| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||
| Title of Each Class | Trading Symbols | Name of Each Exchange on Which Registered | ||||||
| Large accelerated filer | ☐ | ☒ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
| PART I. | ||||||||
| ITEM 1. | ||||||||
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) for the three months ended March 31, 2021 and 2020 | ||||||||
Condensed Consolidated Balance Sheets at March 31, 2021 (Unaudited) and December 31, 2020 | ||||||||
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the three months ended March 31, 2021 and 2020 | ||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2021 and 2020 | ||||||||
| Notes to the Condensed Consolidated Financial Statements (Unaudited) | ||||||||
| ITEM 2. | ||||||||
| ITEM 3. | ||||||||
| ITEM 4. | ||||||||
| PART II. | ||||||||
| ITEM 1. | ||||||||
| ITEM 1A. | ||||||||
| ITEM 2. | ||||||||
| ITEM 3. | ||||||||
| ITEM 4. | ||||||||
| ITEM 6. | ||||||||
| (In thousands, except per share amounts) | Three Months Ended March 31, | ||||||||||
| 2021 | 2020 | ||||||||||
| Revenues: | (As Restated) | ||||||||||
| Net gaming | $ | $ | |||||||||
| Amusement | |||||||||||
| ATM fees and other revenue | |||||||||||
| Total net revenues | |||||||||||
| Operating expenses: | |||||||||||
| Cost of revenue (exclusive of depreciation and amortization expense shown below) | |||||||||||
| General and administrative | |||||||||||
| Depreciation and amortization of property and equipment | |||||||||||
| Amortization of route and customer acquisition costs and location contracts acquired | |||||||||||
| Other expenses, net | |||||||||||
| Total operating expenses | |||||||||||
| Operating income | |||||||||||
| Interest expense, net | |||||||||||
| Loss (gain) on change in fair value of contingent earnout shares | ( | ||||||||||
| Gain on change in fair value of warrants | ( | ||||||||||
| Income before income tax expense (benefit) | |||||||||||
| Income tax expense (benefit) | ( | ||||||||||
| Net income | $ | $ | |||||||||
| Net income per common share: | |||||||||||
| Basic | $ | $ | |||||||||
| Diluted | |||||||||||
| Weighted average number of shares outstanding: | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
| Comprehensive income | |||||||||||
| Net income | |||||||||||
Unrealized gain on investment in convertible notes (net of income taxes of $ | |||||||||||
| Comprehensive income | $ | $ | |||||||||
(In thousands, except par value and share amounts) | March 31, | December 31, | |||||||||
| 2021 | 2020 | ||||||||||
| Assets | (Unaudited) | (As Restated) | |||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Prepaid expenses | |||||||||||
| Income taxes receivable | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Other noncurrent assets: | |||||||||||
| Route and customer acquisition costs, net | |||||||||||
| Location contracts acquired, net | |||||||||||
| Goodwill | |||||||||||
| Investment in convertible notes, less current portion | |||||||||||
| Deferred income tax asset | |||||||||||
| Other assets | |||||||||||
| Total other noncurrent assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Current maturities of debt | $ | $ | |||||||||
| Current portion of route and customer acquisition costs payable | |||||||||||
| Accrued location gaming expense | |||||||||||
| Accrued state gaming expense | |||||||||||
| Accounts payable and other accrued expenses | |||||||||||
| Accrued compensation and related expenses | |||||||||||
| Current portion of consideration payable | |||||||||||
| Total current liabilities | |||||||||||
| Long-term liabilities: | |||||||||||
| Debt, net of current maturities | |||||||||||
| Route and customer acquisition costs payable, less current portion | |||||||||||
| Consideration payable, less current portion | |||||||||||
| Contingent earnout share liability | |||||||||||
| Warrant liability | |||||||||||
| Total long-term liabilities | |||||||||||
| Stockholders’ equity : | |||||||||||
Preferred Stock, par value of $ | |||||||||||
Class A-1 Common Stock, par value $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive income | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
| (In thousands, except shares) | Accumulated | ||||||||||||||||||||||||||||||||||
| Class A-1 | Additional | Other | Total | ||||||||||||||||||||||||||||||||
| Common Stock | Paid-In | Comprehensive | Accumulated | Stockholders’ | |||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Income | Deficit | Equity | ||||||||||||||||||||||||||||||
| Balance, January 1, 2021 [as restated] | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Unrealized gain on investment in convertible notes | — | — | — | — | |||||||||||||||||||||||||||||||
| Net income | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||
| (In thousands, except shares) | Class A-1 | Additional | Total | ||||||||||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Stockholders’ | ||||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | |||||||||||||||||||||||||
| Balance, January 1, 2020 [as restated] | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||||
| Conversion of Class A-2 Common Stock to Class A-1 Common Stock | — | — | |||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | ||||||||||||||||||||||||||
| Net income [as restated] | — | — | — | ||||||||||||||||||||||||||
| Balance, March 31, 2020 [as restated] | $ | $ | $ | ( | $ | ||||||||||||||||||||||||
| ACCEL ENTERTAINMENT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | |||||||||||
| (In thousands) | Three Months Ended March 31, | ||||||||||
| 2021 | 2020 | ||||||||||
| Cash flows from operating activities: | (As Restated) | ||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization of property and equipment | |||||||||||
Amortization of route and customer acquisition costs and location contracts acquired | |||||||||||
| Amortization of debt issuance costs | |||||||||||
| Loss (gain) on change in fair value of contingent earnout shares | ( | ||||||||||
| Gain on change in fair value of warrants | ( | ||||||||||
| Stock-based compensation | |||||||||||
| Gain on disposal of property and equipment | ( | ( | |||||||||
| Net loss on write-off of route and customer acquisition costs and route and customer acquisition costs payable | |||||||||||
| Remeasurement of contingent consideration | ( | ||||||||||
Payments on consideration payable | ( | ( | |||||||||
Accretion of interest on route and customer acquisition costs payable, contingent consideration, and contingent stock consideration | |||||||||||
| Deferred income taxes | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Prepaid expenses and other current assets | ( | ||||||||||
| Income taxes receivable | |||||||||||
| Route and customer acquisition costs | ( | ( | |||||||||
| Route and customer acquisition costs payable | |||||||||||
| Accounts payable and accrued expenses | ( | ( | |||||||||
| Accrued compensation and related expenses | ( | ( | |||||||||
| Other assets | ( | ||||||||||
| Net cash provided by (used in) operating activities | ( | ||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Proceeds from the sale of property and equipment | |||||||||||
| Business and asset acquisitions, net of cash acquired | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Payments on term loan | ( | ( | |||||||||
| Proceeds from delayed draw term loans | |||||||||||
| Payments on delayed draw term loans | ( | ( | |||||||||
| Proceeds from line of credit | |||||||||||
| Payments on line of credit | ( | ( | |||||||||
| Payments for debt issuance costs | ( | ||||||||||
| Payments on consideration payable | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Net increase in cash and cash equivalents | |||||||||||
| Cash and cash equivalents: | |||||||||||
| Beginning of period | |||||||||||
| End of period | $ | $ | |||||||||
| ACCEL ENTERTAINMENT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued) (Unaudited) | |||||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash payments for: | |||||||||||
| Interest, net of amount of capitalized | $ | $ | |||||||||
| Supplemental schedules of noncash investing and financing activities: | |||||||||||
| Purchases of property and equipment in accounts payable and accrued liabilities | $ | $ | |||||||||
| Conversion of contingent earnout shares | $ | $ | |||||||||
| Acquisition of businesses and assets: | |||||||||||
| Total identifiable net assets acquired | $ | $ | |||||||||
| Cash purchase price | $ | $ | |||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
| Gaming terminals and equipment | $ | $ | |||||||||
| Amusement and other equipment | |||||||||||
| Office equipment and furniture | |||||||||||
| Computer equipment and software | |||||||||||
| Leasehold improvements | |||||||||||
| Vehicles | |||||||||||
| Buildings and improvements | |||||||||||
| Land | |||||||||||
| Construction in progress | |||||||||||
| Total property and equipment | |||||||||||
| Less accumulated depreciation and amortization | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
| Cost | $ | $ | |||||||||
| Accumulated amortization | ( | ( | |||||||||
| Route and customer acquisition costs, net | $ | $ | |||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
| Cost | $ | $ | |||||||||
| Accumulated amortization | ( | ( | |||||||||
| Location contracts acquired, net | $ | $ | |||||||||
| March 31, 2021 | December 31, 2020 | ||||||||||
| 2019 Senior Secured Credit Facility: | |||||||||||
| Revolving credit facility | $ | $ | |||||||||
| Term Loan | |||||||||||
| Delayed Draw Term Loan (DDTL) | |||||||||||
| Total debt | |||||||||||
| Less: Debt issuance costs | ( | ( | |||||||||
| Total debt, net of debt issuance costs | |||||||||||
| Less: Current maturities | ( | ( | |||||||||
| Total debt, net of current maturities | $ | $ | |||||||||
| Three months ended | |||||
| March 31, 2020 | |||||
| Revenues | $ | ||||
| Net income | |||||
| March 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
| Current | Long-Term | Current | Long-Term | ||||||||||||||||||||
| TAV | $ | $ | $ | $ | |||||||||||||||||||
| Fair Share Gaming | |||||||||||||||||||||||
| Family Amusement | |||||||||||||||||||||||
| Skyhigh | |||||||||||||||||||||||
| G3 | |||||||||||||||||||||||
| Grand River | |||||||||||||||||||||||
| IGS | |||||||||||||||||||||||
| Tom's Amusements | |||||||||||||||||||||||
| AVG | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Fair Value Measurement at Reporting Date Using | |||||||||||||||||||||||
| March 31, 2021 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Investment in convertible notes | $ | $ | $ | $ | |||||||||||||||||||
| Fair Value Measurement at Reporting Date Using | |||||||||||||||||||||||
| December 31, 2020 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Investment in convertible notes | $ | $ | $ | $ | |||||||||||||||||||
| Fair Value Measurement at Reporting Date Using | |||||||||||||||||||||||
| March 31, 2021 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Contingent consideration | $ | $ | $ | $ | |||||||||||||||||||
| Contingent earnout shares | |||||||||||||||||||||||
| Warrants | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Fair Value Measurement at Reporting Date Using | |||||||||||||||||||||||
| December 31, 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 | $ | $ | $ | $ | |||||||||||||||||||
| Contingent earnout shares | |||||||||||||||||||||||
| Warrants | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (As Restated) | |||||||||||
| Net income | $ | $ | |||||||||
| Less: Net income applicable to contingently issuable shares | |||||||||||
| Net income on which diluted earnings per share is calculated | $ | $ | |||||||||
| Basic weighted average outstanding shares of common stock | |||||||||||
| Dilutive effect of stock-based awards for common stock | |||||||||||
| Dilutive effect of contingent earnout shares before conversion | |||||||||||
| Diluted weighted average outstanding shares of common stock | |||||||||||
| Earnings per share: | |||||||||||
| Basic | $ | $ | |||||||||
| Diluted | $ | $ | |||||||||
| (in thousands, except %'s) | Three Months Ended March 31, | Increase / (Decrease) | |||||||||||||||||||||
| 2021 | 2020 | Change ($) | Change (%) | ||||||||||||||||||||
| Revenues: | (As Restated) | ||||||||||||||||||||||
| Net gaming | $ | 140,464 | $ | 101,575 | $ | 38,889 | 38.3 | % | |||||||||||||||
| Amusement | 4,049 | 2,831 | 1,218 | 43.0 | % | ||||||||||||||||||
| ATM fees and other revenue | 2,556 | 2,057 | 499 | 24.3 | % | ||||||||||||||||||
| Total revenues | 147,069 | 106,463 | 40,606 | 38.1 | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization expense shown below) | 98,891 | 70,708 | 28,183 | 39.9 | % | ||||||||||||||||||
| General and administrative | 24,475 | 21,975 | 2,500 | 11.4 | % | ||||||||||||||||||
| Depreciation and amortization of property and equipment | 5,989 | 4,867 | 1,122 | 23.1 | % | ||||||||||||||||||
Amortization of route and customer acquisition costs and location contracts acquired | 6,106 | 5,565 | 541 | 9.7 | % | ||||||||||||||||||
| Other expenses, net | 2,053 | 1,205 | 848 | 70.4 | % | ||||||||||||||||||
| Total operating expenses | 137,514 | 104,320 | 33,194 | 31.8 | % | ||||||||||||||||||
| Operating income | 9,555 | 2,143 | 7,412 | 345.9 | % | ||||||||||||||||||
| Interest expense, net | 3,344 | 4,248 | (904) | (21.3) | % | ||||||||||||||||||
| Loss (gain) on change in fair value of contingent earnout shares | 2,797 | (17,406) | 20,203 | (116.1) | % | ||||||||||||||||||
| Gain on change in fair value of warrants | — | (32,603) | 32,603 | (100.0) | % | ||||||||||||||||||
| Income before income tax expense (benefit) | 3,414 | 47,904 | (44,490) | (92.9) | % | ||||||||||||||||||
| Income tax expense (benefit) | 1,913 | (139) | 2,052 | (1,476.3) | % | ||||||||||||||||||
| Net income | $ | 1,501 | $ | 48,043 | $ | (46,542) | (96.9) | % | |||||||||||||||
| As of March 31, | Increase / (Decrease) | ||||||||||||||||||||||
| 2021 | 2020 | Change $ | Change % | ||||||||||||||||||||
| Licensed establishments | 2,470 | 2,353 | 117 | 5.0 | % | ||||||||||||||||||
| Video gaming terminals | 12,720 | 11,164 | 1,556 | 13.9 | % | ||||||||||||||||||
| Average remaining contract term (years) | 6.7 | 7.0 | (0.3) | (4.3) | % | ||||||||||||||||||
| March 31, | Increase / (Decrease) | ||||||||||||||||||||||
| 2021 | 2020 | Change $ | Change % | ||||||||||||||||||||
Location hold-per-day - for the three months ended (1) | $ | 784 | $ | 572 | $ | 212 | 37.1 | % | |||||||||||||||
| (in thousands) | Three Months Ended March 31, | ||||||||||
| 2021 | 2020 | ||||||||||
| (As Restated) | |||||||||||
| Net income | $ | 1,501 | $ | 48,043 | |||||||
| Adjustments: | |||||||||||
Amortization of route and customer acquisition costs and location contracts acquired (1) | 6,106 | 5,565 | |||||||||
Stock-based compensation (2) | 1,593 | 1,060 | |||||||||
Loss (gain) on change in fair value of contingent earnout shares (3) | 2,797 | (17,406) | |||||||||
Gain on change in fair value of warrants(4) | — | (32,603) | |||||||||
Other expenses, net (5) | 2,053 | 1,205 | |||||||||
Tax effect of adjustments (6) | (2,993) | (467) | |||||||||
| Adjusted net income | $ | 11,057 | $ | 5,397 | |||||||
Depreciation and amortization of property and equipment | 5,989 | 4,867 | |||||||||
| Interest expense, net | 3,344 | 4,248 | |||||||||
Emerging markets (7) | 517 | — | |||||||||
| Income tax expense | 4,906 | 328 | |||||||||
| Adjusted EBITDA | $ | 25,813 | $ | 14,840 | |||||||
| (in thousands) | Three Months Ended March 31, | ||||||||||
| 2021 | 2020 | ||||||||||
| (As Restated) | |||||||||||
| Net cash provided by (used in ) operating activities | $ | 21,586 | $ | (4,349) | |||||||
| Net cash used in investing activities | (2,462) | (3,734) | |||||||||
| Net cash provided by financing activities | 19,103 | 49,218 | |||||||||
| Exhibit No. | Exhibit | |||||||
| 10.20 | ||||||||
| 10.21* ** | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | ||||||||
| 32.2 | ||||||||
| 101.INS | XBRL Instance Document | |||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Inline XBRL File (included in Exhibit 101) | |||||||
| ACCEL ENTERTAINMENT, INC. | ||||||||
| Date: May 10, 2021 | By: | /s/ Brian Carroll | ||||||
| Brian Carroll Chief Financial Officer | ||||||||
| Date: May 10, 2021 | /s/ Andrew Rubenstein | |||||||
| Andrew Rubenstein | ||||||||
| Chief Executive Officer (Principal Executive Officer) | ||||||||
| Date: May 10, 2021 | /s/ Brian Carroll | |||||||
| Brian Carroll | ||||||||
| Chief Financial Officer (Principal Financial Officer) | ||||||||
/s/ Andrew Rubenstein | ||
| Andrew Rubenstein | ||
| Chief Executive Officer (Principal Executive Officer) | ||
/s/ Brian Carroll | ||
| Brian Carroll | ||
| Chief Financial Officer (Principal Financial Officer) | ||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Income Statement [Abstract] | ||
| Income taxes for unrealized gain on investment in convertible notes | $ 187 | $ 0 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Preferred stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 |
| Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 |
| Preferred stock, issued (in shares) | 0 | 0 |
| Preferred stock, outstanding (in shares) | 0 | 0 |
| Class A-1 Common Stock | ||
| Common stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
| Common stock, shares issued (in shares) | 93,379,508 | 93,379,508 |
| Common stock, shares outstanding (in shares) | 93,379,508 | 93,379,508 |
Description of Business |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| 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 (“IGB”) since March 15, 2012. Its terminal operator license allows the Company to install and operate video gaming terminals (“VGTs”) 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 Illinois 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. In July 2020, the Georgia Lottery Corporation approved one of the Company's consolidated subsidiaries as a licensed operator, or Master Licensee, which allows the Company to install and operate coin operated amusement machines for commercial use by the public for play throughout the State of Georgia. The Company also holds a license from the Pennsylvania Gaming Control Board. The Company is subject to various federal, state and local laws and regulations in addition to gaming regulations. The Company operates 12,720 and 11,164 video gaming terminals across 2,470 and 2,353 locations in the State of Illinois as of March 31, 2021 and 2020, respectively. 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 (see Note 13). 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 shares 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, or (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 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. This temporary shutdown of Illinois video gaming impacted 15 of the 91 gaming days (or 16% of gaming days) during the three months ended March 31, 2020. As a resurgence of COVID-19 occurred in the fall of 2020, the virus spread exponentially in every geographical region (currently 11 regions) in the State of Illinois. In response, the IGB suspended all video gaming operations across the entire state of Illinois starting at 11:01 PM on Thursday November 19, 2020. Video gaming operations resumed in certain regions of the state beginning on January 16, 2021, and fully resumed in all regions on January 23, 2021. Even though video gaming operations resumed across all regions, certain regions still had government-imposed restrictions that, among other things, limited hours of operation and restricted the number of patrons allowed within the licensed establishments. Given the staggered reopening by region in January of 2021, the temporary shutdown impacted, on average, 18 of the 90 gaming days (or 20% of gaming days) during the three months ended March 31, 2021. In light of these events and their effect on the Company’s employees and licensed establishment partners, the Company took action to help mitigate the potential effects caused by the temporary cessation of operations. During the initial shutdown in 2020, the Company furloughed a significant portion of its employees and deferred 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 2020, the Company started reinstating employees from furlough in anticipation of resuming operations on July 1, 2020. During the second shutdown starting in November 2020, the Company furloughed idle staff as appropriate and deferred certain payments to major vendors. As a result of these developments, the Company's revenues, results of operations and cash flows have been materially affected, and the Company expects these trends 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 currently aware of and cannot reasonably anticipate. 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 March 31, 2021. 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 in all regions effective January 23, 2021, 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.
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Summary of Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2021 | |
| 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, 2020, as amended (the “Form 10-K”). In preparing our condensed consolidated financial statements, we applied the same significant accounting policies as described in Note 3 to the consolidated financial statements in the Company's Annual Report on Form 10-K. Any significant changes to those accounting policies are discussed below. Interim results are not necessarily indicative of results for a full year. Restatement of prior periods: The Company amended the condensed consolidated financial statements for the period ended March 31, 2020 and for the year ended December 31, 2020 in its previously filed Form 10-K. Please see Note 2 to the consolidated financial statements in the Form 10-K for the facts and circumstance on the restatement. Adopted accounting pronouncements: In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplified 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 did not have a material impact on the Company's condensed consolidated financial statements. 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, the valuation of contingent earnout shares and warrants, contingencies, and the expected term of share-based compensation awards and stock price volatility 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. 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 adoption in fiscal year 2021 will 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.
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Investment in Convertible Notes |
3 Months Ended |
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Mar. 31, 2021 | |
| Investments, Debt and Equity Securities [Abstract] | |
| Investment in Convertibles Notes | 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, was payable in equal $1,000,000 monthly installments until all principal was repaid in full. 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 the terminal operator. The Amendment, among other things, extended 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 March 9, 2021, the Company and the terminal operator entered into the Second Omnibus Amendment (the “Second Amendment”) to both of the convertible notes and the agreement to purchase the convertible notes. The Second Amendment, among other things, extends the December 31, 2020 maturity and conversion feature of the $5.0 million convertible note to December 31, 2021, the maturity and conversion feature of the $25.0 million convertible note to June 1, 2024 and the beginning of the payback period for the $25.0 million convertible note from December 31, 2020 to January 1, 2022. The carrying amount of the investment in the convertible notes approximates the fair value, in all material respects, as of March 31, 2021. The Company recognized an unrealized gain of $0.5 million, net of taxes, within comprehensive income for the three months ended March 31, 2021. For more information on how the Company determined the fair value of the convertible notes, see Note 12.
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Property and Equipment |
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| Property and Equipment | Property and Equipment Property and equipment consists of the following at March 31, 2021 and December 31, 2020 (in thousands):
Depreciation and amortization of property and equipment amounted to $6.0 million and $4.9 million for the three months ended March 31, 2021 and 2020, respectively.
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Route and Customer Acquisition Costs |
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Route and Customer Acquisition Costs | 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 or quarterly. Gross payments due, based on the number of live locations, were approximately $6.5 million and $6.4 million as of March 31, 2021 and December 31, 2020, 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 was $5.8 million and $5.7 million as of March 31, 2021 and December 31, 2020, respectively, of which approximately $1.6 million is included in current liabilities in the accompanying condensed consolidated balance sheets for each of March 31, 2021 and December 31, 2020. The route and customer acquisition cost asset was comprised of payments made on the contracts of $17.8 million and $17.7 million as of March 31, 2021 and December 31, 2020, 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 clawback provision if the customer cancels the contract prior to completion. The payments subject to a clawback were $1.6 million and $1.7 million as of March 31, 2021 and December 31, 2020, respectively. Route and customer acquisition costs consisted of the following at March 31, 2021 and December 31, 2020 (in thousands):
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Location Contracts Acquired |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Location Contracts Acquired | 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 consisted of the following at March 31, 2021 and December 31, 2020 (in thousands):
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Goodwill |
3 Months Ended |
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Mar. 31, 2021 | |
| Goodwill and Intangible Assets Disclosure [Abstract] | |
| Goodwill | GoodwillThe Company acquired various companies which were accounted for as a business combination using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed was recorded as goodwill of $45.8 million as of March 31, 2021 and December 31, 2020, of which $36.5 million was deductible for tax purposes as of March 31, 2021. As previously discussed in Note 1, the Company evaluated its goodwill for potential impairment triggers as of March 31, 2021. No impairment losses were recorded. |
Debt |
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| Debt | Debt The Company’s debt as of March 31, 2021 and December 31, 2020, consisted of the following (in thousands):
2019 Senior Secured Credit Facility On November 13, 2019, the Company entered into a credit agreement (the “Credit Agreement”) as borrower, with the Company and its wholly-owned domestic subsidiaries, as guarantors, 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 March 31, 2021, there remained approximately $76.0 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 their 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 0.5%) 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 March 31, 2021, 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. 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. The revolving loans and term loans bear interest at either (a) ABR (150 bps floor) plus a margin of 1.75% or (b) LIBOR (50 bps floor) plus a margin of 2.75% , at the option of the Company. The additional term loan facility was 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. Given the uncertainty of COVID-19 and the resulting potential impact to the gaming industry and its 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). The amendment also raised the floor for the adjusted LIBOR rate to 0.5% and the floor for the Base Rate to 1.50%. The Company incurred costs of $0.4 million associated with the amendment of the Credit Agreement, of which $0.3 million was capitalized and is being amortized over the remaining life of the Credit Agreement. The Company was in compliance with all debt covenants as of March 31, 2021. 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.
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Business and Asset Acquisitions |
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| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business and Asset Acquisitions | Business and Asset Acquisitions 2021 Business Acquisition On March 2, 2021, the Company announced that it had entered into a securities purchase agreement, to acquire Century Gaming Inc. (“Century”). Century is Montana’s largest gaming operator and a leader in the Nevada gaming market with over 900 licensed establishments and more than 8,500 gaming terminals across both states. Pursuant to the purchase agreement, the Company will acquire all of the outstanding equity interests of Century in a cash and stock transaction valued at $140 million. The transaction was approved by the board of directors of each of the Company and Century, and is expected to close by the end of 2021, subject to the satisfaction of customary closing conditions, including regulatory approvals from applicable gaming authorities. The transaction will be funded through a combination of the Company’s cash on hand and capacity under its existing credit facility, in addition to the issuance of approximately 450,000 Accel shares. 2020 Business Acquisition American Video Gaming On December 30, 2020, the Company acquired American Video Gaming, LLC, and Erickson Amusements, Inc. (collectively referred to as "AVG"), a terminal operator licensed by the Illinois Gaming Board. AVG had 267 VGTs in 49 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 $32.0 million, which included i) cash paid at closing of $30.5 million and ii) contingent purchase consideration with an estimated fair value of $1.5 million. The contingent consideration potentially represents two installment payments, as follows i.) $0.9 million if the acquired locations meet certain base performance criteria and ii.) an additional $1.4 million if the acquired locations meet additional performance criteria. The estimated fair value of the contingent consideration was determined based on the Company’s expected probability of future payment, discounted using AVG’s weighted average cost of capital. The fair value of the contingent consideration is included within consideration payable on the condensed consolidated balance sheets. The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations ("Topic 805"). 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 was recorded as goodwill. The Company's purchase price allocation was finalized at the end of 2020 and the AVG acquisition resulted in goodwill of $11.2 million. The condensed consolidated statements of operations and comprehensive income include $3.2 million of revenue and $0.2 million of net income attributable to AVG for the three months ended March 31, 2021. Tom's Amusements On July 22, 2020 (the “Closing Date”), the Company acquired Tom’s Amusement Company, Inc., (“Tom's Amusements”) a southeastern U.S. gaming and amusement operator and Master Licensee in the state of Georgia. The total purchase price was $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. The fair value of the contingent consideration was $1.5 million as of March 31, 2021 and is included within consideration payable on the condensed consolidated balance sheets. In addition, the Georgia Lottery Corporation approved Accel's operating subsidiary, Bulldog Gaming, LLC, as a Master Licensee, which allows the Company to install and operate coin operated amusement machines for commercial use by the public for play throughout the State of Georgia. The acquisition was accounted for as a business combination using the acquisition method of accounting in accordance with Topic 805. The purchase price of $3.6 million has been preliminarily allocated to the following assets: i) video game terminals and equipment totaling $1.6 million; ii) location contracts totaling $0.8 million; iii) indefinite-lived gaming license intangible asset of $1.0 million and; iv) cash of $0.2 million. The areas of the purchase price allocation that are not yet finalized are primarily related to the valuation of location contracts and the indefinite-lived gaming license intangible asset. The condensed consolidated statements of operations and comprehensive income include $0.9 million of revenue and $0.6 million of net loss attributable to Tom's Amusements for the three months ended March 31, 2021. 2020 Asset Acquisition On August 6, 2020, pursuant to the terms of an asset purchase agreement, the Company purchased from Illinois Operators, Inc. terminal use agreements and equipment representing the operations of 13 licensed establishments. The Company has accounted for this transaction as an asset acquisition. The purchase consideration of $4.0 million consisted of: i) cash payment of $3.7 million paid at closing and; ii) deferred payment of $0.3 million which was payable 90-days from the closing date. The asset acquisition costs were allocated to the following assets: i) video game terminals and equipment totaling $0.6 million and; ii) location contracts totaling $3.4 million. Pro Forma Results The following unaudited pro forma consolidated financial information reflects the results of operations of the Company for the three months ended March 31, 2020 as if the acquisitions of AVG and Tom's Amusements had occurred as of January 1, 2019, 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).
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 March 31, 2021 and December 31, 2020. 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 March 31, 2021 and December 31, 2020 (in thousands):
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Contingent Earnout Share Liability |
3 Months Ended |
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Mar. 31, 2021 | |
| Business Combinations [Abstract] | |
| Contingent Earnout Share Liability | Contingent Earnout Share Liability Pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, the Company authorized and has available for issuance 10,000,000 shares of 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. The Company concluded that the Class A-2 Common Stock should be reflected as a contingent earnout share liability due to the fact that such shares are not entitled to dividends, voting rights, or a stake in the Company in the case of liquidation. In November of 2019, 5,000,000 shares of Class A-2 Common Stock were issued, subject to the conditions set forth in a 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 Class A-1 Common Stock. The exchange of Class A-2 Common Stock for 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 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 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 shares of Class A-2 Common Stock, will be exchanged for 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 consecutive thirty trading day period; and •Tranche III, equal to 1,666,667 shares of Class A-2 Common Stock, will be exchanged for 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 exceeds $16.00 for at least twenty trading days in any consecutive thirty trading day period. On January 14, 2020, the market condition for the settlement of Tranche I was satisfied. However, no stockholder is permitted to own more than 4.99% of the issued and outstanding Class A-1 Common Stock after the settlement unless obtaining required gaming approvals from the applicable gaming authorities. In connection with the settlement, no gaming approvals were obtained. As a result, only 1,666,636 shares of the 1,666,666 shares of Class A-2 Common Stock were converted into Class A-1 Common Stock.
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Warrant Liability |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Other Liabilities Disclosure [Abstract] | |
| Warrant Liability | Warrant liability In November of 2019, 7,333,326 warrants to purchase shares of Class A-1 Common Stock were issued with other consideration prior to the reverse recapitalization (the “Private Placement Warrants”). As a part of the reverse recapitalization, 2,444,437 Private Placement Warrants were canceled and reissued under the same terms and conditions to Accel legacy stockholders. Each warrant expires five years from issuance and entitles the holder to purchase one share of Class A-1 Common Stock 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. 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 share of Class A-1 Common Stock 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. 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 0.25 shares of Class A-1 Common Stock in exchange for each warrant tendered pursuant to the Offer. The Offer was open until 11:59 p.m., Eastern Standard Time, on August 11, 2020. On July 16, 2020, the Company consummated the redemption of its Public Warrants. The Company exchanged each Public Warrant for 0.25 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. The exchange was an equitable exchange at fair value and was accounted for as a capital transaction. On July 22, 2020, the Company received written notice from the New York Stock Exchange (the “NYSE”) that the NYSE suspended trading in, and had 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 was a result of the failure 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 August 14, 2020, 7,189,990 of the Private Placement Warrants were validly tendered representing approximately 99.93% of the total Private Placement Warrants outstanding. The Company accepted all such warrants and issued an aggregate of 1,797,474 shares of its Class A-1 Common Stock in exchange for the warrants tendered.
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Fair Value Measurements |
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| 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. Assets measured at fair value The following tables summarize the Company’s assets that are measured at fair value on a recurring basis (in thousands):
Investment in convertible notes The Company engaged a third-party firm to assist it in determining the fair value of its investment in convertible notes. The valuation 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. Liabilities measured at fair value The following tables summarizes the Company’s liabilities that are measured at fair value on a recurring basis (in thousands):
Contingent Consideration 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 $0.1 million while a hypothetical 1% decrease in the applicable discount rate would increase other expenses, net by approximately $0.1 million. The valuation of the Company's contingent consideration is considered to be a Level 3 fair value measurement as the significant inputs are unobservable and require significant judgment or estimation. Changes in the fair value of contingent consideration liabilities are classified within other expenses, net on the accompanying condensed consolidated statements of operations and comprehensive income. Contingent earnout shares The Company determined the fair value of the contingent earnout shares based on the market price of the Company's A-1 common stock. The liability, by tranche, is then stated at present value based on i) an interest rate derived from the Company's borrowing rate and the applicable risk-free rate and ii) an estimate on when it expects the contingent earnout shares to convert to A-1 common stock. The valuation of the Company's contingent consideration is considered to be a Level 2 fair value measurement. Changes in the fair value of contingent earnout shares are included within loss (gain) on change in fair value of contingent earnout shares on the accompanying condensed consolidated statements of operations and comprehensive income Warrants The Company determined the fair value of its Public Warrants based on their closing price (ticker symbol ACEL.WS) on the NYSE and is considered to be a Level 1 fair value measurement. The Company determines the fair value of its Private Placement Warrants by using the fair value of its Public Warrants and a Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires inputs such as the fair value of the Company's A-1 Common Stock, the risk-free interest rate, expected term, expected dividend yield and expected volatility. The Company's valuation of its Private Placement Warrants is considered to be a Level 2 fair value measurement. Changes in the fair value of the warrants are included within gain on change in fair value of warrants on the accompanying condensed consolidated statements of operations and comprehensive income.
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Stockholders' Equity |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| Equity [Abstract] | |
| Stockholders' Equity | Stockholders’ Equity 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 shares of Class A-1 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 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. On September 28, 2020, the Company completed an underwritten public offering (the “Offering”) of 8,000,000 shares of its Class A-1 Common Stock (par value $0.0001 per share) at a price of $10.50 per share for a total offering size of $84.0 million. The Company received net proceeds from the Offering of approximately $78.7 million (net of underwriting discounts and commissions). The Company incurred offering costs totaling $5.3 million which have been capitalized to additional paid-in capital. The Offering also granted the underwriters an option to purchase up to 1,200,000 additional shares of Class A-1 Common Stock at the public offering price of $10.50 less the underwriting discount, exercisable at any time within 30 days of September 23, 2020.
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Stock-based Compensation |
3 Months Ended |
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Mar. 31, 2021 | |
| Share-based Payment Arrangement [Abstract] | |
| Stock-based Compensation | Stock-based Compensation The Company grants various types of stock-based awards. Stock-based compensation awards granted are valued on the date of grant and are expensed over the required service period. Under the Accel Entertainment, Inc. Long Term Incentive Plan, the Company granted 0.2 million options to eligible officers and employees of the Company during the first quarter of 2021, which shall vest over a period of 4 years. Also in the first quarter of 2021, the Company issued 0.4 million restricted stock units (“RSUs”) to the board of directors and certain employees, which shall vest over a period of 4 years for employees and a period of approximately 9 months for board of directors. The estimated grant date fair value of these options and RSUs totaled $5.6 million. Stock-based compensation expense, which pertains to the Company’s stock options and RSUs, was $1.6 million and $1.1 million for the three months ended March 31, 2021 and March 31, 2020, respectively. Stock-based compensation expense is included within general and administrative expenses in the condensed consolidated statements of operations and other comprehensive income.
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Income Taxes |
3 Months Ended |
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Mar. 31, 2021 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes The Company recognized an income tax expense of $1.9 million for the three months ended March 31, 2021 compared to an income tax benefit of $0.1 million for the three months ended March 31, 2020. The Company calculates its provision for (benefit from) 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 56.0% and (0.3)% for the three months ended March 31, 2021 and 2020, respectively. The Company’s effective income tax rate can vary from period to period depending on, among other factors, the amount of permanent tax adjustments and discrete items. 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 was eligible for certain credits of the relief programs under the CARES Act and has recorded a receivable of $1.1 million on its condensed consolidated balance sheets. The Company will continue to monitor the situation and evaluate any additional future legislation.
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2021 | |
| 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 professionals 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. 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 has answered the complaint and asserted a counterclaim, and intends to defend itself against the allegations. Mr. Rowell's claims and the Company's claims are both being litigated in this lawsuit, while the original lawsuit remains pending against the other defendants. 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 $10.0 million. 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 December 18, 2020, the Company received a disciplinary complaint from the IGB alleging violations of the Video Gaming Act and the IGB’s Adopted Rules for Video Gaming. The disciplinary complaint seeks to fine the Company in the amount of $5 million. The Company filed its initial answer to the IGB’s complaint on January 11, 2021 and have begun the administrative hearing process. The Company intends to vigorously defend itself against the allegations in the complaint and denies any allegations of wrongdoing. The Company has not accrued any amounts related to this complaint as losses are not probable or reasonably estimable.
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Related-Party Transactions |
3 Months Ended |
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Mar. 31, 2021 | |
| 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”), G3 Gaming, LLC (“G3”), Tom's Amusements and AVG, the sellers became employees of the Company. Consideration payable to the Fair Share seller was $1.8 million and $1.6 million as of March 31, 2021 and December 31, 2020, respectively. Payments to the Fair Share seller under the acquisition agreement were $0.1 million and $0.2 during the three months ended March 31, 2021 and 2020. Consideration payable to the G3 sellers was $0.4 million and $0.5 million as of March 31, 2021 and December 31, 2020, respectively. Payments to the G3 seller under the acquisition agreement were $0.0 million and $2.5 million during the three months ended March 31, 2021 and March 31, 2020, respectively. Consideration payable to the Tom's Amusements seller was $1.5 million as of both March 31, 2021 and December 31, 2020. There were no payments to the Tom's Amusements seller during the three months ended March 31, 2021. Consideration payable to the AVG seller was $1.5 million as of both March 31, 2021 and December 31, 2020. There were no payments to the AVG seller during the three months ended March 31, 2021. 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 three months ended March 31, 2021 and 2020, Accel paid Much Shelist $0.1 million, and less than $0.1 million, respectively. These payments were included in general and administrative expenses within the condensed consolidated statements of operations and comprehensive income. The Company completed an underwritten public offering of 8,000,000 shares of its Class A-1 Common Stock, pursuant to the terms of an Underwriting Agreement, dated September 23, 2020, with Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as representatives of the several underwriters named therein. The Raine Group, which employs a director of the Company, Gordon Rubenstein, was part of the underwriting group and was paid fees totaling $0.2 million (5.5% of underwriting fee (4.5% of $84 million)). These payments were capitalized to additional paid-in-capital on the condensed consolidated statements of stockholders' equity.
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Earnings Per Share |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share | Earnings Per Share The components of basic and diluted earnings per share (“EPS”) were as follows for the three months ended March 31 (in thousands, except per share amounts):
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Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
|---|---|
Mar. 31, 2021 | |
| 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, 2020, as amended (the “Form 10-K”). In preparing our condensed consolidated financial statements, we applied the same significant accounting policies as described in Note 3 to the consolidated financial statements in the Company's Annual Report on Form 10-K. Any significant changes to those accounting policies are discussed below. Interim results are not necessarily indicative of results for a full year. |
| Restatement of prior periods | Restatement of prior periods: The Company amended the condensed consolidated financial statements for the period ended March 31, 2020 and for the year ended December 31, 2020 in its previously filed Form 10-K. Please see Note 2 to the consolidated financial statements in the Form 10-K for the facts and circumstance on the restatement. |
| Adopted accounting pronouncements / Recent accounting pronouncements | Adopted accounting pronouncements: In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplified 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 did not have a material impact on the Company's condensed consolidated financial statements.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 adoption in fiscal year 2021 will 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. |
| 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, the valuation of contingent earnout shares and warrants, contingencies, and the expected term of share-based compensation awards and stock price volatility 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. |
Summary of Significant Accounting Policies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property and Equipment Useful Lives | Property and equipment consists of the following at March 31, 2021 and December 31, 2020 (in thousands):
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Property and Equipment (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property and Equipment | Property and equipment consists of the following at March 31, 2021 and December 31, 2020 (in thousands):
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Route and Customer Acquisition Costs (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Route and Customer Acquisition Costs | Route and customer acquisition costs consisted of the following at March 31, 2021 and December 31, 2020 (in thousands):
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Location Contracts Acquired (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Location Contracts Acquired | Location contracts acquired consisted of the following at March 31, 2021 and December 31, 2020 (in thousands):
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-term Debt Instruments | The Company’s debt as of March 31, 2021 and December 31, 2020, consisted of the following (in thousands):
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Business and Asset Acquisitions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Consideration Payable | Current and long-term portions of consideration payable consist of the following at March 31, 2021 and December 31, 2020 (in thousands):
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| Business Acquisition, Pro Forma Information | This unaudited pro forma information does not project revenues and net income post acquisition (in thousands).
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value, Assets Measured on Recurring Basis | The following tables summarize the Company’s assets that are measured at fair value on a recurring basis (in thousands):
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| Schedule of Liabilities Measured on a Recurring Basis | The following tables summarizes the Company’s liabilities that are measured at fair value on a recurring basis (in thousands):
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Earnings Per Share (Tables) |
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Components of Basic and Diluted EPS | The components of basic and diluted earnings per share (“EPS”) were as follows for the three months ended March 31 (in thousands, except per share amounts):
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Description of Business (Details) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2021
USD ($)
location
terminal
day
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Mar. 31, 2020
USD ($)
terminal
location
day
|
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| Unusual or Infrequent Item, or Both [Line Items] | ||
| Number of video gaming terminals | terminal | 12,720 | 11,164 |
| Number of video gaming locations | location | 2,470 | 2,353 |
| Number of days video gaming terminals inoperable | day | 18 | 15 |
| Number of video gaming days in quarter | day | 90 | 91 |
| Percent of days inoperable during quarter | 20.00% | 16.00% |
| Cash payment for asset acquisition | $ | $ 2,044 | $ 3,855 |
| Other operating expenses | $ | $ 2,053 | $ 1,205 |
Investment in Convertible Notes (Details) - USD ($) |
3 Months Ended | |||||
|---|---|---|---|---|---|---|
Oct. 11, 2019 |
Jul. 19, 2019 |
Mar. 31, 2021 |
Mar. 31, 2020 |
Mar. 09, 2021 |
Jul. 30, 2020 |
|
| Debt Securities, Available-for-sale [Line Items] | ||||||
| Monthly installment receivable | $ 1,000,000 | |||||
| Unrealized gain on investment in convertible notes, net | $ 469,000 | $ 0 | ||||
| Convertible Promissory Notes | ||||||
| Debt Securities, Available-for-sale [Line Items] | ||||||
| Investment purchase | $ 25,000,000.0 | $ 30,000,000.0 | $ 25,000,000.0 | $ 25,000,000.0 | ||
| Investment interest rate | 3.00% | |||||
| Convertible Promissory Notes | Subordinated Debt | ||||||
| Debt Securities, Available-for-sale [Line Items] | ||||||
| Investment purchase | $ 5,000,000.0 | $ 5,000,000.0 | $ 5,000,000.0 | |||
| Investment maturity | 6 months | |||||
Route and Customer Acquisition Costs - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
|
| Revenue from Contract with Customer [Abstract] | |||
| Gross payments due | $ 6,500 | $ 6,400 | |
| Net present value of payments due | 5,800 | 5,700 | |
| Current portion of payments due | 1,639 | 1,608 | |
| Customer acquisition cost asset | 17,800 | 17,700 | |
| Capitalized contract cost, subject to claw back | 1,600 | $ 1,700 | |
| Amortization expense (decrease in expense) on route and customer acquisition costs | $ 500 | $ 400 | |
Route and Customer Acquisition Costs - Schedule of Customer Contract Acquired (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Revenue from Contract with Customer [Abstract] | ||
| Cost | $ 27,759 | $ 27,364 |
| Accumulated amortization | (12,413) | (12,113) |
| Route and customer acquisition costs, net | $ 15,346 | $ 15,251 |
Location Contracts Acquired - Schedule of Customer Contract Acquired (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Cost | $ 226,428 | $ 226,012 |
| Accumulated amortization | (63,933) | (58,278) |
| Location contracts acquired, net | $ 162,495 | $ 167,734 |
Location Contracts Acquired - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Location Contract | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Amortization of intangible assets | $ 5.7 | $ 5.1 |
Goodwill (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | ||
| Goodwill | $ 45,754 | $ 45,754 |
| Tax exempt portion of goodwill | 36,500 | |
| Goodwill impairment | $ 0 |
Debt - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
Mar. 01, 2020 |
|---|---|---|---|
| Debt Instrument [Line Items] | |||
| Total debt | $ 367,000 | $ 347,562 | |
| Less: Debt issuance costs | (6,917) | (7,421) | |
| Total debt, net of debt issuance costs | 360,083 | 340,141 | |
| Less: Current maturities | (18,250) | (18,250) | |
| Total debt, net of current maturities | 341,833 | 321,891 | |
| New Credit Facility | Revolving credit facility | |||
| Debt Instrument [Line Items] | |||
| Total debt | 24,000 | 0 | |
| New Credit Facility | Term Loan | |||
| Debt Instrument [Line Items] | |||
| Total debt | 225,000 | 228,000 | |
| New Credit Facility | Delayed Draw Term Loan (DDTL) | |||
| Debt Instrument [Line Items] | |||
| Total debt | $ 118,000 | $ 119,562 | $ 65,000 |
Business and Asset Acquisitions - Schedule of Unaudited Pro Forma Results (Details) $ in Thousands |
3 Months Ended |
|---|---|
|
Mar. 31, 2020
USD ($)
| |
| Business Combinations [Abstract] | |
| Revenues | $ 110,423 |
| Net income | $ 49,046 |
Business and Asset Acquisitions - Schedule of Consideration Payable (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Business Acquisition [Line Items] | ||
| Current | $ 4,041 | $ 3,013 |
| Long-Term | 20,270 | 20,943 |
| TAV | ||
| Business Acquisition [Line Items] | ||
| Current | 490 | 490 |
| Long-Term | 3,078 | 3,206 |
| Fair Share Gaming | ||
| Business Acquisition [Line Items] | ||
| Current | 1,232 | 1,096 |
| Long-Term | 566 | 523 |
| Family Amusement | ||
| Business Acquisition [Line Items] | ||
| Current | 394 | 391 |
| Long-Term | 2,536 | 2,609 |
| Skyhigh | ||
| Business Acquisition [Line Items] | ||
| Current | 722 | 601 |
| Long-Term | 5,873 | 5,789 |
| G3 | ||
| Business Acquisition [Line Items] | ||
| Current | 387 | 355 |
| Long-Term | 62 | 100 |
| Grand River | ||
| Business Acquisition [Line Items] | ||
| Current | 0 | 0 |
| Long-Term | 5,922 | 5,755 |
| IGS | ||
| Business Acquisition [Line Items] | ||
| Current | 80 | 80 |
| Long-Term | 0 | 0 |
| Tom's Amusements | ||
| Business Acquisition [Line Items] | ||
| Current | 736 | 0 |
| Long-Term | 727 | 1,455 |
| AVG | ||
| Business Acquisition [Line Items] | ||
| Current | 0 | 0 |
| Long-Term | $ 1,506 | $ 1,506 |
Warrant Liability (Details) |
12 Months Ended | |||||
|---|---|---|---|---|---|---|
|
Aug. 14, 2020
shares
|
Jul. 16, 2020
shares
|
Nov. 20, 2019
$ / shares
shares
|
Dec. 31, 2017 |
Jul. 14, 2020 |
Dec. 31, 2018
shares
|
|
| Class of Warrant or Right [Line Items] | ||||||
| Warrants issued (in shares) | 7,333,326 | 15,000,000 | ||||
| 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 | |||||
| Warrants, subject to adjustments after consummation of reverse capitalization period | 30 days | 30 days | ||||
| Exercise conversion rate of warrants (share per share) | 0.25 | 0.25 | ||||
| Warrants tendered (in shares) | 7,189,990 | |||||
| Percent of warrants outstanding | 99.93% | |||||
| Class A-1 Common Stock | ||||||
| Class of Warrant or Right [Line Items] | ||||||
| Conversion of stock, shares converted (in shares) | 3,784,416 | |||||
| Exercise of warrants (in shares) | 1,797,474 |
Fair Value Measurements - Narrative (Details) $ in Millions |
3 Months Ended |
|---|---|
|
Mar. 31, 2021
USD ($)
| |
| Fair Value Disclosures [Abstract] | |
| Decrease in other expenses due to one percent increase in discount rate | $ 0.1 |
| Increase in other expenses due to one percent decrease in discount rate | $ 0.1 |
Fair Value Measurements - Schedule of Assets Measured at Fair Value (Details) - Fair Value, Recurring - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Investment in convertible notes | $ 30,786 | $ 30,129 |
| Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Investment in convertible notes | 0 | 0 |
| Significant Other Observable Inputs (Level 2) | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Investment in convertible notes | 0 | 0 |
| Significant Unobservable Inputs (Level 3) | ||
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
| Investment in convertible notes | $ 30,786 | $ 30,129 |
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions |
Sep. 28, 2020 |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|---|
| Class of Warrant or Right [Line Items] | |||
| Total offering size | $ 84.0 | ||
| Sale of stock, consideration received on transaction | $ 78.7 | ||
| Public Stock Offering | |||
| Class of Warrant or Right [Line Items] | |||
| Common stock, shares issued (in shares) | 8,000,000 | ||
| Offering costs | $ 5.3 | ||
| Class A-1 Common Stock | |||
| Class of Warrant or Right [Line Items] | |||
| Common stock, par value (in usd per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 |
| Sale of stock (in usd per share) | $ 10.50 | ||
| Class A-1 Common Stock | Public Stock Offering | |||
| Class of Warrant or Right [Line Items] | |||
| Common stock, shares issued (in shares) | 8,000,000 | ||
| Class A-1 Common Stock | Over-Allotment Option | |||
| Class of Warrant or Right [Line Items] | |||
| Common stock, shares issued (in shares) | 1,200,000 |
Stock-based Compensation (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Stock option compensation expense | $ 1.6 | $ 1.1 |
| RSU | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Restricted stock units granted (in shares) | 0.4 | |
| Estimated grant date fair value of options and RSUs granted | $ 5.6 | |
| RSU | Employee | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Vesting period | 4 years | |
| RSU | Director | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Vesting period | 9 months | |
| Class A-1 Common Stock | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Options granted (in shares) | 0.2 | |
| Vesting period | 4 years | |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Income Tax Contingency [Line Items] | ||
| Income tax expense (benefit) | $ 1,913 | $ (139) |
| Effective tax rate | 56.00% | (0.30%) |
| COVID-19 | ||
| Income Tax Contingency [Line Items] | ||
| COVID credits receivable | $ 1,100 | |
Commitments and Contingencies (Details) |
12 Months Ended | ||
|---|---|---|---|
|
Dec. 18, 2020
USD ($)
|
Jul. 02, 2019
USD ($)
|
Dec. 31, 2012
location
|
|
| Loss Contingencies [Line Items] | |||
| Number of defendant establishments | location | 10 | ||
| Illinois Gaming Investors, LLC vs. The Company | |||
| Loss Contingencies [Line Items] | |||
| Damages sought | $ 10,000,000.0 | ||
| IGB Complaint | |||
| Loss Contingencies [Line Items] | |||
| Damages sought | $ 5,000,000 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
| Earnings Per Share [Abstract] | ||
| Net income | $ 1,501 | $ 48,043 |
| Less: Net income applicable to contingently issuable shares | 0 | 798 |
| Net income on which diluted earnings per share is calculated | $ 1,501 | $ 47,245 |
| Basic weighted average outstanding shares of common stock (in shares) | 93,471,000 | 78,003,000 |
| Dilutive effect of stock-based awards for common stock (in shares) | 809,000 | 862,000 |
| Dilutive effect of contingent earnout shares before conversion (in shares) | 0 | 228,000 |
| Diluted weighted average outstanding shares of common stock (in shares) | 94,280,000 | 79,093,000 |
| Earnings per share - basic (in usd per share) | $ 0.02 | $ 0.62 |
| Earnings per share - diluted (in usd per share) | $ 0.02 | $ 0.60 |
| Anti-dilutive options excluded from calculation of diluted EPS (in shares) | 5,359,661 | 28,217,335 |