11.LEASES

The Company determines if an arrangement is a lease at inception. Operating leases and finance lease ROU assets are included in leased ROU assets in the Company’s condensed consolidated balance sheets. Operating lease liabilities are included in current portion of lease liabilities and operating lease liabilities in the Company’s condensed consolidated balance sheets. Finance lease liabilities are included in current portion of lease liabilities and finance lease liabilities in the Company’s condensed consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the rate implicit is not readily determinable for the Company’s leases, the Company uses its incremental borrowing rate in each of the jurisdictions in which its subsidiaries operate to calculate the present value of lease payments. If an implicit rate is readily determinable in the arrangement, the Company will utilize the implicit rate. Lease terms may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that the Company will exercise those options. Operating lease expense is recorded on a straight-line basis over the lease term.

The Company accounts for lease agreements with lease and non-lease components as a single lease component for all asset classes. The Company does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.

The Company’s operating and finance leases include land, casino space, corporate offices, gaming equipment and other equipment. The leases have remaining lease terms of one month to 28 years.

Land – The Company leases the land on which the REC at CMR is built. The lease term is 20 years and the Company has six options to renew for additional five year terms.

Casino space - The Company leases space for its casino in Bath, England, its seven casinos operating in Poland and its casinos onboard five cruise ships. The lease term for CCB is 28 years with an option to renew for an additional 15 year term. The lease terms for the casinos in Poland mirror the gaming license terms of six years. The lease terms for the casinos onboard the cruise ships mirror the agreement terms with the cruise ships, and the lease payments are variable based on revenue.

Corporate offices – The Company leases space for its corporate offices in Vienna, Austria and Colorado Springs, Colorado. The lease terms are three and 10 years, respectively. The corporate office lease in Vienna has an option to renew for an additional three years.

Gaming equipment – The majority of the gaming equipment that the Company leases is on a monthly basis with variable payments based on revenue.

Other equipment – The lease terms range from one to six years, some of which include options to extend the lease and some of which include options to terminate within one year.

The components of lease expense were as follows:


	For the three months		For the six months ended
	ended June 30,		ended June 30,
Amounts in thousands	2019		2019
Operating lease expense	$	1,537	$	3,015

Finance lease expense:
Amortization of right-of-use assets	$	29	$	61
Interest on lease liabilities		8		11
Total finance lease expense	$	37	$	72

Short-term lease expense	$	401	$	539

Variable lease expense	$	1,085	$	1,766

Supplemental cash flow information related to leases was as follows:


	For the six months
	ended June 30,
Amounts in thousands	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	7
Operating cash flows from operating leases		3,418
Financing cash flows from finance leases		111

Supplemental balance sheet information related to leases was as follows:


	As of
Amounts in thousands	June 30, 2019
Operating leases
Leased right-of-use assets, net	$	41,343

Current portion of operating lease liabilities		4,168
Operating lease liabilities, net of current portion		39,703
Total operating lease liabilities		43,871

Finance leases
Finance lease right-of-use assets, gross		1,842
Accumulated depreciation		(389)
Leased right-of-use assets, net		1,453

Current portion of finance lease liabilities		281
Finance lease liabilities, net of current portion		952
Total finance lease liabilities		1,233

Weighted-average remaining lease term
Operating leases		14.8 years
Finance leases		4.5 years

Weighted-average discount rate
Operating leases		4.9%
Finance leases		4.3%

Maturities of lease liabilities as of June 30, 2019 were as follows:


Amounts in thousands		Operating leases	Finance leases
Remaining 2019	$	2,857	$	184
2020		5,677		314
2021		5,637		280
2022		5,395		262
2023		4,728		247
Thereafter		41,335		80
Total lease payments		65,629		1,367
Less imputed interest		(21,758)		(134)
Total	$	43,871	$	1,233