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 eight 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 range from six to 12 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 ended		For the nine months ended
Amounts in thousands	September 30, 2019		September 30, 2019
Operating lease expense	$	1,495	$	4,367

Finance lease expense:
Amortization of right-of-use assets	$	142	$	203
Interest on lease liabilities		20		31
Total finance lease expense	$	162	$	234

Short-term lease expense	$	132	$	679

Variable lease expense	$	904	$	2,614

Supplemental cash flow information related to leases was as follows:


	For the nine months
	ended September 30,
Amounts in thousands	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	31
Operating cash flows from operating leases		5,185
Financing cash flows from finance leases		250

Supplemental balance sheet information related to leases was as follows:


	As of
Amounts in thousands	September 30, 2019
Operating leases
Leased right-of-use assets, net	$	45,860

Current portion of operating lease liabilities		4,229
Operating lease liabilities, net of current portion		44,550
Total operating lease liabilities		48,779

Finance leases
Finance lease right-of-use assets, gross		1,768
Accumulated depreciation		(386)
Leased right-of-use assets, net		1,382

Current portion of finance lease liabilities		351
Finance lease liabilities, net of current portion		979
Total finance lease liabilities		1,330

Weighted-average remaining lease term
Operating leases		14.6 years
Finance leases		4.1 years

Weighted-average discount rate
Operating leases		4.7%
Finance leases		4.3%

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


Amounts in thousands		Operating leases	Finance leases
Remaining 2019	$	1,451	$	107
2020		5,791		403
2021		5,754		370
2022		5,525		271
2023		4,898		257
Thereafter		46,957		85
Total lease payments		70,376		1,493
Less imputed interest		(21,597)		(163)
Total	$	48,779	$	1,330