Income Taxes

9 Months Ended

Sep. 30, 2023

Income Taxes [Abstract]

Income Taxes

8.INCOME TAXES

Income tax expense or benefits are recorded relative to the jurisdictions that recognize book earnings. For the nine months ended September 30, 2023, the Company recognized an income tax benefit of ($1.3) million on pre-tax loss of ($11.4) million, representing an effective income tax rate of 11.8% compared to an income tax benefit of ($8.1) million on pre-tax earnings of $8.6 million, representing an effective income tax rate of (94.1%) for the same period in 2022.

For the nine months ended September 30, 2023, the Company computed an annual effective tax rate using forecasted information. Based on current forecasts, the Company’s effective tax rate is expected to be highly sensitive to changes in earnings. The Company concluded that computing its effective tax rate using forecasted information would be appropriate in estimating tax expense for the nine months ended September 30, 2023.

A number of items caused the effective income tax rate for the nine months ended September 30, 2023 to differ from the US federal statutory income tax rate of 21%, including certain nondeductible business expenses in Poland, various exchange rate benefits, and income attributable to the non-controlling interest holder of Smooth Bourbon, which is taxed as a partnership for US federal income tax purposes. Further, capital gains recognized from the Canada Real Estate Sale with VICI PropCo were subject to an effective tax rate of 11.5%, a 50% reduction from the Canadian statutory rate of 23%. As of September 30, 2023, the Company continues to maintain a full valuation allowance on deferred tax assets for CMR, CRM and Century Resorts International Ltd.

Additionally, with the completion of the Canada Real Estate Sale, the Company does not currently intend to permanently reinvest approximately $40.0 million of earnings and profits from the Canadian subsidiaries, which would be available for repatriation. In anticipation of a potential repatriation to the Company, which would generally be exempt from taxation in the United States, the Company recorded a deferred tax liability of $2.9 million for the required foreign tax withholding associated with repatriating a cash dividend to the United States.

The Company has unrecognized income tax benefits of $0.5 million due to the Company’s ability to utilize pre-acquisition net operating losses. The Company received notification of an examination by Canada Revenue Agency, and it will assess the ability to recognize the $0.5 million in income tax benefits upon completion of the examination. The Company believes that the examination will not conclude until 2024.