Goodwill And Intangible Assets

6 Months Ended

Jun. 30, 2023

Goodwill And Intangible Assets [Abstract]

4.GOODWILL AND INTANGIBLE ASSETS

Goodwill represents the future economic benefits of a business combination to the extent that the purchase price exceeds the fair value of the net identified tangible and intangible assets acquired and liabilities assumed. The Company determines the estimated fair value of the net identified tangible and intangible assets acquired and liabilities assumed after review and consideration of relevant information including discounted cash flows, quoted market prices, and estimates made by management.

The Company tests goodwill for impairment as of October 1 each year, or more frequently as circumstances indicate it is necessary. Testing compares the estimated fair values of our reporting units to the reporting units’ carrying values. The reportable segments with goodwill balances as of June 30, 2023 included the United States, Canada and Poland. For the quantitative goodwill impairment test, the current fair value of each reporting unit with goodwill balances is estimated using a combination of (i) the income approach using the discounted cash flow method for projected revenue, EBITDA and working capital, (ii) the market approach observing the price at which comparable companies or shares of comparable companies are bought or sold, and (iii) fair value measurements using either quoted market price or an estimate of fair value using a present value technique. The cost approach, estimating the cost of reproduction or replacement of an asset, was considered but not used because it does not adequately capture an operating company’s intangible value. If the carrying value of a reporting unit exceeds its estimated fair value, the Company will recognize an impairment for the amount by which the carrying value exceeds the reporting unit’s fair value. The impairment analysis requires management to make estimates about future operating results, valuation multiples and discount rates and assumptions based on historical data and consideration of future market conditions. Changes in the assumptions can materially affect these estimates. Given the uncertainty inherent in any projection, heightened by the possibility of additional effects of COVID-19, actual results may differ from the estimates and assumptions used, or conditions may change, which could result in additional impairment charges in the future. Such impairments could be material.

The Company tests its indefinite-lived intangible assets as of October 1 each year, or more frequently as circumstances indicate it is necessary. The fair value is determined primarily using the multi-period excess earnings methodology and the relief from royalty method under the income approach.

Goodwill

Changes in the carrying amount of goodwill related to the United States, Canada and Poland segments are as follows:


Amounts in thousands	United States		Canada		Poland		Total
Gross carrying value January 1, 2023	$	19,786	$	7,142	$	5,816	$	32,744
Acquisition		36,540		—		—		36,540
Currency translation		—		84		445		529
Gross carrying value June 30, 2023		56,326		7,226		6,261		69,813

Accumulated impairment losses January 1, 2023		(19,786)		(3,375)		—		(23,161)
Accumulated impairment losses June 30, 2023		(19,786)		(3,375)		—		(23,161)

Net carrying value at January 1, 2023	$	—	$	3,767	$	5,816	$	9,583
Net carrying value at June 30, 2023	$	36,540	$	3,851	$	6,261	$	46,652

Intangible Assets

Intangible assets at June 30, 2023 and December 31, 2022 consisted of the following:


		June 30,		December 31,
Amounts in thousands	2023		2022
Finite-lived
Casino licenses	$	2,876	$	2,672
Less: accumulated amortization		(2,137)		(1,763)
		739		909
Trademarks		10,508		2,368
Less: accumulated amortization		(983)		(730)
		9,525		1,638
Players club lists		42,483		20,373
Less: accumulated amortization		(10,796)		(8,974)
		31,687		11,399
Total finite-lived intangible assets, net		41,951		13,946
Indefinite-lived
Casino licenses		30,585		29,331
Trademarks		1,600		1,494
Total indefinite-lived intangible assets		32,185		30,825
Total intangible assets, net	$	74,136	$	44,771

‎

Trademarks

The Company currently owns four trademarks, the Century Casinos trademark, the Mountaineer trademark, the Nugget trademark and the Casinos Poland trademark, which are reported as intangible assets on the Company’s condensed consolidated balance sheets.

Trademarks: Finite-Lived

The Company has determined that the Mountaineer trademark and the Nugget trademark, both reported in the United States segment, have useful lives of ten years after considering, among other things, the expected use of the asset, the expected useful life of other related assets or asset groups, any legal, regulatory, or contractual provisions that may limit the useful life, the effects of obsolescence, demand and other economic factors, and the maintenance expenditures required to promote and support the trademark. As such, the trademarks will be amortized over their useful lives. Costs incurred to renew trademarks that are finite-lived are expensed over the renewal period to general and administrative expenses on the Company’s condensed consolidated statements of (loss) earnings. Changes in the carrying amount of the United States trademarks are as follows:


Amounts in thousands		Balance at ‎January 1, 2023		Acquisition		Amortization		Balance at ‎June 30, 2023
United States	$	1,638	$	8,140	$	(253)	$	9,525

As of June 30, 2023, estimated amortization expense of the United States trademarks over the next five years was as follows:


Amounts in thousands
2023	$	594
2024		1,051
2025		1,051
2026		1,051
2027		1,051
Thereafter		4,727
	$	9,525

The weighted-average amortization period of the United States trademarks is 8.1 years.

Trademarks: Indefinite-Lived

The Company has determined that the Casinos Poland trademark, reported in the Poland segment, and the Century Casinos trademark, reported in the Corporate and Other segment, have indefinite useful lives and therefore the Company does not amortize these trademarks. Costs incurred to renew trademarks that are indefinite-lived are expensed over the renewal period as general and administrative expenses on the Company’s condensed consolidated statements of (loss) earnings. Changes in the carrying amount of the indefinite-lived trademarks are as follows:


Amounts in thousands		Balance at January 1, 2023		Currency translation		Balance at June 30, 2023
Poland	$	1,386	$	106	$	1,492
Corporate and Other		108		—		108
	$	1,494	$	106	$	1,600

Casino Licenses: Finite-Lived

As of June 30, 2023, Casinos Poland had eight casino licenses, each with an original term of six years, which are reported as finite-lived intangible assets and are amortized over their respective useful lives. Changes in the carrying amount of the Casinos Poland licenses are as follows:


Amounts in thousands		Balance at January 1, 2023		Amortization		Currency translation		Balance at ‎June 30, 2023
Poland	$	909	$	(229)	$	59	$	739

‎

As of June 30, 2023, estimated amortization expense for the CPL casino licenses over the next five years was as follows:


Amounts in thousands
2023	$	217
2024		231
2025		102
2026		75
2027		75
Thereafter		39
	$	739

These estimates do not reflect the impact of future foreign exchange rate changes or the continuation of the licenses following their expiration. The weighted average period before the next license expiration is 1.4 years. In Poland, gaming licenses are not renewable. Once a gaming license has expired, any gaming company can apply for the license.

Casino Licenses: Indefinite-Lived

The Company has determined that the casino licenses held in the United States segment from the Missouri Gaming Commission, the West Virginia Lottery Commission and the Nevada Gaming Commission (held by Smooth Bourbon) and those held in the Canada segment from the Alberta Gaming, Liquor and Cannabis Commission and Horse Racing Alberta are indefinite-lived. Costs incurred to renew licenses that are indefinite-lived are expensed over the renewal period to general and administrative expenses on the Company’s condensed consolidated statements of (loss) earnings. Changes in the carrying amount of the licenses are as follows:


Amounts in thousands		Balance at ‎January 1, 2023		Consolidation of Smooth Bourbon		Currency translation		Balance at ‎June 30, 2023
United States	$	17,962	$	1,000	$	—	$	18,962
Canada		11,369		—		254		11,623
	$	29,331	$	1,000	$	254	$	30,585

Player’s Club Lists

The Company has determined that the player’s club lists, reported in the United States segment, have useful lives of seven to 10 years based on estimated revenue attrition among the player’s club members over each property’s historical operations as estimated by management. As such, the player’s club lists will be amortized over their useful lives. Changes in the carrying amount of the player’s club lists are as follows:


Amounts in thousands		Balance at ‎January 1, 2023		Acquisition		Amortization		Balance at ‎June 30, 2023
United States	$	11,399	$	22,110	$	(1,822)	$	31,687

As of June 30, 2023, estimated amortization expense for the player’s club lists over the next five years was as follows:


Amounts in thousands
2023	$	2,745
2024		5,121
2025		5,121
2026		4,879
2027		2,211
Thereafter		11,610
	$	31,687

The weighted-average amortization period for the player’s club lists is 5.0 years.