption of Topic 606. The cumulative impact of the new revenue standard for fiscal year 2019 was recorded in the fourth quarter and reflects the adjustment as if the Company adopted the standard as of January 1, 2019. The timing and amount of revenue recognized by the Company did not change upon the adoption of the new standard, however the Company’s accounting for route acquisition costs was impacted. ASC 340-40, Other Assets and Deferred Costs—Contracts With Customers (“ASC 340-40”), issued in conjunction with ASU 2014-09, provides updated guidance around accounting for the incremental costs of obtaining a contract with a customer and for the costs incurred to fulfill a contract with a customer. ASC 340-40 states that an entity should amortize contract cost assets “on a systemic basis that is consistent with the transfer to the customer of the good or services to which the asset relates,” which typically corresponds to the period in which revenue will be recognized. The Company chose straight-line amortization of the contracts as it felt that best depicted when revenue would be recognized and when customers are visiting the gaming establishments. When determining the appropriate amortization period under ASC 340-40, the Company evaluated the impact of any renewal clauses that are likely to be exercised. The Company focused on whether commissions paid for renewals were commensurate with commissions paid on the original contract. The Company determined the renewal commissions were not commensurate and the amortization period should include expected renewals. As such, the period over which route and customer acquisition costs are amortized was extended to include expected renewals which resulted in an increase to the average life to 12.4 years. The Company recorded a cumulative effect adjustment, net of taxes, to accumulated deficit of $2.6 million relating to the decreased in accumulated amortization of route acquisition costs. In addition, the Company’s current year amortization expense decreased by $1.1 million.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU No. 2017-01 requires entities to use a screen test to determine when an integrated set of assets and activities is not a business or if the integrated set of assets and activities needs to be further evaluated against the framework. The Company adopted ASU No. 2017-01 on January 1, 2019.

Recent accounting pronouncements: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. In July 2018, the FASB also issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method allowing the standard to be applied at the adoption date. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for the Company’s fiscal year beginning after December 15, 2020, including interim periods within that fiscal year, unless the Company disqualifies as an emerging growth company, in which case earlier adoption may be required. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is assessing impact of the standard on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which intends to simplify the guidance by removing certain exceptions to the general principles and clarifying or amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Although the Company is currently evaluating the impact of the adoption of ASU 2019-12, the Company does not expect it to have a material impact on its consolidated financial statements.

Use of estimates

Use of estimates: The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates used by the Company include, among other things, the useful lives for depreciable and amortizable assets, income tax provisions, the evaluation of the future realization of deferred tax assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with business acquisitions, the selection of useful lives for depreciable and amortizable assets in conjunction with business acquisitions, the valuation of level 3 investments, contingencies, and the expected term of share-based compensation awards and stock price volatility when computing share-based compensation expense. The Company also estimated stock prices prior to the reverse recapitalization discussed in Note 1 when computing share-based compensation expense. Actual results may differ from those estimates.

Use of estimates: The preparation of consolidated financial statements requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the consolidated financial statements and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates used by the Company include, among other things, the useful lives for depreciable and amortizable assets, income tax provisions, the evaluation of the future realization of deferred tax assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with business acquisitions, the initial selection of useful lives for depreciable and amortizable assets in conjunction with business acquisitions, contingencies, and the expected term of share-based compensation awards, stock price volatility and estimated stock prices prior to the reverse recapitalization discussed in Note 3 when computing share-based compensation expense. Actual results may differ from those estimates.

Segment information

Segment information: The Company operates as a single operating segment. The Company’s chief operating decision maker (“CODM”) is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM assesses the Company’s performance and allocates resources based on consolidated results, and this is the only discrete financial information that is regularly reviewed by the CODM.

Segment information: The Company operates as a single operating segment. The Company’s chief operating decision maker (“CODM”) is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM assesses the Company’s performance

and allocates resources based on consolidated results, and this is the only discrete financial information that is regularly reviewed by the CODM.

Cash

Cash and cash equivalents: Cash and cash equivalents include bank deposit accounts; term bank deposit accounts; uncollected cash in the Company’s video gaming terminals, ATMs, and redemption terminals; and cash in Company vaults.

The Company’s policy is to limit the amount of credit exposure to any one financial institution. The Company maintains its cash in accounts which may at times exceed Federal Deposit Insurance Corporation insured limits. The Company has not experienced any losses in such accounts.

Cash: Cash includes bank deposit accounts; uncollected cash in the Company’s video gaming terminals, ATMs, and redemption terminals; and cash in Company vaults.

The Company’s policy is to limit the amount of credit exposure to any one financial institution. The Company maintains its cash in accounts which may at times exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. The Company has not experienced any losses in such accounts.

Convertible notes

Convertible notes: At acquisition, an entity shall classify debt securities as trading, available-for-sale, or held-to-maturity. While the Company has no the intention of selling the notes, it cannot classify them as held-to-maturity due to the conversion feature. Therefore, the Company has classified its investment in convertible notes as available for sale.

Property and equipment

Property and equipment: Property and equipment are stated at cost or fair value at the date of acquisition. Maintenance and repairs are charged to expense as incurred. Major additions, replacements and improvements are capitalized. Spare parts are included in other current assets when acquired and are expensed when used to repair equipment. Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video gaming terminals and equipment	10
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3-5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15-29

Leasehold improvements are amortized over the shorter of the useful life or the lease.

Development costs directly associated with the acquisition, development and construction of a project are capitalized as a cost of the project during the periods in which activities necessary to prepare the property for its intended use are in progress. Interest costs associated with major construction projects are capitalized as part of the cost of the constructed assets. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using the weighted-average cost of borrowing. Capitalization of interest ceases when the project (or discernible portions of the project) is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

Property and equipment: Property and equipment are stated at cost or fair value at the date of acquisition. Maintenance and repairs are charged to expense as incurred. Major additions, replacements and improvements are capitalized. Spare parts are included in other current assets when acquired and are expensed when used to repair equipment. Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video game terminals and equipment	7
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3 - 5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15 - 29

Leasehold improvements are amortized over the shorter of the useful life or the lease.

Development costs directly associated with the acquisition, development and construction of a project are capitalized as a cost of the project during the periods in which activities necessary to prepare the property for its intended use are in progress. Interest costs associated with major construction projects are capitalized as part of the cost of the constructed assets. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using the weighted-average cost of borrowing. Capitalization of interest ceases when the project (or discernible portions of the project) is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

Concentration of credit risk

Concentration of credit risk: The Company’s operations are centralized primarily in the State of Illinois. Should there be favorable or unfavorable changes to the Illinois Gaming Act there may be an impact on the Company’s results of operations. The Company has high concentrations of locations within certain municipalities in Illinois which could impact the Company if these municipalities change their gaming laws.

Fair value of financial instruments

Fair value of financial instruments: The Company’s financial instruments consist principally of cash, convertibles notes, accounts payable, contingent consideration, and bank indebtedness.

The carrying amount of cash, accounts payable and short-term borrowings approximates fair value because of the short-term maturity of these instruments. The Company estimates the fair value of its convertible notes using a binomial lattice model in which a convertible instrument is split into two separate components: a cash-only (debt) component and an equity component. The Company estimates the fair value of its debt using level two and level three inputs by discounting the future cash flows using current interest rates at which it could obtain similar borrowings in consideration of the estimated enterprise value of the Company.

Contingent consideration, which is recorded within consideration payable on the accompanying consolidated balance sheets, is measured at fair value on a recurring basis based on Level 3 inputs. The fair value recorded at December 31, 2019 and 2018 was determined using a discounted cash flow analysis. Refer to consideration payable below for disclosure of unobservable Level 3 inputs used.

Revenue recognition / Route and customer acquisition costs

Revenue recognition: The Company generates revenues in the State of Illinois from the following types of services: Video gaming terminals, Amusements and ATMs. Revenue is disaggregated by type of revenue and is presented on the face of the consolidated statements of operations.

Video gaming terminal revenue is the net cash from gaming activities, which is the difference between gaming wins and losses. Video gaming terminal revenue includes the amounts earned by the licensed video gaming locations and is recognized at the time of gaming play. Additionally, taxes and administrative expenses due to the State of Illinois are recorded as video gaming terminal revenue and video gaming expenses.

Amusement revenue represents amounts collected from machines (e.g. dart boards, digital jukeboxes, pool tables, etc.) operated at various locations and is recognized at the time the machine is used.

ATM fees and other revenue represents fees charged for the withdrawal of funds from the Company’s redemption terminals and stand-alone ATM machines and is recognized at the time of the transaction.

The Company determined that in a gaming environment, whenever a customer’s money has been accepted by a machine, the Company has an obligation (an implied contract) to provide the customer access to the game and honor the outcome of the game (in the case of video gaming terminals). The Company determined that the implied contract is entered into between the Company and customers satisfies the requirements of a contract under the new revenue standard, as (i) the contract is a legally enforceable contract with the customer, (ii) the arrangement identifies the rights of the parties, (iii) the contract has commercial substance, and (iv) the cash is received upfront from the customer so its collectability is probable. The gaming service is a single performance obligation in each implied contract with the customer. The Company applies the portfolio approach of all wins and losses by Video Gaming Terminals (“VGTs”) daily to determine the total transaction price of the portfolio of implied contracts. The Company recognizes revenue when the single performance obligation is satisfied, which is at the completion of each game.

Route and customer acquisition costs: The Company’s route and customer acquisition costs consist of fees paid at the inception of contracts entered into with third parties and licensed video gaming establishments throughout the State of Illinois which allow the Company to install and operate video gaming terminals. The route and customer acquisition costs and route and customer acquisition costs payable are recorded at the net present value of the future payments using a discount rate equal to the Company’s incremental borrowing rate associated with its long-term debt. Route and customer acquisition costs are amortized on a straight-line basis beginning on the date the location goes live and amortized over the life of the contract, which upon adoption of Topic 606, includes expected renewals. The Company records the accretion of interest on route and customer acquisitions

costs payable in the consolidated statements of operations as a component of interest expense. For locations that close prior to the end of the contractual term, the Company writes-off the net book value of the route and customer acquisition cost and route and customer acquisition cost payable and records a gain or loss in the consolidated statements of operations as a component of other expenses, net. The Company’s route and customer acquisition costs also consists of prepaid commission costs to our internal sales force of employees. The commissions paid to internal sales employees are subsequently expensed once the respective licensed video gaming location goes live and the commission is earned by the employee.

Business acquisitions / Consideration payable / Contingent stock consideration

Business acquisitions: The Company evaluates the inputs, processes and outputs of each business acquisition to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and amortized over the useful life of the acquired assets. The Company accounts for acquisitions using the acquisition method and records the cost of the businesses acquired among tangible and recognized intangible assets and liabilities based upon their estimated fair values as of the acquisition date. Recognized intangibles primarily include the value of location contracts. The Company estimates the fair value of the business acquired using a combination of the cost and income approaches, depending on the specific assets or liabilities acquired. The Company estimates the value of property and equipment and other current assets and liabilities acquired based on their cost, which approximates fair value at acquisition.

Consideration payable: Consideration payable consists of amounts payable related to certain business acquisitions as well as contingent consideration for future location performance related to certain business acquisitions (see Note 10). Consideration payable, exclusive of contingent consideration, is discounted using the Company’s incremental borrowing rate associated with its long-term debt. The contingent consideration is measured at fair value on a recurring basis. The changes in the fair value of contingent consideration are recognized within the Company’s consolidated statements of operations as other expenses, net.

Contingent stock consideration: Contingent stock, which is provided as consideration in business acquisitions, is valued based on the fair value of stock issued. The contingent stock consideration is discounted using the

Company’s weighted average cost of capital and the accretion of interest is recorded in the consolidated statements of operations as a component of interest expense.

Location contracts acquired

Location contracts acquired: Location contracts acquired are accounted for as intangible assets and consist of expected cash flows to be generated from location contracts acquired through business and asset acquisitions. Location contracts acquired are amortized on a straight-line basis over the expected useful life of 10 years.

Goodwill

Goodwill: Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets acquired when accounted for using the purchase method of accounting. Goodwill is not amortized, but reviewed for impairment annually, as of October 1st, and whenever events or changes in circumstances indicate that the carrying value of the goodwill may not be recoverable. The Company compares the fair value of the reporting unit to its carrying value. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, the Company would record an impairment loss equal to the difference.

Impairment of long-lived assets

Impairment of long-lived assets: Long-lived assets, which includes property and equipment, net and other assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. Impairment of the assets is measured by a comparison of the carrying amount of the asset to future undiscounted cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount of which the carrying amount of the asset exceeds the fair value of the asset. There were no indicators of impairment of long-lived assets in 2019, 2018, or 2017.

Stock-based compensation

Stock-based compensation: The Company grants common stock options and/or restricted stock units to certain employees and officers. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as general and administrative expense over the employee’s requisite service period.

Stock-based compensation: The Company grants common stock options to certain employees and officers. Stock option compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as general and administrative expense over the employee’s requisite service period.

Income taxes

Income taxes: The Company is organized as a C-corporation and is taxable at the federal and state level. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the book basis of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of the deferred tax asset, will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in the tax laws and rates as of the date of enactment.

The Company follows ASC Topic 740, Income Taxes, for accounting for uncertainty in income taxes. The consolidated financial statements reflect expected future tax consequences of uncertain tax positions presuming the taxing authorities’ full knowledge of the position and all relevant facts. The Company files tax returns in all appropriate jurisdictions, which includes a federal tax return and three state returns. Open tax years for the federal and state returns are 2016 to 2018, which statutes expire in 2020 to 2022, respectively. When and if applicable, potential interest and penalty costs are accrued as incurred with expenses recognized in general and administrative expenses in the consolidated statements of operations.

Comprehensive income (loss)

Comprehensive income (loss): Comprehensive income (loss) is a measure of net income (loss) and all other changes in equity that result from transactions other than transactions with stockholders. Management has determined that net income (loss) is the Company’s only component of comprehensive income (loss). Accordingly, there is no difference between net income (loss) and comprehensive income (loss).

Earnings (loss) per share

Earnings (loss) per share: The Company determines earnings per share in accordance with the authoritative guidance in ASC Topic 260, Earnings Per Share. The Company computes basic earnings per share by dividing net income (loss) by the weighted average number of shares outstanding for the applicable period. Diluted earnings per share are computed in the same manner as basic earnings per share, except that the number of shares is increased to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase would be anti-dilutive. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that the Company has not yet recognized are assumed to be used to repurchase shares.

Debt issuance costs

Debt issuance costs: Debt issuance costs are capitalized and amortized on a straight-line basis, which approximates the effective interest method, over the contractual terms of the related loans and are presented as an offset to the related loans.

Reverse recapitalization expenses

Reverse recapitalization expenses. Legal fees and other costs that were determined to be direct and incremental to the reverse recapitalization were recorded to equity as additional paid-in capital. Other fees associated with the reverse recapitalization that were not direct and incremental were recorded to other expenses, net on the consolidated statements of operations.

Advertising costs

Advertising costs: Advertising costs are primarily comprised of marketing expenses, which are recorded within general and administrative expense within the accompanying consolidated statements of operations. Advertising costs were $4.7 million, $3.0 million, and $2.8 million for the years ended December 31, 2019, 2018, and 2017, respectively.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Accounting Policies [Abstract]

Schedule of Change in Accounting Estimate

The impact of this change in estimate for the three and six months ended June 30, 2020, was as follows (in thousands):

	Three months ended June 30, 2020		Six months ended June 30, 2020
Decrease to depreciation expense	$	1,898	$	4,511
Decrease to net loss	$	1,533	$	3,687
Decrease to loss per share	$	0.02	$	0.05

Schedule of Property and Equipment Useful Lives

Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video gaming terminals and equipment	10
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3-5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15-29

Property and equipment consists of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Video game terminals and equipment	$	176,453		$	166,850
Amusement and other equipment		19,115			16,417
Office equipment and furniture		1,590			1,540
Computer equipment and software		9,405			8,715
Leasehold improvements		1,507			44
Vehicles		10,254			9,304
Buildings and improvements		10,757			12,075
Land		911			911
Construction in progress		1,025			768
Total property and equipment		231,017			216,624
Less accumulated depreciation and amortization		(107,258	)		(97,423	)
Property and equipment, net	$	123,759		$	119,201

Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video game terminals and equipment	7
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3 - 5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15 - 29

Property and equipment consists of the following at December 31 (in thousands):

	2019			2018
Video game terminals and equipment	$	166,850		$	126,043
Amusement and other equipment		16,417			12,539
Office equipment and furniture		1,540			1,827
Computer equipment and software		8,715			5,092
Leasehold improvements		44			44
Vehicles		9,304			7,174
Buildings and improvements		12,075			9,365
Land		911			883
Construction in progress		768			1,339
Total property and equipment		216,624			164,306
Less accumulated depreciation and amortization		(97,423	)		(71,864	)
Property and equipment, net	$	119,201		$	92,442

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Reverse Recapitalization (Tables)

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Schedule of Cash Proceeds from Reverse Capitalization

In accounting for the reverse recapitalization, the net equity infusion from the reverse recapitalization was $29.3 million as shown in the table below (in thousands):

	Amount
TPG Holdings Corp cash balance, November 19, 2019	$	429,952
Less redemption of Accel shares prior to reverse recapitalization		(413,733	)
Cash balance prior to backstop equity financing		16,219
Plus funds from Investment Private Placement		48,038
Cash balance prior to consummation of the reverse recapitalization		64,257
Less adjustments to equity infusion:
Payment for sponsor loan		(4,000	)
Transaction costs related to the reverse recapitalization, net of tax		(31,005	)
Net equity infusion prior to stock issuance		29,252
Impact of stock issued in reverse recapitalization		10
Net equity infusion from reverse recapitalization		29,262
Less impact from conversion of treasury stock and issuance of warrants		(7,415	)
Net impact to additional paid-in-capital from reverse recapitalization	$	21,847

Schedule of Reverse Capitalization, Equity Interest Issued or Issuable

The table below summarizes the number of shares of Accel issued upon consummation of the reverse recapitalization consisting of (i) the number of shares of Accel stock outstanding immediately before the reverse recapitalization along with the impact of the exchange ratio.

Accel Capital Stock—pre reverse recapitalization	Number of Shares
Class A Common Stock		472,773
Class B Common Stock		662,228
Class C Preferred Stock		1,530,779
Class D Preferred Stock		944,925
Total Shares of Accel Stock on November 20, 2019		3,610,705
Exchange ratio		17.188531
Effect of exchange ratio to convert Accel stock to A-1 Common Stock		62,062,715
Shares issued in reverse recapitalization		14,574,755
Total A-1 Common Stock		76,637,470

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended				12 Months Ended
	Jun. 30, 2020		Jun. 30, 2019		Jun. 30, 2020		Jun. 30, 2019		Dec. 31, 2019		Dec. 31, 2018		Dec. 31, 2017
Net revenues	$ 379		$ 104,267		$ 105,607		$ 201,692		$ 424,385		$ 331,993		$ 248,435
Operating expenses:
Video gaming expenses	0		66,082		67,980		127,703		271,999		210,507		157,010
General and administrative	10,451		17,476		33,919		33,600		75,028		58,157		45,364
Depreciation and amortization of property and equipment	5,071		6,100		9,938		12,141		26,398		20,782		16,768
Amortization of route and customer acquisition costs and location contracts acquired	5,565		4,624		11,130		8,927		17,975		14,681		9,792
Other expenses, net	3,132		730		4,336		1,346		19,649		2,997		1,331
Total operating expenses	24,219		95,012		127,303		183,717		411,049		307,124		230,265
Operating income	(23,840)		9,255		(21,696)		17,975		13,336		24,869		18,170
Interest expense	2,489		3,156		6,738		6,203		12,860		9,644		8,105
Loss on debt extinguishment									1,141		0		0
(Loss) income before income tax expense	(26,329)		6,099		(28,434)		11,772		(665)		15,225		10,065
Income tax expense	(5,055)		1,771		(5,194)		3,449		5,199		4,422		1,754
Net (loss) income	$ (21,274)		$ 4,328		$ (23,240)		$ 8,323		$ (5,864)		$ 10,803		$ 8,311
Net (loss) income per common share:
Net (loss) income per common share - basic (in usd per share)	$ (0.27)	[1]	$ 0.07	[1]	$ (0.30)	[1]	$ 0.14	[1]	$ (0.09)	[2]	$ 0.19	[2]	$ 0.15	[2]
Net (loss) income per common share - diluted (in usd per share)	$ (0.27)	[1]	$ 0.07	[1]	$ (0.30)	[1]	$ 0.13	[1]	$ (0.09)	[2]	$ 0.17	[2]	$ 0.14	[2]
Weighted average number of shares outstanding:
Weighted average number of shares outstanding - basic (in shares)	78,317	[1]	58,605	[1]	78,161	[1]	57,896	[1]	61,850	[2]	57,621	[2]	56,321	[2]
Weighted average number of shares outstanding - diluted (in shares)	78,317	[1]	61,904	[1]	78,161	[1]	61,742	[1]	61,850	[2]	62,182	[2]	59,408	[2]
Net video gaming
Net revenues	$ 0		$ 100,994		$ 101,575		$ 195,169		$ 410,636		$ 321,711		$ 240,235
Amusement
Net revenues	260		1,348		1,952		2,786		5,912		4,199		3,422
ATM fees and other revenue
Net revenues	$ 119		$ 1,925		$ 2,080		$ 3,737		$ 7,837		$ 6,083		$ 4,778

[1] Per share and share amounts for 2019 have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 1.

[2] Per share and share amounts have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 3.

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Property and Equipment (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Schedule of Property and Equipment

Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video gaming terminals and equipment	10
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3-5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15-29

Property and equipment consists of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Video game terminals and equipment	$	176,453		$	166,850
Amusement and other equipment		19,115			16,417
Office equipment and furniture		1,590			1,540
Computer equipment and software		9,405			8,715
Leasehold improvements		1,507			44
Vehicles		10,254			9,304
Buildings and improvements		10,757			12,075
Land		911			911
Construction in progress		1,025			768
Total property and equipment		231,017			216,624
Less accumulated depreciation and amortization		(107,258	)		(97,423	)
Property and equipment, net	$	123,759		$	119,201

Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video game terminals and equipment	7
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3 - 5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15 - 29

Property and equipment consists of the following at December 31 (in thousands):

	2019			2018
Video game terminals and equipment	$	166,850		$	126,043
Amusement and other equipment		16,417			12,539
Office equipment and furniture		1,540			1,827
Computer equipment and software		8,715			5,092
Leasehold improvements		44			44
Vehicles		9,304			7,174
Buildings and improvements		12,075			9,365
Land		911			883
Construction in progress		768			1,339
Total property and equipment		216,624			164,306
Less accumulated depreciation and amortization		(97,423	)		(71,864	)
Property and equipment, net	$	119,201		$	92,442

Property, Plant and Equipment [Member]

Schedule of Property and Equipment

Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video gaming terminals and equipment	10
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3-5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15-29

Property and equipment consists of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Video game terminals and equipment	$	176,453		$	166,850
Amusement and other equipment		19,115			16,417
Office equipment and furniture		1,590			1,540
Computer equipment and software		9,405			8,715
Leasehold improvements		1,507			44
Vehicles		10,254			9,304
Buildings and improvements		10,757			12,075
Land		911			911
Construction in progress		1,025			768
Total property and equipment		231,017			216,624
Less accumulated depreciation and amortization		(107,258	)		(97,423	)
Property and equipment, net	$	123,759		$	119,201

Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video game terminals and equipment	7
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3 - 5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15 - 29

Property and equipment consists of the following at December 31 (in thousands):

	2019			2018
Video game terminals and equipment	$	166,850		$	126,043
Amusement and other equipment		16,417			12,539
Office equipment and furniture		1,540			1,827
Computer equipment and software		8,715			5,092
Leasehold improvements		44			44
Vehicles		9,304			7,174
Buildings and improvements		12,075			9,365
Land		911			883
Construction in progress		768			1,339
Total property and equipment		216,624			164,306
Less accumulated depreciation and amortization		(97,423	)		(71,864	)
Property and equipment, net	$	119,201		$	92,442

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Route and Customer Acquisition Costs (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Schedule of Route and Customer Acquisition Costs

Route and customer acquisition costs consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Cost	$	28,167		$	28,501
Accumulated amortization		(11,707	)		(11,102	)
Route and customer acquisition costs, net	$	16,460		$	17,399

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

	2019			2018
Cost	$	28,501		$	27,726
Accumulated amortization		(11,102	)		(13,732	)
Route and customer acquisition costs, net	$	17,399		$	13,994

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Location Contracts Acquired (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Location Contracts Acquired

Location contracts acquired consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020			December 31, 2019
Cost	$	204,353		$	204,353
Accumulated amortization		(47,729	)		(37,570	)
Location contracts acquired, net	$	156,624		$	166,783

Location contracts acquired consist of the following at December 31, 2019 and 2018 (in thousands):

	2019			2018
Cost	$	204,353		$	147,341
Accumulated amortization		(37,570	)		(21,302	)
Location contracts acquired, net	$	166,783		$	126,038

Schedule of Future Amortization Expense

Estimated amortization expense related to location contracts acquired for the next five years and thereafter is as follows:

Year ending December 31:
2020	$	20,475
2021		20,475
2022		20,475
2023		20,475
2024		20,267
Thereafter		64,615
Total	$	166,783

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Debt (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

The Company’s debt as of June 30, 2020 and December 31, 2019, consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
2019 Senior Secured Credit Facility:
Revolving credit facility	$	50,500		$	58,500
Term Loan		234,000			240,000
Delayed Draw Term Loan (DDTL)		122,688			60,000
Total debt		407,188			358,500
Less: Debt issuance costs		(8,198	)		(8,808	)
Total debt, net of debt issuance costs		398,990			349,692
Less: Current maturities		(18,250	)		(15,000	)
Total debt, net of current maturities	$	380,740		$	334,692

The Company’s debt as of December 31, consisted of the following (in thousands):

	2019			2018
New Credit Facility:
Revolving credit facility	$	58,500		$	—
Term Loan		240,000			—
Delayed Draw Term Loan (DDTL)		60,000			—
Prior Credit Facility:
Line of credit		—			50,000
Contract draw loan		—			67,000
Term loans		—			115,625
Total debt		358,500			232,625
Less: Debt issuance costs		(8,808	)		(1,230	)
Total debt, net of debt issuance costs		349,692			231,395
Less: Current maturities		(15,000	)		(62,500	)
Total debt, net of current maturities	$	334,692		$	168,895

Schedule of Maturities of Long-term Debt

The principal maturities of long-term debt as of December 31, 2019 are as follows (in thousands):

Year ending December 31:
2020	$	15,000
2021		15,000
2022		15,000
2023		15,000
2024		298,500
Total debt	$	358,500

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments

The carrying value and estimated fair value of our debt at December 31, was as follows (in thousands):

	2019		2018
Carrying value	$	349,692	$	231,395
Estimated Fair value		349,692		229,763

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Business and Asset Acquisitions (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Business Combinations [Abstract]

Schedule of Consideration Transferred and Fair Value of Assets Acquired and Liabilities Assumed

The following table summarizes the fair value of consideration transferred and the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash paid	$	106,578
Contingent consideration		7,136
Total consideration	$	113,714
Cash	$	8,861
Location contracts acquired		53,200
Property and equipment:
Video game terminals and equipment		18,000
Land		28
Buildings		548
Vehicles		600
Goodwill		34,511
Total assets acquired		115,748
Accounts payable assumed		(532	)
Accrued expenses assumed		(1,502	)
Net assets acquired	$	113,714

The following table summarizes the consideration paid and the fair values of the tangible and intangible assets acquired at the acquisition dates for the Company’s 2018 business acquisitions (in thousands):

	Quad B		Skyhigh		G3		Mike’s Amusement		Family Amusement		Total
Cash paid at closing	$	610	$	9,268	$	36,500	$	3,500	$	1,512	$	51,390
Contingent consideration payable		—		4,324		1,026		—		—		5,350
Promissory note		—		—		—		—		3,368		3,368
Due to seller		—		618		3,019		—		—		3,637
Total Consideration	$	610	$	14,210	$	40,545	$	3,500	$	4,880	$	63,745
Cash	$	—	$	1,126	$	2,507	$	—	$	—	$	3,633
Video game terminals and equipment		—		506		3,009		—		—		3,515
Amusement and other equipment		472		59		204		420		300		1,455
Location contracts acquired		138		12,519		34,825		3,080		4,580		55,142
Total fair value of net assets acquired		610		14,210		40,545		3,500		4,880		63,745

The following table summarizes the consideration paid and the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash paid at closing	$	48,000
Issuance of common stock to seller		10,794
Contingent stock consideration		3,675
Due to seller		2,055
Contingent consideration		595
Total consideration	$	65,119
Cash	$	4,926
Video game terminals and equipment		6,363
Vehicles		126
Amusement and other equipment		1,148
Location contracts acquired		52,716
Total assets acquired		65,279
Accrued expenses assumed		(160	)
Net assets acquired	$	65,119

Schedule of Unaudited Pro Forma Results

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three and six months ended June 30, 2019 as if the acquisition of Grand River had occurred as of January 1, 2018, after giving effect to certain purchase accounting adjustments. These amounts are based on available financial information of the acquiree prior to the acquisition date and are not necessarily indicative of what Company’s operating results would have been had the acquisition actually taken place as of January 1, 2019. This unaudited pro forma information does not project revenues and net income post acquisition (in thousands).

	Three months ended June 30, 2019		Six months ended June 30, 2019
Revenues	$	119,427	$	231,902
Net income		5,542		10,711

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the years ended December 31, 2019, 2018 and 2017 as if the acquisitions of Grand River, Quad B, Skyhigh, G3, Mike’s Amusements, Family Amusement and Fair Share Gaming, had occurred as of the beginning

of the fiscal year prior to the fiscal year of acquisition, after giving effect to certain purchase accounting adjustments. These amounts are based on available financial information of the acquirees prior to the acquisition dates and are not necessarily indicative of what Company’s operating results would have been had the acquisitions actually taken place at the beginning of the fiscal year prior to the fiscal year of acquisition. This unaudited pro forma information for the years ended December 31, does not project revenues and income before income tax expense post acquisition (in thousands).

	2019			2018		2017
Revenues	$	466,466		$	409,142	$	467,676
Net (loss) income		(2,598	)		16,098		26,535

Schedule of Consideration Payable

Current and long-term portions of consideration payable consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020				December 31, 2019
	Current		Long-Term		Current		Long-Term
TAV	$	494	$	3,546	$	490	$	3,497
Abraham		26		—		55		—
Fair Share Gaming		1,221		474		1,057		899
Family Amusement		395		2,787		293		2,815
Skyhigh		762		4,212		763		3,948
G3		294		99		2,952		154
Grand River		—		5,423		2,304		5,113
IGS		80		—		2,379		—
Total	$	3,272	$	16,541	$	10,293	$	16,426

Current and long-term portions of consideration payable consist of the following at December 31 (in thousands) :

	2019				2018
	Current		Long- Term		Current		Long- Term
TAV	$	490	$	3,497	$	194	$	1,232
Abraham		55		—		207		—
Fair Share Gaming		1,057		899		1,027		—
Family Amusement		293		2,815		357		3,011
Skyhigh		763		3,948		550		3,971
G3		2,952		154		221		806
Grand River		2,304		5,113		—		—
IGS		2,379		—		—		—
Total	$	10,293	$	16,426	$	2,556	$	9,020

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Fair Value Measurements (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of Liabilities Measured on a Recurring Basis

The following tables summarize the Company’s liabilities that are measured at fair value on a recurring basis (in thousands):

			Fair Value Measurement at Reporting Date Using
	June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	12,591	$	—	$	—	$	12,591

			Fair Value Measurement at Reporting Date Using
	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	17,327	$	—	$	—	$	17,327

The following tables summarize the Company’s liabilities that are measured at fair value on a recurring basis (in thousands):

			Fair Value Measurement at Reporting Date Using
	December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	17,327	$	—	$	—	$	17,327

			Fair Value Measurement at Reporting Date Using
	December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Contingent consideration	$	6,782	$	—	$	—	$	6,782

Schedule of Changes in Level 3 Instruments

The following table provides a roll-forward of the fair value of recurring Level 3 fair value measurements for the years ended December 31, 2019, 2018 and 2017 (in thousands):

	2019			2018			2017
Liabilities:
Contingent consideration:
Beginning of year balance	$	6,782		$	785		$	190
Issuance of contingent consideration in connection with acquisitions		7,216			5,350			595
Payment of contingent consideration		(1,658	)		(387	)		—
Additional accruals included in earnings		4,987			1,034			—
Ending balance	$	17,327		$	6,782		$	785

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Stockholders' Equity (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Equity [Abstract]

Schedule of Warrants

Redemption Date	Fair Market Value of Class A-1 shares
(period to expiration of the New Accel Warrants)	$10		$11		$12		$13		$14		$15		$16		$17		$18
57 months		0.257		0.277		0.294		0.310		0.324		0.337		0.348		0.358		0.365
54 months		0.252		0.272		0.291		0.307		0.322		0.335		0.347		0.357		0.365
51 months		0.246		0.268		0.287		0.304		0.320		0.333		0.346		0.357		0.365
48 months		0.241		0.263		0.283		0.301		0.317		0.332		0.344		0.356		0.365
45 months		0.235		0.258		0.279		0.298		0.315		0.330		0.343		0.356		0.365
42 months		0.228		0.252		0.274		0.294		0.312		0.328		0.342		0.355		0.364
39 months		0.221		0.246		0.269		0.290		0.309		0.325		0.340		0.354		0.364
36 months		0.213		0.239		0.263		0.285		0.305		0.323		0.339		0.353		0.364
33 months		0.205		0.232		0.257		0.280		0.301		0.320		0.337		0.352		0.364
30 months		0.196		0.224		0.250		0.274		0.297		0.316		0.335		0.351		0.364
27 months		0.185		0.214		0.242		0.268		0.291		0.313		0.332		0.350		0.364
24 months		0.173		0.204		0.233		0.260		0.285		0.308		0.329		0.348		0.364
21 months		0.161		0.193		0.223		0.252		0.279		0.304		0.326		0.347		0.364
18 months		0.146		0.179		0.211		0.242		0.271		0.298		0.322		0.345		0.363
15 months		0.130		0.164		0.197		0.230		0.262		0.291		0.317		0.342		0.363
12 months		0.111		0.146		0.181		0.216		0.250		0.282		0.312		0.339		0.363
9 months		0.090		0.125		0.162		0.199		0.237		0.272		0.305		0.336		0.362
6 months		0.065		0.099		0.137		0.178		0.219		0.259		0.296		0.331		0.362
3 months		0.034		0.065		0.104		0.150		0.197		0.243		0.286		0.326		0.361
0 months		—		—		0.042		0.115		0.179		0.233		0.281		0.323		0.361

Redemption Date	Fair Market Value of Class A-1 shares
(period to expiration of the New Accel Warrants)	$10		$11		$12		$13		$14		$15		$16		$17		$18
57 months		0.257		0.277		0.294		0.310		0.324		0.337		0.348		0.358		0.365
54 months		0.252		0.272		0.291		0.307		0.322		0.335		0.347		0.357		0.365
51 months		0.246		0.268		0.287		0.304		0.320		0.333		0.346		0.357		0.365
48 months		0.241		0.263		0.283		0.301		0.317		0.332		0.344		0.356		0.365
45 months		0.235		0.258		0.279		0.298		0.315		0.330		0.343		0.356		0.365
42 months		0.228		0.252		0.274		0.294		0.312		0.328		0.342		0.355		0.364
39 months		0.221		0.246		0.269		0.290		0.309		0.325		0.340		0.354		0.364
36 months		0.213		0.239		0.263		0.285		0.305		0.323		0.339		0.353		0.364
33 months		0.205		0.232		0.257		0.280		0.301		0.320		0.337		0.352		0.364
30 months		0.196		0.224		0.250		0.274		0.297		0.316		0.335		0.351		0.364
27 months		0.185		0.214		0.242		0.268		0.291		0.313		0.332		0.350		0.364
24 months		0.173		0.204		0.233		0.260		0.285		0.308		0.329		0.348		0.364
21 months		0.161		0.193		0.223		0.252		0.279		0.304		0.326		0.347		0.364
18 months		0.146		0.179		0.211		0.242		0.271		0.298		0.322		0.345		0.363
15 months		0.130		0.164		0.197		0.230		0.262		0.291		0.317		0.342		0.363
12 months		0.111		0.146		0.181		0.216		0.250		0.282		0.312		0.339		0.363
9 months		0.090		0.125		0.162		0.199		0.237		0.272		0.305		0.336		0.362
6 months		0.065		0.099		0.137		0.178		0.219		0.259		0.296		0.331		0.362
3 months		0.034		0.065		0.104		0.150		0.197		0.243		0.286		0.326		0.361
0 months		—		—		0.042		0.115		0.179		0.233		0.281		0.323		0.361

Schedule of Stock Reserved for Issuance

At December 31, 2019 and 2018, the Company has reserved Class A-1 Common Stock for future issuance in relation to the following:

	2019		2018
Class A-1 Common Stock warrants issued and outstanding		22,333,308		3,275,704
Class A-1 Common Stock options issued and outstanding		2,376,700		5,622,557
Conversion of Class A-2 Common Stock		4,999,999		—
Class A-1 Common Stock reserved for issuance		29,710,007		8,898,261

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Stock-based Compensation (Tables)

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Schedule of Assumptions for Options Granted

The following assumptions were used in the option valuation model for options granted during the years ended December 31,:

	2019*	2018	2017
Expected approximate volatility	None%	35%	35%
Expected dividends	None	None	None
Expected term (in years)	None	3-5	5
Risk-free rate	None%	2.41% - 2.62%	1.81% - 2.18%
Stock price	None	$4 - $5	$3 - $4

* there were no options granted in 2019

Summary of Options Granted and Range in Vesting Periods

A summary of the options granted and the range in vesting periods based on specific provisions within the option agreements during the years ended December 31, are as follows:

	2019		2018		2017
Options granted		—		108,288		612,771
Vesting period (in years)		—		3 - 5		5

Schedule of Vested Stock Options

The following table sets forth of the activities of the Company’s vested stock options for the years ended December 31, 2019, 2018 and 2017, as restated to give effect for the reverse recapitalization discussed in Note 3.

Outstanding options	Shares			Weighted Average Grant Date Fair Value		Weighted Average Exercise Price
Outstanding at January 1, 2017		4,512,952		$	0.60	$	1.75
Granted		612,771			1.27		3.72
Exercised		(867,024	)		0.59		1.62
Forfeited/expired		(135,789	)		0.96		2.73
Outstanding at December 31, 2017		4,122,910			0.69		2.03
Granted		108,288			1.73		5.10
Exercised		(284,642	)		0.40		1.15
Forfeited/expired		(114,132	)		1.03		2.96
Outstanding at December 31, 2018		3,832,424			0.73		2.16
Granted		—			—		—
Exercised		(2,590,274	)		0.62		1.84
Forfeited/expired		(13,751	)		0.77		2.33
Outstanding at December 31, 2019		1,228,399			0.96		2.91

Summary of Nonvested Stock Options

A summary of the status of the activities of the Company’s nonvested stock options for the years ended December 31, 2019, 2018 and 2017, as restated to give effect for the reverse recapitalization discussed in Note 3.

Nonvested options	Shares			Weighted Average Grant Date Fair Value
Nonvested at January 1, 2017		3,639,156		$	0.60
Granted		612,771			1.27
Vested		(1,380,566	)		0.60
Forfeited		(135,789	)		0.96
Nonvested at December 31, 2017		2,735,572			0.73
Granted		108,288			1.73
Vested		(1,032,910	)		0.62
Forfeited		(101,361	)		1.07
Nonvested at December 31, 2018		1,709,589			0.82
Granted		—			—
Vested		(547,537	)		0.85
Forfeited		(13,751	)		0.77
Nonvested at December 31, 2019		1,148,301			0.95

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense

The Company recognized income tax expense of $5.2 million, $4.4 million and $1.8 million during the years ended December 31, 2019, 2018 and 2017, respectively, which consists of the following (in thousands):

	2019			2018			2017
Current provision
Federal	$	(85	)	$	(100	)	$	173
State		43			222			62
Total current provision		(42	)		122			235
Deferred provision
Federal		3,740			3,256			955
State		1,501			1,044			564
Total deferred provision		5,241			4,300			1,519
Total income tax expense	$	5,199		$	4,422		$	1,754

Reconciliation of Expected Income Taxes

A reconciliation of the “expected” income taxes computed by applying the federal statutory income tax rate to the total expense is as follows (in thousands):

	2019			2018			2017
Computed “expected” tax (benefit) expense	$	(139	)	$	3,197		$	3,422
Increase (decrease) in income taxes resulting from:
State income taxes		1,535			1,219			2
Return-to-provision		49			—			—
Permanent items		4,054			(264	)		190
Enacted rate change		—			—			(1,755	)
Other		(300	)		270			(105	)
Total income tax expense	$	5,199		$	4,422		$	1,754

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows at December 31, 2019 and 2018 (in thousands):

	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	6,633		$	4,192
Location contracts acquired		4,699			1,887
Other		260			1,032
		11,592			7,111
Deferred tax liabilities:
Property and equipment		24,568			16,006
	$	(12,976	)	$	(8,895	)

Summary of Carryforwards of Net Operating Losses

The following table summarizes carryforwards of net operating losses as of December 31, 2019 and 2018 (in thousands):

	2019				2018
	Amount		Expiration		Amount		Expiration
Federal net operating losses	$	27,873		2033 - 2039	$	17,942		2031 - 2038
State net operating losses		14,454		2024 - 2031		5,655		2023 - 2030

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Payments

Future minimum payments under these leases are as follows (in thousands):

Years ending December 31:
2020	$	273
2021		142
2022		104
2023		65
2024		—
Total	$	584

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands		Jun. 30, 2020	Dec. 31, 2019		Dec. 31, 2018
Current assets:
Cash		$ 148,834	$ 125,403		$ 92,229
Prepaid expenses		3,443	4,151		2,538
Income taxes receivable		3,907	3,907		2,102
Investment in convertible notes (current)		17,000	11,000		0
Other current assets		6,637	7,034		5,142
Total current assets		179,821	151,495		102,011
Property and equipment, net		123,759	119,201		92,442
Other assets:
Route and customer acquisition costs, net		16,460	17,399		13,994
Location contracts acquired, net		156,624	166,783		126,038
Goodwill		34,511	34,511		0
Investment in convertible note, less current portion		13,000	19,000		0
Other assets		1,101	928		689
Total other assets		221,696	238,621		140,721
Total assets		525,276	509,317		335,174
Current liabilities:
Current maturities of debt		18,250	15,000		62,500
Current maturities of capital lease			0		531
Current portion of route and customer acquisition costs payable		1,675	1,700		1,821
Accrued location gaming expense		0	1,323		1,132
Accrued state gaming expense		0	7,119		4,929
Accounts payable and other accrued expenses		27,278	19,511		12,413
Current portion of consideration payable		3,272	10,293		2,556
Total current liabilities		50,475	54,946		85,882
Long-term liabilities:
Debt, net of current maturities		380,740	334,692		168,895
Route and customer acquisition costs payable, less current portion		4,708	4,752		5,364
Consideration payable, less current portion		16,541	16,426		9,020
Deferred income tax liability		7,781	12,976		8,895
Total long-term liabilities		409,770	368,846		192,174
Stockholders' equity :
Preferred Stock, value		0	0	[1]	0	[1]
Treasury stock, at cost	[1]		0		(5,832)
Additional paid-in capital		108,732	105,986	[1]	80,146	[1]
Accumulated deficit		(43,710)	(20,470)	[1]	(17,202)	[1]
Total stockholders' equity		65,031	85,525	[1]	57,118	[1]
Total liabilities and equity		525,276	509,317		335,174
Class A-1 Common Stock
Stockholders' equity :
Common stock issued		8	8	[1]	6	[1]
Class A-2 Common Stock
Stockholders' equity :
Common stock issued		$ 1	$ 1	[1]	$ 0	[1]

[1] Equity amounts have been retroactively restated to give effect to the reverse capitalization that is discussed in Note 3.

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Earnings Per Share (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Earnings Per Share [Abstract]

Components of Basic and Diluted EPS

The components of basic and diluted earning per share (“EPS”) were as follows for the three and six months ended June 30 (in thousands, except per share amounts):

	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Net (loss) income	$	(21,274	)	$	4,328	$	(23,240	)	$	8,323
Basic weighted average outstanding shares of common stock		78,317			58,605		78,161			57,896
Dilutive effect of stock-based awards for common stock		—			1,120		—			1,117
Dilutive effect of stockholder notes receivable for common stock		—			917		—			948
Dilutive effect of warrants for common stock		—			1,263		—			1,781
Diluted weighted average outstanding shares of common stock		78,317			61,904		78,161			61,742
Earnings (loss) per share:
Basic	$	(0.27	)	$	0.07	$	(0.30	)	$	0.14
Diluted	$	(0.27	)	$	0.07	$	(0.30	)	$	0.13

The components of basic and diluted EPS were as follows (in thousands, except per share amounts):

	2019			2018		2017
Net (loss) income	$	(5,864	)	$	10,803	$	8,311
Basic weighted average outstanding shares of common stock		61,850			57,621		56,321
Dilutive effect of stock-based awards for common stock		—			1,605		666
Dilutive effect of stockholder notes receivable for common stock		—			407		53
Dilutive effect of warrants for common stock		—			2,549		2,368
Diluted weighted average outstanding shares of common stock		61,850			62,182		59,408
Earnings (loss) per share:
Basic	$	(0.09	)	$	0.19	$	0.15
Diluted	$	(0.09	)	$	0.17	$	0.14

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Description of Business (Details) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020 USD ($) location terminal	Jun. 30, 2019 USD ($) location terminal	Jun. 30, 2020 USD ($) location terminal	Jun. 30, 2019 USD ($) location terminal	Dec. 31, 2019 USD ($) terminal location	Dec. 31, 2018 USD ($) terminal location	Dec. 31, 2017 USD ($)
Unusual or Infrequent Item, or Both [Line Items]
Number of video gaming terminals | terminal	11,108	8,082	11,108	8,082	10,499	7,649
Number of video gaming locations | location	2,335	1,762	2,335	1,762	2,312	1,686
COVID response, number of days video gaming terminals inoperable			106
COVID response, number of days in quarter			182
COVID Response Percent of Days Inoperable During Quarter			58.00%
COVID Response Percentage of Employees Furloughed			90.00%
Cash payment for asset acquisition			$ 4,123	$ 10,600	$ 20,796	$ 23,246	$ 23,626
Other operating expenses	$ 3,132	$ 730	4,336	$ 1,346	$ 19,649	$ 2,997	$ 1,331
COVID19 [Member]
Unusual or Infrequent Item, or Both [Line Items]
Other nonrecurring expense	$ 1,300		1,900
Cash payment for asset acquisition			1,400
Other operating expenses			$ 300

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Summary of Significant Accounting Policies - Adopted accounting pronouncements (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 01, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019		Dec. 31, 2018		Dec. 31, 2017	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect adjustment		$ 65,031	$ 67,547	$ 65,031	$ 67,547	$ 85,525	[1]	$ 57,118	[1]	$ 44,534	$ 84,619	$ 61,802	$ 24,139
Decrease in amortization expense on route and customer acquisition costs		(500)	(600)	(900)	(1,300)	(1,700)		(3,900)		(3,300)
Cumulative Transition Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect adjustment								2,596
Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Average life of contract	12 years 4 months 24 days
Decrease in amortization expense on route and customer acquisition costs	$ 1,100
Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect adjustment		$ (43,710)	$ (8,879)	$ (43,710)	$ (8,879)	$ (20,470)		(17,202)		$ (28,005)	$ (22,436)	$ (13,207)	$ (36,316)
Retained Earnings | Cumulative Transition Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect adjustment								$ 2,596
Retained Earnings | Accounting Standards Update 2014-09 | Cumulative Transition Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect adjustment	$ 2,600

[1] Equity amounts have been retroactively restated to give effect to the reverse capitalization that is discussed in Note 3.

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Summary of Significant Accounting Policies - Change in estimate (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended	12 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
Video Game Terminals and Equipment [Member]
Change in Accounting Estimate [Line Items]
Useful life				7 years
Service Life
Change in Accounting Estimate [Line Items]
Decrease in depreciation expense	$ 1,898		$ 4,511
Decrease to net loss	$ 1,533		$ 3,687
Decrease to loss per share	0.02		0.05
Service Life | Video Game Terminals and Equipment [Member]
Change in Accounting Estimate [Line Items]
Useful life		10 years	10 years	7 years

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Summary of Significant Accounting Policies - Schedule of property and equipment useful lives (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Video game terminals and equipment
Property, Plant and Equipment [Line Items]
Useful life		7 years
Amusement and other equipment
Property, Plant and Equipment [Line Items]
Useful life	7 years	7 years
Office equipment and furniture
Property, Plant and Equipment [Line Items]
Useful life	7 years	7 years
Computer equipment and software | Minimum
Property, Plant and Equipment [Line Items]
Useful life	3 years	3 years
Computer equipment and software | Maximum
Property, Plant and Equipment [Line Items]
Useful life	5 years	5 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Useful life	5 years	5 years
Vehicles
Property, Plant and Equipment [Line Items]
Useful life	5 years	5 years
Buildings and improvements | Minimum
Property, Plant and Equipment [Line Items]
Useful life	15 years	15 years
Buildings and improvements | Maximum
Property, Plant and Equipment [Line Items]
Useful life	29 years	29 years

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Summary of Significant Accounting Policies - Location contracts acquired (Details)	12 Months Ended
	Dec. 31, 2019
Accounting Policies [Abstract]
Expected useful life	10 years

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Summary of Significant Accounting Policies - Advertising costs (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Advertising costs	$ 4.7	$ 3.0	$ 2.8

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Reverse Recapitalization - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands			12 Months Ended
		Nov. 20, 2019	Dec. 31, 2019		Dec. 31, 2017		Jun. 30, 2020	Mar. 31, 2020	Nov. 21, 2019	Jun. 30, 2019	[2]	Mar. 31, 2019	[2]	Dec. 31, 2018		Dec. 31, 2016
Business Acquisition [Line Items]
Number of shares repurchased (in shares)		36,157
Repurchase price (in usd per share)		$ 177
Net equity infusion from reverse recapitalization		$ 29,300	$ 29,262		$ 10,794
Shares outstanding (in shares)		3,610,705
TPG Holdings
Business Acquisition [Line Items]
Sale of stock (in usd per share)		$ 10.30
TPG Holdings | Accel
Business Acquisition [Line Items]
Purchase price (in usd per share)		$ 177
Common Stock | Class A-1 Common Stock
Business Acquisition [Line Items]
Net equity infusion from reverse recapitalization	[1]		$ 2		$ 1
Shares outstanding (in shares)									76,637,470
Shares issued (in shares)			76,637,470	[1]	58,459,396	[1]	78,382,405	78,234,106	76,637,470	60,150,404		58,986,311		58,491,281	[1],[2]	54,133,885	[1]
Common Stock | Class A-2 Common Stock
Business Acquisition [Line Items]
Cash election (in shares)			3,000,000
Net equity infusion from reverse recapitalization			$ 1
Shares outstanding (in shares)									4,999,999
Shares issued (in shares)			4,999,999		0		3,403,363	3,403,363	4,999,999					0		0
Common Stock | TPG Holdings | Class A-1 Common Stock
Business Acquisition [Line Items]
Number of shares acquired (in shares)		7,500,000
Common Stock | TPG Holdings | Class A-2 Common Stock
Business Acquisition [Line Items]
Number of shares acquired (in shares)		2,000,000
Warrants
Business Acquisition [Line Items]
Cash election (in shares)			2,444,444
Warrants | Class A-1 Common Stock
Business Acquisition [Line Items]
Shares outstanding (in shares)									22,333,308
Shares issued (in shares)									22,333,308
Warrants | TPG Holdings
Business Acquisition [Line Items]
Number of shares acquired (in shares)		4,888,889
Investment Private Placement | Class A-1 Common Stock
Business Acquisition [Line Items]
Common stock, shares issued (in shares)		4,696,675
Sale of stock (in usd per share)		$ 10.22
Common stock issued		$ 48,000

[1] See Note 3 for reverse recapitalization effects herein.

[2] Share amounts for 2019 have been retroactively restated to give effect to the reverse capitalization that is discussed in Note 1.

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Reverse Recapitalization - Schedule of Proceeds from Reverse Capitalization (Details) - USD ($) $ in Thousands		12 Months Ended
	Nov. 20, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Business Combinations [Abstract]
Cash balance	$ 429,952	$ 92,229
Less redemption of Accel shares prior to reverse recapitalization	(413,733)	0	$ (3,343)	$ (123)
Cash balance prior to backstop equity financing	16,219
Plus funds from Investment Private Placement	48,038
Cash balance	64,257	$ 125,403	$ 92,229
Payment for sponsor loan	(4,000)
Transaction costs related to the reverse recapitalization	(31,005)
Net equity infusion prior to stock issuance	29,252
Impact of stock issued in reverse recapitalization	10
Net equity infusion from reverse recapitalization	29,262
Less impact from conversion of treasury stock and issuance of warrants	(7,415)
Net impact to additional paid-in-capital from reverse recapitalization	$ 21,847

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Reverse Recapitalization - Schedule of Equity Interests Issued from Reverse Capitalization (Details)	Nov. 20, 2019 shares	Jun. 30, 2020 shares	Dec. 31, 2019 shares	Dec. 31, 2018 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding (in shares)	3,610,705
Exchange ratio	17.188531
Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding (in shares)	472,773
Class B Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding (in shares)	662,228
Class C Preferred Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding (in shares)	1,530,779
Class D Preferred Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares outstanding (in shares)	944,925
Class A-1 Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Effect of exchange ratio to convert Accel stock to A-1 Common Stock (in shares)	62,062,715
Shares issued in reverse recapitalization (in shares)	14,574,755
Common stock outstanding (in shares)	76,637,470	78,382,405	76,637,470	58,491,280

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Preferred stock, par value (in usd per share)	$ 0.0001	$ 0.0001	$ 0.0001
Preferred stock, authorized (in shares)	1,000,000	1,000,000	1,000,000
Preferred stock, issued (in shares)	0	0	0
Preferred stock, outstanding (in shares)	0	0	0
Common stock, par value (in usd per share)	$ 0.0001	$ 0.0001
Class A-1 Common Stock
Common stock, par value (in usd per share)	$ 0.0001	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	250,000,000	250,000,000	250,000,000
Common stock, shares issued (in shares)	78,382,405	76,637,470	58,491,280
Common stock, shares outstanding (in shares)	78,382,405	76,637,470	58,491,280
Class A-2 Common Stock
Common stock, par value (in usd per share)	$ 0.0001	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	10,000,000	10,000,000	10,000,000
Common stock, shares issued (in shares)	3,403,363	4,999,999	0
Common stock, shares outstanding (in shares)	3,403,363	4,999,999	0

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Investment in Convertible Note (Details) - USD ($)			12 Months Ended
	Oct. 11, 2019	Jul. 19, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Debt Securities, Available-for-sale [Line Items]
Purchase of investment in convertible notes	$ 25,000,000.0	$ 5,000,000.0	$ 30,000,000	$ 0	$ 0
Monthly installment receivable	$ 1,000,000
Convertible Promissory Notes
Debt Securities, Available-for-sale [Line Items]
Investment purchase (up to)		$ 30,000,000.0	$ 30,000,000.0
Investment interest rate		3.00%
Investment maturity		6 months

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Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 231,017		$ 231,017		$ 216,624	$ 164,306
Less accumulated depreciation and amortization	(107,258)		(107,258)		(97,423)	(71,864)
Property and equipment, net	123,759		123,759		119,201	92,442
Depreciation and amortization of property and equipment	5,071	$ 6,100	9,938	$ 12,141	26,398	20,782	$ 16,768
Video game terminals and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	176,453		176,453		166,850	126,043
Amusement and other equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	19,115		19,115		16,417	12,539
Office equipment and furniture
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,590		1,590		1,540	1,827
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	9,405		9,405		8,715	5,092
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,507		1,507		44	44
Vehicles
Property, Plant and Equipment [Line Items]
Property and equipment, gross	10,254		10,254		9,304	7,174
Buildings and improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	10,757		10,757		12,075	9,365
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	911		911		911	883
Construction in Progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,025		$ 1,025		$ 768	$ 1,339

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Route and Customer Acquisition Costs - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 01, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Capitalized Contract Cost [Line Items]
Gross payments due		$ 6,800		$ 6,800		$ 7,400	$ 8,200
Net present value of payments due		6,400		6,400		6,500	7,200
Current portion of payments due		1,675		1,675		1,700	1,821
Customer acquisition cost asset		18,600		18,600		18,700	18,800
Capitalized contract cost, subject to claw back		2,100		2,100		2,200	2,600
Amortization expense (decrease in expense) on route and customer acquisition costs		$ 500	$ 600	$ 900	$ 1,300	$ 1,700	$ 3,900	$ 3,300
Accounting Standards Update 2014-09
Capitalized Contract Cost [Line Items]
Amortization expense (decrease in expense) on route and customer acquisition costs	$ (1,100)

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Route and Customer Acquisition Costs - Schedule of Customer Contract Acquired (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Revenue from Contract with Customer [Abstract]
Cost	$ 28,167	$ 28,501	$ 27,726
Accumulated amortization	(11,707)	(11,102)	(13,732)
Route and customer acquisition costs, net	$ 16,460	$ 17,399	$ 13,994

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Location Contracts Acquired - Schedule of Customer Contract Acquired (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
Cost	$ 204,353	$ 204,353	$ 147,341
Accumulated amortization	(47,729)	(37,570)	(21,302)
Location contracts acquired, net	$ 156,624	$ 166,783	$ 126,038

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Location Contracts Acquired - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Finite-Lived Intangible Assets [Line Items]
Expected useful life					10 years
Location Contract
Finite-Lived Intangible Assets [Line Items]
Amortization of intangible assets	$ 5.1	$ 4.0	$ 10.2	$ 7.6	$ 16.2	$ 10.8	$ 6.5

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Location Contracts Acquired - Schedule of Finite-Lived Intangible Assets Amortization Expense (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]
2020		$ 20,475
2021		20,475
2022		20,475
2023		20,475
2024		20,267
Thereafter		64,615
Location contracts acquired, net	$ 156,624	$ 166,783	$ 126,038

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Goodwill (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Goodwill [Line Items]
Goodwill	$ 34,511	$ 34,511	$ 0
Tax exempt portion of goodwill	$ 28,700	28,700
Previously Reported
Goodwill [Line Items]
Tax exempt portion of goodwill		$ 27,300

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Debt - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 01, 2020	Dec. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Total debt	$ 407,188		$ 358,500	$ 232,625
Less: Debt issuance costs	(8,198)		(8,808)	(1,230)
Total debt, net of debt issuance costs	398,990		349,692	231,395
Less: Current maturities	(18,250)		(15,000)	(62,500)
Total debt, net of current maturities	380,740		334,692	168,895
New Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Total debt	50,500		58,500	0
New Credit Facility | Delayed Draw Term Loan (DDTL)
Debt Instrument [Line Items]
Total debt	122,688	$ 65,000	60,000	0
New Credit Facility | Term Loan
Debt Instrument [Line Items]
Total debt	$ 234,000		240,000	0
Prior Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Total debt			0	50,000
Prior Credit Facility | Contract draw loan
Debt Instrument [Line Items]
Total debt			0	67,000
Prior Credit Facility | Term Loan
Debt Instrument [Line Items]
Total debt			$ 0	$ 115,625

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Debt - Narrative (Details) - USD ($)				3 Months Ended			6 Months Ended	12 Months Ended
	Apr. 10, 2018	Nov. 15, 2016	Dec. 08, 2015	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2020	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Mar. 01, 2020	Nov. 13, 2019
Debt Instrument [Line Items]
Loss on debt extinguishment								$ 1,141,000	$ 0	$ 0
Long term debt, gross							$ 407,188,000	358,500,000	232,625,000
New Credit Facility
Debt Instrument [Line Items]
Remaining availability							$ 49,500,000	$ 106,500,000
Ratio of consolidated net debt to EBITDA (no greater than)							4.50	4.50
Ratio of consolidated EBITDA to fixed charges (no less than)								1.20
Debt issuance costs								$ 8,800,000
New Credit Facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate							2.25%	2.25%
New Credit Facility | Alternative Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate							1.25%	1.25%
New Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity												$ 100,000,000.0
Weighted average interest rate							3.30%	4.45%
Long term debt, gross							$ 50,500,000	$ 58,500,000	0
New Credit Facility | Revolving Credit Facility | Federal Funds Effective Rate
Debt Instrument [Line Items]
Basis spread on variable rate							0.50%	0.50%
New Credit Facility | Revolving Credit Facility | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate							1.00%	1.00%
New Credit Facility | Letter of Credit
Debt Instrument [Line Items]
Maximum borrowing capacity												10,000,000.0
New Credit Facility | Swing Line Facility
Debt Instrument [Line Items]
Maximum borrowing capacity												10,000,000.0
New Credit Facility | Term Loan
Debt Instrument [Line Items]
Face amount												240,000,000.0
Additional term loan repayment rate							5.00%	5.00%
Long term debt, gross							$ 234,000,000	$ 240,000,000	0
New Credit Facility | Additional Term Loan Facility
Debt Instrument [Line Items]
Face amount												$ 125,000,000.0
New Credit Facility | Delayed Draw Term Loan (DDTL)
Debt Instrument [Line Items]
Long term debt, gross							$ 122,688,000	60,000,000	$ 0		$ 65,000,000
Prior Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 300,000,000	$ 210,000,000
Unused line fee	0.25%	0.30%
Weighted average interest rate									4.60%
Loss on debt extinguishment								1,100,000
Prior Credit Facility | LIBOR | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate	1.70%	1.95%	2.00%
Prior Credit Facility | LIBOR | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate	2.50%	3.00%	3.25%
Prior Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 85,000,000	$ 55,000,000	$ 35,000,000					85,000,000.0
Borrowing base limitation, percentage of cash outstanding	90.00%
Payments required if balance exceeds credit commitment amount	$ 85,000,000
Long term debt, gross								0	$ 50,000,000
Prior Credit Facility | Swing Line Facility
Debt Instrument [Line Items]
Maximum borrowing capacity								5,000,000.0
Prior Credit Facility | Term Loan
Debt Instrument [Line Items]
Maximum borrowing capacity	125,000,000	90,000,000
Face amount			50,000,000
Long term debt, gross								0	115,625,000
Prior Credit Facility | Term Loan | Forecast
Debt Instrument [Line Items]
Future quarterly payment				$ 4,687,500	$ 3,906,250	$ 3,125,000
Prior Credit Facility | Additional Term Loan Facility
Debt Instrument [Line Items]
Maximum borrowing capacity								125,000,000.0
Prior Credit Facility | Contract draw loan
Debt Instrument [Line Items]
Maximum borrowing capacity								170,000,000.0
Face amount	$ 90,000,000	$ 65,000,000	$ 40,000,000
Long term debt, gross								$ 0	$ 67,000,000

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands		Total		Cumulative Transition Adjustment	Common Stock Class A-1 Common Stock		Common Stock Class A-2 Common Stock	Additional Paid-In Capital		Treasury Stock		Note Receivable, Stockholder	Accumulated Deficit	Accumulated Deficit Cumulative Transition Adjustment
Beginning balance (in shares) at Dec. 31, 2016					54,133,885	[1]	0			(96,273)
Beginning balance at Dec. 31, 2016		$ 24,139			$ 5	[1]	$ 0	$ 60,667	[1]	$ (217)		$ 0	$ (36,316)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Repurchase of common stock (in shares)										(32,658)
Repurchase of common and preferred stock		$ (124)								$ (124)
Exercise of common stock options (in shares)		867,024			1,122,256	[1]				17,206
Exercise of common stock options		$ 1,380						1,351	[1]	$ 29
Exercise of warrants (in shares)					118,601	[1]				79,067
Exercise of warrants		205						16	[1]	$ 189
Employee stock option compensation		804						804	[1]
Issuance of common stock pursuant to acquisition of business / net equity infusion from reverse recapitalization (in shares)					2,521,815	[1]				32,658
Issuance of common stock pursuant to acquisition of business / net equity infusion from reverse recapitalization		10,794			$ 1	[1]		10,670	[1]	$ 123
Issuance of note receivable and shares (in shares)	[1]				562,838
Issuance of note receivable and shares		(975)						2,293	[1]			(3,268)
Net (loss) income		8,311											8,311
Ending balance (in shares) at Dec. 31, 2017					58,459,396	[1]	0			0
Ending balance at Dec. 31, 2017		44,534			$ 6	[1]	$ 0	75,801	[1]	$ 0		(3,268)	(28,005)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Repurchase of common stock (in shares)										(694,726)
Repurchase of common and preferred stock		$ (3,343)								$ (3,343)
Exercise of common stock options (in shares)		284,642			31,885	[1]				252,981
Exercise of common stock options		$ 396						(782)	[1]	$ 1,178
Receipt of stock previously issued pursuant to acquisition into treasury (in shares)										(67,998)
Receipt of stock previously issued pursuant to acquisition into treasury		(399)								$ (399)
Reclassification of contingent stock consideration		4,674						4,674	[1]
Settlement of note receivable issued (in shares)										(802,137)
Settlement of note receivable issued										$ (3,268)		3,268
Employee stock option compensation		453						453	[1]
Net (loss) income		10,803											10,803
Ending balance (in shares) at Dec. 31, 2018					58,491,281	[1],[2]	0			(1,311,880)	[2]
Ending balance at Dec. 31, 2018		57,118	[3]	$ 2,596	$ 6	[1],[2]	$ 0	80,146	[1],[2]	$ (5,832)	[2]	0	(17,202)	$ 2,596
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of warrants (in shares)	[2]				495,030					46,409
Exercise of warrants		561						334	[2]	$ 227	[2]
Employee stock option compensation		128						128	[2]
Net (loss) income		3,995											3,995
Ending balance (in shares) at Mar. 31, 2019	[2]				58,986,311					(1,265,471)
Ending balance at Mar. 31, 2019		61,802			$ 6	[2]		80,608	[2]	$ (5,605)	[2]		(13,207)
Beginning balance (in shares) at Dec. 31, 2018					58,491,281	[1],[2]	0			(1,311,880)	[2]
Beginning balance at Dec. 31, 2018		57,118	[3]	2,596	$ 6	[1],[2]	$ 0	80,146	[1],[2]	$ (5,832)	[2]	0	(17,202)	2,596
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income		8,323
Ending balance (in shares) at Jun. 30, 2019	[2]				60,150,404					(980,863)
Ending balance at Jun. 30, 2019		67,547			$ 6	[2]		81,941	[2]	$ (5,521)	[2]		(8,879)
Beginning balance (in shares) at Dec. 31, 2018					58,491,281	[1],[2]	0			(1,311,880)	[2]
Beginning balance at Dec. 31, 2018		$ 57,118	[3]	$ 2,596	$ 6	[1],[2]	$ 0	80,146	[1],[2]	$ (5,832)	[2]	0	(17,202)	$ 2,596
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options (in shares)		2,590,274			342,139	[1]				1,244,725
Exercise of common stock options		$ 3,225						(4,299)	[1]	$ 7,524
Exercise of warrants (in shares)					3,229,295	[1]				46,409
Exercise of warrants		3,392						3,165	[1]	$ 227
Employee stock option compensation		2,236						2,236	[1]
Contributed capital, professional service fees paid by shareholder		2,891						2,891	[1]
Shares exchanged for withholding on stock options and shares repurchased (in shares)										(906,128)
Shares exchanged for withholding on stock options and shares repurchased		(9,331)								$ (9,331)
Issuance of common stock pursuant to acquisition of business / net equity infusion from reverse recapitalization (in shares)					14,574,755	[1]	4,999,999			926,874
Issuance of common stock pursuant to acquisition of business / net equity infusion from reverse recapitalization		29,262			$ 2	[1]	$ 1	21,847	[1]	$ 7,412
Net (loss) income		(5,864)											(5,864)
Ending balance (in shares) at Dec. 31, 2019					76,637,470	[1]	4,999,999			0
Ending balance at Dec. 31, 2019		85,525	[3]		$ 8	[1]	$ 1	105,986	[1]	$ 0		0	(20,470)
Beginning balance (in shares) at Mar. 31, 2019	[2]				58,986,311					(1,265,471)
Beginning balance at Mar. 31, 2019		61,802			$ 6	[2]		80,608	[2]	$ (5,605)	[2]		(13,207)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options (in shares)	[2]									284,608
Exercise of common stock options		84								$ 84	[2]
Exercise of warrants (in shares)	[2]				1,164,093
Exercise of warrants		1,205						1,205	[2]
Employee stock option compensation		128						128	[2]
Net (loss) income		4,328											4,328
Ending balance (in shares) at Jun. 30, 2019	[2]				60,150,404					(980,863)
Ending balance at Jun. 30, 2019		67,547			$ 6	[2]		81,941	[2]	$ (5,521)	[2]		(8,879)
Beginning balance (in shares) at Dec. 31, 2019					76,637,470	[1]	4,999,999			0
Beginning balance at Dec. 31, 2019		85,525	[3]		$ 8	[1]	$ 1	105,986	[1]	$ 0		0	(20,470)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Conversion of Class A-2 Common Stock to Class A-1 Common Stock (in shares)					1,596,636		(1,596,636)
Employee stock option compensation		1,060						1,060
Net (loss) income		(1,966)											(1,966)
Ending balance (in shares) at Mar. 31, 2020					78,234,106		3,403,363
Ending balance at Mar. 31, 2020		84,619			$ 8		$ 1	107,046					(22,436)
Beginning balance (in shares) at Dec. 31, 2019					76,637,470	[1]	4,999,999			0
Beginning balance at Dec. 31, 2019		85,525	[3]		$ 8	[1]	$ 1	105,986	[1]	$ 0		$ 0	(20,470)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income		(23,240)
Ending balance (in shares) at Jun. 30, 2020					78,382,405		3,403,363
Ending balance at Jun. 30, 2020		65,031			$ 8		$ 1	108,732					(43,710)
Beginning balance (in shares) at Mar. 31, 2020					78,234,106		3,403,363
Beginning balance at Mar. 31, 2020		84,619			$ 8		$ 1	107,046					(22,436)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of common stock options (in shares)					148,299
Exercise of common stock options		359						359
Employee stock option compensation		1,327						1,327
Net (loss) income		(21,274)											(21,274)
Ending balance (in shares) at Jun. 30, 2020					78,382,405		3,403,363
Ending balance at Jun. 30, 2020		$ 65,031			$ 8		$ 1	$ 108,732					$ (43,710)

[1] See Note 3 for reverse recapitalization effects herein.

[2] Share amounts for 2019 have been retroactively restated to give effect to the reverse capitalization that is discussed in Note 1.

[3] Equity amounts have been retroactively restated to give effect to the reverse capitalization that is discussed in Note 3.

XML

Debt - Schedule of Maturities of Long-term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Debt Disclosure [Abstract]
2020		$ 15,000
2021		15,000
2022		15,000
2023		15,000
2024		298,500
Total debt	$ 407,188	$ 358,500	$ 232,625

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Debt - Schedule of Carrying Value and Estimated Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Carrying value
Debt Instrument [Line Items]
Debt	$ 349,692	$ 231,395
Estimated Fair value
Debt Instrument [Line Items]
Debt	$ 349,692	$ 229,763

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Business and Asset Acquisitions - Narrative (Details) shares in Thousands, $ in Thousands							2 Months Ended	3 Months Ended			4 Months Ended	5 Months Ended	6 Months Ended			12 Months Ended
	Sep. 23, 2019 USD ($) location terminal	Sep. 16, 2019 USD ($) terminal installment_payment location	Oct. 16, 2018 location	Aug. 01, 2018 location	Jul. 01, 2017 USD ($) location	Jun. 01, 2016 location	Dec. 31, 2018 USD ($) terminal location	Jun. 30, 2020 USD ($) location terminal	Dec. 31, 2019 USD ($) terminal location	Jun. 30, 2019 USD ($) location terminal	Dec. 31, 2018 USD ($) terminal location	Dec. 31, 2018 USD ($) terminal location	Jun. 30, 2020 USD ($) location terminal	Jun. 30, 2019 USD ($) location terminal	Dec. 31, 2017 USD ($)	Dec. 31, 2019 USD ($) installment_payment terminal location	Dec. 31, 2018 USD ($) terminal location shares	Dec. 31, 2017 USD ($)	Oct. 31, 2018 location	Sep. 01, 2018 location	Dec. 30, 2014 location
Business Acquisition [Line Items]
Number of video gaming terminals | terminal							7,649	11,108	10,499	8,082	7,649	7,649	11,108	8,082		10,499	7,649
Number of video gaming locations | location							1,686	2,335	2,312	1,762	1,686	1,686	2,335	1,762		2,312	1,686
Consideration transferred																	$ 63,745
Contingent purchase consideration																	5,350
Revenues										$ 119,427				$ 231,902		$ 466,466	409,142	$ 467,676
Net (loss) income										5,542				10,711		(2,598)	16,098	26,535
Reduction in amortization of customer acquisition costs and location contracts acquired								$ (5,565)		(4,624)			$ (11,130)	(8,927)		(17,975)	(14,681)	$ (9,792)
Goodwill							$ 0	34,511	$ 34,511		$ 0	$ 0	34,511			34,511	0
Grand River
Business Acquisition [Line Items]
Number of video gaming terminals | terminal		2,009
Number of video gaming locations | location		450
Consideration transferred		$ 113,714
Cash payment, before additional payment for working capital adjustment		100,000
Additional payment for working capital adjustment		6,600
Contingent purchase consideration		$ 7,136
Number of installment payments | installment_payment		2
Acquisition related costs																200
Revenues									16,600				12,300
Net (loss) income									1,200				800
Goodwill		$ 34,511						$ 34,500	34,500				$ 34,500			34,500
Grand River | Installment payment within 30 days following the one-year anniversary
Business Acquisition [Line Items]
Maximum amount to be paid for contingent consideration		2,500
Reversal of maximum amout to be paid for contingent consideration										$ 2,500				$ 2,500
Grand River | Installment payment within 30 days following the three-year anniversary
Business Acquisition [Line Items]
Maximum amount to be paid for contingent consideration		7,000
Quad B
Business Acquisition [Line Items]
Number of video gaming locations | location																				61
Consideration transferred																	610
Contingent purchase consideration																	0
Revenues											100					300
Net (loss) income											100					100
Skyhigh
Business Acquisition [Line Items]
Number of video gaming locations | location				23
Consideration transferred																	14,210
Contingent purchase consideration																	4,324
Revenues												3,900				9,300
Net (loss) income												1,100				2,200
Contingent consideration, placed in operation period				5 years
Contingent consideration, percentage of adjusted net terminal income				18.44%
Contingent consideration, final payment ratio				1.75%
Fair value of contingent consideration							4,500		4,700		4,500	4,500				4,700	4,500
Skyhigh | Payments made monthly
Business Acquisition [Line Items]
Contingent consideration, payment period				2 years
Skyhigh | Frequency of payments after the first two years
Business Acquisition [Line Items]
Contingent consideration, payment period				3 months
Skyhigh | Payments made every three years
Business Acquisition [Line Items]
Contingent consideration, payment period				3 years
G3
Business Acquisition [Line Items]
Number of video gaming locations | location			87
Consideration transferred																	40,545
Contingent purchase consideration																	1,026
Revenues							4,300									21,800
Net (loss) income							800									3,300
Contingent consideration, placed in operation period			3 years
Fair value of contingent consideration							1,000		3,100		1,000	1,000				3,100	1,000
Mike's Amusement
Business Acquisition [Line Items]
Number of video gaming locations | location			73
Consideration transferred																	3,500
Contingent purchase consideration																	0
Revenues							200									1,000
Net (loss) income							100									$ 400
Family Amusement
Business Acquisition [Line Items]
Number of video gaming locations | location																			139
Consideration transferred																	4,880
Contingent purchase consideration																	0
Number of installment payments | installment_payment																3
Revenues							100									$ 400
Net (loss) income							100									200
Fair value of contingent consideration							3,400		3,100		3,400	3,400				3,100	3,400
Reduction in amortization of customer acquisition costs and location contracts acquired																100
Promissory note, due from 2019 to 2021																400
Promissory note, installment due in 2022																700
Promissory note, installment due in 2023																2,100
Fair Share Gaming
Business Acquisition [Line Items]
Number of video gaming locations | location					125
Consideration transferred					$ 65,119
Contingent purchase consideration					$ 595
Revenues															$ 19,000	42,800	40,800
Net (loss) income															$ 3,300	7,800	7,000
Contingent consideration, placed in operation period					1 year
Contingent consideration, payment period					2 years
Fair value of contingent consideration							1,000		2,000		1,000	1,000				2,000	$ 1,000
Equity issued in business acquisition, value					$ 15,000
Issuance of common stock to seller					10,794
Shares received back which were previously issued (in shares) | shares																	3,956
Contingent stock consideration					$ 3,675
Abraham
Business Acquisition [Line Items]
Number of video gaming locations | location						138
Contingent consideration, placed in operation period						2 years
Fair value of contingent consideration							200		100		200	200				100	$ 200
TAV Gaming
Business Acquisition [Line Items]
Number of video gaming locations | location																					32
Fair value of contingent consideration							$ 1,400		$ 4,000		$ 1,400	$ 1,400				$ 4,000	$ 1,400
IGS
Business Acquisition [Line Items]
Number of video gaming terminals | terminal	139
Number of video gaming locations | location	29
Cash payment, before additional payment for working capital adjustment		$ 6,600
Cash payment for asset acquisition	$ 2,400
Note payable	2,300
Video game terminals and equipment acquired	1,700
Location contracts acquired	$ 3,000
IGS | Notes Payable
Business Acquisition [Line Items]
Interest rate	5.00%

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Business and Asset Acquisitions - Schedule of Consideration Transferred and Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands			12 Months Ended
	Sep. 16, 2019	Jul. 01, 2017	Dec. 31, 2018	Jun. 30, 2020	Dec. 31, 2019
Business Acquisition [Line Items]
Cash paid			$ 51,390
Contingent consideration			5,350
Promissory note			3,368
Due to seller			3,637
Total consideration			63,745
Cash			3,633
Location contracts acquired			55,142
Goodwill			0	$ 34,511	$ 34,511
Total assets acquired			63,745
Video game terminals and equipment
Business Acquisition [Line Items]
Property and equipment			3,515
Amusement and other equipment
Business Acquisition [Line Items]
Property and equipment			1,455
Grand River
Business Acquisition [Line Items]
Cash paid	$ 106,578
Contingent consideration	7,136
Total consideration	113,714
Cash	8,861
Location contracts acquired	53,200
Property and equipment	18,000
Goodwill	34,511			$ 34,500	$ 34,500
Total assets acquired	115,748
Accounts payable assumed	(532)
Accrued expenses assumed	(1,502)
Net assets acquired	113,714
Grand River | Land
Business Acquisition [Line Items]
Property and equipment	28
Grand River | Building
Business Acquisition [Line Items]
Property and equipment	548
Grand River | Vehicles
Business Acquisition [Line Items]
Property and equipment	$ 600
Quad B
Business Acquisition [Line Items]
Cash paid			610
Contingent consideration			0
Promissory note			0
Due to seller			0
Total consideration			610
Cash			0
Location contracts acquired			138
Total assets acquired			610
Quad B | Video game terminals and equipment
Business Acquisition [Line Items]
Property and equipment			0
Quad B | Amusement and other equipment
Business Acquisition [Line Items]
Property and equipment			472
Skyhigh
Business Acquisition [Line Items]
Cash paid			9,268
Contingent consideration			4,324
Promissory note			0
Due to seller			618
Total consideration			14,210
Cash			1,126
Location contracts acquired			12,519
Total assets acquired			14,210
Skyhigh | Video game terminals and equipment
Business Acquisition [Line Items]
Property and equipment			506
Skyhigh | Amusement and other equipment
Business Acquisition [Line Items]
Property and equipment			59
G3
Business Acquisition [Line Items]
Cash paid			36,500
Contingent consideration			1,026
Promissory note			0
Due to seller			3,019
Total consideration			40,545
Cash			2,507
Location contracts acquired			34,825
Total assets acquired			40,545
G3 | Video game terminals and equipment
Business Acquisition [Line Items]
Property and equipment			3,009
G3 | Amusement and other equipment
Business Acquisition [Line Items]
Property and equipment			204
Mike's Amusement
Business Acquisition [Line Items]
Cash paid			3,500
Contingent consideration			0
Promissory note			0
Due to seller			0
Total consideration			3,500
Cash			0
Location contracts acquired			3,080
Total assets acquired			3,500
Mike's Amusement | Video game terminals and equipment
Business Acquisition [Line Items]
Property and equipment			0
Mike's Amusement | Amusement and other equipment
Business Acquisition [Line Items]
Property and equipment			420
Family Amusement
Business Acquisition [Line Items]
Cash paid			1,512
Contingent consideration			0
Promissory note			3,368
Due to seller			0
Total consideration			4,880
Cash			0
Location contracts acquired			4,580
Total assets acquired			4,880
Family Amusement | Video game terminals and equipment
Business Acquisition [Line Items]
Property and equipment			0
Family Amusement | Amusement and other equipment
Business Acquisition [Line Items]
Property and equipment			$ 300
Fair Share Gaming
Business Acquisition [Line Items]
Cash paid		$ 48,000
Issuance of common stock to seller		10,794
Contingent stock consideration		3,675
Contingent consideration		595
Due to seller		2,055
Total consideration		65,119
Cash		4,926
Location contracts acquired		52,716
Total assets acquired		65,279
Accrued expenses assumed		(160)
Net assets acquired		65,119
Fair Share Gaming | Vehicles
Business Acquisition [Line Items]
Property and equipment		126
Fair Share Gaming | Video game terminals and equipment
Business Acquisition [Line Items]
Property and equipment		6,363
Fair Share Gaming | Amusement and other equipment
Business Acquisition [Line Items]
Property and equipment		$ 1,148

XML

Business and Asset Acquisitions - Schedule of Unaudited Pro Forma Results (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Business Combinations [Abstract]
Revenues	$ 119,427	$ 231,902	$ 466,466	$ 409,142	$ 467,676
Net (loss) income	$ 5,542	$ 10,711	$ (2,598)	$ 16,098	$ 26,535

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Business and Asset Acquisitions - Schedule of Consideration Payable (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Current	$ 3,272	$ 10,293	$ 2,556
Long-Term	16,541	16,426	9,020
TAV Gaming
Business Acquisition [Line Items]
Current	494	490	194
Long-Term	3,546	3,497	1,232
Abraham
Business Acquisition [Line Items]
Current	26	55	207
Long-Term	0	0	0
Fair Share Gaming
Business Acquisition [Line Items]
Current	1,221	1,057	1,027
Long-Term	474	899	0
Family Amusement
Business Acquisition [Line Items]
Current	395	293	357
Long-Term	2,787	2,815	3,011
Skyhigh
Business Acquisition [Line Items]
Current	762	763	550
Long-Term	4,212	3,948	3,971
G3
Business Acquisition [Line Items]
Current	294	2,952	221
Long-Term	99	154	806
Grand River
Business Acquisition [Line Items]
Current	0	2,304	0
Long-Term	5,423	5,113	0
IGS
Business Acquisition [Line Items]
Current	80	2,379	0
Long-Term	$ 0	$ 0	$ 0

XML

Fair Value Measurements - Schedule of Fair Value Measurements, Liabilities Measured on a Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ 12,591	$ 17,327	$ 6,782
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	0	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	0	0	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ 12,591	$ 17,327	$ 6,782

XML

Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Fair Value Disclosures [Abstract]
Decrease in other expenses due to one percent increase in discount rate	$ 0.2	$ 0.2
Increase in other expenses due to one percent decrease in discount rate	$ 0.2	$ 0.2

XML

Fair Value Measurements - Schedule of Fair Value Measurements, Contingent Considerations (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning of year balance	$ 6,782	$ 785	$ 190
Issuance of contingent consideration in connection with acquisitions	7,216	5,350	595
Payment of contingent consideration	(1,658)	(387)	0
Additional accruals included in earnings	4,987	1,034	0
Ending balance	$ 17,327	$ 6,782	$ 785

XML

Stockholders' Equity - Narrative (Details)				12 Months Ended
	Jul. 14, 2020 shares	Jan. 14, 2020 shares	Nov. 20, 2019 $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Jun. 30, 2020 $ / shares shares	Nov. 19, 2019 USD ($) $ / shares shares	Jun. 30, 2019 shares	Dec. 31, 2018 $ / shares shares	Jan. 31, 2013 $ / shares shares
Class of Warrant or Right [Line Items]
Common stock, par value (in usd per share) | $ / shares				$ 0.0001		$ 0.0001
Preferred stock, authorized (in shares)				1,000,000		1,000,000			1,000,000
Warrants issued and outstanding (in shares)				0		0		91,350	190,575
Warrants issued (in shares)			7,333,326		15,000,000					253,575
Warrants canceled and reissued to prior shareholders (in shares)			2,444,437
Term of warrants			5 years		5 years
Warrant, exercise price (in usd per share) | $ / shares			$ 11.50		$ 11.50					$ 17.80
Warrants, subject to adjustments after consummation of reverse capitalization period			30 days
Exercise of warrants (in shares)				190,575	11,500
Proceeds from issuance of stock warrants | $				$ 3,392,235	$ 204,700
Redemption price (in usd per share) | $ / shares					$ 0.01
Subsequent Event
Class of Warrant or Right [Line Items]
Exercise conversion rate of warrants (share per share)	0.250
20 trading days within 30 trading-day period
Class of Warrant or Right [Line Items]
Stock price at which warrants may be redeemed (in usd per share) | $ / shares					18.00
Trading day prior to date of notice of redemption
Class of Warrant or Right [Line Items]
Stock price at which warrants may be redeemed (in usd per share) | $ / shares					$ 10.00
Stock price at which warrants may be redeemed, after first exercisable (in usd per share) | $ / shares			$ 10.00
Tranche I - EBITDA for last 12 months or 20 trading days in consecutive 30 day trading period
Class of Warrant or Right [Line Items]
Maximum EBITDA before stock conversion | $							$ 132,000,000
Tranche II - LTM EBITDA or 20 trading days in consecutive 30 day trading period
Class of Warrant or Right [Line Items]
Maximum EBITDA before stock conversion | $							152,000,000
Tranche III - LTM EBITDA or 20 trading days in consecutive 30 day trading period
Class of Warrant or Right [Line Items]
Maximum EBITDA before stock conversion | $							$ 172,000,000
Class A-1 Common Stock
Class of Warrant or Right [Line Items]
Common stock, par value (in usd per share) | $ / shares				$ 0.0001		$ 0.0001			$ 0.0001
Common stock, shares authorized (in shares)				250,000,000		250,000,000			250,000,000
Common stock, shares issued (in shares)				76,637,470		78,382,405			58,491,280
Class A-1 Common Stock | Subsequent Event
Class of Warrant or Right [Line Items]
Conversion of stock, shares converted (in shares)	3,784,416
Class A-1 Common Stock | Tranche I - EBITDA for last 12 months or 20 trading days in consecutive 30 day trading period
Class of Warrant or Right [Line Items]
Maximum stock price of common stock before conversion (in usd per share) | $ / shares							$ 12.00
Class A-1 Common Stock | Tranche II - LTM EBITDA or 20 trading days in consecutive 30 day trading period
Class of Warrant or Right [Line Items]
Maximum stock price of common stock before conversion (in usd per share) | $ / shares							14.00
Class A-1 Common Stock | Tranche III - LTM EBITDA or 20 trading days in consecutive 30 day trading period
Class of Warrant or Right [Line Items]
Maximum stock price of common stock before conversion (in usd per share) | $ / shares							$ 16.00
Class A-2 Common Stock
Class of Warrant or Right [Line Items]
Common stock, par value (in usd per share) | $ / shares				$ 0.0001		$ 0.0001			$ 0.0001
Common stock, shares authorized (in shares)				10,000,000		10,000,000			10,000,000
Common stock, shares issued (in shares)				4,999,999		3,403,363	5,000,000		0
Percentage of ownership requiring exchange (less than)				4.99%		4.99%
Class A-2 Common Stock | Tranche I - EBITDA for last 12 months or 20 trading days in consecutive 30 day trading period
Class of Warrant or Right [Line Items]
Conversion of stock, shares converted (in shares)		1,666,666
Number of shares to be exchanged (in shares)							1,666,666
Class A-2 Common Stock | Tranche I - EBITDA for last 12 months or 20 trading days in consecutive 30 day trading period | Subsequent Event
Class of Warrant or Right [Line Items]
Conversion of stock, shares converted (in shares)		1,666,666
Class A-2 Common Stock | Tranche II - LTM EBITDA or 20 trading days in consecutive 30 day trading period
Class of Warrant or Right [Line Items]
Number of shares to be exchanged (in shares)							1,666,667
Class A-2 Common Stock | Tranche III - LTM EBITDA or 20 trading days in consecutive 30 day trading period
Class of Warrant or Right [Line Items]
Number of shares to be exchanged (in shares)							1,666,667
Number of shares converted (in shares)		1,596,636

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net (loss) income	$ (23,240)	$ 8,323	$ (5,864)	$ 10,803	$ 8,311
Non-cash items included in net (loss) income:
Depreciation and amortization of property and equipment	9,938	12,141	26,398	20,782	16,768
Amortization of route and customer acquisition costs and location contracts acquired	11,130	8,927	17,975	14,681	9,792
Amortization of debt issuance costs	936	333	655	394	284
Contributed capital, professional service fees paid by shareholder			2,891	0	0
Stock option compensation	2,387	256	2,236	453	804
Loss (gain) on disposal of property and equipment	93	(47)	100	61	338
Loss on write-off of route and customer acquisition costs and route and customer acquisition costs payable	611	171	342	516	395
Loss on debt extinguishment			1,141	0	0
Remeasurement of contingent consideration	(2,432)	227	6,723	852	0
Payments on consideration payable	(1,548)	0
Accretion of interest on route and customer acquisition costs payable, contingent consideration, and contingent stock consideration	1,078	255	1,623	912	695
Deferred income taxes	(5,195)	0	4,081	4,300	1,519
Changes in operating assets and liabilities, net of acquisition of businesses:
Prepaid expenses and other current assets	1,105	(3,360)	(3,507)	(491)	(3,825)
Income taxes receivable	0	(1,050)	(1,804)	(1,436)	(667)
Route and customer acquisition costs	(585)	(1,271)	(5,438)	(3,719)	(2,778)
Route and customer acquisition costs payable	(69)	(714)	(1,342)	(956)	(1,354)
Accounts payable and accrued expenses	(11,319)	1,973	(405)	(2,649)	3,222
Consideration payable			0	(196)	0
Other assets	(174)	(81)	(240)	36	(407)
Net cash (used in) provided by operating activities	(17,284)	26,083	45,565	44,343	33,097
Cash flows from investing activities:
Purchases of property and equipment	(4,123)	(10,600)	(20,796)	(23,246)	(23,626)
Proceeds from the sale of property and equipment	121	52	121	1,173	259
Payments for location contracts acquired			0	(80)	(2,374)
Purchase of investment in convertible notes			(30,000)	0	0
Business and asset acquisitions, net of cash acquired			(100,857)	(51,394)	(45,129)
Net cash used in investing activities	(4,002)	(10,548)	(151,532)	(73,547)	(70,870)
Cash flows from financing activities:
Proceeds from term loan			240,000	46,250	0
Payments on term loan	(6,000)	(3,125)	(115,625)	(11,625)	(9,000)
Proceeds from delayed draw term loans	65,000	10,750	169,000	75,000	60,000
Payments on delayed draw term loans	(2,313)	(4,750)	(159,000)	(59,000)	(9,000)
Net proceeds (payments) on line of credit	(8,000)	(12,000)	(8,500)	3,000	18,500
Payments for debt issuance costs	(325)	0	(9,374)	(533)	0
Payments for repurchase of common shares			0	(3,343)	(123)
Proceeds from exercise of stock options and warrants	359	1,851	3,583	396	1,584
Payments on consideration payable	(4,004)	(452)	(2,321)	(814)	(351)
Payments on capital lease obligation	0	(531)	(531)	(3,276)	(2,729)
Net increase in outstanding checks in excess of bank balance			0	67	200
Proceeds from capital infusion in reverse recapitalization			27,030	0	0
Tax withholding on share-based payments			(5,121)	0	0
Net cash provided by (used in) financing activities	44,717	(8,257)	139,141	46,122	59,081
Net increase in cash and cash equivalents	23,431	7,278	33,174	16,918	21,308
Cash and cash equivalents:
Beginning of year	125,403	92,229	92,229	75,311	54,003
End of year	148,834	99,507	125,403	92,229	75,311
Supplemental disclosures of cash flow information:
Interest, net of amount of capitalized	6,678	5,263	12,024	8,719	6,224
Income taxes	0	1,759	1,759	1,594	0
Supplemental schedules of noncash investing and financing activities:
Purchases of property and equipment in accounts payable and accrued liabilities	$ 10,586	$ 2,186	11,501	2,243	1,050
Reclassification of contingent stock consideration from liabilities to equity			0	2,575	890
Acquisition of businesses and assets:
Total identifiable net assets acquired			119,178	63,745	65,119
Less cash acquired			(8,861)	(3,633)	(4,926)
Less contingent consideration			(7,216)	(5,350)	(595)
Less promissory note			(2,244)	(3,368)	0
Less common stock consideration			0	0	(10,794)
Less contingent stock consideration			0	0	(3,675)
Cash purchase price			$ 100,857	$ 51,394	$ 45,129

XML

Stockholders' Equity - Schedule of Fair Market Value of Warrants (Details)	Jun. 30, 2020 $ / shares	Dec. 31, 2019 $ / shares	Nov. 20, 2019	Dec. 31, 2017
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants			5 years	5 years
57 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	57 months	57 months
54 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	54 months	54 months
51 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	51 months	51 months
48 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	48 months	48 months
45 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	45 months	45 months
42 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	42 months	42 months
39 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	39 months	39 months
36 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	36 months	36 months
33 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	33 months	33 months
30 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	30 months	30 months
27 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	27 months	27 months
24 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	24 months	24 months
21 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	21 months	21 months
18 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	18 months	18 months
15 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	15 months	15 months
12 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	12 months	12 months
9 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	9 months	9 months
6 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	6 months	6 months
3 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	3 months	3 months
0 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Term of warrants	0 months	0 months
$10
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Stock price (in usd per share)	$ 10	$ 10
$10 | 57 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.257	0.257
$10 | 54 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.252	0.252
$10 | 51 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.246	0.246
$10 | 48 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.241	0.241
$10 | 45 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.235	0.235
$10 | 42 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.228	0.228
$10 | 39 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.221	0.221
$10 | 36 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.213	0.213
$10 | 33 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.205	0.205
$10 | 30 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.196	0.196
$10 | 27 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.185	0.185
$10 | 24 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.173	0.173
$10 | 21 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.161	0.161
$10 | 18 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.146	0.146
$10 | 15 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.130	0.130
$10 | 12 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.111	0.111
$10 | 9 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.090	0.090
$10 | 6 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.065	0.065
$10 | 3 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.034	0.034
$10 | 0 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0	0
$11
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Stock price (in usd per share)	$ 11	$ 11
$11 | 57 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.277	0.277
$11 | 54 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.272	0.272
$11 | 51 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.268	0.268
$11 | 48 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.263	0.263
$11 | 45 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.258	0.258
$11 | 42 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.252	0.252
$11 | 39 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.246	0.246
$11 | 36 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.239	0.239
$11 | 33 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.232	0.232
$11 | 30 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.224	0.224
$11 | 27 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.214	0.214
$11 | 24 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.204	0.204
$11 | 21 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.193	0.193
$11 | 18 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.179	0.179
$11 | 15 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.164	0.164
$11 | 12 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.146	0.146
$11 | 9 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.125	0.125
$11 | 6 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.099	0.099
$11 | 3 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.065	0.065
$11 | 0 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0	0
$12
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Stock price (in usd per share)	$ 12	$ 12
$12 | 57 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.294	0.294
$12 | 54 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.291	0.291
$12 | 51 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.287	0.287
$12 | 48 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.283	0.283
$12 | 45 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.279	0.279
$12 | 42 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.274	0.274
$12 | 39 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.269	0.269
$12 | 36 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.263	0.263
$12 | 33 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.257	0.257
$12 | 30 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.250	0.250
$12 | 27 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.242	0.242
$12 | 24 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.233	0.233
$12 | 21 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.223	0.223
$12 | 18 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.211	0.211
$12 | 15 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.197	0.197
$12 | 12 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.181	0.181
$12 | 9 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.162	0.162
$12 | 6 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.137	0.137
$12 | 3 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.104	0.104
$12 | 0 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.042	0.042
$13
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Stock price (in usd per share)	$ 13	$ 13
$13 | 57 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.310	0.310
$13 | 54 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.307	0.307
$13 | 51 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.304	0.304
$13 | 48 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.301	0.301
$13 | 45 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.298	0.298
$13 | 42 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.294	0.294
$13 | 39 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.290	0.290
$13 | 36 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.285	0.285
$13 | 33 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.280	0.280
$13 | 30 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.274	0.274
$13 | 27 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.268	0.268
$13 | 24 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.260	0.260
$13 | 21 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.252	0.252
$13 | 18 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.242	0.242
$13 | 15 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.230	0.230
$13 | 12 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.216	0.216
$13 | 9 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.199	0.199
$13 | 6 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.178	0.178
$13 | 3 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.150	0.150
$13 | 0 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.115	0.115
$14
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Stock price (in usd per share)	$ 14	$ 14
$14 | 57 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.324	0.324
$14 | 54 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.322	0.322
$14 | 51 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.320	0.320
$14 | 48 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.317	0.317
$14 | 45 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.315	0.315
$14 | 42 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.312	0.312
$14 | 39 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.309	0.309
$14 | 36 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.305	0.305
$14 | 33 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.301	0.301
$14 | 30 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.297	0.297
$14 | 27 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.291	0.291
$14 | 24 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.285	0.285
$14 | 21 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.279	0.279
$14 | 18 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.271	0.271
$14 | 15 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.262	0.262
$14 | 12 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.250	0.250
$14 | 9 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.237	0.237
$14 | 6 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.219	0.219
$14 | 3 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.197	0.197
$14 | 0 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.179	0.179
$15
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Stock price (in usd per share)	$ 15	$ 15
$15 | 57 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.337	0.337
$15 | 54 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.335	0.335
$15 | 51 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.333	0.333
$15 | 48 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.332	0.332
$15 | 45 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.330	0.330
$15 | 42 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.328	0.328
$15 | 39 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.325	0.325
$15 | 36 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.323	0.323
$15 | 33 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.320	0.320
$15 | 30 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.316	0.316
$15 | 27 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.313	0.313
$15 | 24 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.308	0.308
$15 | 21 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.304	0.304
$15 | 18 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.298	0.298
$15 | 15 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.291	0.291
$15 | 12 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.282	0.282
$15 | 9 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.272	0.272
$15 | 6 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.259	0.259
$15 | 3 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.243	0.243
$15 | 0 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.233	0.233
$16
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Stock price (in usd per share)	$ 16	$ 16
$16 | 57 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.348	0.348
$16 | 54 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.347	0.347
$16 | 51 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.346	0.346
$16 | 48 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.344	0.344
$16 | 45 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.343	0.343
$16 | 42 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.342	0.342
$16 | 39 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.340	0.340
$16 | 36 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.339	0.339
$16 | 33 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.337	0.337
$16 | 30 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.335	0.335
$16 | 27 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.332	0.332
$16 | 24 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.329	0.329
$16 | 21 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.326	0.326
$16 | 18 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.322	0.322
$16 | 15 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.317	0.317
$16 | 12 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.312	0.312
$16 | 9 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.305	0.305
$16 | 6 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.296	0.296
$16 | 3 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.286	0.286
$16 | 0 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.281	0.281
$17
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Stock price (in usd per share)	$ 17	$ 17
$17 | 57 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.358	0.358
$17 | 54 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.357	0.357
$17 | 51 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.357	0.357
$17 | 48 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.356	0.356
$17 | 45 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.356	0.356
$17 | 42 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.355	0.355
$17 | 39 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.354	0.354
$17 | 36 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.353	0.353
$17 | 33 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.352	0.352
$17 | 30 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.351	0.351
$17 | 27 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.350	0.350
$17 | 24 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.348	0.348
$17 | 21 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.347	0.347
$17 | 18 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.345	0.345
$17 | 15 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.342	0.342
$17 | 12 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.339	0.339
$17 | 9 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.336	0.336
$17 | 6 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.331	0.331
$17 | 3 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.326	0.326
$17 | 0 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.323	0.323
$18
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Stock price (in usd per share)	$ 18	$ 18
$18 | 57 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.365	0.365
$18 | 54 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.365	0.365
$18 | 51 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.365	0.365
$18 | 48 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.365	0.365
$18 | 45 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.365	0.365
$18 | 42 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.364	0.364
$18 | 39 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.364	0.364
$18 | 36 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.364	0.364
$18 | 33 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.364	0.364
$18 | 30 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.364	0.364
$18 | 27 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.364	0.364
$18 | 24 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.364	0.364
$18 | 21 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.364	0.364
$18 | 18 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.363	0.363
$18 | 15 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.363	0.363
$18 | 12 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.363	0.363
$18 | 9 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.362	0.362
$18 | 6 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.362	0.362
$18 | 3 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.361	0.361
$18 | 0 months
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items]
Exercise conversion rate of warrants (share per share)	0.361	0.361

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Stockholders' Equity - Schedule of Stock Reserved for Issuance (Details) - shares	Dec. 31, 2019	Dec. 31, 2018
Class of Stock [Line Items]
Class A-1 Common Stock reserved for issuance	29,710,007	8,898,261
Warrants
Class of Stock [Line Items]
Class A-1 Common Stock reserved for issuance	22,333,308	3,275,704
Warrants | Options
Class of Stock [Line Items]
Class A-1 Common Stock reserved for issuance	2,376,700	5,622,557
Warrants | Class A-2 Common Stock
Class of Stock [Line Items]
Class A-1 Common Stock reserved for issuance	4,999,999	0

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Video Gaming Terminal Fees (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Aug. 01, 2018	Jul. 31, 2018
Video Gaming Terminal Fees [Abstract]
Administrative fee, percentage payable to third-party				0.8513%	0.7275%
Video gaming terminal fees, tax and administrative fee	$ 133.2	$ 99.1	$ 73.8
Licensed video gaming location net terminal income share	$ 138.8	$ 111.4	$ 83.2

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Employee Benefit Plans (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Defined Contribution Plan Disclosure [Line Items]
Annual vesting percentage	20.00%
Employer matching contribution, percentage	50.00%
Employer matching contribution, percent of employee's pay	5.00%
401(k) benefit plan expense	$ 0.6	$ 0.5	$ 0.2
Bonus expense	2.1	1.8	$ 1.6
Accrued bonuses	$ 1.7	$ 1.7
20 percent vested
Defined Contribution Plan Disclosure [Line Items]
Vesting period	6 years
Fully vested
Defined Contribution Plan Disclosure [Line Items]
Vesting period	2 years

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Stock-based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 31, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum percentage of common stock outstanding allowed for awards						10.00%
Options granted (in shares)						0	108,288	612,771
Stock option compensation expense		$ 1.3	$ 0.1	$ 2.4	$ 0.3
Number of shares outstanding which vested (in shares)						1,228,399	3,832,424	4,122,910	4,512,952
Fair value of vested options						$ 1.2	$ 0.6	$ 0.8
Unrecognized compensation expense						$ 0.9	$ 0.9
Weighted-average exercise price of non-vested awards (in usd per share)						$ 2.86	$ 2.52
Weighted-average remaining contractual term of vested awards						1 year 10 months 24 days	3 years 2 months 12 days
Weighted-average remaining contractual term of outstanding awards						2 years 8 months 12 days	2 years 9 months 18 days
Intrinsic value of options exercised						$ 20.7	$ 4.4	1.7
Excess tax benefits from share based compensation						$ (0.1)	$ 1.0	$ 0.1
Class A-1 Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)		1,200,000
Vesting period		5 years
Key Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares outstanding which vested (in shares)						80,098	1,137,176
Weighted-average remaining contractual term						1 year 10 months 24 days	3 years 2 months 12 days
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period								5 years
Award termination period	10 years					10 years
Purchase price of common stock as a percent						100.00%
Stock option compensation expense						$ 2.2	$ 0.5	$ 0.8
Options | Class A-1 Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Class A1 common stock authorized (in shares)	6,000,000
Options | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period						3 years	3 years
Options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period						5 years	5 years
RSU
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted (in shares)				1,300,000
Estimated grant date fair value of options and RSUs granted				$ 20.2
RSU | Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period				5 years
RSU | Minimum | Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period				6 months
RSU | Maximum | Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period				1 year

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Stock-based Compensation - Schedule of Assumptions for Options Granted (Details) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	0	108,288	612,771
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected approximate volatility	0.00%	35.00%	35.00%
Expected dividends	0.00%	0.00%	0.00%
Expected term (in years)			5 years
Risk-free rate	0.00%
Risk-free rate, minimum		2.41%	1.81%
Risk-free rate, maximum		2.62%	2.18%
Stock price (in usd per share)	$ 0
Options | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)		3 years
Stock price (in usd per share)		$ 4	$ 3
Options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)		5 years
Stock price (in usd per share)		$ 5	$ 4

XML

Stock-based Compensation - Summary of Options Granted and Range in Vesting Periods (Details) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	0	108,288	612,771
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			5 years
Options | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years	3 years
Options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	5 years	5 years

XML

Stock-based Compensation - Schedule of Vested Stock Options (Details) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Shares
Number of shares outstanding (in shares)	3,832,424	4,122,910	4,512,952
Granted (in shares)	0	108,288	612,771
Exercised (in shares)	(2,590,274)	(284,642)	(867,024)
Forfeited/expired (in shares)	(13,751)	(114,132)	(135,789)
Number of shares outstanding (in shares)	1,228,399	3,832,424	4,122,910
Weighted Average Grant Date Fair Value
Weighted average grant date fair value, outstanding (in usd per share)	$ 0.73	$ 0.69	$ 0.60
Granted (in usd per share)	0	1.73	1.27
Exercised (in usd per share)	0.62	0.40	0.59
Forfeited/expired (in usd per share)	0.77	1.03	0.96
Weighted average grant date fair value, outstanding (in usd per share)	0.96	0.73	0.69
Weighted Average Exercise Price
Weighted average exercise price, outstanding (in usd per share)	2.16	2.03	1.75
Granted (in usd per share)	0	5.10	3.72
Exercised (in usd per share)	1.84	1.15	1.62
Forfeited/expired (in usd per share)	2.33	2.96	2.73
Weighted average exercise price, outstanding (in usd per share)	$ 2.91	$ 2.16	$ 2.03

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Stock-based Compensation - Summary of Nonvested Stock Options (Details) - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Shares
Number of shares outstanding (in shares)	1,709,589	2,735,572	3,639,156
Granted (in shares)	0	108,288	612,771
Vested (in shares)	(547,537)	(1,032,910)	(1,380,566)
Forfeited (in shares)	(13,751)	(101,361)	(135,789)
Number of shares outstanding (in shares)	1,148,301	1,709,589	2,735,572
Weighted Average Grant Date Fair Value
Weighted average grant date fair value, outstanding (in usd per share)	$ 0.82	$ 0.73	$ 0.60
Granted (in usd per share)	0	1.73	1.27
Vested (in usd per share)	0.85	0.62	0.60
Forfeited (in usd per share)	0.77	1.07	0.96
Weighted average grant date fair value, outstanding (in usd per share)	$ 0.95	$ 0.82	$ 0.73

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Income Taxes - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Income tax expense	$ (5,055)	$ 1,771	$ (5,194)	$ 3,449	$ 5,199	$ 4,422	$ 1,754
Tax credit carryforward					$ 500	$ 300
Effective tax rate	19.20%	29.00%	18.30%	29.30%

XML

Description of Business

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

Description of Business

Accel Entertainment, Inc.’s (and together with its subsidiaries, the “Company”) wholly owned subsidiary, Accel Entertainment Gaming LLC, is a terminal operator licensed by the State of Illinois Gaming Board since March 15, 2012. Its terminal operator license allows the Company to install and operate video gaming terminals in licensed video gaming locations throughout the State of Illinois as approved by individual municipalities. The Company also operates redemption terminals, which also function as automated teller machines (“ATMs”) at its licensed video gaming locations, and amusement equipment at certain locations. The Company is subject to various federal, state and local laws and regulations in addition to gaming regulations. The terminal operator license, which is not transferable or assignable, requires compliance with applicable regulations and the license is renewable annually unless sooner cancelled or terminated.

The Company operates 11,108 and 8,082 video gaming terminals across 2,335 and 1,762 locations in the State of Illinois as of June 30, 2020 and 2019, respectively.

On November 20, 2019, the Company consummated a business combination which was accounted for as a reverse recapitalization. For more details on the reverse recapitalization, see Note 3 to the Company’s Consolidated Financial Statements as presented in its Annual Report on Form 10-K for the year ended December 31, 2019. As a result of the reverse recapitalization, all references to numbers of common shares and per common share data for 2019 in these condensed consolidated financial statements and related notes have been retroactively adjusted to account for the effect of the reverse recapitalization.

The Company is an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) following the consummation of the reverse recapitalization. The Company has elected to use this extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act and as a result of this election, its financial statements may not be comparable to companies that comply with public company effective dates. The Company will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following June 30, 2022, (b) in which Accel has total annual gross revenue of at least $1.0 billion or (c) in which Accel is deemed to be a large accelerated filer, which means the market value of Class A-1 Shares that is held by non-affiliates exceeds $700 million as of the last business day of the prior second fiscal quarter, and (ii) the date on which Accel has issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Impact of COVID-19 on the Condensed Consolidated Financial Statements

In response to the COVID-19 outbreak, the Illinois Gaming Board (“IGB”) made the decision to shut down all video gaming terminals (“VGTs”) across the State of Illinois starting at 9:00 p.m. on March 16, 2020 and ultimately extended the shutdown through June 30, 2020. The temporary shutdown of Illinois video gaming impacted all of the gaming days during the three months ended June 30, 2020 and 106 of the 182 gaming days (or 58% of gaming days) during the six months ended June 30, 2020. In light of these events and their effect on the Company’s employees and licensed establishment partners, the Company took action to position the Company to help mitigate the effects of the temporary cessation of operations by, among other things, furloughing approximately 90% of its employees and deferring certain payments to major vendors. Additionally, members of the Company’s senior management decided to voluntarily forgo their base salaries until the resumption of video gaming operations. Beginning in early June, the Company started reinstating employees from furlough in anticipation of resuming operations on July 1, 2020.

As a result of these developments, the Company’s revenues, results of operations and cash flows have been materially affected, and the Company expects it to continue for at least as long as COVID-19 is a threat to the

public health. The situation is rapidly changing and additional impacts to the business may arise that the Company is not aware of currently.

The Company incurred non-recurring, one-time expenses of $1.3 million and $1.9 million for the three and six months ended June 30, 2020, respectively, for costs to provide benefits (e.g. health insurance) for furloughed employees during the COVID-19 shutdown. These costs are included within other expenses, net. The Company also spent $1.4 million in capital costs related to the purchase of IGB-mandated spacers for its VGTs to promote social distancing requirements within the gaming area and incurred operating expenses of $0.3 million related to cleaning, disinfecting and sanitizing supplies.

As part of the Company’s analysis of the financial reporting impacts of the COVID-19 outbreak, and corollary response in the State of Illinois, including the temporary shutdown of our gaming operations, the Company evaluated its goodwill and long-lived assets for potential impairment triggers as of June 30, 2020. As a result of this analysis, no impairment losses were recorded. The Company will continue to monitor its assets for potential impairment losses in future periods. While the IGB has announced the resumption of all video gaming activities effective July 1, 2020, it is possible that it or the State of Illinois may order a shutdown by region (currently 11 regions), or a complete suspension of video gaming in the state, or institute stay-at-home, closure or other similar orders or measures in the future in response to a resurgence of COVID-19 or other events. If this were to occur, the Company could recognize impairment losses which could be material.

The Company also engaged a 3rd party valuation firm to assist in determining the fair value of its investment in convertible notes as of June 30, 2020. The valuation concluded that the carrying amount of the investment in the convertible notes approximates the fair value in all material respects, as of June 30, 2020.

Description of Business

Accel Entertainment, Inc. and its subsidiaries (“the Company”) wholly owned subsidiary, Accel Entertainment Gaming LLC, is a terminal operator licensed by the State of Illinois Gaming Board since March 15, 2012. Its terminal operator license allows the Company to install and operate video gaming terminals in licensed video gaming locations throughout the State of Illinois as approved by individual municipalities. The Company also operates redemption terminals, which also function as automated teller machines (“ATMs”) at its licensed video gaming locations, and amusement equipment at certain locations. The Company is subject to various federal, state and local laws and regulations in addition to gaming regulations. The terminal operator license, which is not transferable or assignable, requires compliance with applicable regulations and the license is renewable annually unless sooner cancelled or terminated.

The Company operates 10,499 and 7,649 video gaming terminals across 2,312 and 1,686 locations in the State of Illinois as of December 31, 2019 and 2018, respectively.

On November 20, 2019, TPG Pace Holdings Corp., (“TPG Holdings”) entered into a Transaction Agreement with each of the shareholders of Accel Entertainment, Inc. (“Accel”). Pursuant to the Transaction Agreement and in connection therewith, TPG Holdings acquired, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock from the Accel shareholders. In connection with the closing of the transaction, TPG Holdings changed its name to Accel Entertainment, Inc. For more information on this transaction, see Note 3.

The Company is an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) following the consummation of the merger of TPG Pace Holding Corp. and Accel Entertainment, Inc. The Company has elected to use this extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act and as a result of this election, its financial statements may not be comparable to companies that comply with public company effective dates. The Company will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following June 30, 2022, (b) in which Accel has total annual gross revenue of at least $1.0 billion or (c) in which Accel is deemed to be a large accelerated filer, which means the market value of Class A-1 Shares that is held by non-affiliates exceeds $700 million as of the last business day of the prior second fiscal quarter, and (ii) the date on which Accel has issued more than $1.0 billion in non-convertible debt during the prior three-year period.

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Income Taxes - Schedule of Components of Income Tax Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Current provision
Federal					$ (85)	$ (100)	$ 173
State					43	222	62
Total current provision					(42)	122	235
Deferred provision
Federal					3,740	3,256	955
State					1,501	1,044	564
Total deferred provision					5,241	4,300	1,519
Total income tax expense	$ (5,055)	$ 1,771	$ (5,194)	$ 3,449	$ 5,199	$ 4,422	$ 1,754

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Income Taxes - Reconciliation of Expected Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Computed "expected" tax (benefit) expense					$ (139)	$ 3,197	$ 3,422
Increase (decrease) in income taxes resulting from:
State income taxes					1,535	1,219	2
Return-to-provision					49	0	0
Permanent items					4,054	(264)	190
Enacted rate change					0	0	(1,755)
Other					(300)	270	(105)
Total income tax expense	$ (5,055)	$ 1,771	$ (5,194)	$ 3,449	$ 5,199	$ 4,422	$ 1,754

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Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Net operating loss carryforwards	$ 6,633	$ 4,192
Location contracts acquired	4,699	1,887
Other	260	1,032
Total deferred tax assets	11,592	7,111
Deferred tax liabilities:
Property and equipment	24,568	16,006
Deferred tax liabilities, net	$ (12,976)	$ (8,895)

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Income Taxes - Summary of Carryforwards of Net Operating Losses (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Federal net operating losses
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 27,873	$ 17,942
State net operating losses
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 14,454	$ 5,655

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Commitments and Contingencies - Narrative (Details)		6 Months Ended	12 Months Ended
	Jul. 02, 2019 USD ($)	Jun. 30, 2020 location defendent	Dec. 31, 2019 USD ($) defendent location	Dec. 31, 2018 USD ($) location shares	Dec. 31, 2017 USD ($) location shares	Jun. 30, 2019 location
Loss Contingencies [Line Items]
Rent expense			$ 300,000	$ 300,000	$ 400,000
Number of defendant establishments | defendent		10	10
Number of video gaming locations | location		2,335	2,312	1,686		1,762
Note receivable issued to stockholder					(975,000)
Loss due to settlement agreements				$ 400,000
Illinois Gold Rush, Inc. vs. The Company
Loss Contingencies [Line Items]
Settlement amount paid					$ 3,500,000
Number of video gaming locations | location					4
Decrease in location contract assets					$ 1,000,000.0
Illinois Gold Rush, Inc. vs. The Company | Class A Common Stock
Loss Contingencies [Line Items]
Number of shares issued in settlement (in shares) | shares					32,745
Settlement of notes receivable (in shares) | shares				(46,667)
Illinois Gold Rush, Inc. vs. The Company | Stockholder Note Receivable
Loss Contingencies [Line Items]
Note receivable issued to stockholder					$ 3,300,000
Illinois Gold Rush, Inc. vs. The Company | Treasury Stock
Loss Contingencies [Line Items]
Settlement of notes receivable (in shares) | shares				46,667
Illinois Gaming Investors, LLC vs. The Company
Loss Contingencies [Line Items]
Damages sought	$ 10,000,000

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Commitments and Contingencies - Schedule of Future Minimum Payments (Details) $ in Thousands	Dec. 31, 2019 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2020	$ 273
2021	142
2022	104
2023	65
2024	0
Total	$ 584

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Related-Party Transactions (Details) - USD ($)			3 Months Ended		6 Months Ended		12 Months Ended
		Nov. 20, 2019	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Related Party Transaction [Line Items]
Payments on consideration payable					$ 4,004,000	$ 452,000	$ 2,321,000	$ 814,000	$ 351,000
Net equity infusion from reverse recapitalization		$ 29,300,000					29,262,000		10,794,000
Professional service fees paid by shareholder							2,891,000	0	0
Officer and Shareholder
Related Party Transaction [Line Items]
Stockholder notes receivable								1,462,779
Tax benefit due from officer and shareholder								500,000
Additional Paid-In Capital
Related Party Transaction [Line Items]
Net equity infusion from reverse recapitalization	[1]						21,847,000		10,670,000
Consideration Payable to Previous Sellers in Business Acquisitions | Fair Share Seller | Director
Related Party Transaction [Line Items]
Contingent consideration			$ 2,000,000.0		1,700,000		2,000,000.0	1,000,000.0
Payments on consideration payable					200,000	400,000	900,000
Consideration Payable to Previous Sellers in Business Acquisitions | Fair Share Seller | Employee
Related Party Transaction [Line Items]
Payments on consideration payable								0
Consideration Payable to Previous Sellers in Business Acquisitions | G3 Seller | Employee
Related Party Transaction [Line Items]
Contingent consideration			3,100,000		400,000		3,100,000	1,000,000.0
Payments on consideration payable					2,500,000	0	400,000	0
Legal Fees for General Legal and Business Matters | Much Shelist | Affiliated Entity
Related Party Transaction [Line Items]
Legal fees					$ 100,000	$ 200,000	600,000	$ 300,000	$ 600,000
Legal Fees for General Legal and Business Matters | Additional Paid-In Capital | Much Shelist | Affiliated Entity
Related Party Transaction [Line Items]
Net equity infusion from reverse recapitalization			$ 200,000
Investment Banking Services and Assistance with Reverse Recapitalization | The Raine Group | Affiliated Entity
Related Party Transaction [Line Items]
Payments to related party							$ 11,000,000
Payments for Public Accounting Firm Services Rendered on Behalf of the Company | Class A Common Stockholder
Related Party Transaction [Line Items]
Professional service fees paid by shareholder				$ 2,900,000

[1] See Note 3 for reverse recapitalization effects herein.

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						6 Months Ended				12 Months Ended
	Jun. 30, 2020		Mar. 31, 2020	Jun. 30, 2019		Mar. 31, 2019	Jun. 30, 2020		Jun. 30, 2019		Dec. 31, 2019		Dec. 31, 2018		Dec. 31, 2017
Earnings Per Share [Abstract]
Net (loss) income	$ (21,274)		$ (1,966)	$ 4,328		$ 3,995	$ (23,240)		$ 8,323		$ (5,864)		$ 10,803		$ 8,311
Basic weighted average outstanding shares of common stock (in shares)	78,317,000	[1]		58,605,000	[1]		78,161,000	[1]	57,896,000	[1]	61,850,000	[2]	57,621,000	[2]	56,321,000	[2]
Dilutive effect of stock-based awards for common stock (in shares)	0			1,120,000			0		1,117,000		0		1,605,000		666,000
Dilutive effect of stockholder notes receivable for common stock (in shares)	0			917,000			0		948,000		0		407,000		53,000
Dilutive effect of warrants for common stock (in shares)	0			1,263,000			0		1,781,000		0		2,549,000		2,368,000
Diluted weighted average outstanding shares of common stock (in shares)	78,317,000	[1]		61,904,000	[1]		78,161,000	[1]	61,742,000	[1]	61,850,000	[2]	62,182,000	[2]	59,408,000	[2]
Earnings per share - basic (in usd per share)	$ (0.27)	[1]		$ 0.07	[1]		$ (0.30)	[1]	$ 0.14	[1]	$ (0.09)	[2]	$ 0.19	[2]	$ 0.15	[2]
Earnings per share - diluted (in usd per share)	$ (0.27)	[1]		$ 0.07	[1]		$ (0.30)	[1]	$ 0.13	[1]	$ (0.09)	[2]	$ 0.17	[2]	$ 0.14	[2]
Anti-dilutive options excluded from calculation of diluted EPS (in shares)	5,401,791						5,715,823				28,561,724		439,167		629,960

[1] Per share and share amounts for 2019 have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 1.

[2] Per share and share amounts have been retroactively restated to give effect to the reverse recapitalization that is discussed in Note 3.

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Subsequent Events (Details)						12 Months Ended
	Jul. 22, 2020 USD ($)	Jul. 14, 2020 shares	Jan. 14, 2020 shares	Oct. 11, 2019 USD ($)	Jul. 19, 2019 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Subsequent Event [Line Items]
Consideration transferred							$ 63,745,000
Cash purchase price						$ 100,857,000	51,394,000	$ 45,129,000
Purchase of investment in convertible notes				$ 25,000,000.0	$ 5,000,000.0	$ 30,000,000	$ 0	$ 0
Subsequent Event
Subsequent Event [Line Items]
Exercise conversion rate of warrants (share per share)		0.250
Class A-1 Common Stock | Subsequent Event
Subsequent Event [Line Items]
Conversion of stock, shares converted (in shares) | shares		3,784,416
Tranche I - EBITDA for last 12 months or 20 trading days in consecutive 30 day trading period | Class A-2 Common Stock
Subsequent Event [Line Items]
Conversion of stock, shares converted (in shares) | shares			1,666,666
Tranche I - EBITDA for last 12 months or 20 trading days in consecutive 30 day trading period | Class A-2 Common Stock | Subsequent Event
Subsequent Event [Line Items]
Conversion of stock, shares converted (in shares) | shares			1,666,666
Tom's Amusement | Subsequent Event
Subsequent Event [Line Items]
Consideration transferred	$ 3,600,000
Cash purchase price	2,100,000
Contingent consideration	$ 1,500,000
Contingent consideration, first installment term	18 months
Contingent consideration, second installment term	24 months
Contingent consideration, installment amount	$ 750,000

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Summary of Significant Accounting Policies

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of presentation and preparation: The condensed consolidated financial statements and accompanying notes were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements include the accounts of the Company and of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the dates and periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. In preparing our condensed consolidated financial statements, we applied the same significant accounting policies as described in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Any significant changes to those accounting policies are discussed below. Interim results are not necessarily indicative of results for a full year.

Adopted accounting pronouncements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-19”), Revenue from Contracts with Customers (Topic 606), which amends the existing revenue recognition guidance and creates a new topic for Revenue from Contracts with Customers. The guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance also substantially revises required interim and annual disclosures. The Company, as an emerging growth company, elected to use

the non-public effective date and adopted the standard in the fourth quarter of 2019 for the annual period ended December 31, 2019. The Company also elected the modified retrospective adoption approach and applied the standard to all contracts open as of January 1, 2019. The Company’s quarterly financial statements and disclosure for the first six months of 2019 reflect the previous accounting standard of FASB Accounting Standards Codification (“ASC”) 605, Revenue Recognition, and will not be restated for the adoption of Topic 606. The cumulative impact of the new revenue standard for fiscal year 2019 was recorded in the fourth quarter of 2019 and reflects the adjustment as if the Company adopted the standard as of January 1, 2019. The timing and amount of revenue recognized by the Company did not change upon the adoption of the new standard, however the Company’s accounting for route acquisition costs was impacted. ASC 340-40, Other Assets and Deferred Costs—Contracts With Customers (“ASC 340-40”), issued in conjunction with ASU 2014-09, provides updated guidance around accounting for the incremental costs of obtaining a contract with a customer and for the costs incurred to fulfill a contract with a customer. ASC 340-40 states that an entity should amortize contract cost assets “on a systemic basis that is consistent with the transfer to the customer of the good or services to which the asset relates,” which typically corresponds to the period in which revenue will be recognized. The Company chose straight-line amortization of the contracts as it felt that best depicted when revenue would be recognized and when customers are visiting the gaming establishments. When determining the appropriate amortization period under ASC 340-40, the Company evaluated the impact of any renewal clauses that are likely to be exercised. The Company focused on whether commissions paid for renewals were commensurate with commissions paid on the original contract. The Company determined the renewal commissions were not commensurate and the amortization period should include expected renewals. As such, the period over which route and customer acquisition costs are amortized was extended to include expected renewals which resulted in an increase to the average life to 12.4 years.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which intends to simplify the guidance by removing certain exceptions to the general principles and clarifying or amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company early adopted the new standard in Q2 2020 (effective January 1, 2020) on a prospective basis. The adoption of the new standard will not have a material impact on the Company’s full year effective tax rate.

Use of estimates: The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates used by the Company include, among other things, the useful lives for depreciable and amortizable assets, income tax provisions, the evaluation of the future realization of deferred tax assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with business acquisitions, the selection of useful lives for depreciable and amortizable assets in conjunction with business acquisitions, the valuation of level 3 investments, contingencies, and the expected term of share-based compensation awards and stock price volatility when computing share-based compensation expense. The Company also estimated stock prices prior to the reverse recapitalization discussed in Note 1 when computing share-based compensation expense. Actual results may differ from those estimates.

Change in estimate: During the first quarter of 2020, the Company conducted a review of its estimate of depreciable lives for its video gaming terminals and equipment. As a result of this review, the Company extended the useful lives of its video gaming terminals and equipment from 7 to 10 years as the equipment is lasting longer than originally estimated. The Company has many video gaming terminals and equipment that were purchased

when the Company started operations that are still being used today. The impact of this change in estimate for the three and six months ended June 30, 2020, was as follows (in thousands):

	Three months ended June 30, 2020		Six months ended June 30, 2020
Decrease to depreciation expense	$	1,898	$	4,511
Decrease to net loss	$	1,533	$	3,687
Decrease to loss per share	$	0.02	$	0.05

Segment information: The Company operates as a single operating segment. The Company’s chief operating decision maker (“CODM”) is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM assesses the Company’s performance and allocates resources based on consolidated results, and this is the only discrete financial information that is regularly reviewed by the CODM.

Cash and cash equivalents: Cash and cash equivalents include bank deposit accounts; term bank deposit accounts; uncollected cash in the Company’s video gaming terminals, ATMs, and redemption terminals; and cash in Company vaults.

The Company’s policy is to limit the amount of credit exposure to any one financial institution. The Company maintains its cash in accounts which may at times exceed Federal Deposit Insurance Corporation insured limits. The Company has not experienced any losses in such accounts.

Property and equipment: Property and equipment are stated at cost or fair value at the date of acquisition. Maintenance and repairs are charged to expense as incurred. Major additions, replacements and improvements are capitalized. Spare parts are included in other current assets when acquired and are expensed when used to repair equipment. Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video gaming terminals and equipment	10
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3-5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15-29

Leasehold improvements are amortized over the shorter of the useful life or the lease.

Development costs directly associated with the acquisition, development and construction of a project are capitalized as a cost of the project during the periods in which activities necessary to prepare the property for its intended use are in progress. Interest costs associated with major construction projects are capitalized as part of the cost of the constructed assets. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using the weighted-average cost of borrowing. Capitalization of interest ceases when the project (or discernible portions of the project) is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

Stock-based compensation: The Company grants common stock options and/or restricted stock units to certain employees and officers. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as general and administrative expense over the employee’s requisite service period.

Recent accounting pronouncements: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. In July 2018, the FASB also issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method allowing the standard to be applied at the adoption date. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for the Company’s fiscal year beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, unless the Company disqualifies as an emerging growth company, in which case earlier adoption may be required. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is assessing impact of the standard on its condensed consolidated financial statements.

Summary of Significant Accounting Policies

Basis of presentation and preparation: The consolidated financial statements and accompanying notes were prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company and of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Adopted accounting pronouncements: In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the existing revenue recognition and creates a new topic for Revenue from Contracts with Customers. The guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance also substantially revises required interim and annual disclosures. The Company, as an Emerging Growth Company (“EGC”), elected to use the non-public

effective date and adopted the standard in the fourth quarter of 2019 for the annual period ended December 31, 2019. The Company also elected the modified retrospective adoption approach and applied the standard to all contracts open as of January 1, 2019. The Company’s quarterly financial statement disclosure for the first nine months of 2019 reflect the previous accounting standard of FASB ASC 605, Revenue Recognition, and will not be restated for the adoption of Topic 606. The cumulative impact of the new revenue standard for fiscal year 2019 was recorded in the fourth quarter and reflects the adjustment as if the Company adopted the standard as of January 1, 2019. The timing and amount of revenue recognized by the Company did not change upon the adoption of the new standard, however the Company’s accounting for route acquisition costs was impacted. ASC 340-40, Other Assets and Deferred Costs—Contracts With Customers (“ASC 340-40”), issued in conjunction with ASU 2014-09, provides updated guidance around accounting for the incremental costs of obtaining a contract with a customer and for the costs incurred to fulfill a contract with a customer. ASC 340-40 states that an entity should amortize contract cost assets “on a systemic basis that is consistent with the transfer to the customer of the good or services to which the asset relates,” which typically corresponds to the period in which revenue will be recognized. The Company chose straight-line amortization of the contracts as it felt that best depicted when revenue would be recognized and when customers are visiting the gaming establishments. When determining the appropriate amortization period under ASC 340-40, the Company evaluated the impact of any renewal clauses that are likely to be exercised. The Company focused on whether commissions paid for renewals were commensurate with commissions paid on the original contract. The Company determined the renewal commissions were not commensurate and the amortization period should include expected renewals. As such, the period over which route and customer acquisition costs are amortized was extended to include expected renewals which resulted in an increase to the average life to 12.4 years. The Company recorded a cumulative effect adjustment, net of taxes, to accumulated deficit of $2.6 million relating to the decreased in accumulated amortization of route acquisition costs. In addition, the Company’s current year amortization expense decreased by $1.1 million.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU No. 2017-01 requires entities to use a screen test to determine when an integrated set of assets and activities is not a business or if the integrated set of assets and activities needs to be further evaluated against the framework. The Company adopted ASU No. 2017-01 on January 1, 2019.

Use of estimates: The preparation of consolidated financial statements requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the consolidated financial statements and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates used by the Company include, among other things, the useful lives for depreciable and amortizable assets, income tax provisions, the evaluation of the future realization of deferred tax assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with business acquisitions, the initial selection of useful lives for depreciable and amortizable assets in conjunction with business acquisitions, contingencies, and the expected term of share-based compensation awards, stock price volatility and estimated stock prices prior to the reverse recapitalization discussed in Note 3 when computing share-based compensation expense. Actual results may differ from those estimates.

Segment information: The Company operates as a single operating segment. The Company’s chief operating decision maker (“CODM”) is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM assesses the Company’s performance

and allocates resources based on consolidated results, and this is the only discrete financial information that is regularly reviewed by the CODM.

Cash: Cash includes bank deposit accounts; uncollected cash in the Company’s video gaming terminals, ATMs, and redemption terminals; and cash in Company vaults.

The Company’s policy is to limit the amount of credit exposure to any one financial institution. The Company maintains its cash in accounts which may at times exceed Federal Deposit Insurance Corporation (“FDIC”) insured limits. The Company has not experienced any losses in such accounts.

Convertible notes: At acquisition, an entity shall classify debt securities as trading, available-for-sale, or held-to-maturity. While the Company has no the intention of selling the notes, it cannot classify them as held-to-maturity due to the conversion feature. Therefore, the Company has classified its investment in convertible notes as available for sale.

Property and equipment: Property and equipment are stated at cost or fair value at the date of acquisition. Maintenance and repairs are charged to expense as incurred. Major additions, replacements and improvements are capitalized. Spare parts are included in other current assets when acquired and are expensed when used to repair equipment. Depreciation has been computed using the straight-line method over the following estimated useful lives:

	Years
Video game terminals and equipment	7
Amusement and other equipment	7
Office equipment and furniture	7
Computer equipment and software	3 - 5
Leasehold improvements	5
Vehicles	5
Buildings and improvements	15 - 29

Leasehold improvements are amortized over the shorter of the useful life or the lease.

Development costs directly associated with the acquisition, development and construction of a project are capitalized as a cost of the project during the periods in which activities necessary to prepare the property for its intended use are in progress. Interest costs associated with major construction projects are capitalized as part of the cost of the constructed assets. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using the weighted-average cost of borrowing. Capitalization of interest ceases when the project (or discernible portions of the project) is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed.

Concentration of credit risk: The Company’s operations are centralized primarily in the State of Illinois. Should there be favorable or unfavorable changes to the Illinois Gaming Act there may be an impact on the Company’s results of operations. The Company has high concentrations of locations within certain municipalities in Illinois which could impact the Company if these municipalities change their gaming laws.

Fair value of financial instruments: The Company’s financial instruments consist principally of cash, convertibles notes, accounts payable, contingent consideration, and bank indebtedness.

The carrying amount of cash, accounts payable and short-term borrowings approximates fair value because of the short-term maturity of these instruments. The Company estimates the fair value of its convertible notes using a binomial lattice model in which a convertible instrument is split into two separate components: a cash-only (debt) component and an equity component. The Company estimates the fair value of its debt using level two and level three inputs by discounting the future cash flows using current interest rates at which it could obtain similar borrowings in consideration of the estimated enterprise value of the Company.

Contingent consideration, which is recorded within consideration payable on the accompanying consolidated balance sheets, is measured at fair value on a recurring basis based on Level 3 inputs. The fair value recorded at December 31, 2019 and 2018 was determined using a discounted cash flow analysis. Refer to consideration payable below for disclosure of unobservable Level 3 inputs used.

Revenue recognition: The Company generates revenues in the State of Illinois from the following types of services: Video gaming terminals, Amusements and ATMs. Revenue is disaggregated by type of revenue and is presented on the face of the consolidated statements of operations.

Video gaming terminal revenue is the net cash from gaming activities, which is the difference between gaming wins and losses. Video gaming terminal revenue includes the amounts earned by the licensed video gaming locations and is recognized at the time of gaming play. Additionally, taxes and administrative expenses due to the State of Illinois are recorded as video gaming terminal revenue and video gaming expenses.

Amusement revenue represents amounts collected from machines (e.g. dart boards, digital jukeboxes, pool tables, etc.) operated at various locations and is recognized at the time the machine is used.

ATM fees and other revenue represents fees charged for the withdrawal of funds from the Company’s redemption terminals and stand-alone ATM machines and is recognized at the time of the transaction.

The Company determined that in a gaming environment, whenever a customer’s money has been accepted by a machine, the Company has an obligation (an implied contract) to provide the customer access to the game and honor the outcome of the game (in the case of video gaming terminals). The Company determined that the implied contract is entered into between the Company and customers satisfies the requirements of a contract under the new revenue standard, as (i) the contract is a legally enforceable contract with the customer, (ii) the arrangement identifies the rights of the parties, (iii) the contract has commercial substance, and (iv) the cash is received upfront from the customer so its collectability is probable. The gaming service is a single performance obligation in each implied contract with the customer. The Company applies the portfolio approach of all wins and losses by Video Gaming Terminals (“VGTs”) daily to determine the total transaction price of the portfolio of implied contracts. The Company recognizes revenue when the single performance obligation is satisfied, which is at the completion of each game.

Route and customer acquisition costs: The Company’s route and customer acquisition costs consist of fees paid at the inception of contracts entered into with third parties and licensed video gaming establishments throughout the State of Illinois which allow the Company to install and operate video gaming terminals. The route and customer acquisition costs and route and customer acquisition costs payable are recorded at the net present value of the future payments using a discount rate equal to the Company’s incremental borrowing rate associated with its long-term debt. Route and customer acquisition costs are amortized on a straight-line basis beginning on the date the location goes live and amortized over the life of the contract, which upon adoption of Topic 606, includes expected renewals. The Company records the accretion of interest on route and customer acquisitions

costs payable in the consolidated statements of operations as a component of interest expense. For locations that close prior to the end of the contractual term, the Company writes-off the net book value of the route and customer acquisition cost and route and customer acquisition cost payable and records a gain or loss in the consolidated statements of operations as a component of other expenses, net. The Company’s route and customer acquisition costs also consists of prepaid commission costs to our internal sales force of employees. The commissions paid to internal sales employees are subsequently expensed once the respective licensed video gaming location goes live and the commission is earned by the employee.

Business acquisitions: The Company evaluates the inputs, processes and outputs of each business acquisition to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and amortized over the useful life of the acquired assets. The Company accounts for acquisitions using the acquisition method and records the cost of the businesses acquired among tangible and recognized intangible assets and liabilities based upon their estimated fair values as of the acquisition date. Recognized intangibles primarily include the value of location contracts. The Company estimates the fair value of the business acquired using a combination of the cost and income approaches, depending on the specific assets or liabilities acquired. The Company estimates the value of property and equipment and other current assets and liabilities acquired based on their cost, which approximates fair value at acquisition.

Location contracts acquired: Location contracts acquired are accounted for as intangible assets and consist of expected cash flows to be generated from location contracts acquired through business and asset acquisitions. Location contracts acquired are amortized on a straight-line basis over the expected useful life of 10 years.

Goodwill: Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets acquired when accounted for using the purchase method of accounting. Goodwill is not amortized, but reviewed for impairment annually, as of October 1st, and whenever events or changes in circumstances indicate that the carrying value of the goodwill may not be recoverable. The Company compares the fair value of the reporting unit to its carrying value. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, the Company would record an impairment loss equal to the difference.

Consideration payable: Consideration payable consists of amounts payable related to certain business acquisitions as well as contingent consideration for future location performance related to certain business acquisitions (see Note 10). Consideration payable, exclusive of contingent consideration, is discounted using the Company’s incremental borrowing rate associated with its long-term debt. The contingent consideration is measured at fair value on a recurring basis. The changes in the fair value of contingent consideration are recognized within the Company’s consolidated statements of operations as other expenses, net.

Impairment of long-lived assets: Long-lived assets, which includes property and equipment, net and other assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset or asset group may not be recoverable. Impairment of the assets is measured by a comparison of the carrying amount of the asset to future undiscounted cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount of which the carrying amount of the asset exceeds the fair value of the asset. There were no indicators of impairment of long-lived assets in 2019, 2018, or 2017.

Contingent stock consideration: Contingent stock, which is provided as consideration in business acquisitions, is valued based on the fair value of stock issued. The contingent stock consideration is discounted using the

Company’s weighted average cost of capital and the accretion of interest is recorded in the consolidated statements of operations as a component of interest expense.

Stock-based compensation: The Company grants common stock options to certain employees and officers. Stock option compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as general and administrative expense over the employee’s requisite service period.

Income taxes: The Company is organized as a C-corporation and is taxable at the federal and state level. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the book basis of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of the deferred tax asset, will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in the tax laws and rates as of the date of enactment.

The Company follows ASC Topic 740, Income Taxes, for accounting for uncertainty in income taxes. The consolidated financial statements reflect expected future tax consequences of uncertain tax positions presuming the taxing authorities’ full knowledge of the position and all relevant facts. The Company files tax returns in all appropriate jurisdictions, which includes a federal tax return and three state returns. Open tax years for the federal and state returns are 2016 to 2018, which statutes expire in 2020 to 2022, respectively. When and if applicable, potential interest and penalty costs are accrued as incurred with expenses recognized in general and administrative expenses in the consolidated statements of operations.

Comprehensive income (loss): Comprehensive income (loss) is a measure of net income (loss) and all other changes in equity that result from transactions other than transactions with stockholders. Management has determined that net income (loss) is the Company’s only component of comprehensive income (loss). Accordingly, there is no difference between net income (loss) and comprehensive income (loss).

Earnings (loss) per share: The Company determines earnings per share in accordance with the authoritative guidance in ASC Topic 260, Earnings Per Share. The Company computes basic earnings per share by dividing net income (loss) by the weighted average number of shares outstanding for the applicable period. Diluted earnings per share are computed in the same manner as basic earnings per share, except that the number of shares is increased to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase would be anti-dilutive. Under the treasury stock method, the amount the employee must pay for exercising stock options and the amount of compensation cost for future service that the Company has not yet recognized are assumed to be used to repurchase shares.

Debt issuance costs: Debt issuance costs are capitalized and amortized on a straight-line basis, which approximates the effective interest method, over the contractual terms of the related loans and are presented as an offset to the related loans.

Reverse recapitalization expenses. Legal fees and other costs that were determined to be direct and incremental to the reverse recapitalization were recorded to equity as additional paid-in capital. Other fees associated with the reverse recapitalization that were not direct and incremental were recorded to other expenses, net on the consolidated statements of operations.

Advertising costs: Advertising costs are primarily comprised of marketing expenses, which are recorded within general and administrative expense within the accompanying consolidated statements of operations. Advertising costs were $4.7 million, $3.0 million, and $2.8 million for the years ended December 31, 2019, 2018, and 2017, respectively.

Recent accounting pronouncements: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. In July 2018, the FASB also issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method allowing the standard to be applied at the adoption date. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for the Company’s fiscal year beginning after December 15, 2020, including interim periods within that fiscal year, unless the Company disqualifies as an emerging growth company, in which case earlier adoption may be required. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is assessing impact of the standard on its consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which intends to simplify the guidance by removing certain exceptions to the general principles and clarifying or amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Although the Company is currently evaluating the impact of the adoption of ASU 2019-12, the Company does not expect it to have a material impact on its consolidated financial statements.

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Reverse Recapitalization

6 Months Ended

12 Months Ended

Jun. 30, 2020

Dec. 31, 2019

Reverse Recapitalization

Business and Asset Acquisitions

2019 Business Acquisition

Grand River Jackpot

On August 26, 2019, the Company entered into an agreement to acquire all issued and outstanding membership interests in Grand River Jackpot, LLC and subsidiaries (“Grand River”), a terminal operator licensed by the State of Illinois Gaming Board. On September 16, 2019, the Company completed its acquisition of Grand River. Grand River had 2,009 VGTs in over 450 licensed establishments. The Company completed this transaction in order to expand its presence within the State of Illinois.

The acquisition aggregate purchase consideration transferred totaled $113.7 million, which included: i) a cash payment made at closing of $100.0 million; ii) a subsequent cash payment of approximately $6.6 million for a working capital adjustment and; iii) contingent purchase consideration with an estimated fair value of $7.1 million. The contingent consideration represents two installment payments that are to be paid, up to a maximum amount, as follows: i) $2.5 million within 30 days following the one-year anniversary of the acquisition closing date and; ii) $7.0 million within 30 days following the three-year anniversary of the acquisition closing date. These payments are subject to adjustment based on certain performance measures included within the purchase agreement. The estimated fair value was determined based on the Company’s expected probability of future payment, discounted using Grand River’s weighted average cost of capital. The cash payment made at closing and subsequent working capital adjustment payment were both funded by the Company’s credit facilities. In light of the temporary suspension of gaming by the IGB due to the COVID-19 pandemic, the Company reversed its contingent liability for the previously mentioned $2.5 million installment payment due 30 days following the one-year anniversary of the acquisition closing date in the first quarter of 2020 as it is unlikely the performance measures for the period will be reached.

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase price has been allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The Company’s purchase price allocation was finalized in the first quarter of 2020 and the Grand River acquisition resulted in goodwill of $34.5 million as a result of a higher consideration multiple paid relative to prior similar acquisitions driven by maturity and quality of the operations and industry, including workforce and corresponding synergies, and is amortizable for income tax purposes.

The condensed consolidated statements of operations include $12.3 million of revenue and $0.8 million of net income attributable to operations of Grand River for the six months ended June 30, 2020.

2019 Asset Acquisition

On September 23, 2019, pursuant to the terms of an asset purchase agreement, the Company purchased from Illinois Gaming Systems, LLC (“IGS”) terminal use agreements and equipment representing the operations of 139 video game terminals in 29 licensed establishments. The Company has accounted for this transaction as an asset acquisition. The purchase consideration consisted of: i) cash payment of $2.4 million paid at closing and; ii) note payable of $2.3 million issued at closing which was recorded in consideration payable. The asset acquisition costs were allocated to the following assets: i) video game terminals and equipment totaling $1.7 million and; ii) location contracts totaling $3.0 million. The note payable bore interest at 5% and was paid in full in March 2020.

Pro Forma Results

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three and six months ended June 30, 2019 as if the acquisition of Grand River had occurred as of January 1, 2018, after giving effect to certain purchase accounting adjustments. These amounts are based on available financial information of the acquiree prior to the acquisition date and are not necessarily indicative of what Company’s operating results would have been had the acquisition actually taken place as of January 1, 2019. This unaudited pro forma information does not project revenues and net income post acquisition (in thousands).

	Three months ended June 30, 2019		Six months ended June 30, 2019
Revenues	$	119,427	$	231,902
Net income		5,542		10,711

Consideration Payable

The Company has a contingent consideration payable related to certain locations, as defined, in the respective acquisition agreement which are placed into operation during a specified period after the acquisition date. The fair value of contingent consideration is included in the consideration payable on the condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019. The contingent consideration accrued is measured at fair value on a recurring basis.

Current and long-term portions of consideration payable consist of the following at June 30, 2020 and December 31, 2019 (in thousands):

	June 30, 2020				December 31, 2019
	Current		Long-Term		Current		Long-Term
TAV	$	494	$	3,546	$	490	$	3,497
Abraham		26		—		55		—
Fair Share Gaming		1,221		474		1,057		899
Family Amusement		395		2,787		293		2,815
Skyhigh		762		4,212		763		3,948
G3		294		99		2,952		154
Grand River		—		5,423		2,304		5,113
IGS		80		—		2,379		—
Total	$	3,272	$	16,541	$	10,293	$	16,426

Reverse Recapitalization

As discussed in Note 1, on November 20, 2019, Accel Entertainment, Inc., consummated a business combination pursuant to the Transaction Agreement, which has been accounted for as a reverse recapitalization. Pursuant to the Transaction Agreement, TPG Holdings Corp. acquired, directly or indirectly, all of the issued and outstanding shares of common stock and preferred stock of Accel Entertainment, Inc. In connection with reverse recapitalization, TPG Pace Holdings Corp. changed its name to Accel Entertainment, Inc.

The consideration paid to holders of Accel stock in connection with the reverse recapitalization and subject to the terms and conditions of the Transaction Agreement, consisted of a mix of consideration comprised of cash consideration equal to the number of shares of Accel stock for which such holder of Accel stock made a cash election multiplied by $177 per share (the “Purchase Price”) and share consideration comprised of a number of Class A-1 Shares equal to the number of shares of Accel Stock for which such holder of Accel Stock did not make a cash election multiplied by an exchange ratio calculated by dividing the Purchase Price by $10.30, which was the closing price of the common stock of TPG Pace Holdings Corp. on November 20, 2019. In addition, each holder of Accel stock that made a cash election with respect to less than 70% of its shares of Accel stock received its pro rata share, with such pro rata share determined with reference to a number of shares equal to 70% of such holder’s shares of Accel Stock less the number of shares of Accel stock with respect to which such holder made a cash election, of 2,444,444 2019 Warrants, subject to the conditions set forth in a warrant agreement and 3,000,000 Class A-2 Shares, subject to the conditions set forth in a restricted stock agreement.

In connection with the reverse recapitalization, TPG Pace Holdings and its affiliates converted 7,500,000 of Class A-1 Shares, 4,888,889 2019 Warrants subject to the conditions set forth in the New Pace Warrant Agreement and 2,000,000 Class A-2 Shares, subject to the conditions set forth in a restricted stock agreement.

As part of an Investment Private Placement, certain accredited investors (as defined by Rule 501 of Regulation D) agreed to subscribe for and purchase and Pace agreed to issue and sell to such investors 4,696,675 Class A-1 Shares for a purchase price of $10.22 per share, or an aggregate of approximately $48 million. The proceeds from the Investment Private Placement was used to fund a portion of the cash consideration required in the reverse recapitalization.

In connection with the reverse recapitalization, Accel repurchased approximately 36,157 shares of its stock from certain employees, directors and officers at a repurchase price of $177 per share in order to facilitate (i) the repayment of existing loans to Accel’s executive officers, (ii) the exercise of vested options and (iii) funding any resulting tax obligations from the exercise of such vested options.

In accounting for the reverse recapitalization, the net equity infusion from the reverse recapitalization was $29.3 million as shown in the table below (in thousands):

	Amount
TPG Holdings Corp cash balance, November 19, 2019	$	429,952
Less redemption of Accel shares prior to reverse recapitalization		(413,733	)
Cash balance prior to backstop equity financing		16,219
Plus funds from Investment Private Placement		48,038
Cash balance prior to consummation of the reverse recapitalization		64,257
Less adjustments to equity infusion:
Payment for sponsor loan		(4,000	)
Transaction costs related to the reverse recapitalization, net of tax		(31,005	)
Net equity infusion prior to stock issuance		29,252
Impact of stock issued in reverse recapitalization		10
Net equity infusion from reverse recapitalization		29,262
Less impact from conversion of treasury stock and issuance of warrants		(7,415	)
Net impact to additional paid-in-capital from reverse recapitalization	$	21,847

Capitalization Adjustments

The table below summarizes the number of shares of Accel issued upon consummation of the reverse recapitalization consisting of (i) the number of shares of Accel stock outstanding immediately before the reverse recapitalization along with the impact of the exchange ratio.

Accel Capital Stock—pre reverse recapitalization	Number of Shares
Class A Common Stock		472,773
Class B Common Stock		662,228
Class C Preferred Stock		1,530,779
Class D Preferred Stock		944,925
Total Shares of Accel Stock on November 20, 2019		3,610,705
Exchange ratio		17.188531
Effect of exchange ratio to convert Accel stock to A-1 Common Stock		62,062,715
Shares issued in reverse recapitalization		14,574,755
Total A-1 Common Stock		76,637,470

Immediately after the reverse recapitalization, there were 76,637,470 Class A-1 Shares, 4,999,999 Class A-2 Shares, and 22,333,308 warrants to purchase Class A-1 Share issued and outstanding. Upon the closing, the Company’s Class A-1 Shares and warrants began trading on the New York Stock Exchange.

2019 Business Acquisitions

Grand River Jackpot

On August 26, 2019, the Company entered into an agreement to acquire all issued and outstanding membership interests in Grand River Jackpot, LLC and subsidiaries (“Grand River”), a terminal operator licensed by the State of Illinois Gaming Board. On September 16, 2019, the Company completed its acquisition of Grand River. Grand River had 2,009 VGTs in over 450 licensed establishments. The Company completed this transaction in order to expand its presence within the State of Illinois.

The acquisition aggregate purchase consideration transferred totaled $113.7 million, which included: i) a cash payment made at closing of $100.0 million; ii) a subsequent cash payment of approximately $6.6 million for a working capital adjustment and; iii) contingent purchase consideration with an estimated fair value of $7.1 million. The contingent consideration represents two installment payments that are to be paid, up to a maximum amount, as follows: i) $2.5 million within 30 days following the one-year anniversary of the acquisition closing date and; ii) $7.0 million within 30 days following the three-year anniversary of the acquisition closing date. These payments are subject to adjustment based on certain performance measures included within the purchase agreement. The estimated fair value was determined based on the Company’s expected probability of future payment, discounted using Grand River’s weighted average cost of capital. The cash payment made at closing and subsequent working capital adjustment payment were both funded with the Company’s existing credit facilities.

The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase price has been preliminarily allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values. The areas of the purchase price that are not yet finalized are primarily related to the valuation of location contracts, property and equipment, contingent consideration, and a final adjustment to working capital. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. The Grand River acquisition resulted in recorded goodwill as a result of a higher consideration multiple paid relative to prior similar acquisitions driven by maturity and quality of the operations and industry, including workforce and corresponding synergies, and is amortizable for income tax purposes. Management plans to integrate the Grand River acquisition into its existing business structure, which is comprised of a single reporting unit.

The following table summarizes the fair value of consideration transferred and the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash paid	$	106,578
Contingent consideration		7,136
Total consideration	$	113,714
Cash	$	8,861
Location contracts acquired		53,200
Property and equipment:
Video game terminals and equipment		18,000
Land		28
Buildings		548
Vehicles		600
Goodwill		34,511
Total assets acquired		115,748
Accounts payable assumed		(532	)
Accrued expenses assumed		(1,502	)
Net assets acquired	$	113,714

The Company incurred $0.2 million in acquisition related costs that are included in other operating expenses within the consolidated statement of operations for the period ended December 31, 2019.

The results of operations for Grand River are included in the consolidated financial statements of the Company from the date of acquisition. Grand River’s acquired assets generated revenues and net income of $16.6 million and $1.2 million for the period from the acquisition date of September 16, 2019, through December 31, 2019.

2019 Asset Acquisition

On September 23, 2019, pursuant to the terms of an asset purchase agreement, the Company purchased from Illinois Gaming Systems, LLC (“IGS”) terminal use agreements and equipment representing the operations of 139 video game terminals in 29 licensed establishments. The Company has accounted for this transaction as an asset acquisition. The purchase consideration consisted of: i) cash payment of $2.4 million paid at closing and; ii) note payable of $2.3 million issued at closing which is recorded in consideration payables. The asset acquisition

costs were allocated to the following assets: i) video game terminals and equipment totaling $1.7 million and; ii) location contracts totaling $3.0 million. The note payable bears interest of 5% and is due in full on March 23, 2020.

2018 Business Acquisitions

The following table summarizes the consideration paid and the fair values of the tangible and intangible assets acquired at the acquisition dates for the Company’s 2018 business acquisitions (in thousands):

	Quad B		Skyhigh		G3		Mike’s Amusement		Family Amusement		Total
Cash paid at closing	$	610	$	9,268	$	36,500	$	3,500	$	1,512	$	51,390
Contingent consideration payable		—		4,324		1,026		—		—		5,350
Promissory note		—		—		—		—		3,368		3,368
Due to seller		—		618		3,019		—		—		3,637
Total Consideration	$	610	$	14,210	$	40,545	$	3,500	$	4,880	$	63,745
Cash	$	—	$	1,126	$	2,507	$	—	$	—	$	3,633
Video game terminals and equipment		—		506		3,009		—		—		3,515
Amusement and other equipment		472		59		204		420		300		1,455
Location contracts acquired		138		12,519		34,825		3,080		4,580		55,142
Total fair value of net assets acquired		610		14,210		40,545		3,500		4,880		63,745

Quad B

On September 1, 2018, the Company acquired certain assets of B.B.B.B., Inc. (“Quad B”), an Illinois amusement operator. The Company acquired 61 locations that are or are expected to become operational. Quad B’s acquired assets generated revenues and net income of $0.1 million and $0.1 million, respectively, for the period from the acquisition date of September 1, 2018, through December 31, 2018. Quad B’s acquired assets generated revenues and net income of $0.3 million and $0.1 million, respectively, for the year ended December 31, 2019.

Skyhigh Gaming

On August 1, 2018, the Company acquired certain assets of Skyhigh Gaming, LLC (“Skyhigh”), an Illinois licensed terminal operator. The Company initially acquired 23 locations that are or are expected to become operational.

The Company has a contingent consideration payable related to certain locations, as defined, in the acquisition agreement placed in operation during five years after the acquisition date (“the installment period”). The Company will pay Skyhigh 18.44% of the adjusted net terminal income, related to locations in operation during five years after the acquisition date. Payments will be made on a monthly basis for the first two years and every three months for the latter three years, through July 2023. The agreement also provides for a final payment upon the expiration of the installment period equal to 1.75 times the adjusted and defined net terminal income generated by the locations in the twelve-month period ending on the final payment date. The fair value of contingent consideration due as of December 31, 2019 and 2018 were $4.7 million and $4.5 million, respectively. The fair value of contingent consideration is included in the consideration payable on the consolidated balance sheets at December 31, 2019 and 2018. The contingent consideration accrued is measured at fair value on a recurring basis. The maximum amount is determined based on the net terminal income for the related locations.

Skyhigh’s acquired assets generated revenues and net income of $3.9 million and $1.1 million, respectively, for the period from the acquisition date of August 1, 2018, through December 31, 2018. Skyhigh’s acquired assets generated revenues and net income of $9.3 million and $2.2 million, respectively, for the year ended December 31, 2019.

G3 Gaming

On October 16, 2018, the Company acquired certain assets of G3 Gaming, LLC (“G3”), an Illinois licensed terminal operator. The Company initially acquired 87 locations that are or are expected to become operational.

The Company has contingent consideration payable related to locations placed in operation during the three years after the acquisition date whereby the Company will pay G3 a specified percent of the monthly terminal operator revenue less video gaming terminal fees for pending locations, recently added locations, and for a specified group of target establishments through 2022. The fair value of contingent consideration due as of December 31, 2019 and 2018 were $3.1 million and $1.0 million, respectively. The maximum amount is determined based on the net terminal income for the related locations.

G3’s acquired assets generated revenues and net income of $4.3 million and $0.8 million, respectively, for the period from the acquisition date of October 16, 2018, through December 31, 2018. G3’s acquired assets generated revenues and net income of $21.8 million and $3.3 million, respectively, for the year ended December 31, 2019.

Mike’s Amusements

On October 16, 2018, the Company acquired certain assets of Mike’s Amusements, Inc. (“Mike’s Amusements”), an Illinois amusement operator. The Company initially acquired 73 locations that are or are expected to become operational.

Mike’s Amusement’s acquired assets generated revenues and net income of $0.2 million and $0.1 million, respectively, for the period from the acquisition date of October 16, 2018, through December 31, 2018. Mike’s Amusement’s acquired assets generated revenues and net income of $1.0 million and $0.4 million, respectively, for the year ended December 31, 2019.

Family Amusement

On October 31, 2018, the Company entered into an agreement to acquire certain assets of Family Amusement, Inc. (“Family Amusement”), an Illinois amusement operator. The Company initially acquired 139 locations that are or are expected to become operational. Family Amusement’s acquired assets generated revenues and net income of $0.1 million and $0.1 million, respectively, for the period from the acquisition date of October 31, 2018, ending on December 31, 2018. Family Amusement’s acquired assets generated revenues and net income of $0.4 million and $0.2 million, respectively, for the year ended December 31, 2019.

The Company entered into a promissory note in connection with the acquisition. The promissory note provides for three annual installments of $0.4 million from 2019 through 2021, one installment of $0.7 million in 2022, and one installment of $2.1 million in 2023. The first installment was paid upon signing of the promissory note and each subsequent installment shall be paid on or before the anniversary date of the signing of the promissory note. The fair value of the consideration due as of December 31, 2019 and 2018 was $3.1 million and

$3.4 million, respectively. The consideration is included in the consideration payable on the consolidated balance sheets at December 31, 2019 and 2018. The Company and Family Amusement had a pre-existing relationship prior to the business acquisition. Under that pre-existing relationship the Company had route and customer acquisition costs payable to Family Amusement. As a result of the business acquisition, the pre-existing route and customer acquisition payables to Family Amusement were settled and cost and accumulated amortization of the existing Family Amusement route and customer acquisition cost assets was disposed, and a $0.1 million reduction in amortization of route and customer acquisition costs and location contracts acquired was recorded.

2017 and prior Business Acquisitions

Fair Share Gaming

On July 1, 2017, the Company acquired certain assets and assumed certain liabilities of Fair Share Gaming, LLC (“Fair Share”), an Illinois licensed terminal operator. The Company initially acquired 125 locations that are or will become operational.

The following table summarizes the consideration paid and the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash paid at closing	$	48,000
Issuance of common stock to seller		10,794
Contingent stock consideration		3,675
Due to seller		2,055
Contingent consideration		595
Total consideration	$	65,119
Cash	$	4,926
Video game terminals and equipment		6,363
Vehicles		126
Amusement and other equipment		1,148
Location contracts acquired		52,716
Total assets acquired		65,279
Accrued expenses assumed		(160	)
Net assets acquired	$	65,119

The Company has a contingent consideration payable related to certain locations, as defined in the acquisition agreement, in operation one year after the acquisition date. The Company will pay Fair Share half of the Company’s share of revenue after the state taxes based on the number of locations expected to be in operation one year after the acquisition date. On the one-year anniversary of the date the location goes live, monthly payments commence for a period of two years. The fair value of contingent consideration due as of December 31, 2019 and December 31, 2018 was $2.0 million and $1.0 million, respectively. The remaining contingent consideration is included in the consideration payable on the consolidated balance sheets. The contingent consideration accrued is measured at fair value on a recurring basis. The maximum amount is determined based on the net terminal income for the related locations.

The purchase agreement provided for $15 million of the purchase price to be paid through the issuance of Class A Common Stock in the Company. The purchase agreement allowed for an adjustment to the $15 million

issuance of common stock to the seller fifteen months after the date of acquisition predicated on the estimated value of the Company at September 30, 2018. The fair value of the common stock issued on the acquisition date was $10.8 million. The difference between the $15 million provided for in the purchase agreement and the fair value of the common stock issued was discounted and $3.7 million was recorded as contingent stock consideration at the acquisition date. The adjustment was determined based on the difference between estimated Accel Value, as defined, at the acquisition date and actual Accel Value, as defined, as of September 30, 2018. As a result of this adjustment, 3,956 shares of Common Stock A were received back from Fair Share and placed into treasury during the year ended December 31, 2018.

Fair Share’s acquired assets generated revenues and net income of $19.0 million and $3.3 million, respectively, for the period from the acquisition date of July 1, 2017, through December 31, 2017. Fair Share’s acquired assets generated revenues and net income of $40.8 million and $7.0 million, respectively, for the year ended December 31, 2018. Fair Share’s acquired assets generated revenues and net income of $42.8 million and $7.8 million, respectively, for the year ended December 31, 2019.

Abraham

On June 1, 2016, the Company acquired certain assets and assumed certain liabilities of Abraham Gaming, LLC (“Abraham”), an Illinois licensed terminal operator. The Company initially acquired 138 locations that are or are expected to become operational.

The Company has a contingent consideration payable related to certain locations in operation two years after these locations go live. The Company will make one payment to Abraham for half of the Company’s share of revenue after the state taxes related to locations in operation within 10 business days after determining the amount owed related to the two years of operations. The fair value of contingent consideration due as of December 31, 2019 and 2018, was $0.1 million and $0.2 million, respectively. The remaining contingent consideration is included in the consideration payable on the consolidated balance sheets. The contingent consideration accrued is measured at fair value on a recurring basis. The maximum amount is determined based on the net terminal income for the related locations.

TAV Gaming

On December 30, 2014, the Company acquired certain assets and assumed certain liabilities of TAV Gaming, Inc. (“TAV”), an Illinois licensed terminal operator.

The total purchase consideration payable to TAV is subject to earnouts based on actual locations placed in operation and the performance thereof. The Company initially acquired 32 locations that were or would become operational. Consideration payable due to TAV in relation to the acquisition was $4.0 million and $1.4 million at December 31, 2019 and 2018, respectively, which is included in consideration payable in the accompanying consolidated balance sheets. The Company makes monthly payments of principal and interest due through December 30, 2024.

Pro Forma Results

The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the years ended December 31, 2019, 2018 and 2017 as if the acquisitions of Grand River, Quad B, Skyhigh, G3, Mike’s Amusements, Family Amusement and Fair Share Gaming, had occurred as of the beginning

of the fiscal year prior to the fiscal year of acquisition, after giving effect to certain purchase accounting adjustments. These amounts are based on available financial information of the acquirees prior to the acquisition dates and are not necessarily indicative of what Company’s operating results would have been had the acquisitions actually taken place at the beginning of the fiscal year prior to the fiscal year of acquisition. This unaudited pro forma information for the years ended December 31, does not project revenues and income before income tax expense post acquisition (in thousands).

	2019			2018		2017
Revenues	$	466,466		$	409,142	$	467,676
Net (loss) income		(2,598	)		16,098		26,535

Consideration Payable

The Company has a contingent consideration payable related to certain locations, as defined, in the respective acquisition agreement which are placed into operation during a specified period after the acquisition date. The fair value of contingent consideration is included in the consideration payable on the consolidated balance sheets as of December 31, 2019 and 2018. The contingent consideration accrued is measured at fair value on a recurring basis.

Current and long-term portions of consideration payable consist of the following at December 31 (in thousands) :

	2019				2018
	Current		Long- Term		Current		Long- Term
TAV	$	490	$	3,497	$	194	$	1,232
Abraham		55		—		207		—
Fair Share Gaming		1,057		899		1,027		—
Family Amusement		293		2,815		357		3,011
Skyhigh		763		3,948		550		3,971
G3		2,952		154		221		806
Grand River		2,304		5,113		—		—
IGS		2,379		—		—		—
Total	$	10,293	$	16,426	$	2,556	$	9,020