GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

The Company performs its annual goodwill impairment test as of the first day of the fourth quarter of each year at the reporting unit level, which is at or one level below the operating segment level. Intangible assets not subject to amortization are reviewed for impairment annually. In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred which would require interim impairment testing. Late in the first quarter of 2020, as a result of the current and expected future economic and market conditions surrounding the COVID-19 pandemic and the decline in its stock price and market capitalization the Company experienced, the Company determined that it was more likely than not that the carrying value of all of its reporting units exceeded these units’ fair value and performed an interim quantitative impairment test of goodwill.

The Company estimated the fair values of all reporting units using both the market approach, applying a multiple of earnings based on guidelines for publicly traded companies, and the income approach, discounting projected future cash flows based on management’s expectations of the current and future operating environment for each reporting unit. The calculation of the impairment charge includes substantial fact-based determinations and estimates including weighted average cost of capital, future revenue, profitability, cash flows and fair values of assets and liabilities. The rates used to discount projected future cash flows under the income approach reflect a weighted average cost of capital in the range of 10% to 15%, which considered guidelines for publicly traded companies, capital structure and risk premiums, including those reflected in the current market capitalization. The Company corroborated the reasonableness of the estimated reporting unit fair values by reconciling to its enterprise value and market capitalization. Based on this analysis, the Company determined that only the carrying value of its Black Hawk Casinos reporting unit exceeded its fair value by an amount that exceeded the assigned goodwill and indefinite lived intangibles as of the acquisition date. As a result, the Company recorded a total impairment charge of $8.7 million, which as of March 31, 2020 is included in our “Other” reportable segment, and was allocated between goodwill and intangible assets with charges of $5.4 million and $3.3 million, respectively. The goodwill impairment charge reflects all of the Black Hawk Casinos reporting unit goodwill, based on the preliminary acquisition date assigned fair values.

The goodwill impairment charge recorded in the quarter ended March 31, 2020 is subject to change based upon the final purchase price allocation during the measurement period for estimated fair values of assets acquired and liabilities assumed from the Black Hawk Casinos acquisition. There can be no assurance that such final assessments will not result in material increases or decreases to the recorded goodwill and intangible impairment charge based upon the preliminary purchase price allocations, due to changes in the provisional opening balance sheet estimates of goodwill. The Company’s estimates and assumptions are subject to change during the measurement period (up to one year from the acquisition date). Refer to Note 4. “Acquisitions” for further information about the preliminary purchase price allocation and provisional goodwill and intangible balance estimated as of the acquisition date.

The change in carrying value of goodwill by reportable segment for the three months ended March 31, 2020 is as follows:


(in thousands)	Rhode Island		Delaware		Biloxi		Other		Total
Goodwill as of December 31, 2019	$	83,101	$	1,047	$	48,934	$	—	$	133,082
Goodwill from current year business acquisitions	—		—		—		5,408		5,408
Impairment charges	—		—		—		(5,408)		(5,408)
Goodwill as of March 31, 2020	$	83,101	$	1,047	$	48,934	$	—	$	133,082