Leases

9 Months Ended

Sep. 30, 2022

12.LEASES

The Company determines if an arrangement is a lease at inception. The right-of-use (“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. 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. 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, and gaming and other equipment. The leases have remaining lease terms of one month to 15 years.

The components of lease expense were as follows:


	For the three months ended				For the nine months ended
	September 30,				September 30,
Amounts in thousands	2022		2021		2022		2021
Operating lease expense	$	1,305	$	1,463	$	3,988	$	4,445

Finance lease expense:
Amortization of right-of-use assets	$	26	$	31	$	110	$	97
Interest on lease liabilities		10		1		19		5
Total finance lease expense	$	36	$	32	$	129	$	102

Variable lease expense	$	415	$	554	$	1,139	$	942

Variable lease expense relates primarily to rates based on changes in indexes that are excluded from the lease liability and fluctuations in foreign currency related to leases in Poland.

Supplemental cash flow information related to leases was as follows:


	For the nine months ended
	September 30,
Amounts in thousands	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	15	$	5
Operating cash flows from operating leases		3,579		3,960
Financing cash flows from finance leases		115		93

Right-of-use assets obtained in exchange for operating lease liabilities	$	1,050	$	334

Supplemental balance sheet information related to leases was as follows:


	As of		As of
Amounts in thousands	September 30, 2022		December 31, 2021
Operating leases
Leased right-of-use assets, net	$	27,470	$	28,383

Current portion of operating lease liabilities		3,610		3,915
Operating lease liabilities, net of current portion		26,539		27,229
Total operating lease liabilities		30,149		31,144

Finance leases
Finance lease right-of-use assets, gross		747		424
Accumulated depreciation		(142)		(342)
Property and equipment, net		605		82

Current portion of finance lease liabilities		149		38
Finance lease liabilities, net of current portion		430		43
Total finance lease liabilities		579		81

Weighted-average remaining lease term
Operating leases		10.8 years		11.2 years
Finance leases		3.8 years		2.2 years

Weighted-average discount rate
Operating leases		4.9%		4.7%
Finance leases		7.0%		4.0%

Maturities of lease liabilities as of September 30, 2022 were as follows:


Amounts in thousands		Operating Leases	Finance Leases
2022	$	1,215	$	49
2023		4,845		180
2024		4,179		174
2025		3,228		159
2026		2,995		84
Thereafter		23,837		15
Total lease payments		40,299		661
Less imputed interest		(10,150)		(82)
Total	$	30,149	$	579