Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

NOTE 10 — SEGMENT INFORMATION

The Company operates in the following five segments: (1) Big Fish Games; (2) Casinos, which includes video poker and casino operations at Calder Casino, Fair Grounds Slots, Harlow’s Casino Resort & Spa ("Harlow's"), the Company's equity investment in MVG, Oxford Casino (“Oxford”), Riverwalk Casino Hotel ("Riverwalk") and Video Services, LLC (“VSI”); (3) TwinSpires, which includes TwinSpires, our Advance Deposit Wagering (“ADW”) business, Fair Grounds Account Wagering, Bloodstock Research Information Services and Velocity, a business focused on high wagering-volume international customers, as well as the Company's equity investment in HRTV, LLC, prior to its sale during January 2015; (4) Racing, which includes Churchill Downs, Arlington International Race Course ("Arlington") and its ten off-track betting facilities ("OTBs"), and Fair Grounds Race Course ("Fair Grounds") and the pari-mutuel activity generated at its twelve OTBs; and (5) Other Investments, which includes United Tote, Bluff and the Company's other minor investments. Eliminations include the elimination of intersegment transactions.

In order to evaluate the performance of these operating segments internally, the Company's chief operating decision maker uses Adjusted EBITDA (defined as earnings before interest, taxes, depreciation, amortization, and adjusted for insurance recoveries net of losses, share-based compensation expenses, pre-opening expenses, the impairment of assets, Big Fish Games transaction expenses, Big Fish Games acquisition-related charges, changes in Big Fish Games deferred revenue and other charges or recoveries). Big Fish Games transaction expenses include legal, accounting and other deal-related expenses.  Big Fish Games acquisition-related charges reflect the change in fair value of the Big Fish Games earnout and deferred consideration liability recorded each reporting period.  Changes in Big Fish Games deferred revenue reflect reductions in revenue from business combination accounting rules when deferred revenue balances assumed as part of an acquisition are adjusted to their fair values.  Fair value approximates the cost of fulfilling the service obligation, plus a reasonable profit margin. Adjusted EBITDA also includes 50% of the operating income or loss of our joint venture, MVG. The Company utilizes the Adjusted EBITDA metric because it believes the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide a more accurate measure of its core operating results and enables management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP. The Company's calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited.

The table below presents information about the reported segments for the three months ended March 31, 2015 and 2014 (in thousands):

	Three Months Ended March 31,
	2015			2014
Net revenues from external customers:
Big Fish Games	$	91,903		$	—
Casinos:
Calder Casino	20,379			20,583
Fair Grounds Slots	11,482			11,784
VSI	9,184			8,754
Harlow's Casino	13,680			14,451
Oxford Casino	17,503			17,519
Riverwalk Casino	13,187			13,295
Total Casinos	85,415			86,386
TwinSpires	45,315			46,084
Racing:
Churchill Downs	2,008			2,142
Arlington	5,812			6,122
Calder	674			8,024
Fair Grounds	15,944			14,291
Total Racing	24,438			30,579
Other Investments	3,605			3,837
Corporate	234			255
Net revenues from external customers	$	250,910		$	167,141
Intercompany net revenues:
TwinSpires	$	297		$	230
Racing:
Churchill Downs	233			228
Arlington	958			1,017
Calder	—			356
Fair Grounds	858			732
Total Racing	2,049			2,333
Other Investments	795			898
Eliminations	(3,141		)	(3,461		)
Net revenues	$	—		$	—
Reconciliation of segment Adjusted EBITDA to net loss:
Big Fish Games	$	20,026		$	—
Casinos	28,787			27,251
TwinSpires	11,190			9,950
Racing	(9,197		)	(10,250		)
Other Investments	(668		)	(1,353		)
Total segment Adjusted EBITDA	50,138			25,598
Corporate Adjusted EBITDA	(1,867		)	(1,106		)
Insurance recoveries, net of losses	—			431
Big Fish Games acquisition charges	(6,400		)	—
Big Fish Games changes in deferred revenue	(12,876		)	—
Share-based compensation	(2,723		)	(5,241		)
Pre-opening costs	—			(27		)
MVG interest expense, net	(554		)	(540		)
Other charges and recoveries	6,138			—
Depreciation and amortization	(27,407		)	(15,284		)
Interest (expense) income, net	(7,266		)	(4,969		)
Income tax benefit	1,259			438
Loss from continuing operations	(1,558		)	(700		)
Foreign currency translation, net of ($328) tax effected	(387		)	—
Comprehensive loss	$	(1,945	)	$	(700	)

The table below presents equity in earnings of unconsolidated investments included in the Company’s reported segments for the three months ended March 31, 2015 and 2014 (in thousands):

	Three Months Ended March 31,
	2015		2014
Casinos	$	2,558	$	2,041
TwinSpires	—		220
Other Investments	390		29
	$	2,948	$	2,290

The table below presents total assets for the reported segments (in thousands):

	March 31, 2015		December 31, 2014
Total assets:
Big Fish Games	$	1,018,086	$	1,009,668
Casinos	616,201		621,240
TwinSpires	183,175		182,322
Racing	455,079		518,517
Other Investments	29,829		30,757
	$	2,302,370	$	2,362,504

The table below presents total capital expenditures for the reported segments for the three months ended March 31, 2015 and 2014 (in thousands):

	Three Months Ended March 31,
	2015		2014
Capital expenditures:
Big Fish Games	$	1,163	$	—
Casinos	4,261		2,250
TwinSpires	943		1,592
Racing	3,264		14,037
Other Investments	153		2,290
	$	9,784	$	20,169