PROPERTY AND EQUIPMENT

6 Months Ended

Jun. 30, 2011

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

NOTE 5—PROPERTY AND EQUIPMENT

        From time to time, we may dispose of real property, equipment or other assets that do not continue to support the operation of our core properties. In February 2010, we agreed in principle to a listing agreement with a commercial real estate broker to actively market our non-operating real properties. However, although it is our intent to enter into a listing agreement, an agreement has not been finalized. Based upon the determination in 2009 of our intent to sell the properties and changes in market conditions, we performed an evaluation to determine that the properties were carried at the lower of carrying value or fair value, as determined by an independent appraisal, less cost to sell. As a result, the carrying values were adjusted. Other than the sales completed during 2010 and 2011, the remaining properties do not meet the classification criteria established in ASC 360 and as such are not classified as held for sale at June 30, 2011 and December 31, 2010. These properties are included in non-operating real properties in our accompanying consolidated balance sheets at June 30, 2011 and December 31, 2010.

        On April 14, 2011, we completed the sale of 21 acres of non-operating real property land holdings in West Virginia for approximately $425,000, after estimated closing costs. This transaction resulted in a gain on sale of approximately $196,000. The carrying value of this property was included in non-operating real properties in our consolidated balance sheet as of December 31, 2010.

        On May 10, 2011, Mountaineer entered into lease agreements with Chesapeake Appalachia, LLC ("Chesapeake") to lease mineral rights (primarily oil and gas) with respect to approximately 1,707 acres in West Virginia that Mountaineer controls or holds the mineral rights. The agreements have an initial term of five (5) years, with an option to extend for an additional five (5) year term. The agreements required Chesapeake to pay Mountaineer a lease bonus payment of $1,265 per acre on land parcels totaling 1,454 acres, for a total of approximately $1.8 million, which was included in other revenues in our accompanying statement of operations for the three and six months ended June 30, 2011. In addition, Mountaineer will receive a 14% royalty on the sale of any oil or gas retrieved by Chesapeake. The lease bonus payment on the remaining 253 acres of property, at $1,265 per acre, will be paid upon the release of certain liens on that property. Such future royalty and lease bonus payments will be recognized as other revenues in our statements of operations when received. Mountaineer will continue to retain the ownership rights in all of the property and has the ability to sell the property subject to the terms of the lease agreements.

        During the six months ended June 30, 2010, we disposed of gaming equipment which resulted in losses in the aggregate amount of $157,000. In addition, we sold various parcels of non-operating real property land holdings located in West Virginia and Pennsylvania for aggregate proceeds of approximately $1.4 million, after closing costs. These transactions, when aggregated, resulted in a net gain on sale of approximately $36,000.

        During the six months ended June 30, 2010, the West Virginia Racing Commission provided reimbursement for capital expenditures aggregating $2.3 million. No such reimbursements occurred during the six months ended June 30, 2011.