What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-28 compared with 2021-02-26 · 674 added, 551 removed, 1276 unchanged (49% of the section changed)

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2022, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, effective January 1, 2019, the Company adopted FASB ASC Topic 842, Leases , using the modified retrospective approach.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill and Other Intangible Assets - Refer to Notes 2 and 9 to the financial statements

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill – Greektown Hotel Casino Reporting Unit Refer to Notes 2 and 9 to the financial statements

Critical Audit Matter Description

The Company’s goodwill, gaming license, and trademarks are tested annually for impairment, or more frequently if indicators of impairment exist, by comparing the fair value of each reporting unit to their carrying amount for goodwill and by comparing the fair value of each gaming license or trademark to its carrying value.

The Company’s goodwill is tested annually for impairment, or more frequently if indicators of impairment exist, by comparing the fair value of each reporting unit to their carrying amount for goodwill.

The Company determines the fair value of its reporting units using a combination of income-based and market-based approaches.

The Company assesses the fair value of its gaming

licenses using the Greenfield Method under the income approach, which estimates the fair value using a discounted cash flow model assuming the Company built a casino with similar utility to that of the existing casino.

The Company assesses the fair value of its trademarks using the relief-from-royalty method under the income approach.

The key inputs in determining the fair value, among others, include projected revenue and operating cash flows discounted to reflect the level of risk associated with receiving future cash flows.

As of December 31, 2020, the book value of goodwill is $1,157.1 million, gaming license is $1,246.1 million, and trademarks is $240.9 million.

Auditing the fair value of the Company’s reporting units, gaming licenses, and trademarks involved a high degree of subjectivity in evaluating whether management’s estimates and assumptions of projected revenue and operating cash flows and the selection of the discount rates used to derive the fair value were reasonable, including the need to involve our fair value specialists.

The key inputs in determining the fair value, among others, include projected operating cash flows discounted to reflect the level of risk associated with receiving future cash flows.

As of December 31, 2021, the book value of goodwill is $ 2,822.5 million of which $67.4 million is allocated to Greektown Hotel Casino (the “property”).

The fair value of Greektown Hotel Casino exceeded its carrying value by 8% as of the measurement date, therefore, no impairment was recognized.

Auditing the fair value of the property involved a high degree of subjectivity in evaluating whether management’s estimates and assumptions of projected revenue and operating cash flows and the selection of the discount rates used to derive the fair value were reasonable, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to forecasts of future revenue and operating cash flows and the determination of the discount rates used by management to estimate the fair value of the reporting units, gaming licenses, and trademarks included the following, among others:

• We tested the effectiveness of controls over determining the fair value of the Company’s reporting units, gaming licenses, and trademarks, including those over the forecasts of future revenue and operating cash flows and the selection of the discount rates.

• We evaluated management’s ability to accurately forecast future revenues and operating cash flows by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s revenue and operating cash flow forecasts by comparing the forecasts to:

Our audit procedures related to forecasts of revenue and operating cash flows and the determination of the discount rates used by management to estimate the fair value of the property included the following, among others:

• We tested the effectiveness of controls over determining the fair value of the property, including those over the forecasts of revenue and operating cash flows and the selection of the discount rates.

• We evaluated management’s ability to accurately forecast revenues and operating cash flows by comparing actual results to management’s historical forecasts.

• We evaluated the reasonableness of management’s operating cash flow forecasts by comparing the forecasts to:

◦ Historical results

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◦ Forecasted information included in the Company’s press release as well as in analyst and industry reports for the Company and certain of its peer companies

◦ The impact of changes in the regulatory environment on management’s projections.

◦ The impact of the regulatory environment on management’s projections.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rates by:

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◦ Developing a range of independent estimates and comparing those to the discount rates selected by management.

Acquisitions – Refer to Notes 2 and 6 to the financial statements

Critical Audit Matter Description

The Company completed the acquisition of Score Media and Gaming Inc.

on October 19, 2021 for a purchase price of approximately $2.1 billion.

Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including gaming technology and tradename.

Management estimated the fair value of the gaming technology and tradename using a relief from royalty income approach.

The fair value determination of the gaming technology and tradename required management to make significant estimates and assumptions related to future cash flows and the selection of the discount rate.

Goodwill was recognized as the excess of the cash consideration and the purchase price over the identifiable assets acquired and liabilities assumed.

The fair value determination of gaming technology and tradename required management to make significant estimates and assumptions around expected cash flows and projected financial results, including forecasted revenues (collectively the “forecast”), as well as the selection of discount rates.

Changes to these assumptions and estimates could have a significant impact on the fair value of the gaming technology and tradename and the recognition of goodwill.

Therefore, auditing the forecast and the selection of the discount rate involved a higher degree of auditor judgment and subjectivity, as well as an increased level of audit effort, including the involvement of fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts and the selection of the discount rate used by management to determine the fair value of the acquired intangible assets and the assigned goodwill included the following, among others:

• We tested the effectiveness of controls over the valuation of the gaming technology and tradename intangible asset, including management’s controls over forecasts of future cash flows and selection of the discount rate.

• We evaluated the assumptions and estimates included in the forecast by:

◦ Comparing the forecasts to information included in the Company’s communications to the Board of Directors, gaming industry reports, and analyst reports for the Company and certain of its peer companies;

◦ Comparing the forecasts to historical financial results;

◦ Conducting inquiries with management;

◦ Evaluating whether the forecast was consistent with evidence obtained in other areas of the audit.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rate by:

◦ Testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of the calculation.

◦ Developing a range of independent estimates and comparing those to the discount rate selected by management.

/s/ Deloitte & Touche LLP

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Cash and cash equivalents $ 1,863.9 $ 1,853.8

Receivables, net of allowance for doubtful accounts of $ 8.8 and $ 7.7

Accounts receivable, net 195.0 96.4

Prepaid expenses 132.3 103.5

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Series C preferred stock ($ 0.01 par value, 18,500 shares authorized, no shares issued and outstanding)

Series D Preferred stock ($ 0.01 par value, 5,000 shares authorized, 883 shares issued and outstanding)

Common stock ($ 0.01 par value, 200,000,000 shares authorized, 157,868,227 and 118,125,652 shares issued, and 155,700,834 and 115,958,259 shares outstanding)

Series D Preferred stock ($ 0.01 par value, 5,000 shares authorized, 969 and 883 shares issued, and 775 and 883 shares outstanding)

Common stock ($ 0.01 par value, 400,000,000 and 200,000,000 shares authorized, 171,729,276 and 157,868,227 shares issued, and 169,561,883 and 155,700,834 shares outstanding)

Exchangeable shares ($ 0.01 par value, 697,539 shares authorized and issued, and 653,059 shares outstanding as of December 31, 2021.

None authorized, issued or outstanding for the year ended December 31, 2020.)

Treasury stock, at cost, ( 2,167,393 shares held in both periods)

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Additional paid-in capital 4,239.6 3,167.2

Retained earnings (accumulated deficit) ( 507.3 ) 161.6

Accumulated deficit ( 86.5 ) ( 507.3 )

Accumulated other comprehensive loss ( 54.4 ) —

Total Penn National stockholders’ equity 4,097.8 2,656.2

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF OPERATIONS

For the year ended December 31,

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Food, beverage, hotel and other 959.7 527.6 1,032.7

Management service and license fees — — 6.0

Reimbursable management costs — — 57.3

Total revenues 5,905.0 3,578.7 5,301.4

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General and administrative 1,352.9 1,130.8 1,187.7

Reimbursable management costs — — 57.3

Depreciation and amortization 344.5 366.7 414.2

Impairment losses — 623.4 173.1

Recoveries on loan loss and unfunded loan commitments — — ( 17.0 )

Total operating expenses 4,845.4 3,988.9 4,729.5

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Net (income) loss attributable to non-controlling interest 0.3 ( 0.4 ) 0.8

Net income (loss) attributable to Penn National $ ( 669.5 ) $ 43.9 $ 93.5

Comprehensive income (loss) $ ( 669.1 ) $ 43.1 $ 93.5

Comprehensive (income) loss attributable to non-controlling interest ( 0.4 ) 0.8 —

Comprehensive income (loss) attributable to Penn National $ ( 669.5 ) $ 43.9 $ 93.5

Net income (loss) attributable to Penn National Gaming, Inc.

$ 420.8 $ ( 669.5 ) $ 43.9

Earnings (loss) per share

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

For the year ended December 31,

(in millions) 2021 2020 2019

Net income (loss) $ 420.5 $ ( 669.1 ) $ 43.1

Other comprehensive loss:

Foreign currency translation adjustment during the period ( 54.4 ) — —

Other comprehensive loss ( 54.4 ) — —

Total comprehensive income (loss) 366.1 ( 669.1 ) 43.1

Comprehensive loss (income) attributable to non-controlling interest 0.3 ( 0.4 ) 0.8

Comprehensive income (loss) attributable to Penn National $ 366.4 $ ( 669.5 ) $ 43.9

See accompanying notes to the Consolidated Financial Statements.

PENN NATIONAL GAMING, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Preferred Stock Common Stock Treasury

Stock Additional

Capital Retained Earnings (Accum-

ulated Deficit) Accum-

Loss Total Penn National Stock-holders’

Preferred Stock Common Stock Treasury Stock Additional

Capital Retained Earnings (Accumulated Deficit) Accumulated

Comprehensive

Income (Loss) Total Penn National Stock-holders’

Equity (Deficit) Non-Controlling Interest Total

Stock-holders’ Equity (Deficit)

(in millions, except share data) Shares Amount Shares Amount

(in millions, except share data) Shares Amount Penn National Gaming Shares Amount Exchangeable Shares Amount

Balance as of January 1, 2019 — $ — 116,687,808 $ 1.2 — $ — $ ( 28.4 ) $ 1,726.4 $ ( 968.0 ) $ — $ 731.2 $ — $ 731.2

Share-based compensation arrangements — — 542,274 — — — — 16.8 — — 16.8 — 16.8

Pinnacle Acquisition — — 26,295,439 0.3 — 749.4 — — 749.7 — 749.7

Reclassification of accumulated other comprehensive loss to earnings upon termination of management contract — — — — — — — 1.5 1.5 — 1.5

Cumulative-effect adjustment upon adoption of ASC 842 — — — — — — — — 1,085.7 — 1,085.7 — 1,085.7

Share repurchases — — ( 1,271,823 ) — — — — ( 24.9 ) — — ( 24.9 ) — ( 24.9 )

Net income — — — — — — 93.5 — 93.5 — 93.5

Balance as of December 31, 2018 — — 116,687,808 1.2 ( 28.4 ) 1,726.4 ( 968.0 ) — 731.2 — 731.2

Share-based compensation arrangements — — 542,274 — — 16.8 — — 16.8 — 16.8

Cumulative-effect adjustment upon adoption of ASC 842 — — — — — — 1,085.7 — 1,085.7 — 1,085.7

Share repurchases — — ( 1,271,823 ) — — ( 24.9 ) — — ( 24.9 ) — ( 24.9 )

Net Income (loss) — — — — — — — — 43.9 — 43.9 ( 0.8 ) 43.1

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Balance as of December 31, 2020 883 23.1 155,700,834 1.6 — — ( 28.4 ) 3,167.2 ( 507.3 ) — 2,656.2 ( 0.4 ) 2,655.8

Share-based compensation arrangements — — 1,061,242 — — — — 35.1 — — 35.1 — 35.1

Share issuance in connection with acquisitions (Note 15) — — 12,561,127 0.1 697,539 — — 1,039.5 — — 1,039.6 — 1,039.6

Preferred stock issuance (Note 15) 86 8.1 — — — — — — — — 8.1 — 8.1

Preferred stock conversions (Note 15) ( 194 ) ( 5.4 ) 194,200 — — — — 5.4 — — — — —

Exchangeable shares conversions (Note 15) — — 44,480 — ( 44,480 ) — — — — — — — —

Currency translation adjustment — — — — — — — — — ( 54.4 ) ( 54.4 ) — ( 54.4 )

Net income (loss) — — — — — — — — 420.8 — 420.8 ( 0.3 ) 420.5

Other — — — — — — — ( 7.6 ) — — ( 7.6 ) — ( 7.6 )

Balance as of December 31, 2021 775 $ 25.8 169,561,883 $ 1.7 653,059 $ — $ ( 28.4 ) $ 4,239.6 $ ( 86.5 ) $ ( 54.4 ) $ 4,097.8 $ ( 0.7 ) $ 4,097.1

See accompanying notes to the Consolidated Financial Statements.

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Amortization of items charged to interest expense 22.8 16.3 7.7

Noncash interest expense 17.9 — —

Noncash operating lease expense 160.8 120.3 100.4

Change in fair values of contingent purchase price ( 1.1 ) 7.0 0.5

Holding gain on equity securities ( 106.7 ) ( 19.9 ) —

Change in fair value of contingent purchase price 1.9 ( 1.1 ) 7.0

Gain on acquisition of Sam Houston ( 29.9 ) — —

Holding loss (gain) on equity securities 24.9 ( 106.7 ) ( 19.9 )

Loss (gain) on sale or disposal of property and equipment 1.1 ( 29.2 ) 5.5

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Impairment losses — 623.4 173.1

Recoveries on loan loss and unfunded loan commitments — — ( 17.0 )

Reclassification of accumulated other comprehensive loss to earnings upon termination of management contract — — 1.5

Loss on early extinguishment of debt — 1.2 —

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Other current and long-term liabilities 65.2 16.3 47.6

Other ( 2.7 ) — —

Net cash provided by operating activities 896.1 338.8 703.9

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Consideration paid for acquisitions of businesses, net of cash acquired ( 877.6 ) ( 3.0 ) ( 1,359.4 )

Consideration paid for remaining interest of Sam Houston ( 42.0 ) — —

Proceeds from sale-and-leaseback transactions in conjunction with acquisitions — — 961.1

Cash received for the sale of the Divested Properties and Belterra Park — — 661.7

Consideration paid for gaming licenses and other intangible assets ( 24.2 ) ( 4.8 ) ( 11.7 )

Acquisition of equity securities ( 26.0 ) — ( 5.1 )

Additional contributions from (to) joint ventures ( 5.4 ) ( 0.4 ) 18.9

For the year ended December 31,

(in millions) 2021 2020 2019

Proceeds from sale of loan — — 15.2

Receipts applied against non-accrual loan — — 0.5

Additional contributions to joint ventures ( 1.4 ) ( 5.4 ) ( 0.4 )

Other ( 8.0 ) 2.7 ( 2.0 )

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Principal payments on long-term debt ( 64.4 ) ( 161.7 ) ( 46.6 )

Prepayment penalties and modification payments incurred with debt refinancing — — ( 11.3 )

Debt and equity issuance costs ( 7.5 ) ( 6.9 ) —

Proceeds from other long-term obligations 72.5 — —

Payments of other long-term obligations ( 17.0 ) ( 16.2 ) ( 15.4 )

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Principal payments on finance leases ( 8.5 ) ( 3.9 ) ( 6.2 )

Proceeds from the sale of real estate assets in conjunction with acquisitions — — 250.0

Proceeds from common stock offerings, net of discounts and fees — 1,288.8 —

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Net cash provided by (used in) financing activities 339.9 1,310.1 ( 122.4 )

Effect of currency rate changes on cash, cash equivalents, and restricted cash ( 4.5 ) — —

Change in cash, cash equivalents, and restricted cash 9.7 1,415.2 ( 26.0 )

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Cash payments (refunds) related to income taxes, net $ 108.3 $ ( 15.2 ) $ 21.8

Non-cash investing activities:

Non-cash activities:

Rent credits received upon sale of Tropicana land and buildings and Morgantown land $ — $ 337.5 $ —

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Organization:

Penn National Gaming, Inc., together with its subsidiaries (“Penn National,” the “Company,” “we,” “our,” or “us”), is a leading, diversified, multi-jurisdictional owner and manager of gaming and racing properties, retail and online sports betting operations, and video gaming terminal (“VGT”) operations.

Our wholly-owned interactive division, Penn Interactive Ventures, LLC (“Penn Interactive”), operates retail sports betting across the Company’s portfolio, as well as online sports betting, online social casino, bingo and online casinos (“iGaming”).

In February 2020, the Company acquired 36 % (inclusive of 1% on a delayed basis) equity interest in Barstool Sports, Inc.

(“Barstool Sports”), a leading digital sports, entertainment, lifestyle and media company, and entered into a strategic relationship with Barstool Sports, whereby Barstool Sports will exclusively promote the Company's land-based retail sportsbooks, iGaming products and online sports betting products, including the Barstool Sportsbook mobile app, to its national audience.

We launched an online sports betting app called Barstool Sports in Pennsylvania in September 2020 and in Michigan in January 2021.

We also operate iGaming in Pennsylvania and Michigan.

Our MYCHOICE ® customer loyalty program (the "my choice program") currently has over 20 million members and provides such members with various benefits, including complimentary goods and/or services.

The Company’s strategy has continued to evolve from an owner and manager of gaming and racing properties into an omni-channel provider of retail and online gaming, live racing and sports betting entertainment.

As of December 31, 2020, we owned, managed, or had ownership interests in 41 gaming and racing properties in 19 states and were licensed to offer live sports betting at our properties in Colorado, Illinois, Indiana, Iowa, Michigan, Mississippi, Nevada, Pennsylvania and West Virginia.

With a gaming footprint that includes 44 properties across 20 states as of December 31, 2021, Penn National Gaming, Inc., together with its subsidiaries (“Penn National,” the “Company,” “we,” “our,” or “us”) is a highly innovative omni-channel provider of retail casino gaming, online gaming, live racing, sports betting, and digital sports content.

Our wholly-owned interactive division, Penn Interactive Ventures, LLC (“Penn Interactive”), operates retail sports betting in the Company’s retail properties, as well as online sports betting and online social casino, bingo, and iCasino products (collectively, “iGaming”).

In October 2021, we acquired Score Media and Gaming, Inc.

(“theScore”), a sports betting and digital media company.

In addition, in February 2020, we entered a strategic partnership with Barstool Sports, Inc.

(“Barstool Sports”), a leading digital sports, entertainment, lifestyle and media company.

Combined with the power of theScore and Barstool Sports, Penn National has evolved into a leading North American digital sports content, gaming and technology company.

The Company's omni-channel approach is further bolstered by its my choice customer loyalty program (the “my choice program”), which rewards and recognizes its over 25 million members for their loyalty to both retail and online gaming and sports betting products with a dynamic set of industry offers, experiences, and service levels.

The majority of the real estate assets (i.e., land and buildings) used in our operations are subject to triple net master leases;

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GLPI) (“GLPI”), a real estate investment trust (“REIT”).

In May 2019, we acquired Greektown Casino-Hotel (“Greektown”), in Detroit, Michigan, subject to a triple net lease with VICI Properties Inc.

VICI) (“VICI”, a REIT and collectively with GLPI, our “REIT Landlords”) (the “Greektown Lease”) and, in January 2019, we acquired Margaritaville Casino Resort (“Margaritaville”) in Bossier City, Louisiana, subject to a triple net lease with VICI (the “Margaritaville Leas e”).

See Note 12, “Leases,” In October 2018, the Company completed the acquisition of Pinnacle Entertainment, Inc.

(“Pinnacle”), a leading regional gaming operator (the “Pinnacle Acquisition”), which added 12 gaming properties to our holdings.

For more information on our acquisitions, see Note 6, “Acquisitions and Dispositions.”

Impact of the COVID-19 Pandemic and Company Response:

On March 11, 2020, the World Health Organization declared the novel coronavirus (known as “COVID-19”) outbreak to be a global pandemic.

We began temporarily suspending the operations of all of our properties between March 13, 2020 and March 19, 2020 pursuant to various orders from state gaming regulatory bodies or governmental authorities to combat the rapid spread of COVID-19.

We began reopening our properties on May 18, 2020 with reduced gaming and hotel capacity and limited food and beverage offerings in order to accommodate comprehensive social distancing and health and safety protocols.

During the fourth quarter of 2020, our properties temporarily suspended operations in Pennsylvania, Michigan and Illinois and were subject to increased operational restrictions in Ohio and Massachusetts (among other states).

Our Michigan property was temporarily closed on November 17, 2020 and reopened December 23, 2020.

Our Pennsylvania properties were temporarily closed on December 12, 2020 and reopened on January 4, 2021.

Our Illinois properties were temporarily closed on November 20, 2020 and began reopening with limited hours of operations beginning January 16, 2021 and throughout the week.

The property closures were pursuant to various orders from state gaming regulatory bodies or governmental authorities to combat the rapid spread of COVID-19.

As of February 26, 2021 , all of our properties were open to the public with the exception of Zia Park and Valley Race Park, which remain closed.

Between March 13, 2020 and December 31, 2020, we entered into a series of transactions to improve our financial position and liquidity in light of the COVID-19 pandemic, including:

(i) on March 13, 2020, we provided notice to our lenders to borrow the remaining available amount of $ 430.0 million under our Revolving Credit Facility;

(ii) on March 27, 2020, we entered into a binding term sheet with GLPI (the “Term Sheet”) whereby GLPI agreed to (a) purchase the real estate assets associated with Tropicana Las Vegas (“Tropicana”) in exchange for rent credits of $ 307.5 million, which closed on April 16, 2020, and (b) a sale-leaseback of the land underlying our Hollywood Casino Morgantown (“Morgantown”) development project in Morgantown, Pennsylvania, in exchange for rent credits of $ 30.0 million, which closed on October 1, 2020;

(iii) on May 14, 2020 (May 19, 2020 with respect to the underwriters’ exercising their options to acquire additional 2.75 % Convertible Notes), we completed a public offering of $ 330.5 million aggregate principal amount of 2.75 % Convertible Notes;

(iv) on May 14, 2020 (May 19, 2020 with respect to the underwriters’ exercising their options to purchase additional shares), we completed a

public offering of 19,166,667 aggregate shares of common stock, par value of $ 0.01 per share, of the Company (“Penn Common Stock”) for gross proceeds of $ 345.0 million;

and (v) on September 24, 2020 (September 25, 2020 with respect to the underwriters’ exercising their options to purchase additional shares), we completed a public offering of 16,100,000 aggregate shares of Penn Common Stock for gross proceeds of $ 982.1 million.

In addition, on April 14, 2020, the Company entered into an amendment to its Credit Agreement, which, among other things, provides it with relief from its financial covenants for a period of up to one year .

On September 30, 2020, the Company fully repaid $ 670.0 million of outstanding borrowings under its Revolving Credit Facility.

Further, on November 12, 2020 the Company prepaid $ 115.0 million of outstanding borrowings on its Term Loan B-1 Facility.

The terms “Revolving Credit Facility,” “Convertible Notes”, “Credit Agreement” and "Term Loan B-1" are defined in Note 11, “Long-term Debt.”

The COVID-19 pandemic caused significant disruptions to our business and had a material adverse impact on our financial condition, results of operations and cash flows, the magnitude of which continues to develop based on (i) the timing and extent of the recovery in visitation and consumer spending at our properties;

(ii) the continued impact of implementing social distancing and health and safety guidelines at our properties, including reductions in gaming, hotel capacity, limiting the number of food and beverage options and limiting other amenities;

and (iii) whether any of our properties will be required to again temporarily suspend operations in the event that the pandemic significantly worsens.

We are currently unable to determine whether, when or how the conditions surrounding the COVID-19 pandemic will change or whether the recovery in visitation and consumer spending is sustainable.

The Company could experience other potential adverse impacts as a result of the COVID-19 pandemic, including, but not limited to, further charges from adjustments to the carrying amount of goodwill and other intangible assets, long-lived asset impairment charges, or impairments of investments in joint ventures.

In addition, the negative impacts of the COVID-19 pandemic may result in further changes in the amount of valuation allowance required.

Actual results may differ materially from the Company’s current estimates as the scope of the COVID-19 pandemic evolves, depending largely, though not exclusively, on the impact of required capacity reductions, social distancing and health and safety guidelines, and the sustainability of current trends in recovery at our reopened properties.

As of December 31, 2020, the Company has a strong balance sheet and sufficient liquidity in place, including total cash and cash equivalents, excluding restricted cash, of $ 1.9 billion and available borrowing capacity of $ 0.7 billion.

To help combat the spread of COVID-19 and pursuant to various orders from state gaming regulatory bodies or governmental authorities, operations at all of our properties were temporarily suspended for single or multiple time periods during 2020 and into 2021.

Once reopened, properties operated with reduced gaming and hotel capacity and limited food and beverage offerings in order to accommodate social distancing and health and safety protocols.

As of December 31, 2021, the majority of our properties are operating at full capacity while adhering to state mandated health and safety protocols.

The COVID-19 pandemic caused significant disruptions to our business and had a material adverse impact on our financial condition, results of operations and cash flows.

As a consequence, between March 13, 2020 and December 31, 2020, we entered into a series of transactions to improve our financial position and liquidity, as described in the relevant notes to our Consolidated Financial Statements.

Additionally, we completed a $ 400.0 million offering of senior unsecured notes on July 1, 2021, as discussed in Note 11, “ Long term debt.

” We could experience further adverse impacts as a result of the COVID-19 pandemic, including, but not limited to, temporarily suspending operations at our properties if ordered by such governmental bodies, or capacity restrictions on our operations.

Basis of Presentation:

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The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions as of the date of the Consolidated Financial Statements that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, and (iii) the reported amounts of revenues and expenses during the reporting period.

Estimates used by us include, among other things, the useful lives for depreciable and amortizable assets, the allowance for doubtful accounts receivable, income tax provisions, the evaluation of the future realization of deferred tax assets, determining the adequacy of reserves for self-insured liabilities, the liabilities associated with our my choice program, the initial measurements of financing obligations associated with the Master Leases, projected cash flows in assessing the recoverability of long-lived assets, asset impairments, goodwill and other intangible assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with acquisitions, the initial selection of useful lives for depreciable and amortizable assets in conjunction with acquisitions, contingencies and litigation, and stock-based compensation expense.

Estimates used by us include, among other things, the useful lives for depreciable and amortizable assets, the provision for credit losses, income tax provisions, the evaluation of the future realization of deferred tax assets, determining the adequacy of reserves for self-insured liabilities, the liabilities associated with our my choice program, the initial measurements of financing obligations associated

with the Master Leases, projected cash flows in assessing the recoverability of long-lived assets, asset impairments, goodwill and other intangible assets, projected cash flows in assessing the initial valuation of intangible assets in conjunction with acquisitions, the initial selection of useful lives for depreciable and amortizable assets in conjunction with acquisitions, contingencies and litigation inclusive of financing arrangements in which the Company receives up-front cash proceeds, and stock-based compensation expense.

We applied estimation methods consistently for all periods presented within our Consolidated Financial Statements.

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Segment Information:

We view each of our gaming and racing properties as an operating segment with the exception of our two properties in Jackpot, Nevada, which we view as one operating segment.

We consider our combined VGT operations, by state, to be separate operating segments.

We have five reportable segments:

Northeast, South, West, Midwest, and Interactive.

Our gaming and racing properties are grouped by geographic location and each is viewed as an operating segment with the exception of our two properties in Jackpot, Nevada, which are viewed as one operating segment.

We consider our combined Video Gaming Terminal (“VGT”) operations, by state, to be separate operating segments.

Interactive includes the operations of Penn Interactive, theScore, and our proportionate share of earnings attributable to Barstool Sports.

See Note 18, “Segment Information,” for further information.

For financial reporting purposes, we aggregate our operating segments into the following four reportable segments:

For financial reporting purposes, we aggregate our operating properties into the following reportable segments:

Location Real Estate Assets Lease or Ownership Structure

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Hollywood Casino Lawrenceburg Lawrenceburg, Indiana Penn Master Lease

Hollywood Casino Morgantown Morgantown, Pennsylvania Morgantown Lease (1)

Hollywood Casino at Penn National Race Course Grantville, Pennsylvania Penn Master Lease

Hollywood Casino Perryville Perryville, Maryland Perryville Lease

Hollywood Casino Toledo Toledo, Ohio Penn Master Lease

Hollywood Casino York York, Pennsylvania Operating Lease (not with REIT Landlord)

Hollywood Gaming at Dayton Raceway Dayton, Ohio Penn Master Lease

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Pennsylvania N/A

Meadows Racetrack and Casino Washington, Pennsylvania Meadows Lease

Hollywood Casino at Meadows Racetrack Washington, Pennsylvania Meadows Lease

Plainridge Park Casino Plainville, Massachusetts Pinnacle Master Lease

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Hollywood Casino at Kansas Speedway (4)

Kansas City, Kansas Owned - JV

Kansas City, Kansas Owned - joint venture

Hollywood Casino St.

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Louis, Missouri Pinnacle Master Lease

(1) Upon termination of the Morgantown Lease, ownership of the constructed building and all tenant improvements will transfer from the Company to GLPI.

(2) VGT route operations

(2) Resorts Casino Tunica ceased operations on June 30, 2019, but remains subject to the Penn Master Lease.

(3) The riverboat is owned by us and not subject to the Penn Master Lease.

(4) Pursuant to a joint venture (“JV”) with NASCAR and includes the Company’s 50 % investment in Kansas Entertainment, LLC (“Kansas Entertainment”), which owns Hollywood Casino at Kansas Speedway.

(4) Pursuant to a joint venture with NASCAR and includes the Company’s 50 % investment in Kansas Entertainment, LLC (“Kansas Entertainment”), which owns Hollywood Casino at Kansas Speedway.

Cash and Cash Equivalents:

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The Company issues markers to approved casino customers following investigations of creditworthiness.

The Company utilizes a forward-looking current expected credit loss model to measure the provision for credit losses.

The Company’s receivables as of December 31, 2021 and 2020 primarily consisted of the following:

(in millions) 2021 2020

Markers issued to customers $ 14.8 $ 22.9

Credit card receivables and other advances to customers 8.9 16.5

Markers and returned checks $ 15.1 $ 14.8

Credit card and other advances to customers 11.5 8.9

Receivables from ATM and cash kiosk transactions 20.9 10.9

Hotel and banquet receivables 2.7 6.5

Hotel and banquet 4.1 2.7

Racing settlements 12.8 7.7

Receivables due from platform providers for social casino games 10.5 3.3

Online gaming and licensing receivables from third party operators, including taxes 70.0 16.4

Media receivables 10.3 —

Insurance Receivable - Hurricane Laura 28.7 23.0

Other 29.6 20.8

Allowance for doubtful accounts ( 8.8 ) ( 7.7 )

Provision for credit losses ( 8.0 ) ( 8.8 )

Accounts receivable, net $ 195.0 $ 96.4

The Company adopted Accounting Standards Codification (“ASC”) No.

2016-13 (“ASC 2016-13”), “Financial Instruments - Credit Losses (Topic 326):

Measurements of Credit Losses on Financial Instruments” during the first quarter of 2020 which utilizes a forward-looking current expected credit loss model to measure the allowance for doubtful accounts.

Prior to the adoption of ASC 2016-13, accounts were written off when management determined that an account was uncollectible.

Recoveries of accounts previously written off were recorded when received.

Historically, the Company has not incurred any significant credit-related losses.

Property and Equipment:

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Goodwill represents the future economic benefits of a business combination measured as the excess of the purchase price over the fair value of net assets acquired and has been allocated to our reporting units.

Goodwill is tested annually, or more frequently if indicators of impairment exist.

Goodwill is tested for impairment annually on October 1 st of each year, or more frequently if indicators of impairment exist.

For the quantitative goodwill impairment test, an income approach, in which a discounted cash flow (“DCF”) model is utilized, and a market-based approach using guideline public company multiples of earnings before interest, taxes, depreciation, and amortization (“EBITDA”) from the Company’s peer group are utilized in order to estimate the fair market value of the Company’s reporting units.

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We consider our gaming licenses, trademarks, and certain other intangible assets to be indefinite-lived based on our future expectations to operate our gaming properties indefinitely as well as our historical experience in renewing these intangible assets at minimal cost with various state commissions.

Indefinite-lived intangible assets are tested annually for impairment, or more frequently if indicators of impairment exist, by comparing the fair value of the recorded assets to their carrying amount.

Indefinite-lived intangible assets are tested annually for impairment on October 1 st of each year, or more frequently if indicators of impairment exist, by comparing the fair value of the recorded assets to their carrying amount.

If the carrying amounts of the indefinite-lived intangible assets exceed their fair value, an impairment is recognized.

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The principle behind this method is that the value of the trademark is equal to the present value of the after-tax royalty savings attributable to the owned trademark.

Our annual goodwill and other indefinite-lived intangible assets impairment test is performed on October 1 st of each year.

Once an impairment of goodwill or other intangible asset has been recorded, it cannot be reversed.

Other intangible assets that have a definite-life are amortized on a straight-line basis over their estimated useful lives or related service contract.

Other intangible assets that have a definite-life, including gaming technology and media technology, are amortized on a straight-line basis over their estimated useful lives or related service contract.

The Company reviews the carrying amount of its amortizing intangible assets for possible impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

If the carrying amount of the amortizing intangible assets exceed their fair value, an impairment is recognized.

Should events and circumstances indicate amortizing intangible assets may not be recoverable, the Company performs a test for recoverability whereby estimated undiscounted cash flows are compared to the carrying values of the assets.

Should the estimated undiscounted cash flows exceed the carrying value, no impairments are recorded.

If the undiscounted cash flows do not exceed the carrying values, an impairment is recorded based on the fair value of the asset, typically measured using either a discounted cash flow or replacement cost approach.

Once an impairment of goodwill or other intangible asset has been recorded, it cannot be reversed .

See Note 9, “Goodwill and Other Intangible Assets.”

Equity Securities:

The Company’s equity securities (including warrants) are measured at fair value each reporting period with unrealized holding gains and losses included in current period earnings.

During the year ended December 31, 2020, the Company recognized a holding gain of $ 106.7 million related to equity securities, which is included in “Other,” as reported in “Other income (expenses)” within our Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company’s equity securities (including warrants) are measured at fair value each reporting period with unrealized gains and losses included in current period earnings.

The Company records realized and unrealized gains and losses in “Other” within our Consolidated Statements of Operations.

Convertible Debt:

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Financing Obligations:

Subsequent to the adoption of ASC 842, “Leases” (“ASC 842”) on January 1, 2019, certain of the components contained within our Master Leases (primarily buildings) are accounted for as financing obligations, rather than leases.

Prior to the adoption of ASC 842, our Master Leases, in their entirety, were accounted for as financing obligations.

Certain of the components contained within our Master Leases (primarily buildings) are accounted for as financing obligations in accordance with ASC 470 - Debt, rather than leases.

On November 1, 2013, the Company spun-off its real estate assets into GLPI (the “Spin-Off”) and entered into the Penn Master Lease.

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The lease term included renewal options that were reasonably assured of being exercised and the funded construction of certain leased assets in development at the commencement of the Penn Master Lease.

On October 15, 2018, in connection with the Pinnacle Acquisition, we assumed the Pinnacle Master Lease.

On October 15, 2018, in connection with the acquisition of Pinnacle Entertainment, Inc.

(the “Pinnacle Acquisition”), we assumed the Pinnacle Master Lease.

Within a business combination, an arrangement that previously did not meet all of the requirements for sale-leaseback accounting treatment (and is accounted for as a financing obligation by the acquiree) retains its classification as a financing obligation on the acquiring entity’s consolidated balance sheets at the business combination date.

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The effective yield used to determine the financing obligation associated with the Plainridge Park Casino Sale-Leaseback was 9.6 %.

Subsequent to the adoption of ASC 842, minimum lease payments under our Master Lease are allocated between components that continue to be financing obligations (primarily buildings) and operating lease components (primarily land).

Subsequent to the adoption of ASC 842, “Leases” (“ASC 842”) on January 1, 2019, minimum lease payments under our Master Leases are allocated between components that continue to be financing obligations (primarily buildings) and operating lease components (primarily land).

Minimum lease payments related to financing obligations are recorded to interest expense and, in part, as repayments of principal reducing the associated financing obligations.

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Upon adoption of ASC 842, we elected the following policies:

(a) to account for lease and non-lease components as a single component for all classes of underlying assets and (b) to not recognize short-term leases (i.e., leases that are less than 12 months and do not contain purchase options) within the Consolidated Balance Sheets, with the expense related to these short-term leases recorded in total operating expenses within the Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company has leasing arrangements that contain both lease and non-lease components.

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The liability for operating and finance leases is based on the present value of future lease payments.

Operating lease expenses are recorded as rent expense, which is included within general and administrative expense, within the Consolidated Statements of Operations and Comprehensive Income (Loss) and presented as operating cash outflows within the Consolidated Statements of Cash Flows.

Finance lease expenses are recorded as depreciation expense, which is included within depreciation and amortization expense within the Consolidated Statements of Operations and Comprehensive Income (Loss) and interest expense over the lease term.

Principal payments associated with finance leases are

presented as financing cash outflows and interest payments associated with finance leases are presented as operating cash outflows within our Consolidated Statements of Cash Flows.

Operating lease expenses are recorded as rent expense, which is included within general and administrative expense, within the Consolidated Statements of Operations and presented as operating cash outflows within the Consolidated Statements of Cash Flows.

Principal payments associated with finance leases are presented as financing cash outflows and interest payments associated with finance leases are presented as operating cash outflows within our Consolidated Statements of Cash Flows.

Debt Discount and Debt Issuance Costs:

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Changes in the fair value of the contingent purchase price obligation can result from changes to one or multiple inputs, including adjustments to the discount rate and changes in the assumed probabilities of successful achievement of certain financial targets.

The changes in the fair value of contingent purchase price are recognized within our Consolidated Statements of Operations and Comprehensive Income (Loss) as a component of “General and administrative” expense.

The changes in the fair value of contingent purchase price are recognized within our Consolidated Statements of Operations as a component of “General and administrative” expense.

Income Taxes:

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Revenue Recognition:

Our revenue from contracts with customers consists of gaming wagers, food and beverage transactions, retail transactions, hotel room sales, racing wagers, sports betting wagers, and management services related to the management of external casinos and reimbursable costs associated with management contracts.

In May 2018, our management contract was terminated for Hollywood Casino-Jamul San Diego, which is located in San Diego, California.

In addition, our management contract was terminated for Casino Rama, which is located in Ontario, Canada, in July 2018.

Our revenue from contracts with customers consists primarily of gaming wagers, inclusive of sports betting and iCasino products, food and beverage transactions, retail transactions, hotel room sales, racing wagers, management services related to the management of external operations and third-party revenue sharing agreements.

See Note 5, “Revenue Disaggregation,” for information on our revenue by type and geographic location.

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The transaction price for our racing operations, inclusive of live racing events conducted at our racing facilities and our import and export arrangements, is the commission received from the pari-mutuel pool less contractual fees and obligations primarily consisting of purse funding requirements, simulcasting fees, tote fees and certain pari-mutuel taxes that are directly related to the racing operations.

The transaction price for our former management service contracts was the amount collected for services rendered in accordance with the contractual terms.

The transaction price for the reimbursable costs associated with our former management contracts was the gross amount of the reimbursable expenditure, which primarily consisted of payroll costs incurred by the Company for the benefit of the managed

Since the Company was the controlling entity to the arrangement, the reimbursement was recorded on a gross basis with an offsetting amount charged to operating expense.

The transaction price for our management service contracts is the amount collected for services rendered in accordance with the contractual terms.

Gaming revenue contracts involve two performance obligations for those customers earning points under our my choice program and a single performance obligation for customers that do not participate in the my choice program.

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Food and beverage, hotel and retail services have been determined to be separate, standalone performance obligations and the transaction price for such contracts is recorded as revenue as the good or service is transferred to the customer over their stay at the hotel or when the delivery is made for the food and beverage or retail product.

Cancellation fees for hotel and meeting space services are recognized upon cancellation by the customer and are included in food, beverage, hotel and other revenue within our Consolidated Statements of Operations and Comprehensive Income (Loss).

Racing revenue contracts, inclusive of our (i) host racing facilities, (ii) import arrangements that permit us to simulcast in live racing events occurring at other racetracks, and (iii) export arrangements that permit our live racing events to be simulcast at other racetracks, provide access to and the processing of wagers into the pari-mutuel pool.

The Company has concluded it is not the controlling entity to the arrangement, but rather functions as an agent to the pari-mutuel pool.

Commissions earned from the pari-mutuel pool less contractual fees and obligations are recognized on a net basis, which is included within food, beverage, hotel and other revenues within our Consolidated Statements of Operations and Comprehensive Income (Loss).

Management services have been determined to be separate, standalone performance obligations and the transaction price for such contracts was recorded as services were performed.

The Company recorded revenues on a monthly basis calculated by applying the contractual rate called for in the contracts.

In addition to sports betting and iGaming revenues, Penn Interactive generates in-app purchase and advertising revenues from free-to-play social casino games, which can be downloaded to mobile phones and tablets from digital storefronts.

Management services have been determined to be separate, standalone performance obligations and the transaction price for such contracts are recorded as services are performed.

The Company records revenues on a monthly basis calculated by applying the contractual rate called for in the contracts.

In addition to sports betting and iCasino revenues, Penn Interactive generates in-app purchase and advertising revenues from free-to-play social casino games, which can be downloaded to mobile phones and tablets from digital storefronts.

Players can purchase virtual playing credits within our social casino games, which allows for increased playing opportunities and functionality.

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Advertising revenues are recognized in the period when the advertising impression, click or install delivery occurs.

Penn Interactive also enters into multi-year agreements with sports betting operators for online sports betting and related iGaming market access (“Skins”) across our portfolio, of which the Company received cash and equity securities, including ordinary shares and warrants, specific to four operator agreements.

In consideration for the use of each skin, the Company receives a monthly revenue share amount of the revenues earned by the operators less contractual fees and obligations primarily consisting of taxes, promotional credits, data fees and player costs.

The market access provided to operators by state and by activity represent separate performance obligations.

The transaction price includes fixed fees for access to certain geographic markets and variable consideration in the form of a monthly revenue share, annual minimum guarantee amounts, and reimbursements for out-of-pocket expenses including state gaming taxes.

The upfront and fixed access fees relate solely to distinct markets and are allocated to the performance obligations specific to those markets.

Market access fees are recognized as revenue over the term of the related market access agreements.

Monthly revenue share and annual minimum guarantee variable consideration relate directly to the Company’s efforts to satisfy each individual performance obligation and, as such, is allocated to each performance obligation.

Revenues from monthly revenue shares are recognized in the period in which the revenue was earned by our third party operators.

Minimum guarantee revenue is deferred at the end of the period in which it relates and subsequently recognized as revenue over the remaining term of the market access agreement.

The Company also recognizes revenue for reimbursements of certain out-of-pocket expenses, including license fees and state gaming taxes.

The Company has elected the “right to invoice” practical expedient and recognizes revenue upon incurring reimbursable costs, as appropriate.

Complimentaries Associated with Gaming Contracts

Food and beverage, hotel, and other services furnished to patrons for free as an inducement to gamble or through the redemption of our customers’ loyalty points are recorded as food and beverage, hotel, and other revenues, at their estimated SSPs with an offset recorded as a reduction to gaming revenues.

Food, beverage, hotel, and other services furnished to patrons for free as an inducement to gamble or through the redemption of our customers’ loyalty points are recorded as food, beverage, hotel, and other revenues, at their estimated SSPs with an offset recorded as a reduction to gaming revenues.

The cost of providing complimentary goods and services to patrons as an inducement to gamble as well as for the fulfillment of our loyalty point obligation is included in food, beverage, hotel, and other expenses.

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The Company has three general types of liabilities related to contracts with customers:

(i) the obligation associated with its my choice program (loyalty points and tier status benefits), (ii) advance payments on goods and services yet to be provided and

for unpaid wagers, and (iii) deferred revenue associated with third-party sports betting operators for online sports betting and related iGaming market access.

Our my choice program allows members to utilize their reward membership cards to earn loyalty points that are redeemable for slot play and complimentaries, such as food and beverage at our restaurants, lodging at our hotels and products offered at our retail stores across the vast majority of our properties.

In addition, members of the my choice program earn credit toward tier status, which entitles them to receive certain other benefits, such as gifts.

(i) the obligation associated with its my choice program (loyalty points and tier status benefits), (ii) advance payments on goods and services yet to be provided and for unpaid wagers, and (iii) deferred revenue associated with third-party sports betting operators for online sports betting and related iCasino market access.

Our my choice program allows members to utilize their reward membership card to earn loyalty points that are redeemable for slot play and complimentaries, such as food and beverage at our restaurants, lodging at our hotels and products offered at our retail stores across the vast majority of our properties.

In addition, members of the my choice program earn credit toward tier status, which entitles them to receive certain other benefits, such as gifts and free play.

The obligation associated with our my choice program, which is included in “Accrued expenses and other current liabilities” within our Consolidated Balance Sheets, was $ 37.6 million and $ 35.8 million as of December 31, 2021 and 2020, respectively, and consisted principally of the obligation associated with the loyalty points.

Our loyalty point obligations are generally settled within six months of issuance.

however, as a result of the COVID-19 pandemic and resulting temporary closures, loyalty point obligations may take longer to settle.

Changes between the opening and closing balances primarily relate to the timing of our customers’ election to redeem loyalty points as well as the timing of when our customers receive their earned tier status benefits.

The Company’s advance payments on goods and services yet to be provided and for unpaid wagers primarily consist of the following:

(i) deposits on rooms and convention space, (ii) money deposited on behalf of a customer in advance of their property visit (referred to as “safekeeping” or “front money”), (iii) outstanding tickets generated by slot machine play or pari-mutuel wagering, (iv) outstanding chip liabilities, (v) unclaimed jackpots, and (vi) gift cards redeemable at our properties.

(i) deposits on rooms and convention space, (ii) money deposited on behalf of a customer in advance of their property visit (referred to as “safekeeping” or “front money”), (iii) money deposited in an online wallet not yet wagered or wagered and not yet withdrawn, (iv) outstanding tickets generated by slot machine play or pari-mutuel wagering, (v) outstanding chip liabilities, (vi) unclaimed jackpots, and (vii) gift cards redeemable at our properties.

Unpaid wagers primarily relate to the Company’s obligation to settle outstanding slot tickets, pari-mutuel racing tickets and gaming chips with customers and generally represent obligations stemming from prior wagering events, of which revenue was previously recognized.

The Company’s advance payments on goods and services yet to be provided and for unpaid wagers were $ 47.1 million and $ 42.2 million as of December 31, 2020 and 2019, respectively, of which $ 0.5 million and $ 0.6 million were classified as long-term in both periods.

The Company’s advance payments on goods and services yet to be provided and for unpaid wagers were $ 112.0 million and $ 47.1 million as of December 31, 2021 and 2020, respectively, no ne of which was classified as long-term on December 31, 2021 as compared to $ 0.5 million in the prior year.

The current portion and long-term portion of our advance payments on goods and services yet to be provided and for unpaid wagers are included in “Accrued expenses and other current liabilities” and “Other long-term liabilities” within our Consolidated Balance Sheets, respectively.

Penn Interactive enters into multi-year agreements with sports betting operators for online sports betting and related iGaming market access across our portfolio of properties, from which we received cash and equity securities, including ordinary shares and warrants, specific to two operator agreements.

During the fourth quarter of 2019, certain of the operations contemplated by these agreements commenced, resulting in the recognition of $ 5.6 million and $ 0.6 million of revenue (most of which was previously deferred) during the year ended December 31, 2020 and 2019, respectively.

Deferred revenue associated with third-party sports betting operators for online sports betting and related iGaming market access, which is included in “Other long-term liabilities” within our Consolidated Balance Sheets was $ 52.7 million and $ 43.6 million as of December 31, 2020 and 2019, respectively.

Penn Interactive enters into multi-year agreements with sports betting operators for online sports betting and related iCasino market access across our portfolio of properties, from which we received cash and equity securities, including ordinary shares and warrants, specific to two operator agreements.

Certain of the operations contemplated by these agreements commenced, resulting in the recognition of $ 16.3 million, $ 5.6 million and $ 0.6 million of revenue (most of which was previously deferred) during the years ended December 31, 2021, 2020 and 2019 respectively.

Deferred revenue associated with third-party sports betting operators for online sports betting and related iCasino market access, which is included in “Other long-term liabilities” within our Consolidated Balance Sheets was $ 52.2 million and $ 52.7 million as of December 31, 2021 and 2020, respectively.

The Company expenses advertising costs the first time the advertising takes place or as incurred.

Advertising expenses, which generally relate to media placement costs and are primarily included in “General and administrative” expenses within the Consolidated Statements of Operations, were $ 88.2 million, $ 36.7 million, and $ 59.4 million, for the years ended December 31, 2021, 2020 and 2019, respectively.

Gaming and Racing Taxes:

We are subject to gaming and pari-mutuel taxes based on gross gaming revenue and pari-mutuel revenue in the jurisdictions in which we operate.

For the years ended December 31, 2020, 2019 and 2018, these expenses, which were recorded primarily in gaming expense within the Consolidated Statements of Operations and Comprehensive Income (Loss), were $ 1,098.9 million, $ 1,590.0 million, and $ 1,102.3 million, respectively.

The Company primarily recognizes gaming and pari-mutuel tax expense based on the statutorily required percentage of revenue that is required to be paid to state and local jurisdictions in the states where or in which the wagering occurs, as well as taxes on revenues derived from arrangements which allow for third-party partners to operate online casinos and online sportsbooks under our gaming licenses.

For the years ended December 31, 2021, 2020 and 2019, these expenses, which were recorded in “Gaming” expense or “Food, beverage, hotel and other” expenses within the Consolidated Statements of Operations, were $ 2.0 billion, $ 1.1 billion, and $ 1.6 billion, respectively.

Foreign Currency Translation:

The functional currency of the Company’s foreign subsidiaries is the local currency in which the subsidiary operates.

Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date.

Translation adjustments resulting from this process are recorded to other comprehensive income (loss).

Revenues and expenses are translated at the average exchange rates during the year.

Gains or losses resulting from foreign currency transactions are included in “Other” within our Consolidated Statements of Operations.

Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss):

Comprehensive income (loss) includes net income (loss) and all other non-stockholder changes in equity, or other comprehensive income (loss).

The balance of accumulated other comprehensive income (loss) consists solely of foreign currency translation adjustments.

Stock-Based Compensation:

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Basic earnings per share (“EPS”) is computed by dividing net income (loss) applicable to common stock by the weighted-average number of common shares outstanding during the period.

Diluted EPS reflects the additional dilution, if any, for all potentially-dilutive securities such as stock options, unvested restricted stock awards (“RSAs”), outstanding convertible preferred stock and convertible debt.

Diluted EPS reflects the additional dilution, if any, for all potentially-dilutive securities such as stock options, unvested restricted stock awards (“RSAs”) and restricted stock units (“RSUs”), outstanding convertible preferred stock and convertible debt.

Holders of the Company’s Series D Preferred Stock (as defined in Note 7, “Investments in and Advances to Unconsolidated Affiliates” ) are entitled to participate equally and ratably in all dividends and distributions paid to holders of Penn Common Stock irrespective of any vesting requirement.

Accordingly, the Series D Preferred Stock shares are considered a

participating security and the Company is required to apply the two-class method to consider the impact of the preferred shares on the calculation of basic and diluted EPS.

Accordingly, the Series D Preferred Stock shares are considered a participating security and the Company is required to apply the two-class method to consider the impact of the preferred shares on the calculation of basic and diluted EPS.

The holders of the Company’s Series D Preferred Stock are not obligated to absorb losses;

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If the fair value ascribed to tangible and identifiable intangible assets changes during the measurement period (due to additional information being available and related Company analysis), the measurement period adjustment is recognized in the reporting period in which the adjustment amount is determined and offset against goodwill.

The measurement period for our acquisitions are no more than one year in duration.

The measurement period for our acquisitions is no more than one year in duration.

See Note 6, “Acquisitions and Dispositions.”

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Under the VOE model, controlling financial interest is generally defined as a majority ownership of voting rights.

Under the VIE model, controlling financial interest is defined as (i) the power to direct activities that most significantly impact the economic performance of the entity and (ii) the obligation to absorb losses of or the right to receive benefits from the entity that could potentially be significant to the entity.

Under the VIE model, controlling financial interest is defined as (i) the power to direct activities that most significantly impact the economic performance of the entity and (ii) the obligation to

absorb losses of or the right to receive benefits from the entity that could potentially be significant to the entity.

For those entities that qualify as a VIE, the primary beneficiary is generally defined as the party who has a controlling financial interest in the VIE.

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Note 3—New Accounting Pronouncements

Accounting Pronouncements Implemented in 2020

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2016-13, “Financial Instruments - Credit Losses (Topic 326):

Measurements of Credit Losses on Financial Instruments” (“ASU 2016-13”), which sets forth a “current expected credit loss” (referred to as “CECL”) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures.

We adopted ASU 2016-13 during the first quarter of 2020 using a modified retrospective approach, which resulted in a cumulative-effect adjustment to retained earnings of $ 0.6 million as of January 1, 2020.

In August 2018, the FASB issued ASU No.

2018-15, “Customer’s Accounting for Implementation Cost Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”).

Under the new guidance, customers apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license.

This will result in certain implementation costs being capitalized;

the associated amortization charge will, however, be recorded as an operating expense.

Under the previous guidance, costs incurred when implementing a cloud computing arrangement deemed to be a service contract were recorded as an operating expense when incurred.

We adopted ASU 2018-15 during the first quarter of 2020 using a prospective approach, which did not have a material impact on our Consolidated Financial Statements.

In December 2019, the FASB issued ASU No.

2019-12, “Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which intends to simplify the guidance by removing certain exceptions to the general principles and clarifying or amending existing guidance.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

We elected to early adopt ASU 2019-12 during the third quarter of 2020 on a prospective basis, which did not have a material impact on our Consolidated Financial Statements.

In January 2020, the FASB issued ASU No.

2020-01, “Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815” (“ASU 2020-01”), which made targeted improvements to accounting for financial instruments, including providing an entity the ability to measure certain equity securities without a readily determinable fair value at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Among other topics, ASU 2020-01 clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting.

ASU 2020-01 is effective for fiscal

years beginning after December 15, 2020, and interim periods within those fiscal years with early adoption permitted.

The Company's early adoption of ASU 2020-01 did not have a material impact on our Consolidated Financial Statements.

In October 2020, the FASB issued ASU No.

2020-10, “Codification Improvements,” (“ASU 2020-10”) which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations.

ASU 2020-10 is effective for fiscal years beginning after December 15, 2020 with early adoption permitted.

The Company's early adoption of ASU 2020-10 did not have a material impact on our Consolidated Financial Statements.

Accounting Pronouncements to be Implemented

In March 2020, the FASB issued ASU No.

2020-04, “Reference Rate Reform (Topic 848):

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”).

ASU 2020-04 provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

ASU 2020-04 provides an optional expedient and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

In response to the concerns about structural risks of interbank offered rates and, particularly, the risk of cessation of the London Interbank Offered Rate (referred to as “LIBOR”), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation.

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The Company is currently evaluating the impact of the adoption of ASU 2020-04 on our Consolidated Financial Statements.

In August 2020, The FASB issued ASU No.

2020-06, “Debt—Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Topic 814):

In August 2020, The FASB issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Topic 814):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”).

ASU 2020-06 eliminates the number of accounting models used to account for convertible debt instruments and convertible preferred stock.

The update also amends the disclosure requirements for convertible instruments and EPS in effort to increase financial reporting transparency.

ASU 2020-06 will be effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

Early adoption is permitted.

The Company is currently evaluating the impact of the adoption of ASU 2020-06 on our Consolidated Financial Statements.

The update also amends the disclosure requirements for convertible instruments and EPS in an effort to increase financial reporting transparency.

The new standard impacts the Company’s existing 2.75 % convertible senior notes due May 2026 (“Convertible Notes”) which are currently accounted for under the cash conversion feature model.

The cash conversion feature model is eliminated under the new standard and entities will no longer separately present in stockholders’ equity an embedded conversion feature of a debt instrument.

The new guidance also requires the use of the if-converted method when calculating diluted earnings per share for convertible instruments and the treasury stock method should no longer be used.

Under the new guidance, convertible instruments that may be settled in cash or shares (e.g., the Company’s Convertible Notes) are to be included in the calculation of diluted EPS if the effect is more dilutive, with no option for rebutting the presumption of share settlement based on stated policy or past experience.

Adoption of ASU 2020-06 will result in reclassification of the $ 88.2 million cash conversion feature related to the Company’s Convertible Notes, from stockholders’ equity to liabilities.

The adoption of ASU 2020-06 allows for the recognition of a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption without recasting the financial statements in periods prior to adoption.

The Company plans to elect this transition option.

We expect the adoption of ASU 2020-06 to have a material impact on our Consolidated Financial Statements and related disclosures.

We are finalizing the impact of ASU 2020-06 to our accounting policies, processes, disclosures, and internal control over financial reporting.

A variety of proposed or otherwise potential accounting standards are currently being studied by standard-setting organizations and certain regulatory agencies.

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The Company maintains insurance, subject to certain deductibles and coinsurance, for the repair or replacement of assets that suffered loss and provides coverage for interruption to our business, including lost profits.

As of December 31, 2020, the Company recorded a receivable of $ 23.0 million relating to our estimate of repairs and maintenance costs which have been incurred as well as identified property and equipment which have been written off for which we deem the recovery of such costs from our insurers to be probable.

The insurance recovery receivable is included in “Receivables” within the Consolidated Balance Sheets.

The Company recorded a receivable relating to our estimate of repairs and maintenance costs which have been incurred and property and equipment which have been written off, and for which we deem the recovery of such costs and property and

equipment from our insurers to be probable.

The insurance recovery receivable is included in “Accounts Receivable, net” within the Consolidated Balance Sheets.

As we deem it is probable that the proceeds to be recovered from our insurers exceeds the total of our insurance recovery recorded and our insurers’ deductible and coinsurance, we did not record any loss associated with the impact of this natural disaster.

Additionally as of December 31, 2020, we continue to be in the process of performing our due diligence in an effort to quantify the claim amount under the policy that will be submitted to the insurers.

During the fourth quarter we received $ 47.5 million of insurance proceeds from our insurers representing upfront payments related to our anticipated policy claim.

Timing differences are likely to exist between the recognition of (i) impairment losses and capital expenditures made to repair or restore the assets and (ii) the receipt of insurance proceeds within the Consolidated Financial Statements.

As of December 31, 2021 and 2020, the amount of the receivable was $ 28.7 million and $ 23.0 million, respectively.

No proceeds were received from our insurers during the year ended December 31, 2021, as compared to $ 47.5 million received during the year ended December 31, 2020.

For the year ended December 31, 2021, we identified an additional $ 5.7 million of costs related to our policy claim.

We continue to be in the process of quantifying the claim amount under the policies to be submitted to our insurers.

We will record proceeds in excess of the recognized losses and lost profits under our business interruption insurance as a gain contingency in accordance with ASC 450, “Contingencies,” which we expect to recognize at the time of final settlement or when nonrefundable cash advances are made in a period subsequent to December 31, 2021.

During the first quarter of 2022, the Company received insurance payments totaling $ 35.6 million.

The following table summarizes the financial impact of Hurricane Laura related matters:

(in millions) For the year ended December 31, 2020

Insurance Proceeds $ 47.5

(in millions) 2021 2020

Insurance proceeds received through the end of the period $ 47.5 $ 47.5

Deductible $ 15.0 $ 15.0

Coinsurance $ 2.5 $ 2.5

Clean-up and Restoration Costs $ 47.1

Clean-up, restoration, and other costs $ 52.8 $ 47.1

Fixed asset write-off $ 23.2 $ 23.2

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We generate revenues at our owned, managed or operated properties principally by providing the following types of services:

(i) gaming, including iGaming and online sportsbook;

(i) gaming, including iCasino, retail and online sports betting;

(ii) food and beverage;

(iv) reimbursable management costs;

and (v) other.

Other revenues are principally comprised of ancillary gaming-related activities, such as commissions received on ATM transactions, racing, and Penn Interactive’s social gaming.

In addition, we assess our revenues based on geographic location of the related properties, which is consistent with our reportable segments (see Note 18, “Segment Information,” for further information).

and (iv) other.

Other revenues are principally comprised of ancillary gaming-related activities, such as commissions received on ATM transactions, racing, Penn Interactive’s social gaming, and revenue from third-party sports betting operators and the related gross-up for taxes.

In addition, we assess our revenues based on geographic location of the related properties, which is consistent with our reportable segments.

During the fourth quarter of 2021, the Company evaluated its reportable segments and changed them to:

Northeast, South, West, Midwest, and Interactive as described in Note 18, “Segment Information.” As a result of the change in reportable segments, we have recast previously reported segment information to conform to the current management view for all prior periods presented.

The changes to reportable segments had no impact to the Company’s consolidated financial statements.

Our revenue disaggregation by type of revenue and geographic location was as follows:

For the year ended December 31, 2021

(in millions) Northeast South West Midwest Other Intersegment Eliminations (1)

(in millions) Northeast South West Midwest Interactive Other Intersegment Eliminations (1)

Gaming $ 2,344.2 $ 1,080.4 $ 352.7 $ 1,009.6 $ 158.4 $ — $ — $ 4,945.3

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For the year ended December 31, 2020

(in millions) Northeast South West Midwest Other Intersegment Eliminations (1)

(in millions) Northeast South West Midwest Interactive Other Intersegment Eliminations (1)

Gaming $ 1,495.1 $ 684.0 $ 194.2 $ 615.2 $ 62.4 $ 0.3 $ ( 0.1 ) $ 3,051.1

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For the year ended December 31, 2019

(in millions) Northeast South West Midwest Other Total

(in millions) Northeast South West Midwest Interactive Other Intersegment Eliminations (1)

Gaming $ 2,117.1 $ 831.1 $ 374.3 $ 938.1 $ 7.8 $ 1.0 $ ( 0.7 ) $ 4,268.7

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Hotel 43.5 98.2 125.9 43.4 — — — 311.0

Reimbursable management costs 46.8 — 10.5 — — 57.3

Other 84.2 35.5 25.6 28.3 30.5 6.8 ( 1.2 ) 209.7

Total revenues $ 2,399.9 $ 1,118.9 $ 642.5 $ 1,094.5 $ 38.3 $ 9.2 $ ( 1.9 ) $ 5,301.4

(1) Represents the elimination of intersegment revenues associated with our Barstool-branded and internally-branded retail sportsbooks, which are operated by Penn Interactive, and our live and televised poker tournament series that operates under the trade name, Heartland Poker Tour (“HPT”).

(1) Primarily represents the elimination of intersegment revenues associated with our internally-branded retail sportsbooks, which are operated by Penn Interactive.

Note 6—Acquisitions and Dispositions

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The acquisition of the operations was financed through a combination of cash on hand and incremental borrowings under the Company’s Revolving Credit Facility (as defined in Note 11, “Long-term Debt” ).

During the first quarter of 2020, the Company finalized the allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed which resulted in no measurement period adjustments for the year ended December 31, 2020.

The fair value is as follows:

(in millions) Fair value

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Management determined the fair value of its office equipment, computer equipment and slot machine gaming devices based on the market approach and other personal property based on the cost approach, supported where available by observable market data, which includes consideration of obsolescence.

Acquired identifiable intangible assets consist of a gaming license and a trademark, which are both indefinite-lived intangible assets, and customer relationships, which is an amortizing intangible asset with an assigned useful life of 2 years.

Management valued (i) the gaming license using the Greenfield Method under the income approach;

(ii) the trademark using the relief-from-royalty method under the income approach;

and (iii) customer relationships (rated player databases) using the

with-and-without method of the income approach.

and (iii) customer relationships (rated player databases) using the with-and-without method of the income approach.

All valuation methods are forms of the income approach supported by observable market data for peer casino operator companies.

See Note 2, “Significant Accounting Policies,” for more information.

The following table includes the financial results of Greektown from the acquisition date through December 31, 2019, which is included within our Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2019:

(in millions) Period from May 23, 2019 through December 31, 2019

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We determined that the land and buildings subject to the Margaritaville Lease, which was entered into at the time of the acquisition, represented operating lease ROU assets with a corresponding operating lease liability calculated based on the present value of the future lease payments at the acquisition date in accordance with GAAP.

Management determined the fair value of its office equipment, computer equipment and slot machine gaming devices based on the market

approach and other personal property based on the cost approach, supported where available by observable market data, which includes consideration of obsolescence.

Acquired identifiable intangible assets consist of a gaming license, which is an indefinite-lived intangible asset, and a customer relationship, which is an amortizing intangible asset with an assigned useful life of 2 years.

Management valued (i) the gaming license using the Greenfield Method under the income approach and (ii) the customer relationships using the with-and-without method of the income approach.

Management valued (i)

the gaming license using the Greenfield Method under the income approach and (ii) the customer relationships using the with-and-without method of the income approach.

All valuation methods are forms of the income approach supported by observable market data for peer casino operator companies.

See Note 2, “Significant Accounting Policies,” for more information.

The following table includes the financial results of Margaritaville from the acquisition date through December 31, 2019, which is included within our Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 31, 2019:

(in millions) For the year ended December 31, 2019

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Net income $ 13.7

Pinnacle Acquisition

On October 15, 2018, the Company acquired all of the outstanding shares of Pinnacle, for a total purchase price of $ 2,816.2 million, which consisted of (i) a cash payment of $ 20.00 per share of Pinnacle common stock, totaling $ 1,252.2 million;

(ii) issuance of Penn National common stock in the amount of $ 749.7 million;

and (iii) the retirement of $ 814.3 million of Pinnacle debt obligations.

In conjunction with the Pinnacle Acquisition, the Company divested the membership interests of certain Pinnacle subsidiaries, which operated the casinos known as Ameristar St.

Charles, Ameristar Kansas City, Belterra Resort and Belterra Park (referred to collectively as the “Divested Properties”), to Boyd Gaming Corporation (NYSE:

Additionally, as a part of the transaction, GLPI acquired the real estate assets associated with Plainridge Park Casino, and concurrently leased back such assets to the Company.

In connection with the sale of the Divested Properties and the Plainridge Park Casino Sale-Leaseback, the Pinnacle Master Lease, which was assumed by the Company concurrent with the closing of the Pinnacle Acquisition, was amended.

The Pinnacle Acquisition added 12 gaming properties to our holdings and provided us with greater operational scale and geographic diversity.

For more information on the Pinnacle Master Lease and related amendment, see Note 12, “Leases.”

During the third quarter of 2019, the Company finalized the allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed, with the excess recorded as goodwill as follows :

Tropicana Las Vegas

On April 16, 2020, we sold the real estate assets associated with the operations of Tropicana Las Vegas Hotel and Casino, Inc.

(“Tropicana”) property to GLPI in exchange for rent credits of $ 307.5 million, and utilized the rent credits to pay rent under our existing Master Leases and the Meadows Lease, (as defined and discussed in Note 12, “Leases” ), beginning in May 2020.

Contemporaneous with the sale, the Company entered into the Tropicana Lease, (as defined and discussed in Note 12, “Leases” ).

Pursuant to the purchase agreement, GLPI would conduct a sale process with respect to both the real estate assets and the operations of Tropicana for up to 24 months (the “Sale Period”), with the Company receiving (i) 75 % of the proceeds above $ 307.5 million plus certain taxes, expenses and costs if an agreement for such sale is signed in the first 12 months of the Sale Period or (ii) 50 % of the proceeds above $ 307.5 million plus certain taxes, expenses and costs if an agreement for such sale is signed in the remainder of the Sale Period.

We recognized a gain on this transaction of $ 29.8 million during the year ended December 31, 2020, which is included in “General and administrative” within our Consolidated Statements of Operations.

On January 11, 2022, Penn National entered into a definitive purchase agreement to sell its outstanding equity interest in Tropicana, which has the gaming license and operates the Tropicana, to Bally’s Corporation (“Bally’s”).

This transaction is expected to close within the second half of 2022, subject to Penn National, GLPI, and Bally’s entering into definitive agreements and obtaining regulatory approval.

On October 1, 2020, we sold the land underlying our Morgantown development project to GLPI in exchange for rent credits of $ 30.0 million.

Contemporaneous with the sale, the Company entered into a triple net lease with GLPI for the land underlying Morgantown (as defined and discussed in Note 12, “Leases” ).

As of December 31, 2020, we had utilized all of the rent credits pertaining to the Tropicana and Morgantown transactions which totaled $ 337.5 million (see Note 12, “Leases” ).

HitPoint Inc.

and LuckyPoint Inc.

On May 11, 2021, we acquired 100 % of the outstanding equity of HitPoint Inc.

and Lucky Point Inc.

(collectively, “Hitpoint”).

The purchase price totaled $ 12.7 million, consisting of $ 6.2 million in cash, $ 3.5 million of the Company’s common equity, and a $ 3.0 million contingent liability.

The contingent liability is payable in annual installments over three years , through a combination of cash and the Company’s common equity, and is based on achievement of certain performance factors.

The preliminary purchase price allocation resulted in a recognition of $ 8.8 million of goodwill, $ 4.0 million in developed technology which is included in “Other intangible assets, net” within the Consolidated Balance Sheets, along with other miscellaneous operating assets and liabilities.

The developed technology is an amortizing intangible asset with an assigned useful life of five years , and was valued using the multi-period excess earnings method, a variation of the income approach, which is supported by observable market data for peer companies.

Hollywood Casino Perryville

On July 1, 2021, we completed the acquisition of the operations of Hollywood Casino Perryville (“Perryville”), from GLPI for a purchase price of $ 39.4 million, including working capital adjustments.

The preliminary purchase price allocation resulted in the recognition of a $ 12.7 million gaming license asset and a $ 1.0 million customer relationship asset, both of which are included in “Other intangible assets, net” within our Consolidated Balance Sheets, $ 9.2 million of goodwill, $ 8.2 million of tangible long-term assets, comprised primarily of property and equipment, and $ 8.3 million of various operating assets and

Simultaneous with the closing, we entered into a lease with GLPI for the real estate assets associated with Hollywood Casino Perryville for initial annual rent of $ 7.8 million per year subject to escalation.

The gaming license is an indefinite-lived intangible asset, and the customer relationships is an amortizing intangible asset with a useful life of two years .

The Company valued (i) the gaming license using the Greenfield Method, a form of the income approach;

(ii) the customer relationships using the “with-and-without” method, a form of the income approach, and (iii) the property and equipment and other various operating assets and liabilities primarily utilizing the cost approach.

All valuation methods of the income approach are supported by observable market data for peer casino operator companies.

For the period beginning July 1, 2021 through December 31, 2021 Perryville’s revenue and net income included in the Consolidated Statements of Operations were $ 46.9 million and $ 2.5 million, respectively.

Sam Houston Race Park and Valley Race Park

On August 1, 2021, we completed the acquisition of the remaining 50 % ownership interest in the Sam Houston Race Park in Houston, Texas, the Valley Race Park in Harlingen, Texas, and a license to operate a racetrack in Austin, Texas (collectively, “Sam Houston”), from PM Texas Holdings, LLC for a purchase price of $ 57.8 million, comprised of $ 42.0 million in cash and $ 15.8 million of the Company’s common equity, which was preliminarily allocated to property and equipment.

In conjunction with the acquisition, we recorded a gain of $ 29.9 million on our equity method investment, which is included in “Other” within our Consolidated Statements of Operations.

The property and equipment assets were valued using a combination of the market and cost approaches.

Score Media and Gaming Inc.

On October 19, 2021, we acquired 100 % of theScore for a purchase price of approximately $ 2.1 billion.

Under the terms of the agreement, 1317774 B.C.

(the “Purchaser”), an indirectly wholly owned subsidiary of Penn National, acquired each of the issued and outstanding theScore shares (other than those held by Penn National and its subsidiaries) for US$ 17.00 per share in cash consideration, totaling $ 922.8 million, and either 0.2398 of a share of common stock, par value $ 0.01 of Penn Common Stock or, if validly elected, 0.2398 of an exchangeable share in the capital of the Purchaser (each whole share, an “Exchangeable Share”), totaling 12,319,340 shares of Penn Common Stock and 697,539 Exchangeable Shares for approximately $ 1.0 billion.

Each Exchangeable Share will be exchangeable into one share of Penn Common Stock at the option of the holder, subject to certain adjustments.

In addition, Purchaser may redeem all outstanding Exchangeable Shares in exchange for shares of Penn Common Stock at any time following the fifth anniversary of the closing, or earlier under certain circumstances.

The acquisition provides us with the technology, resources and audience reach to accelerate our media and sports betting strategy across North America.

The Company held shares of theScore common stock prior to the acquisition and, as such, the acquisition date estimated fair value of this previously held investment was a component of the purchase consideration.

Based on the acquisition date fair value of this investment of $ 58.9 million, the Company recorded a gain of $ 2.9 million related to remeasurement of the equity security investment immediately prior to the acquisition date which is included in “Other” within our Consolidated Statements of Operations.

The following table reflects the preliminary allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed, with the excess recorded as goodwill:

(in millions) Fair value

Cash and restricted cash $ 124.2

Assets held for sale 667.5

Cash and cash equivalents $ 160.3

Other current assets 22.8

Property and equipment - non-Pinnacle Master Lease 318.6

Property and equipment - Pinnacle Master Lease (1)

ROU assets 2.6

Property and equipment 1.8

Goodwill 1,690.2

Other intangible assets

Gaming licenses 1,067.6

Trademarks 298.0

Gaming technology 160.0

Media technology 57.0

Tradename 100.0

Advertising relationships 11.0

Customer relationships 8.0

Re-acquired right 2.6

Other long-term assets 5.2

Total assets $ 2,221.5

Long-term financing obligation, including current portion (3)

Current liabilities 206.1

Deferred income taxes 340.0

Other long-term liabilities 16.6

Accounts payable, accrued expenses and other current liabilities $ 67.9

Deferred tax liabilities 69.2

Other non-current liabilities 1.7

Total liabilities 138.8

Net assets acquired $ 2,082.7

(1) Includes buildings, boats, vessels, barges, and implied land and land use rights.

Land use rights represent the intangible value of the Company’s ability to utilize and access land associated with long term ground lease agreements that give the Company the exclusive rights to operate the casino gaming facilities associated with such agreements.

(2) See Note 9, “Goodwill and Other Intangible Assets,” for details on the impact to each reportable segment.

(3) Long-term financing obligation, including current portion represents the financing obligation associated with Pinnacle Master Lease, as amended.

Pro Forma Financial Information - Greektown, Margaritaville, and Pinnacle

The following table includes unaudited pro forma consolidated financial information assuming our acquisitions of Greektown and Margaritaville had occurred as of January 1, 2018 and Pinnacle had occurred as of January 1, 2017.

The pro forma financial information does not represent the anticipated future results of the combined company.

The pro forma amounts include the historical operating results of Penn National, Greektown, Margaritaville, and Pinnacle, prior to the acquisition, with adjustments directly attributable to the acquisitions, inclusive of adjustments for acquisition costs.

The below pro forma results do not include any adjustments related to synergies.

The Company used the income, or cost approach for the valuation, as appropriate, and used valuation inputs in these models and analyses that were based on market participant assumptions.

Market participants are considered to be buyers and sellers unrelated to the Company in the principal or most advantageous market for the asset or liability.

Acquired identifiable intangible assets consist of gaming technology, media technology, tradename, advertising relationships, customer relationships, and a re-acquired right.

Tradename is an indefinite-lived intangible asset.

All other intangible assets are definite-lived with assigned useful lives primarily ranging from 1 - 7 years.

The re-acquired right intangible asset was assigned a 17.8 year useful life based on the remaining term of a pre-acquisition market access contract between Penn National and theScore.

Goodwill, none of which is deductible under the Canadian Income Tax Act, is approximately 81.2 % of the net assets acquired and represents synergies, incremental market share capture and expansion into new markets not existing as of the acquisition date, and future technology development.

The following valuation approaches were utilized to determine the fair value of each intangible asset:

Intangible Asset Valuation Approach

Gaming technology Relief-from-royalty (variation of income approach)

Media technology Replacement cost

Tradename Relief-from-royalty (variation of income approach)

Advertising relationships With-and-without (variation of income approach)

Customer relationships Replacement cost

Re-acquired right Replacement cost

For the period beginning October 19, 2021 through December 31, 2021 theScore’s revenue and net loss included in the Consolidated Statements of Operations were $ 7.5 million and $ 11.9 million, respectively.

Unaudited Pro Forma Financial Information

The following table includes unaudited pro forma consolidated financial information assuming our acquisition of Hitpoint, Perryville, Sam Houston and theScore had occurred as of January 1, 2020.

The pro forma financial information does not necessarily represent the results that may occur in the future.

The pro forma amounts include the historical operating results of Penn National and Hitpoint, Perryville, Sam Houston and theScore prior to our acquisitions.

For the year ended December 31, 2021, pro forma adjustments directly attributable to the acquisitions include acquisition and transaction related costs of $ 77.1 million incurred by both Penn National and the respective acquirees’ and gains of $ 51.0 million related to our purchase of the remaining 50 % of Sam Houston and a net unrealized gain on the equity security investment in theScore.

For the year ended December 31, 2020, pro forma adjustments directly attributable to the acquisitions primarily include a net unrealized gain of $ 8.3 million on the equity security investment in theScore.

For the year ended December 31,

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Net income (loss) $ 347.6 $ ( 705.4 )

1 st Jackpot Casino and Resorts Casino Tunica

On May 1, 2017, the Company acquired the operations of 1 st Jackpot Casino and Resorts Casino Tunica, for a net purchase price of $ 47.0 million.

In connection with the acquisitions, the real estate assets relating to 1 st Jackpot Casino and Resorts Casino Tunica were acquired by GLPI for an aggregate sales price of $ 82.6 million and included in the Penn Master Lease.

Resorts Casino Tunica ceased operations on June 30, 2019.

Jamul Indian Village Development Corporation

In April 2013, the Company and the Jamul Tribe, a federally recognized Indian Tribe holding a government-to-government relationship with the U.S., entered into definitive agreements to assist the Jamul Tribe in the development of a Hollywood

Casino-branded casino on the Jamul Tribe’s trust land in San Diego County, California.

In addition, the definitive agreements and a related loan commitment letter set forth the terms and conditions under which the Company would provide loans to the Jamul Indian Village Development Corporation (the “JIVDC”) to fund certain development costs.

Following the opening, the Company also managed the property.

In October 2016, the JIVDC obtained long-term secured financing, consisting of a revolving credit facility, a term loan B facility and a term loan C facility (the “Term Loan C Facility” and collectively with the revolving credit facility and the term loan B facility, the “Credit Facilities”) totaling approximately $ 460.0 million.

The Company was the lender under the Term Loan C Facility in the amount of $ 98.0 million.

As of December 31, 2017, the JIVDC breached one of the financial covenants contained within the Credit Facilities, resulting in default.

Consequently, the Company performed an analysis of the expected future cash flows it would receive based on forecasted operations of the property, discounted at the Term Loan C Facility’s effective interest rate, as well as any concessions it would grant to the JIVDC.

As a result of such analysis, the Company recorded a charge of $ 86.0 million for the year ended December 31, 2017, of which $ 64.0 million pertained to the Term Loan C Facility and $ 22.0 million was a reserve for unfunded loan commitments.

In addition, the Company recorded charges of $ 3.8 million related to certain advances made to the JIVDC.

In February 2018, the Company and the Jamul Tribe mutually agreed that the Company would no longer manage the property nor provide branding and development services as of May 28, 2018.

On May 25, 2018, the Company entered into a purchase agreement with the senior lender under the Credit Facilities for the property to sell them all of the Company’s outstanding rights and obligations under the Term Loan C Facility and the JIVDC commitments.

As a result, the Company received cash proceeds of $ 15.2 million from the sale and was relieved of all rights and obligations with respect to the JIVDC.

The sale of the loan resulted in a recovery of loan losses and unfunded loan commitments of $ 17.0 million for the year ended December 31, 2018.

Tropicana Las Vegas

On April 16, 2020, we sold the real estate assets associated with our Tropicana property to GLPI in exchange for rent credits of $ 307.5 million that we began utilizing to pay rent under our existing Master Leases and the Meadows Lease in May 2020.

Contemporaneous with the sale, the Company entered into the Tropicana Lease (as defined and discussed in Note 12, “Leases” ).

Pursuant to the purchase agreement, GLPI will conduct a sale process with respect to both the real estate assets and the operations of Tropicana for up to 24 months (the “Sale Period”), with the Company receiving (i) 75 % of the proceeds above $ 307.5 million plus certain taxes, expenses and costs if an agreement for such sale is signed in the first 12 months of the Sale Period or (ii) 50 % of the proceeds above $ 307.5 million plus certain taxes, expenses and costs if an agreement for such sale is signed in the remainder of the Sale Period.

On October 1, 2020, we sold the land underlying our Morgantown development project to GLPI in exchange for rent credits of $ 30.0 million.

Contemporaneous with the sale, the Company entered into a triple net lease with GLPI for the land underlying Morgantown (as defined and discussed in Note 12, “Leases” ).

As of December 31, 2020, we had utilized all of the rent credits pertaining to the Tropicana and Morgantown transactions which totaled $ 337.5 million (see Note 12, “Leases” ).

Hollywood Casino Perryville

On December 15, 2020, the Company entered into a definitive agreement with GLPI to purchase the operations of Hollywood Casino Perryville for $ 31.1 million.

The transaction is expected to close during the second or third quarter of 2021, subject to approval of the Maryland Lottery and Gaming Control Commission and other customary closing conditions.

Simultaneous with the closing of the transaction, we would lease the real estate assets associated with Hollywood Casino Perryville from GLPI with initial annual rent of $ 7.8 million per year subject to escalation.

Note 7—Investments in and Advances to Unconsolidated Affiliates

As of December 31, 2020 and 2019, investments in and advances to unconsolidated affiliates primarily consisted of the Company’s approximate 36 % interest in Barstool Sports;

its 50 % investment in Kansas Entertainment, the JV with NASCAR that owns Hollywood Casino at Kansas Speedway;

As of December 31, 2021 and 2020, investments in and advances to unconsolidated affiliates primarily consisted of the Company’s 36 % interest in Barstool Sports;

its 50 % investment in Kansas Entertainment, the joint venture with NASCAR that owns Hollywood Casino at Kansas Speedway;

its 50 % interest in Freehold Raceway;

and its 50 % JV with MAXXAM, Inc.

(“MAXXAM”) that owns and operates racetracks in Texas.

and its 50 % joint venture with Sam Houston that owns and operates racetracks in Texas.

On August 1, 2021, the Company purchased the remaining 50 % ownership interest of Sam Houston.

See Note 6, “Acquisitions and Dispositions” for further information.

Investment in Barstool Sports

In February 2020, we closed on our investment in Barstool Sports pursuant to a stock purchase agreement with Barstool Sports and certain stockholders of Barstool Sports, in which we purchased 36 % (inclusive of 1 % on a delayed basis) of the common stock, par value $ 0.0001 per share, of Barstool Sports for a purchase price of $ 161.2 million.

The purchase price primarily consisted of $ 135.0 million in cash and $ 23.1 million in shares of a new class of non-voting convertible preferred stock of the Company (as discussed below).

Within the three years after the closing of the transaction or earlier at our election, we will increase our ownership in Barstool Sports to approximately 50 % by purchasing approximately $ 62.0 million worth of additional shares of Barstool Sports common stock, consistent with the implied valuation at the time of the initial investment, which was $ 450.0 million.

With respect to the remaining Barstool Sports shares, we have immediately exercisable call rights, and the existing Barstool Sports stockholders have put rights exercisable beginning three years after closing, all based on a fair market value calculation at the time of exercise (subject to a cap of $ 650.0 million and a floor of 2.25 times the annualized revenue of Barstool Sports, all subject to various adjustments).

On February 20, 2020, the Company issued 883 shares of Series D Preferred Stock, par value $ 0.01 per share (the “Series D Preferred Stock”) to certain individual stockholders affiliated with Barstool Sports.

The purchase price consisted of $ 135.0 million in cash and $ 23.1 million in shares of a new class of non-voting convertible preferred stock of the Company (as discussed below).

Within three years after the closing of the transaction or earlier at our election, we will increase our ownership in Barstool Sports to approximately 50 % by purchasing approximately $ 62.0 million worth of additional shares of Barstool Sports common stock, consistent with the implied valuation at the time of the initial investment, which was $ 450.0 million.

With respect to the remaining Barstool Sports shares, we have immediately exercisable call rights, and the existing Barstool Sports stockholders have put rights exercisable beginning three years after closing, all based on a fair market value calculation at the time of exercise (originally subject to a cap of $ 650.0 million, and subject to such cap, a floor of 2.25 times the annualized revenue of Barstool Sports, all subject to various adjustments).

On October 1, 2021, the terms of the February 2020 stock purchase agreement were amended to (i) set a definitive purchase price of $ 325.0 million on the second 50 % of Barstool Sports common stock, which eliminates the floor of 2.25 times the annual revenue of Barstool Sports and (ii) fix a number of Penn common shares to be delivered to existing February 2020 employee holders of Barstool Sports common stock, to the extent Penn’s stock price exceeds a specified value defined in the amended stock purchase agreement and Penn elects to settle using a combination of cash and equity.

Consistent with the February 2020 stock purchase agreement:

(i) the Barstool Sports common stock remains subject to our immediately exercisable call rights and the existing Barstool Sports stockholders put rights beginning in February 2023, (ii) the requirement to increase our ownership in Barstool Sports to approximately 50 % by purchasing approximately $ 62.0 million worth of additional shares in Barstool Sports common stock remains consistent with the implied valuation at the time of the initial investment, which was $ 450.0 million, and (iii), we may settle the call and put options, at our sole election, using either cash or a combination of cash and equity.

On February 20, 2020, the Company issued 883 shares of Series D Preferred Stock, par value $ 0.01 (the “Series D Preferred Stock”) to certain individual stockholders affiliated with Barstool Sports.

1/1,000 th of a share of Series D Preferred Stock is convertible into one share of Penn Common Stock.

The Series D Preferred Stock will be entitled to participate equally and ratably in all dividends and distributions paid to holders of Penn Common Stock based on the number of shares of Penn Common Stock into which such Series D Preferred Stock could convert.

The Series D Preferred stockholders are entitled to participate equally and ratably in all dividends and distributions paid to holders of Penn Common Stock based on the number of shares of Penn Common Stock into which such Series D Preferred Stock could convert.

Series D Preferred Stock is nonvoting stock.

The Series D Preferred Stock issued to certain individual stockholders affiliated with Barstool Sports will be available for conversion into Penn Common Stock in tranches over the next four years as stipulated in the stock purchase agreement, with the first 20 % tranche available for conversion into Penn Common Stock in the first quarter of 2021.

As of December 31, 2020, none of the Series D Preferred Stock can be converted into Penn Common Stock.

The Series D Preferred Stock issued to certain individual stockholders affiliated with Barstool Sports will be available for conversion into Penn Common Stock in tranches over four years as stipulated in the stock purchase agreement, with the first

20 % tranche having been available for conversion into Penn Common Stock in the first quarter of 2021.

As of December 31, 2021, 26 shares of the Series D Preferred Stock can be converted into Penn Common Stock.

During the first quarter of 2021, the Company acquired 0.3 %, and subsequently acquired an additional 0.3 % during the third quarter of 2021, of Barstool Sports common stock, par value $ 0.0001 per share, which represents a partial settlement of the 1 % purchase on a delayed basis as noted above.

The acquisition of the acquired Barstool Sports common stock was settled through a predetermined number of Series D Preferred Stock as contained within the stock purchase agreement (see Note 15, “Stockholders’ Equity,” and Note 16, “Stock-based Compensation,” for further information).

As a part of the stock purchase agreement, we entered into a commercial agreement that provides us with access to Barstool Sports’ customer list and exclusive advertising on the Barstool Sports platform over the term of the agreement.

The initial term of the commercial agreement is ten years and, unless earlier terminated and subject to certain exceptions, will automatically renew for three additional ten-year terms (a total of 40 years assuming all renewals are exercised).

As of December 31, 2020 we have an amortizing intangible asset pertaining to the customer list of $ 1.6 million and a prepaid expense pertaining to the advertising in the amount of $ 16.5 million, of which $ 15.4 million is classified as long-term.

As of December 31, 2021 and 2020, we have an amortizing intangible asset pertaining to the customer list of $ 0.8 million and $ 1.6 million, respectively.

As of December 31, 2021 and 2020, we have a prepaid expense pertaining to the advertising in the amount of $ 15.4 million and $ 16.5 million, respectively, of which $ 14.2 million and $ 15.4 million was classified as long-term, respectively.

The long-term portion of the prepaid advertising expense is included in “Other assets” within our Consolidated Balance Sheets.

As of December 31, 2020, our investment in Barstool Sports was $ 147.5 million, which is inclusive of $ 3.4 million of costs we incurred to close the transaction.

As of December 31, 2021 and 2020, our investment in Barstool Sports was $ 162.5 million and $ 147.5 million, respectively.

We record our proportionate share of Barstool Sports’ net income or loss one quarter in arrears.

The Company determined that Barstool Sports qualified as a VIE as of December 31, 2020.

The Company did not consolidate its investment in Barstool Sports as of and for the year ended December 31, 2020 as the Company determined that it did not qualify as the primary beneficiary of Barstool Sports either at the commencement date of its investment or for the subsequent period ended December 31, 2020, primarily as a result of the Company not having the power to direct the activities of the VIE that most significantly affect Barstool Sports’ economic performance.

The Company determined that Barstool Sports qualified as a VIE as of December 31, 2021 and 2020.

The Company did not consolidate the financial position of Barstool Sports as of and for the year ended December 31, 2021 and 2020, nor the results of operations for the years ended December 31, 2021 and 2020, as the Company determined that it did not qualify as the primary beneficiary of Barstool Sports either at the commencement date of its investment or for subsequent periods, primarily as a result of the Company not having the power to direct the activities of the VIE that most significantly affect Barstool Sports’ economic performance.

Kansas Joint Venture

As of December 31, 2021 and 2020, our investment in Kansas Entertainment was $ 83.8 million and $ 85.2 million, respectively.

During the years ended December 31, 2020, 2019 and 2018, the Company received distributions from Kansas Entertainment totaling $ 20.0 million, $ 29.0 million and $ 27.0 million, respectively, which the Company deemed to be returns on its investment based on the source of those cash flows from the normal business operations of Kansas Entertainment.

As of the years ended December 31, 2020 and 2019, we determined that Kansas Entertainment does not qualify as a VIE.

Using the guidance for entities that are not VIEs, the Company determined that it did not have a controlling financial interest in the JV as of and for the years ended December 31, 2020 and 2019, primarily as it did not have the ability to direct the activities

of the JV that most significantly impacted the JV’s economic performance without the input of NASCAR.

Therefore, the Company did not consolidate its investment in the JV as of and for the years ended December 31, 2020 and 2019.

During the years ended December 31, 2021, 2020 and 2019, the Company received distributions from Kansas Entertainment totaling $ 31.8 million, $ 20.0 million and $ 29.0 million, respectively.

The Company deems these distributions to be returns on its investment based on the source of those cash flows from the normal business operations of Kansas Entertainment.

The Company has determined that Kansas Entertainment does not qualify as a VIE.

Using the guidance for entities that are not VIEs, the Company determined that it did not have a controlling financial interest in the joint venture, primarily as it did not have the ability to direct the activities of the joint venture that most significantly impacted the joint venture’s economic performance without the input of NASCAR.

Therefore, the Company did not consolidate the financial position of Kansas Entertainment as of December 31, 2021 and 2020, nor the results of operations for the years ended December 31, 2021 and 2020.

The following table provides summarized balance sheet and results of operations information related to Kansas Entertainment and our share of income from unconsolidated affiliates from our investment in Kansas Entertainment:

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Texas and New Jersey Joint Ventures

The Company has a 50 % interest in a JV with MAXXAM, which owns and operates the Sam Houston Race Park in Houston, Texas and the Valley Race Park in Harlingen, Texas, and holds a license for a racetrack in Austin, Texas.

During the first quarter of 2020, principally due to on-going negative operating results of these racetracks, we recorded an other-than-temporary impairment on our investment in the JV of $ 4.6 million, which is included in “Impairment losses” within our Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company had a 50 % interest in a joint venture with Sam Houston, which owns and operates the Sam Houston Race Park in Houston, Texas and the Valley Race Park in Harlingen, Texas, and holds a license for a racetrack in Austin, Texas.

On August 1, 2021, we completed the acquisition of the remaining 50 % ownership interest in Sam Houston.

In conjunction with the acquisition we recorded a gain of $ 29.9 million on our equity method investment, which is included in “Other” within our Consolidated Statements of Operations.

See Note 6, “Acquisitions and Dispositions” for further information.

During the first quarter of 2020, we recorded an other-than-temporary impairment on our investment in the joint venture of $ 4.6 million, which is included in “Impairment losses” within our Consolidated Statements of Operations.

No further impairment loss was recorded for the years ended December 31, 2021 and 2020.

Sam Houston Race Park hosts thoroughbred and quarter-horse racing and offers daily simulcast operations, and Valley Race Park features dog racing and simulcasting.

In addition, through a separate arrangement, the Company has a 50 % interest in a JV with Greenwood, which owns and operates Freehold Raceway, in Freehold, New Jersey.

In addition, through a separate arrangement, the Company has a 50 % interest in a joint venture with Greenwood, which owns and operates Freehold Raceway, in Freehold, New Jersey.

The property features a half-mile standardbred racetrack and a grandstand.

As of December 31, 2020 and 2019, we determined that neither our Texas JV nor our New Jersey JV qualify as a VIE.

Using the guidance for entities that are not VIEs, in both cases, the Company determined that it did not have a controlling financial interest in either of the JVs as of and for the years ended December 31, 2020 and 2019, primarily as it did not have the ability to direct the activities of either of the JVs that most significantly impacted the JVs’ economic performance without the input of MAXXAM or Greenwood, respectively.

Therefore, the Company did not consolidate either of its investment in the JVs as of and for the years ended December 31, 2020 and 2019.

As of December 31, 2021 and 2020, we determined that our New Jersey joint venture did not qualify as a VIE, nor did our former interest in our Texas joint venture for the year ended December 31, 2020.

Using the guidance for entities that are not VIEs, in both cases, the Company determined that it did not have a controlling financial interest in either of the joint ventures as of and for the years ended December 31, 2021 and 2020, primarily as it did not have the ability to direct the activities of either of the joint ventures that most significantly impacted the joint ventures’ economic performance without the input of Sam Houston or Greenwood, respectively.

Therefore, the Company did not consolidate either of its investment in the joint ventures as of and for the years ended December 31, 2021 and 2020.

Note 8—Property and Equipment

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Land and improvements $ 147.6 $ 105.6

$ 105.6 $ 353.2

Building, vessels and improvements 327.3 205.4

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Accumulated depreciation ( 1,634.1 ) ( 1,559.0 )

( 1,559.0 ) ( 1,548.3 )

681.7 1,066.5

Property and equipment - Subject to Master Leases

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Property and equipment, net $ 4,582.2 $ 4,529.3

(1) On April 16, 2020, we sold real estate assets associated with our Tropicana property to GLPI.

See Note 6, Acquisitions and Dispositions.

Depreciation expense was as follows:

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As a result, we wrote off property and equipment with a net book value of $ 23.2 million of which $ 2.1 million and $ 21.1 million was included in Property and equipment – Not subject to Master Lease, and Property and equipment – Subject to Master Leases, respectively.

During the year ended December 31, 2020, we recorded $ 7.3 million of impairment on the property and equipment associated with Tropicana, relating to the operating assets, which is included in “Impairment losses” within our Consolidated Statements of Operations and Comprehensive Income (Loss).

The charge was the result of an impairment assessment performed after reviewing the projected results of this property over the remaining lease term contained within the Tropicana Lease.

There were no impairment charges recorded to property and equipment during the year ended December 31, 2021.

Note 9—Goodwill and Other Intangible Assets

A reconciliation of goodwill and accumulated goodwill impairment losses, by reportable segment, is as follows:

(in millions) Northeast South West Midwest Other Total

(in millions) Northeast South West Midwest Interactive Other Total

Balance as of January 1, 2020

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Goodwill, net 196.4 184.6 200.2 621.1 67.8 0.6 1,270.7

Goodwill acquired during year 67.4 44.2 — — — 111.6

Impairment losses during year ( 43.5 ) ( 9.0 ) — ( 60.5 ) — — ( 113.0 )

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Goodwill, net 152.9 175.6 200.2 560.6 67.8 — 1,157.1

Impairment losses during year ( 43.5 ) ( 9.0 ) — ( 60.5 ) — ( 113.0 )

— — — — ( 0.6 ) ( 0.6 )

Goodwill acquired during year 9.2 — — — 1,699.0 — 1,708.2

Effects of foreign currency exchange rates — — — — ( 42.8 ) — ( 42.8 )

Balance as of December 31, 2021

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Goodwill, net $ 162.1 $ 175.6 $ 200.2 $ 560.6 $ 1,724.0 $ — $ 2,822.5

(1) Amounts relate to adjustments made to the preliminary purchase price allocation of Pinnacle during the year ended December 31, 2019, prior to it being finalized.

(1) Amounts relate to the write-off of goodwill related to the land sale at Sanford Orlando Kennel Club which discontinued our racing operations.

The write-off of this goodwill balance is included as a component of the gain calculation recorded on the sale.

2021 Annual Assessment for Impairment

The Company completed its annual assessment for impairment as of October 1, 2021, which did not result in any impairment charges to goodwill, gaming licenses and trademarks.

The estimated fair values of the reporting units were determined through a combination of discounted cash flow models and market-based approaches, which utilized Level 3 inputs.

The estimated fair values of the gaming licenses and trademarks were determined by using discounted cash flow models, which utilized Level 3 inputs.

2020 Annual and Interim Assessment for Impairment

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The estimated fair values of the gaming licenses and trademarks were determined by using discounted cash flow models, which utilized Level 3 inputs.

As noted in the table above, the goodwill impairments pertained to our Northeast, South and Midwest segments, in the amounts of $ 43.5 million, $ 9.0 million and $ 60.5 million, respectively.

The goodwill impairments pertained to our Northeast, South and Midwest segments, in the amounts of $ 43.5 million, $ 9.0 million and $ 60.5 million, respectively.

The gaming license impairments pertained to our Northeast, South and Midwest segments in the amounts of $ 177.0 million, $ 166.0 million and $ 94.0 million, respectively.

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We completed our annual assessment for impairment as of October 1, 2020, which did not result in any impairment charges to goodwill, gaming licenses and trademarks.

The estimated fair values of the reporting units were determined through a combination of discounted cash flow models and a market-based approach, which utilized Level 3 inputs.

The estimated fair values of the reporting units were determined through a combination of discounted cash

flow models and a market-based approach, which utilized Level 3 inputs.

The estimated fair values of the gaming licenses and trademarks were determined by using discounted cash flow models, which utilized Level 3 inputs.

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The estimated fair values of the gaming licenses and trademarks were determined by using discounted cash flow models, which utilized Level 3 inputs.

As noted in the table above, the goodwill impairments pertained to our Northeast, South and Midwest segments, in the amounts of $ 10.3 million, $ 17.4 million and $ 60.3 million, respectively.

The goodwill impairments pertained to our Northeast, South and Midwest segments, in the amounts of $ 10.3 million, $ 17.4 million and $ 60.3 million, respectively.

The gaming license impairments pertained to our Northeast and South segments in the amounts of $ 55.1 million and $ 7.5 million, respectively.

The trademark impairments pertained to our Northeast, South and Midwest segments, in the amounts of $ 11.5 million, $ 6.5 million and $ 2.0 million, respectively.

2018 Annual Assessment for Impairment

During the year ended December 31, 2018, the Company completed its 2018 annual assessment for impairment, which did not result in any impairment charges to goodwill or other intangible assets.

The aforementioned impairments for the years ended December 31, 2020 and 2019 are included in “Impairment losses” within our Consolidated Statements of Operations and Comprehensive Income (Loss).

See Note 19, “Fair Value Measurements,” for quantitative information about the significant unobservable inputs used in the fair value measurements of other intangible assets.

Carrying Values of Goodwill and Other Intangible Assets

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Northeast segment

Hollywood Casino at Charles Town Races $ 8.7

Hollywood Casino Toledo $ 5.8

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Boomtown New Orleans $ 5.2

Hollywood Casino Gulf Coast $ 2.7

Cactus Petes and Horseshu $ 10.2

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Customer relationships 114.9 ( 91.4 ) 23.5 106.9 ( 85.2 ) 21.7

Technology 252.7 ( 40.5 ) 212.2 32.7 ( 28.6 ) 4.1

Other 19.4 ( 6.8 ) 12.6 6.9 ( 6.9 ) —

Total other intangible assets $ 1,634.2 $ ( 120.7 ) $ 1,513.5 $ 2,125.5 $ ( 99.0 ) $ 2,026.5

During the year ended December 31, 2020 we paid $ 1.3 million for online and retail sports betting licenses.

During the year ended December 31, 2019, we paid $ 10.0 million for online and retail sports betting licenses in Pennsylvania.

During the year ended December 31, 2018, we purchased two Category 4 gaming licenses to operate up to 750 slot machines and initially up to 30 table games, under each license, in York County, Pennsylvania for $ 50.1 million and in Berks County, Pennsylvania for $ 7.5 million, and iGaming and sports betting licenses in Pennsylvania for $ 20.0 million, all of which have been classified as indefinite-lived intangible assets.

Total other intangible assets, net $ 2,011.3 $ ( 138.7 ) $ 1,872.6 $ 1,634.2 $ ( 120.7 ) $ 1,513.5

There were no impairment charges recorded to other intangible assets for the year ended December 31, 2021.

Amortization expense related to our amortizing intangible assets was $ 19.6 million, $ 21.7 million, and $ 24.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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Thereafter 42.2

Total $ 248.3

Note 10—Accrued Expenses and Other Current Liabilities

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Note 11—Long-term Debt

Long-term debt, net of current maturities, was as follows:

The table below presents long-term debt, net of current maturities, debt discounts and issuance costs:

(in millions) 2021 2020

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5.625 % Notes due 2027

4.125 % Notes due 2029

2.75 % Convertible Notes due 2026

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Senior Secured Credit Facilities

On January 19, 2017, the Company entered into an agreement to amend and restate its Amended 2013 Credit Agreement (the “Credit Agreement”), which provided for:

In January 2017, the Company entered into an agreement to amend and restate its previous credit agreement, dated October 30, 2013, as amended (the “Credit Agreement”), which provided for:

(i) a five-year $ 700.0 million revolving credit facility (the “Revolving Credit Facility”);

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and (iii) a seven-year $ 500.0 million Term Loan B facility (the “Term Loan B Facility” and collectively with the Revolving Credit Facility and the Term Loan A Facility, the “Senior Secured Credit Facilities”).

On October 15, 2018, in connection with the Pinnacle Acquisition, we entered into an incremental joinder agreement (the “Incremental Joinder”), which amended the Credit Agreement (the “Amended 2017 Credit Agreement”).

The Incremental Joinder provided for an additional $ 430.2 million of incremental loans having the same terms as the existing Term Loan A Facility, with the exception of extending the maturity date, and an additional $ 1,128.8 million of loans as a new tranche having new terms (the “Term Loan B-1 Facility”).

The proceeds resulting from the Incremental Joinder were used;

together with cash on hand and proceeds received from (i) newly-issued shares of the Company’s common stock, (ii) the sale of the Divested Properties, (iii) the Plainridge Park Casino Sale-Leaseback, and (iv) the sale of the real estate assets associated with Belterra Park;

to (a) acquire all of the issued and outstanding equity interests of Pinnacle, (b) repay in full Pinnacle’s existing senior secured credit facilities at the time of the acquisition, (c) redeem, repurchase, defease or satisfy and discharge in full Pinnacle’s outstanding 5.625 % senior notes due 2024, (d) repay in full the Company’s outstanding borrowings under its Term Loan B Facility at the time of the acquisition, and (e) pay fees, costs and expenses associated with the foregoing.

On October 15, 2018, in connection with the acquisition of Pinnacle Entertainment, Inc.

(“Pinnacle”), we entered into an incremental joinder agreement (the “Incremental Joinder”), which amended the Credit Agreement (the “Amended Credit Agreement”).

The Incremental Joinder provided for an additional $ 430.2 million of incremental loans having the same terms as the existing Term Loan A Facility, with the exception of extending the maturity date, and an additional $ 1.1 billion of loans as a new tranche having new terms (the “Term Loan B-1 Facility”).

With the exception of extending the maturity date, the Incremental Joinder did not impact the Revolving Credit Facility.

The final maturity dates for the Term Loan A Facility and Term Loan B-1 Facility are October 19, 2023 and October 15, 2025, respectively.

The applicable margin for the Term Loan A Facility ranges from 1.25 % to 3.00 % per annum for LIBOR loans and 0.25 % to 2.00 % per annum for base rate loans, in each case depending on the Consolidated Total Net Leverage Ratio (as defined in the Amended 2017 Credit Agreement) as of the most recent fiscal quarter.

The applicable margin for the Term Loan B-1 Facility is 2.25 % per annum for LIBOR loans and 1.25 % per annum for base rate loans.

The Term Loan B-1 Facility

is subject to a LIBOR “floor” of 0.75 %.

Prior to the Amended 2017 Credit Agreement and related extinguishment of the Term Loan B Facility, the applicable margin for the Term Loan B Facility was 2.50 % per annum for LIBOR loans and 1.50 % per annum for base rate loans.

In addition, we pay a commitment fee on the unused portion of the commitments under the Revolving Credit Facility at a rate that ranges from 0.20 % to 0.50 % per annum, depending on the Consolidated Total Net Leverage Ratio as of the most recent fiscal quarter.

On April 14, 2020, the Company entered into a second amendment to its Credit Agreement with its various lenders ( the “Second Amendment”) to provide for certain modifications.

During the period beginning on April 14, 2020 and ending on the earlier of (x) the date that is two business days after the date on which the Company delivers a covenant relief period termination notice to the administrative agent and (y) the date on which the administrative agent receives a compliance certificate for the quarter ending March 31, 2021 (the “Covenant Relief Period”), the Company will not have to comply with any Maximum Leverage Ratio or Minimum Interest Coverage Ratio (as such terms are defined in the Amended 2017 Credit Agreement).

During the Covenant Relief Period, the Company will be subject to a minimum liquidity covenant that requires cash and cash equivalents and availability under its Revolving Credit Facility to be (i) at least $ 400.0 million through April 30, 2020;

(ii) $ 350.0 million during the period from May 1, 2020 through May 31, 2020;

(iii) $ 300.0 million during the period from June 1, 2020 through June 30, 2020;

and (iv) $ 225.0 million during the period from July 1, 2020 through March 31, 2021.

We are required to maintain specified financial ratios and to satisfy certain financial tests when our covenant relief period terminates on March 31, 2021.

The Second Amendment also amended the financial covenants that are applicable after the Covenant Relief Period to permit the Company to (i) maintain a maximum consolidated total net leverage ratio of up to a ratio that varies by quarter, ranging between 5.50 :1.00 and 4.50 :1.00 in 2021 and 4.25 :1.00 thereafter, tested quarterly on a pro forma trailing twelve month (“PF TTM”) basis;

(ii) maintain a maximum senior secured net leverage ratio of up to a ratio that varies by quarter, ranging between 4.50 :1.00 and 3.50 :1.00 in 2021 and 3.00 :1.00 thereafter, tested quarterly on a PF TTM basis;

On April 14, 2020, the Company entered into a second amendment to its Credit Agreement with its various lenders (the “Second Amendment”) to provide for certain modifications to required financial covenants and interest rates during, and subsequent to, a covenant relief period, which concluded on May 7, 2021 (the “Covenant Relief Period”).

Upon conclusion of the Covenant Relief Period, the Second Amendment permits the Company to (i) maintain a maximum consolidated total net leverage ratio of 5.50 :1.00 for the quarter ended March 31, 2021, 5.00 :1.00 for the quarter ended June 30, 2021, 4.75 :1.00 for the quarter ended September 30, 2021, 4.50 :1.00 for the quarter ended December 31, 2021, and 4.25 :1.00 thereafter, tested quarterly on a pro forma trailing twelve month (“PF TTM”) basis;

(ii) maintain a maximum senior secured net leverage ratio of 4.50 :1.00 for the quarter ended March 31, 2021, 4.00 :1.00 for the quarter ended June 30, 2021, 3.75 :1.00 for

the quarter ended September 30, 2021, 3.50 :1.00 for the quarter ended December 31, 2021, and 3.00 :1.00 thereafter, tested quarterly on a PF TTM basis;

and (iii) maintain an interest coverage ratio of 2.50 :1.00, tested quarterly on a PF TTM basis.

In addition, the Second Amendment (i) provides that, during the Covenant Relief Period, loans under the Revolving Credit Facility and the Term Loan A Facility shall bear interest at either a base rate or an adjusted LIBOR rate, in each case, plus an applicable margin, in the case of base rate loans, of 2.00 %, and in the case of adjusted LIBOR rate loans, of 3.00 %;

(ii) provides that, during the Covenant Relief Period, the Company shall pay a commitment fee on the unused portion of the commitments under the Revolving Credit Facility at a rate of 0.50 % per annum;

(iii) provides for a 0.75 % LIBOR floor applicable to all LIBOR loans under the Senior Secured Credit Facilities;

(iv) carves out COVID-19 related effects from certain terms of the Senior Secured Credit Facilities during the Covenant Relief Period;

and (v) makes certain other changes to the covenants and other provisions of the Credit Agreement.

As of December 31, 2020 and 2019, the Company had conditional obligations under letters of credit issued pursuant to the Senior Secured Credit Facilities with face amounts aggregating to $ 28.2 million and $ 30.0 million, respectively, resulting in $ 671.8 million and $ 530.0 million of available borrowing capacity under the Revolving Credit Facility, respectively.

During the fourth quarter of 2020, in connection with a prepayment of $ 115.0 million of outstanding borrowings on our Term Loan B-1 Facility, we recorded a $ 1.2 million loss on early extinguishment of debt, related to the write-off of debt issuance costs and debt discounts.

For the year ended December 31, 2018, in connection with the debt financing transactions relating to the Pinnacle Acquisition and principal repayments on the Term Loan B Facility, the Company recorded $ 5.5 million in refinancing costs and a $ 21.0 million loss on early extinguishment of debt, related to refinancing costs on the extinguishment of the Term Loan B Facility and the write-off of debt issuance costs and the discount on the Term Loan B Facility.

The refinancing costs are included in “Other,” as reported in “Other income (expenses)” within our Consolidated Statements of Operations and Comprehensive Income (Loss).

In addition, upon conclusion of the Covenant Relief Period, loans under the Senior Secured Credit Facilities bear interest at either a base rate or an adjusted LIBOR rate, plus an applicable margin.

The applicable margins for the Revolving Credit Facility and Term Loan A Facility range from 1.25 % to 3.00 % per annum for LIBOR loans and 0.25 % to 2.00 % per annum for base rate loans, in each case depending on the Consolidated Total Net Leverage Ratio (as defined in the Amended Credit Agreement) as of the most recent fiscal quarter.

The Term Loan B-1 Facility continues to bear interest at 2.25 % per annum for LIBOR loans and 1.25 % per annum for base rate loans.

All loans under the Senior Secured Credit Facilities are subject to a LIBOR “floor” of 0.75 %.

In addition, a commitment fee is paid on the unused portion of the commitments under the Revolving Credit Facility at a rate that ranges from 0.20 % to 0.50 % per annum, depending on the Consolidated Total Net Leverage Ratio as of the most recent fiscal quarter.

The payment and performance of obligations under the Senior Secured Credit Facilities are guaranteed by a lien on and security interest in substantially all of the assets (other than excluded property, such as gaming licenses) of the Company.

As of December 31, 2021 and 2020, the Company had conditional obligations under letters of credit issued pursuant to the Senior Secured Credit Facilities with face amounts aggregating to $ 26.0 million and $ 28.2 million, respectively, resulting in $ 674.0 million and $ 671.8 million of available borrowing capacity under the Revolving Credit Facility, respectively.

5.625 % Senior Unsecured Notes

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The 5.625 % Notes are not guaranteed by any of the Company’s subsidiaries except in the event that the Company in the future issues certain subsidiary-guaranteed debt securities.

The Company may redeem the 5.625 % Notes at any time on or after January 15, 2022, at the declining redemption premiums set

forth in the indenture governing the 5.625 % Notes, and, prior to January 15, 2022, at a “make-whole” redemption premium set forth in the indenture governing the 5.625 % Notes.

The Company may redeem the 5.625 % Notes at any time on or after January 15, 2022, at the declining redemption premiums set forth in the indenture governing the 5.625 % Notes, and, prior to January 15, 2022, at a “make-whole” redemption premium set forth in the indenture governing the 5.625 % Notes.

4.125 % Senior Unsecured Notes

On July 1, 2021, the Company completed an offering of $ 400.0 million aggregate principal amount of 4.125 % senior unsecured notes that mature on July 1, 2029 (the “ 4.125 % Notes”).

The 4.125 % Notes were issued at par and interest is payable semi-annually on January 1st and July 1st of each year.

The 4.125 % Notes are not guaranteed by any of the Company’s subsidiaries except in the event that the Company in the future issues certain subsidiary-guaranteed debt securities.

The Company may redeem the 4.125 % Notes at any time on or after July 1, 2024, at the declining redemption premiums set forth in the indenture governing the 4.125 % Notes, and, prior to July 1, 2024, at a “make-whole” redemption premium set forth in the indenture governing the 4.125 % Notes.

2.75 % Unsecured Convertible Notes

In May 2020, the Company completed a public offering of $ 330.5 million aggregate principal amount of 2.75 % unsecured convertible notes that mature, unless earlier converted, redeemed or repurchased, on May 15, 2026 (the “Convertible Notes”) at a price of par.

After lender fees and discounts, net proceeds received by the Company were $ 322.2 million.

Interest on the Convertible Notes is payable on May 15 th and November 15 th of each year, beginning on November 15, 2020.

Interest on the Convertible Notes is payable on May 15 th and November 15 th of each year.

The Convertible Notes are convertible into shares of the Company’s common stock at an initial conversion price of $ 23.40 per share, or 42.7350 shares, per $1,000 principal amount of notes, subject to adjustment if certain corporate events occur.

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As of December 31, 2021, the maximum number of shares that could be issued to satisfy the conversion feature of the Convertible Notes is 18,360,815 and the amount by which the Convertible Notes if-converted value exceeded its principal amount was $ 621.5 million.

Prior to February 15, 2026, at their election, holders of the Convertible Notes may convert outstanding notes starting in the fourth quarter of 2020 if the trading price of the Company’s common stock exceeds 130 % of the conversion price or, starting shortly after the issuance of the Convertible Notes, if the trading price per $1,000 principal amount of notes is less than 98 % of the product of the trading price of the Company’s common stock and the conversion rate then in effect.

Starting in the fourth quarter of 2020 and prior to February 15, 2026, at their election, holders of the Convertible Notes may convert outstanding notes if the trading price of the Company’s common stock exceeds 130 % of the initial conversion price or, starting shortly after the issuance of the Convertible Notes, if the trading price per $1,000 principal amount of notes is less than 98 % of the product of the trading price of the Company’s common stock and the conversion rate then in effect.

The Convertible Notes may, at the Company’s election, be settled in cash, shares of common stock of the Company, or a combination thereof.

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In connection with certain corporate events or if the Company issues a notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their Convertible Notes in connection with such corporate events or during the relevant redemption period for such Convertible Notes.

As of December 31, 2021 and December 31, 2020, no Convertible Notes have been converted into the Company’s common stock.

The Convertible Notes contain a cash conversion feature, and as a result, the Company has separated it into liability and equity components.

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The Convertible Notes consisted of the following components:

(in millions) December 31,

(in millions) December 31, 2021 December 31, 2020

Liability component:

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Interest expense, net

Interest expense, net, was as follows:

The table below presents interest expense, net:

For the year ended December 31,

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Interest expense, net $ ( 561.7 ) $ ( 543.2 ) $ ( 534.2 )

Interest expense related to the Convertible Notes was as follows:

(in millions) For the year ended December 31, 2020

The table below presents interest expense related to the Convertible Notes:

For the year ended December 31,

(in millions) 2021 2020

Coupon interest $ 9.1 $ 5.7

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The remaining term of the Convertible Notes was 4.4 years as of December 31, 2021.

Our Senior Secured Credit Facilities and 5.625 % Notes require us, among other obligations, to maintain specified financial ratios and to satisfy certain financial tests.

In addition, our Senior Secured Credit Facilities and 5.625 % Notes restrict, among other things, our ability to incur additional indebtedness, incur guarantee obligations, amend debt instruments, pay dividends, create liens on assets, make investments, engage in mergers or consolidations, and otherwise restrict corporate activities.

Our debt agreements also contain customary events of default, including cross-default provisions that require us to meet certain requirements under the Penn Master Lease and the Pinnacle Master Lease, each with GLPI.

If we are unable to meet our financial covenants or in the event of a cross-default, it could trigger an acceleration of payment term s.

Our Senior Secured Credit Facilities, 5.625 % Notes and 4.125 % Notes, require us, among other obligations, to maintain specified financial ratios and to satisfy certain financial tests.

In addition, our Senior Secured Credit Facilities, 5.625 % Notes and 4.125 % notes, restrict, among other things, our ability to incur additional indebtedness, incur guarantee obligations, amend debt instruments, pay dividends, create liens on assets, make investments, engage in mergers or consolidations, and otherwise restrict corporate activities.

If we are unable to meet our financial covenants or in the event of a cross-default, it could trigger an acceleration of payment terms.

As of December 31, 2021, the Company was in compliance with all required financial covenants.

When our covenant relief period ends, the Company is subject to and expects to be in compliance with all required financial covenants including ( i) Maximum Consolidated Total Net Leverage Ratio;

(ii) Maximum Consolidated Senior Secured Net Leverage Ratio;

and (iii) Minimum Interest Coverage Ratio (as discussed above) with the Company's submission of its compliance certificate for the quarter ending March 31, 2021.

The Company believes that it will remain in compliance with all of its required financial covenants for at least the next twelve months following the date of filing this Annual Report on Form 10-K with the SEC.

Other Long-Term Obligations

Other Long-term Obligation

In February 2021, we entered into a financing arrangement providing the Company with upfront cash proceeds while permitting us to participate in future proceeds on certain claims.

The financing obligation has been classified as a non-current liability, which is expected to be settled in a future period of which the principal is contingent and predicated on other events.

Consistent with an obligor’s accounting under a debt instrument, period interest will be accreted using an effective interest rate of 27.0 % and until such time that the claims and related obligation is settled.

The amount included in interest expense related to this obligation was $ 17.9 million for the year ended December 31, 2021.

Ohio Relocation Fees

As of December 31, 2020 and 2019, other long-term obligations included $ 60.9 million and $ 76.4 million, respectively, related to the relocation fees for Dayton and Mahoning Valley, which opened in August 2014 and September 2014, respectively.

In June 2013, we finalized the terms of our memorandum of understanding with the State of Ohio, which included an agreement for us to pay a relocation fee in return for being able to relocate our existing racetracks in Toledo and Grove City to Dayton and Mahoning Valley, respectively.

Upon opening Dayton and Mahoning Valley, each relocation fee was recorded at the present value of the contractual obligation, which was calculated as $ 75.0 million based on the 5.0 % discount rate included in the agreement.

Each relocation fee is payable as follows:

$ 7.5 million upon opening and eighteen semi-annual payments of $ 4.8 million beginning one year after opening.

Other long-term obligations included $ 44.5 million and $ 60.9 million as of December 31, 2021 and 2020, related to the relocation fees for Hollywood Gaming at Dayton Raceway (“Dayton”) and Hollywood Gaming at Mahoning Valley Race Course (“Mahoning Valley”), which opened in August 2014 and September 2014, respectively.

The relocation fee for each facility is payable as follows:

$ 7.5 million upon the opening of the facilities and eighteen semi-annual payments of $ 4.8 million beginning one year after the commencement of operations.

This obligation is accreted to interest expense at an effective yield of 5.0 %.

The amount included in interest expense related to this obligation was $ 3.4 million, $ 4.1 million and $ 4.8 million for the years ended December 31, 2020, 2019 and 2018, respectively.

As of December 31, 2020 and 2019, other long-term obligations included $ 12.0 million and $ 12.6 million, respectively, related to the repayment obligation of a hotel and event center located less than a mile away from Hollywood Casino

Lawrenceburg, which was constructed by the City of Lawrenceburg Department of Redevelopment.

As of December 31, 2021 and 2020, other long-term obligations included $ 11.4 million and $ 12.0 million, respectively, related to the repayment obligation of a hotel and event center located less than a mile away from Hollywood Casino Lawrenceburg, which was constructed by the City of Lawrenceburg Department of Redevelopment.

Effective in January 2015, by contractual agreement, we assumed a repayment obligation for the hotel and event center in the amount of $ 15.3 million, which was financed through a loan with the City of Lawrenceburg Department of Redevelopment, in exchange for conveyance of the property.

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This obligation is accreted to interest expense at its effective yield of 3.0 %.

The amount included in interest expense related to this obligation was $ 0.4 million for each of the years ended December 31, 2020, 2019 and 2018.

Note 12—Leases

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Penn Master Lease

The payment structure under the Penn Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2 %, depending on the Adjusted Revenue to Rent Ratio (as defined in the Penn Master Lease) of 1.8 :1, and a component that is based on the performance, which is prospectively adjusted (i) every five years by an amount equal to 4 % of the average change in net revenues of all properties under the Penn Master Lease (other than Columbus and Toledo) compared to a contractual baseline during the preceding five years (“Penn Percentage Rent”) and (ii) monthly by an amount equal to 20 % of the net revenues of Columbus and Toledo in excess of a contractual baseline and subject to a rent floor specific to Toledo (see below).

The payment structure under the Penn Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2 %, depending on the Adjusted Revenue to Rent Ratio (as defined in the Penn Master Lease) of 1.8 :1, and a component that is based on performance, which is prospectively adjusted (i) every five years by an amount equal to 4 % of the average change in net revenues of all properties under the Penn Master Lease (other than Columbus and Toledo) compared to a contractual baseline during the preceding five years (“Penn Percentage Rent”) and (ii) monthly by an amount equal to 20 % of the net revenues of Columbus and Toledo in excess of a contractual baseline and subject to a rent floor specific to Toledo (see below).

As a result of the annual escalator, effective as of November 1, 2021 for the lease year ended October 31, 2021, the fixed component of rent increased by $ 5.6 million and an additional ROU asset and corresponding lease liability of $ 34.2 million were recognized associated with the operating lease components, and an additional ROU asset and corresponding lease liability of $ 3.1 million were recognized associated with the finance lease components.

We did not incur an annual escalator on November 1, 2020 for the lease year ended October 31, 2020.

The next annual escalator test date is scheduled to occur effective November 1, 2021.

As a result of the annual escalator, effective as of November 1, 2019 and 2018, the fixed component of rent increased by $ 5.5 million and $ 5.4 million, for each respective year.

As a result of the annual escalator effective November 1, 2019, an additional ROU asset and corresponding lease liability of $ 34.4 million were recognized associated with operating lease components and an additional ROU asset and corresponding lease liability of $ 3.1 million were recognized associated with finance lease components.

Additionally, effective November 1, 2018, the Penn Percentage Rent reset resulted in an annual rent reduction of $ 11.3 million, which will be in effect until the next Penn Percentage Rent reset, occurring on November 1, 2023.

As a result of the annual escalator, effective as of November 1, 2019, for the lease year ended October 31, 2019, the fixed component of rent increased by $ 5.5 million and an additional ROU asset and corresponding lease liability of $ 34.4 million were recognized associated with operating lease components and an additional ROU asset and corresponding lease liability of $ 3.1 million were recognized associated with finance lease components.

The next annual escalator test date is scheduled to occur effective November 1, 2022, and the next Penn Percentage Rent reset test date is scheduled for November 1, 2023.

The acquisition of Greektown on May 23, 2019 activated a competition clause within the Penn Master Lease, which introduced a rent floor specific to Toledo.

As a result, an additional ROU asset and corresponding lease liability of $ 151.2 million were recognized associated with operating lease components.

Lease payments resulting from the rent floor associated with components determined to continue to be financing obligations are included in “Interest expense, net” within our Consolidated Statements of Operations and Comprehensive Income (Loss).

Monthly rent associated with Columbus and monthly rent in excess of the Toledo rent floor are variable and considered contingent rent.

Expense related to operating lease components associated with Columbus and Toledo are included in “General and administrative” within our Consolidated Statements of Operations and Comprehensive Income (Loss) and the variable expense related to the financing obligation component is included in “Interest expense, net” within our Consolidated Statements of Operations and Comprehensive Income (Loss).

The entire variable expense related to the year ended December 31, 2018 was included in “Interest expense, net” pursuant to the failed sale-leaseback accounting treatment under ASC 840.

Expense related to operating lease components associated with Columbus and Toledo are included in “General and administrative” within our Consolidated Statements of Operations and the variable expense related to the financing obligation component is included in “Interest expense, net” within our Consolidated Statements of Operations.

Total monthly variable expenses were as follows:

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Total variable expenses $ 35.8 $ 24.7 $ 32.5

On January 14, 2022, the ninth amendment to the Penn Master Lease between the Company and GLPI became effective.

The ninth amendment restates the definition of “Net Revenue” to clarify the inclusion of online-based revenues derived when a patron is physically present at a leased property, establishes a “floor” with respect to the Hollywood Casino at Penn National Race Course Net Revenue amount used in the calculation of the annual rent escalator and Penn Percentage Rent, and modifies the rent calculations upon a lease termination event as defined in the amendment.

The lease term and the four five-year optional renewal periods, which if exercised would extend the Penn Master Lease through October 31, 2048, were not modified in the ninth amendment.

We concluded the ninth amendment to the Penn Master Lease constitutes a modification event under ASC 842.

We are currently reassessing, remeasuring, and quantifying the impact of the modification to the Consolidated Financial Statements, which may be material.

The modification event will result in (i) a non-cash debt extinguishment charge recorded to our Consolidated Statements of Operations and corresponding change in our financing obligations on our Consolidated Balance Sheets;

and (ii) a revaluation of our lease right-of-use assets and corresponding lease liabilities on our Consolidated Balance Sheets.

Pinnacle Master Lease

In connection with the Pinnacle Acquisition, we assumed a triple net master lease with GLPI (the “Pinnacle Master Lease”), originally effective April 28, 2016, pursuant to which the Company leases real estate assets associated with 12 of the gaming facilities used in its operations.

Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial ten-year term, with five subsequent, five-year renewal periods, on the same terms and conditions, exercisable at the Company’s option.

Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years

remaining of the initial ten-year term, with five subsequent, five-year renewal periods, on the same terms and conditions, exercisable at the Company’s option.

The Company has determined that the lease term is 32.5 years.

The payment structure under the Pinnacle Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2 %, depending on the Adjusted Revenue to Rent Ratio (as defined in the Pinnacle Master Lease) of 1.8 :1, and a component that is based on the performance of the properties, which is prospectively adjusted every two years by an amount equal to 4 % of the average change in net revenues compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”).

As a result of the annual escalator, effective as of May 1, 2021 for the lease year ended April 30, 2021, the fixed component of rent increased by $ 4.5 million and an additional ROU asset and corresponding lease liability of $ 17.2 million were recognized associated with the operating lease components.

We did not incur an annual escalator on May 1, 2020 for the lease year ended April 30, 2020.

As a result of the annual escalator, effective as of May 1, 2019 for the lease year ended April 30, 2019, the fixed component of rent increased by $ 1.0 million and an additional ROU asset and corresponding lease liability of $ 3.8 million were recognized associated with operating lease components of the Pinnacle Master Lease.

The next annual escalator test date is scheduled to occur on May 1, 2022.

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Upon reset of the Pinnacle Percentage Rent, effective May 1, 2020, we recognized an additional operating lease ROU asset and corresponding lease liability of $ 14.9 million.

On January 14, 2022, the fifth amendment to the Pinnacle Master Lease between the Company and GLPI became effective.

The fifth amendment restates the definition of “Net Revenue” to clarify the inclusion of online-based revenues derived when a patron is physically present at a leased property and modifies the rent calculations upon a lease termination event as defined in the amendment.

The lease term and the five five-year optional renewal periods, which if exercised would extend the Pinnacle Master Lease through April 30, 2051, were not modified in the fifth amendment.

We concluded the fifth amendment to the Pinnacle Master Lease constitutes a modification event under ASC 842.

We are currently reassessing, remeasuring, and quantifying the impact of the modification to the Consolidated Financial Statements, which may be material.

and (ii) a revaluation of our lease right-of-use assets and corresponding lease liabilities on our Consolidated Balance Sheets.

Morgantown Lease

On October 1, 2020, the Company entered into a triple net lease with a subsidiary of GLPI for the land underlying our development project in Morgantown, Pennsylvania (“Morgantown Lease”) in exchange for $ 30.0 million in rent credits to be utilized to pay rent under the Master Leases, Meadows Lease, and the Morgantown Lease, as discussed in Note 6, “Acquisitions and Dispositions.”

The initial term of the Morgantown Lease is twenty years with six subsequent, five-year renewal periods, exercisable at the Company’s option.

Annual rent under the Morgantown Lease will be $ 3.0 million and is subject to 1.50 % fixed annual escalation in each of the first three years subsequent to the facility opening, and thereafter will be subject to an annual escalator consisting of either (i) 1.25 % or (ii) zero depending upon the consumer price index being greater or less than 0.50 %.

All improvements made on the land, including the building currently being constructed, will be owned by the Company while the lease is in effect, however, on the expiration or termination of the Morgantown Lease, ownership of all tenant improvements on the land will transfer to GLPI.

The initial term of the Morgantown Lease is 20 years with six subsequent, five-year renewal periods, exercisable at the Company’s option.

Initial annual rent under the Morgantown Lease is $ 3.0 million, subject to a 1.50 % fixed annual escalation in each of the first three years subsequent to the facility opening, which occurred on December 22, 2021.

Thereafter, the lease will be subject to an annual escalator consisting of either (i) 1.25 %, if the consumer price index increase is greater than 0.50 %, or (ii) zero , if the consumer price index increase is less than 0.50 %.

All improvements made on the land, including the constructed building, will be owned by the Company while the lease is in effect, however, on the expiration or termination of the Morgantown Lease, ownership of all tenant improvements on the land will transfer to GLPI.

We determined the transaction to be a financing arrangement and upon execution of the Morgantown Lease, recorded a $ 30.0 million financing obligation which is included in “Long-term portion of financing obligations” within our Consolidated Balance Sheets.

Lease payments are included in “Interest expense, net” within our Consolidated Statements of Operations and Comprehensive Income (Loss).

Lease payments are included in “Interest expense, net” within our Consolidated Statements of Operations.

Perryville Lease

In conjunction with the acquisition of the operations of Hollywood Casino Perryville on July 1, 2021, the Company entered into a triple net lease with GLPI for the real estate assets associated with the property (“Perryville Lease”) for initial annual rent of $ 7.8 million per year subject to escalation, as discussed in Note 6, “Acquisitions and Dispositions.”

The initial term of the Perryville Lease is 20 years with three subsequent, five-year renewal periods, exercisable at the Company’s option.

The building portion of the annual rent is subject to a fixed annual escalation of 1.50 % in each of the following three years , with subsequent annual escalations of either (i) 1.25 %, if the consumer price index increase is greater than 0.50 %, or (ii) zero , if the consumer price index increase is less than 0.50 %.

We determined the transaction to be a finance lease arrangement and upon execution of the Perryville Lease, recorded a $ 102.9 million ROU asset and a corresponding lease liability.

The interest portion of lease payments is included in “Interest expense, net” and the depreciation of the ROU asset is included in “Depreciation and amortization”, both within our Consolidated Statements of Operations.

Operating Leases

In addition to the operating lease components contained within the Master Leases (primary land), the Company’s operating leases consist mainly of (i) individual triple net leases with GLPI for the real estate assets used in the operations of Tropicana Las Vegas (the “Tropicana Lease”) and Meadows Racetrack and Casino (the “Meadows Lease”), (ii) individual triple net leases with VICI for the real estate assets used in the operations of Margaritaville (the “Margaritaville Lease”) and Greektown (the “Greektown Lease” and collectively with the Master Leases operating lease components (primarily the land), the Meadows Lease, the Margaritaville Lease and the Tropicana Lease, the “Triple Net Operating Leases”), (iii) ground and levee leases to landlords which were not assumed by our REIT Landlords and remain an obligation of the Company, and (iv) building and equipment not subject to the Master Leases.

In addition to the operating lease components contained within the Master Leases (primarily land), the Company’s operating leases consist mainly of (i) individual triple net leases with GLPI for the real estate assets used in the operations of Tropicana Las Vegas (the “Tropicana Lease”) and Hollywood Casino at Meadows Racetrack (the “Meadows Lease”), (ii) individual triple net leases with VICI for the real estate assets used in the operations of Margaritaville (the “Margaritaville Lease”) and Greektown (the “Greektown Lease” and collectively with the Master Leases operating lease components (primarily the land), the Meadows Lease, the Margaritaville Lease and the Tropicana Lease, the “Triple Net Operating Leases”), (iii) ground and levee leases to landlords which were not assumed by our REIT Landlords and remain an obligation of the Company, and (iv) building and equipment not subject to the Master Leases.

Certain of our lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation, and rental payments based on usage.

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Tropicana Lease

On April 16, 2020, we entered into the Tropicana Lease with a subsidiary of GLPI for the real estate assets used in the operations of Tropicana for nominal cash rent and will continue to operate the Tropicana for two years (subject to three one-

year extensions at GLPI’s option) or until the real estate assets and the operations of the Tropicana are earlier sold, as discussed in Note 6, “Acquisitions and Dispositions.” In the event that GLPI sells the real estate assets used in the operations of Tropicana, the Tropicana Lease will automatically terminate.

On April 16, 2020, we entered into the Tropicana Lease with a subsidiary of GLPI for the real estate assets used in the operations of Tropicana for nominal cash rent.

Under the lease agreement, we will continue to operate the Tropicana for two years (subject to three one-year extensions at GLPI’s option) or until the real estate assets and the operations of the Tropicana are earlier sold.

In the event that GLPI sells the real estate assets used in the operations of Tropicana, the Tropicana Lease will automatically terminate.

This transaction is expected to close within the second half of 2022, subject to Penn National, GLPI, and Bally’s entering into definitive agreements and obtaining regulatory approval.

See Note 6, “Acquisitions and Dispositions” for further detail.

Upon execution of the Tropicana Lease, we recorded an operating lease ROU asset of $ 61.6 million, which is included in “Lease right-of-use assets” within the Consolidated Balance Sheets.

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The “Meadows Percentage Rent” is based on performance, which is prospectively adjusted for the next two-year period equal to 4.0 % of the average annual net revenues of the property during the trailing two-year period.

We did not incur an annual escalator on October 1, 2020 for the lease year ended September 30, 2020.

We did not incur an annual escalator on October 1, 2021 or 2020, for the lease years ended September 30, 2021 and 2020, respectively.

Effective October 1, 2019, as a result of the annual escalator for the lease year ended September 30, 2019, which was determined to be $ 0.8 million, an additional operating ROU asset and corresponding operating lease liability of $ 4.3 million were recognized.

The next annual escalator test date is scheduled to occur on October 1, 2022.

Effective October 1, 2020, the Meadows Percentage Rent resulted in an annual rent reduction of $ 2.1 million, which will be in effect until the next Meadows Percentage Rent reset, scheduled to occur on October 1, 2022.

Upon reset of the Meadows Percentage Rent, effective October 1, 2020, we recognized an additional operating lease ROU asset and corresponding lease liability of $ 17.1 million.

On January 14, 2022, the second amendment to the Meadows Lease between the Company and GLPI became effective.

The second amendment restates the definition of “Net Revenue” to clarify the inclusion of online-based revenues derived when a patron is physically present at the facility.

This amendment did not result in a modification event under ASC 842.

Margaritaville Lease

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On February 1, 2020, the Margaritaville Lease was amended to provide for a change in the measurement of the annual escalator from an Adjusted Revenue to Rent Ratio of 1.9 :1 to a minimum coverage floor ratio of Net Revenue to Rent of 6.1 :1.

We did not incur an annual escalator for the lease year ended January 31, 2021.

As a result of the annual escalator, which was determined to be $ 0.3 million, effective February 1, 2020 for the lease year ended January 31, 2020, an additional operating lease ROU asset and corresponding operating lease liability of $ 3.1 million were recognized.

The first percentage rent reset is scheduled to occur on February 1, 2021.

On February 1, 2021, the Margaritaville Percentage Rent reset resulted in an annual rent reduction of $ 0.1 million which will be in effect until the next Margaritaville Percentage Rent reset, scheduled to occur on February 1, 2023.

Upon reset of the Margaritaville Percentage Rent, effective February 1, 2021, we recognized an additional operating lease ROU asset and corresponding lease liability of $ 5.5 million.

Greektown Lease

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The payment structure under the Greektown Lease includes a fixed component, a portion subject to an annual escalator of up to 2 % depending on an Adjusted Revenue to Rent Ratio (as defined in the Greektown Lease) of 1.85 :1, and a component that is based on performance, which is prospectively adjusted every two years by an amount equal to 4 % of the average change in net revenues of the property compared to a contractual baseline during the preceding two years (“Greektown Percentage Rent”).

We did not incur an annual escalator on June 1, 2020 for the lease year ended May 31, 2020.

In May 2020, the lease was amended to remove the escalator for the lease years ending May 31, 2021 and 2022 and to provide for a Net Revenue to Rent coverage floor to be mutually agreed upon prior to the commencement of the fourth lease year (June 1, 2022).

The first Greektown Percentage Rent reset is scheduled to occur on June 1, 2021.

We did not incur an annual escalator on June 1, 2020 for the lease year ended May 31, 2020.

On June 1, 2021, the Greektown Percentage Rent reset resulted in an annual rent reduction of $ 4.2 million, which will be in effect until the next Greektown Percentage Rent reset, scheduled to occur on June 1, 2023.

Upon reset of the Greektown Percentage Rent, effective June 1, 2021, we recognized an additional operating lease ROU asset and corresponding lease liability of $ 4.1 million.

Information related to lease term and discount rate was as follows:

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The components of lease expense were as follows:

Location on Consolidated Statements of Operations and Comprehensive Income (Loss) For the year ended December 31,

Consolidated Statements of Operations For the year ended December 31,

(in millions) 2021 2020

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(2) Excludes the operating lease costs and variable lease costs pertaining to our Triple Net Leases with our REIT landlords classified as operating leases, discussed in footnote (1) above.

(3) Primarily pertains to the Dayton and Mahoning Valley finance leases.

(4) Pertains to the components contained within the Master Leases (primarily buildings) and Morgantown Lease determined to be financing obligations, inclusive of the variable expense associated with Columbus and Toledo for the finance lease components (the buildings).

Total rent expense under all operating lease agreements pursuant to the accounting treatment under ASC 840 was $ 58.1 million for the year ended December 31, 2018.

(3) Primarily pertains to the Dayton and Mahoning Valley finance lease components and the Perryville Lease (effective July 1, 2021).

(4) Pertains to the components contained within the Master Leases (primarily buildings) and the Morgantown Lease determined to be a financing obligation, inclusive of the variable expense associated with Columbus and Toledo for the finance lease components (the buildings).

Supplemental cash flow information related to leases was as follows:

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Pinnacle Master Lease (1)

Perryville Lease 3.9 —

Meadows Lease (1)

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Long-term portion of lease obligations $ 4,321.3 $ 307.3 $ 4,057.8

The Company leases its hotel rooms to patrons and records the corresponding lessor revenue in “Food, beverage, hotel and other revenues” within our Consolidated Statements of Operations and Comprehensive Income (Loss).

For the years ended

December 31, 2020, 2019, and 2018, the Company recognized $ 146.8 million, $ 311.0 million, and $ 163.6 million, of lessor revenues related to the rental of hotel rooms, respectively.

The Company leases its hotel rooms to patrons and records the corresponding lessor revenue in “Food, beverage, hotel and other revenues” within our Consolidated Statements of Operations.

For the years ended December 31, 2021, 2020, and 2019, the Company recognized $ 231.1 million, $ 146.8 million, and $ 311.0 million, of lessor revenues related to the rental of hotel rooms, respectively.

Hotel leasing arrangements vary in duration, but are short-term in nature.

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The Company is subject to various legal and administrative proceedings relating to personal injuries, employment matters, commercial transactions, development agreements and other matters arising in the ordinary course of business.

Although the Company maintains what it believes is adequate insurance coverage to mitigate the risk of loss pertaining to covered matters, legal and administrative proceedings can be costly, time-consuming and unpredictable.

The Company believes that it has meritorious defenses, claims and/or counter-claims with respect to these proceedings, and intends to vigorously defend itself or pursue its claims.

Although no assurance can be given, the Company does not believe that the final outcome of these matters, including costs to defend itself in such matters, will have a material adverse effect on the Company’s Consolidated Financial Statements.

Further, no assurance can be given that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters.

Although the Company maintains what it believes to be adequate insurance coverage to mitigate the risk of loss pertaining to covered matters, legal and administrative proceedings can be costly, time-consuming and unpredictable.

The Company does not believe that the final outcome of these matters will have a material adverse effect on its financial position, results of operations, or cash flows.

Location Share Agreements

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PSG holds the gaming license with the state of Illinois and the location share percentage is determined by the state of Illinois.

For the years ended December 31, 2020, 2019 and 2018, the total location share payments made by PSG, which are recorded within our Consolidated Statements of Operations and Comprehensive Income (Loss) as gaming expenses, were $ 20.2 million, $ 33.1 million, and $ 34.7 million, respectively.

For the years ended December 31, 2021, 2020 and 2019, the total location share payments made by PSG, which are recorded within our Consolidated Statements of Operations as gaming expenses, were $ 43.3 million, $ 20.2 million, and $ 33.1 million, respectively.

Purchase Obligations

The Company has obligations to purchase various goods and services totaling $ 255.2 million as of December 31, 2021, of which $ 101.7 million will be incurred in 2022.

Purchase obligations totaled $ 149.1 million as of December 31, 2020.

The increase over the prior year is primarily due to Penn Interactive launching operations in new states as well as the acquisition of theScore.

Capital Expenditure Commitments

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As of December 31, 2021, we had 43 collective bargaining agreements covering approximately 4,341 active employees.

Nine collective bargaining agreements are scheduled to expire in 2021, and we are currently renegotiating three collective bargaining agreements that expired in 2020.

Four collective bargaining agreements are scheduled to expire in 2022 .

Note 14—Income Taxes

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The Company assessed all available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize our existing net deferred tax assets.

For the year ended December 31, 2020, the Company made a reclassification within the below table to separate the right of use asset from the financing and operating lease obligations.

This reclassification change was also made to 2019 for transparency, which has no impact to the net deferred tax amount.

The components of the Company’s deferred tax assets and liabilities were as follows:

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Net deferred tax liabilities ( 2,637.5 ) ( 2,585.5 )

Long-term deferred tax assets (liabilities), net $ ( 126.3 ) $ ( 244.6 )

Long-term deferred tax liabilities, net $ ( 189.1 ) $ ( 126.3 )

The realizability of the net deferred tax assets is evaluated quarterly by assessing the need for a valuation allowance and by adjusting the amount of the allowance, if necessary.

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The evaluation of both positive and negative evidence is a requirement pursuant to ASC 740 in determining if the net deferred tax assets will be realized.

ASC 740 suggests that additional scrutiny should be given to deferred taxes of an entity with cumulative pre‑tax book losses during the three most recent years

and is widely considered significant negative evidence that is objective and verifiable and therefore, difficult to overcome.

Due to the financial results during the year ended December 31, 2020, the Company has a cumulative pre‑tax book loss of $ 658.2 million, which is significant negative evidence used in our assessment.

ASC 740 suggests that additional scrutiny should be given to deferred taxes of an entity with cumulative pre‑tax book losses during the three most recent years and is widely considered significant negative evidence that is objective and verifiable and therefore, difficult to overcome.

Due to the financial results during the year ended December 31, 2021, the Company has a cumulative pre‑tax book loss of $ 189.1 million, which reflects the significant negative evidence used in our assessment.

Additionally, the Company expects to remain in a three year cumulative loss position in the near future.

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In the event the Company determines that the deferred income tax assets would be realized in the future in excess of their net recorded amount, an adjustment to the valuation allowance would be recorded, which would reduce the provision for income taxes.

During the year ended December 31, 2020, the Company increased the valuation allowance by $ 46.8 million, primarily related to federal and state NOL carryforwards, which substantially increased in the current year as a result of the global pandemic.

During the year ended December 31, 2021, the Company increased the valuation allowance by $ 23.3 million of which $ 18.2 million was recorded to the balance sheet as a purchase accounting adjustment for the theScore acquisition and $ 5.1 million was recorded through income tax expense.

In general, the Company has not recognized any U.S.

tax expense on undistributed foreign earnings, as we intend to reinvest and expand into new markets outside the U.S.

for the foreseeable future.

If our intent changes or if these earnings are needed for our U.S.

operations, we would be required to accrue and pay U.S.

taxes on a portion or all these undistributed earnings.

It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries.

The undistributed foreign earnings were immaterial at December 31, 2021.

Following the ownership changes of the Tropicana, the Company has $ 102.8 million of total gross federal NOL carryforwards that will expire on various dates through 2035.

All acquired tax attributes are subject to limitations under the Internal Revenue Code and underlying Treasury Regulations.

During the year ended December 31, 2020, the Company increased its federal NOL carryforward by $ 148.1 million due to the current year loss, which resulted in an indefinite federal NOL carryforward.

The utilization of the indefinite federal NOL carryforward is limited to 80% of taxable income in any given year.

For state income tax reporting, as of December 31, 2020, the Company had gross state NOL carryforwards aggregating $ 1,332.0 million available to reduce future state income taxes, primarily for the Commonwealth of Pennsylvania and the States of Colorado, Iowa, Louisiana, Missouri, New Mexico and Ohio localities.

During the year ended December 31, 2021, the Company decreased its U.S.

federal NOL carryforward by $ 153.7 million due to the current year utilization and generated a current U.S.

federal NOL carryforward of $ 7.9 million due to the acquisition of the theScore’s U.S.

The Company acquired total gross U.S.

federal NOLs of $ 16.5 million, state NOLs of $ 5.8 million, and Canadian NOLs of $ 42.2 million from theScore acquisition in the amount of $ 64.5 million.

The tax benefit associated with these acquired NOLs is $ 3.4 million, $ 0.4 million, and $ 11.2 million respectively, against which a valuation allowance was recorded of $ 3.9 million for U.S.

federal and state NOLs that will not be recognized.

All acquired tax attributes are subject to limitations under the Internal Revenue Code and underlying Treasury Regulations, however, we believe it is more-likely-than-not that the benefit from these attributes will be realized outside of the portion of NOLs with a valuation allowance recorded as noted above.

For state income tax reporting, as of December 31, 2021, the Company had gross state NOL carryforwards aggregating $ 1.2 billion available to reduce future state income taxes, primarily for the Commonwealth of Pennsylvania, Colorado, Illinois, Iowa, Louisiana, Maryland, Michigan, Missouri, New Mexico and Ohio and Michigan localities.

The tax benefit associated with these NOL carryforwards was $ 71.0 million.

Due to statutorily limited NOL carryforwards and income and loss projections in the applicable jurisdictions, a valuation allowance has been recorded to reflect the NOLs which are not presently expected to be realized in the amount of $ 60.2 million.

If not used, the majority of the carryforwards will expire at various dates from December 31, 2021 through December 31, 2040.

Due to statutorily limited NOL carryforwards and the level of earnings projections in the respective jurisdictions, a valuation allowance of $ 49.1 million has been recorded.

If not used, the majority of the carryforwards will expire at various dates from December 31, 2022 through December 31, 2041 with the remaining being carried forward indefinitely.

The domestic and foreign components of income (loss) before income taxes for the years ended December 31, 2021, 2020 and 2019 were as follows:

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Tax credits ( 1.1 ) 5.8 1.2 10.0 — —

Equity investment write-off ( 2.1 ) 11.3 — — — —

Other 0.6 ( 3.0 ) 0.2 2.0 0.2 ( 0.1 )

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During the year ended December 31, 2021, we did no t record any new tax reserves, and accrued interest or penalties related to current year uncertain tax positions.

Regarding prior year tax positions, we recorded $ 1.9 million of tax reserves and accrued

interest and reversed $ 1.0 million of previously recorded tax reserves and accrued interest for uncertain tax positions.

Regarding prior year tax positions, we recorded $ 4.6 million of tax reserves and accrued interest and reversed $ 0.1 million of previously recorded tax reserves and accrued interest for uncertain tax positions.

As of December 31, 2021 and 2020, unrecognized tax benefits, inclusive of accruals for income tax related penalties and interest, of $ 42.3 million and $ 38.2 million, respectively, were included in “Other long-term liabilities” within the Company’s Consolidated Balance Sheets.

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During the years ended December 31, 2021, 2020 and 2019, we recognized $ 0.7 million, $ 0.5 million and $ 0.1 million, respectively, of interest and penalties, net of deferred taxes.

In addition, due to settlements and/or reductions in previously recorded liabilities, the Company had reductions in previously accrued interest and penalties of $ 0.1 million, net of deferred taxes.

The Company had no reductions in previously accrued interest and penalties for the year ended December 31, 2019.

We classify any income tax related penalties and interest accrued related to unrecognized tax benefits in “Income tax benefit (expense)” within the Consolidated Statements of Operations and Comprehensive Income (Loss).

In addition, the Company had no reductions in previously accrued interest and penalties for the years ended December 31, 2021 and 2020.

We classify any income tax related penalties and interest accrued related to unrecognized tax benefits in “Income tax benefit (expense)” within the Consolidated Statements of Operations.

The Company is currently in various stages of the examination process in connection with its open audits.

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In addition, we are subject to state and local income tax examinations for various tax years in the taxing jurisdictions in which we operate.

Such audits could result in increased tax liabilities, interest and penalties.

Such audits could result in

increased tax liabilities, interest and penalties.

While the Company believes its tax positions are appropriate, we cannot assure the outcome will remain consistent with our expectation.

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Note 15—Stockholders’ Equity

Common Stock Offerings

On May 14, 2020, the Company completed a public offering of 16,666,667 shares of Penn Common Stock and on May 19, 2020, the underwriters exercised their right to purchase an additional 2,500,000 shares of Penn Common Stock, resulting in an aggregate public offering of 19,166,667 shares of Penn Common Stock.

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All of the shares were issued at a public offering price of $ 61.00 per share, resulting in gross proceeds of $ 982.1 million, and net proceeds of $ 957.6 million after underwriter fees and discounts of $ 24.5 million.

On May 11, 2021, as part of the acquisition of Hitpoint, the Company issued 43,684 shares for a total of $ 3.5 million.

See Note 6, “Acquisitions and Dispositions.”

On June 17, 2021, the Company filed its Second Amended and Restated Articles of Incorporation with the Department of State of the Commonwealth of Pennsylvania.

These Articles of Incorporation, as amended and restated and approved by the Company’s shareholders at the 2021 Annual Meeting of Shareholders, increase the number of authorized shares of common stock from 200,000,000 to 400,000,000 .

In August 2021, as part of the acquisition of Sam Houston, the Company issued 198,103 shares for a total of $ 15.8 million.

See Note 6, “Acquisitions and Dispositions.”

On October 19, 2021, as part of the acquisition of theScore, the Company issued 12,319,340 shares of common stock and authorized and issued 697,539 Exchangeable Shares for approximately $ 1.0 billion, each with a par value of $ 0.01 , as discussed in Note 6, “Acquisitions and Dispositions.” As of December 31, 2021 there were 697,539 Exchangeable Shares issued and 653,059 outstanding.

Share Repurchase Program

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All of the repurchased shares were retired.

There were no repurchases of the Company’s common stock for the year ended December 31, 2020.

There were no repurchases of the Company’s common stock for the years ended December 31, 2021, and 2020.

On February 1, 2022, the Board of Directors of Penn National approved a $ 750.0 million share repurchase program.

The three year authorization expires on January 31, 2025.

Repurchases by the Company will be subject to available liquidity, general market and economic conditions, alternate uses for the capital and other factors.

Share repurchases may be made from time to time through a 10b5-1 trading plan, open market transactions, block trades or in private transactions in accordance with applicable securities laws and regulations and other legal requirements.

There is no minimum number of shares that the

Company is required to repurchase and the repurchase program may be suspended or discontinued at any time without prior notice.

During February 2022, the Company repurchased 2,195,290 shares of its common stock in open market transactions for $ 107.1 million at an average price of $ 48.78 per share.

The cost of all repurchased shares is recorded as “Treasury stock” in the Consolidated Balance Sheets.

The remaining availability under our $ 750.0 million share repurchase program was $ 642.9 million as of February 28, 2022.

Preferred Stock

On February 20, 2020, the Company issued 883 shares of Series D Preferred Stock, par value $ 0.01 per share (the “Series D Preferred Stock”), to certain individual stockholders affiliated with Barstool Sports as discussed in " Note 7—Investments in and Advances to Unconsolidated Affiliates ." There were 5,000 shares authorized of Series D Preferred Stock and 883 shares outstanding as of December 31, 2020.

On February 20, 2020, the Company issued 883 shares of Series D Preferred Stock, par value $ 0.01 per share, to certain individual stockholders affiliated with Barstool Sports as discussed in Note 7, “Investments in and Advances to Unconsolidated Affiliates.”

The Company previously issued two series of preferred stock, Series B and Series C, each with a par value of $ 0.01 per share.

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There were no shares outstanding of either Series B or Series C preferred stock as of December 31, 2021 and 2020.

During each of the quarters ended March 31, 2021 and September 30, 2021, the Company issued 43 shares of Series D Preferred Stock, for a total of 86 shares, in conjunction with acquiring an additional 0.6 % of Barstool Sports common stock.

The acquisition of the incremental Barstool Sports common stock represents a partial settlement of the 1 % purchase on a delayed basis as described in Note 7, “Investments in and Advances to Unconsolidated Affiliates.”

During the quarters ended March 31, 2021 and September 30, 2021, 151.2 and 43 shares of Series D Preferred Stock were converted to Penn Common Stock, respectively.

As a result of the conversion, the Company issued 151,200 and 43,000 shares of common stock, each with a par value of $ 0.01 .

As of December 31, 2021 and December 31, 2020, there were 5,000 shares authorized of Series D Preferred Stock of which 775 shares and 883 shares were outstanding, respectively.

In the second quarter of 2021, the Company entered into two promissory notes with shareholders for a total of $ 9.0 million.

The promissory notes are unsecured and bear interest of 2.25 %.

The receivable is recorded as a reduction of equity within our Consolidated Balance Sheets and is presented within our Consolidated Statement of Changes in Stockholders’ Equity within the “Other” caption.

Note 16—Stock-Based Compensation

2018 Long Term Incentive Compensation Plan

The Company’s 2018 Long Term Incentive Compensation Plan, as amended (the “2018 Plan”) permits it to issue stock options (incentive and/or non-qualified), stock appreciation rights (“SARs”), restricted stock awards (“RSAs”), phantom stock units (“PSUs”) and other equity and cash awards to employees.

The Company’s 2018 Long Term Incentive Compensation Plan, as amended (the “2018 Plan”) permits it to issue stock options (incentive and/or non-qualified), stock appreciation rights (“SARs”), RSAs, RSUs, cash-settled phantom stock units (“CPSUs”), and other equity and cash awards to employees and any consultant or advisor to the Company or subsidiary.

Non-employee directors and the chairman emeritus are eligible to receive all such awards, other than incentive stock options.

Pursuant to the 2018 Plan, 12,700,000 shares of the Company’s common stock are reserved for issuance.

For purposes of determining the number of shares available for issuance under the 2018 Plan, stock options and SARs count against the 12,700,000 limit as one share of common stock for each share granted and restricted stock or any other full value stock award count as issuing 2.30 shares of common stock for each share granted.

Any awards that are not settled in shares of common stock are not counted against the limit.

For purposes of determining the number of shares available for issuance under the 2018 Plan, stock options and SARs (except cash-settled SARs) count against the 12,700,000 limit as one share of common stock for each share granted and restricted stock or any other full value stock award count as issuing 2.30 shares of common stock for each share granted.

Any awards that are not settled in shares of common stock are not counted against the share limit.

As of December 31, 2021, there were 4,434,660 shares available for future grants under the 2018 Plan.

On April 12, 2021, the Board of Directors granted 600,000 RSUs and 300,000 RSAs with market-based and service-based vesting conditions (collectively the “Stock Awards”), solely to the Company’s President and Chief Executive Officer pursuant to the 2018 Plan.

The Stock Awards are classified as equity with separate tranches and requisite service periods identified for each separately achievable component.

As of the grant date, the fair value of the Stock Awards was $ 48.7 million and was calculated using a Monte Carlo simulation.

The fair value of the RSAs was estimated at $ 19.4 million and segregated into 15 tranches with expense recognition periods ranging from 2.2 to 6.0 years.

The fair value of the RSUs was estimated at

$ 29.3 million and segregated into four tranches with expense recognition periods ranging from 6.7 to 8.7 years.

We recognized $ 6.3 million of stock compensation expense for the Stock Awards during the year ended December 31, 2021.

Score Media And Gaming Inc.

Second Amended And Restated Stock Option And Restricted Stock Unit Plan ( “ theScore Plan ” )

In connection with the acquisition of theScore on October 19, 2021, the Company registered theScore Plan.

theScore Plan permits the Company to issue non-qualified stock options and RSUs to employees and service providers affiliated with theScore prior to the acquisition date.

At the date of acquisition, the Company rolled over all outstanding, non-vested and unexercised stock options and non-vested RSUs equivalent to 853,904 shares of the Company.

Each rollover option and RSU is subject to substantially the same terms and conditions applicable to the award immediately prior to the acquisition.

In connection with the transaction, the vesting provisions of unvested options and RSUs, awarded under the theScore Plan prior to August 4, 2021, were amended to provide for a new acceleration right for legacy Score employees and service providers.

The amendment provides that, if an involuntary termination without cause occurs at any time prior to April 19, 2023, unvested options and RSUs will automatically accelerate and become fully vested on the effective date of termination.

As of December 31, 2021, there were 207,156 shares available for future grants to legacy Score employees and service providers.

2008 Long Term Incentive Compensation Plan

In November 2008, the Company’s shareholders approved the 2008 Long Term Incentive Compensation Plan (the “2008 Plan”), which permitted the Company to issue stock options (incentive and/or non-qualified), SARs, RSAs, PSUs and other equity and cash awards to employees.

In November 2008, the Company’s shareholders approved the 2008 Long Term Incentive Compensation Plan (the “2008 Plan”), which permitted the Company to issue stock options (incentive and/or non-qualified), SARs, RSAs, CPSUs and other equity and cash awards to employees.

Non-employee directors were eligible to receive all such awards, other than incentive stock options.

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Stock-based Compensation Expense

Stock-based compensation expense, which pertains principally to our stock options and RSAs, for the years ended December 31, 2020, 2019 and 2018 totaled $ 14.5 million, $ 14.9 million and $ 12.0 million, respectively, and is included within the Consolidated Statements of Operations and Comprehensive Income (Loss) under “General and administrative.”

Stock-based compensation expense, which pertains principally to our stock options, RSAs and RSUs for the years ended December 31, 2021, 2020 and 2019 totaled $ 35.1 million, $ 14.5 million and $ 14.9 million, respectively, and is included within the Consolidated Statements of Operations under “General and administrative.”

Stock Options

Stock options that expire between February 21, 2021 and October 31, 2030 have been granted to officers, directors, employees, and predecessor employees to purchase common stock at prices ranging from $ 12.65 to $ 55.74 per share.

Stock options that expire between January 6, 2022 and October 8, 2031 have been granted to officers, directors, employees, and predecessor employees to purchase common stock at prices ranging from $ 2.51 to $ 117.82 per share, including options rolled over from theScore Plan.

All options were granted at the fair market value of the common stock on the grant date (as defined in the respective plan document) and have contractual lives ranging from four to ten years .

The Company issues new authorized common shares to satisfy stock option exercises.

During the year ended December 31, 2021, the Company granted 587,399 stock options, of which 352,768 were rolled over under theScore Plan.

The Company granted 652,733 , and 2,436,811 stock options during the years ended December 31, 2020 and 2019, respectively.

The following table contains information about our stock options:

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Outstanding as of January 1, 2021 3,599,189 $ 19.79

Granted 652,733 $ 26.79

Granted and rolled over 587,399 $ 41.96

Exercised ( 627,523 ) $ 17.28

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Exercisable as of December 31, 2021 1,551,263 $ 18.56 4.62 $ 50.8

The weighted-average grant-date fair value of options granted during the years ended December 31, 2020, 2019 and 2018 were $ 8.62 , $ 6.39 and $ 9.88 , respectively.

The aggregate intrinsic value of stock options exercised during the years ended December 31, 2020, 2019 and 2018 was $ 128.9 million, $ 2.0 million and $ 28.7 million, respectively.

The total fair value of stock options that vested during the years ended December 31, 2020, 2019 and 2018 was $ 9.6 million, $ 6.2 million and $ 5.9 million, respectively.

The following table summarizes information about our outstanding stock options as of December 31, 2020:

Exercise Price Range Total

Outstanding options

Number outstanding 1,045,257 2,245,484 303,974 4,474 3,599,189

Weighted-average remaining contractual term (in years) 2.77 8.44 4.46 9.84 6.46

Weighted-average exercise price $ 13.86 $ 20.88 $ 31.57 $ 55.74 $ 19.79

Exercisable options

Number outstanding 830,121 389,945 123,355 — 1,343,421

Weighted-average exercise price $ 13.48 $ 19.14 $ 30.74 $ — $ 16.71

The combined weighted-average grant-date fair value of options granted and rolled over under theScore Plan during the year ended December 31, 2021, was $ 57.70 .

The weighted-average grant-date fair values of options granted during the years ended December 31, 2020 and 2019 were $ 8.62 and $ 6.39 , respectively.

The aggregate intrinsic values of stock options exercised during the years ended December 31, 2021, 2020 and 2019 were $ 53.1 million, $ 128.9 million and $ 2.0 million, respectively.

The total fair values of stock options that vested during the years ended December 31, 2021, 2020 and 2019 were $ 6.2 million, $ 9.6 million and $ 6.2 million, respectively.

As of December 31, 2021, the unamortized compensation costs not yet recognized related to stock options granted totaled $ 24.1 million and the weighted-average period over which the costs are expected to be recognized was 1.6 years.

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Weighted-average expected life (in years) 5.2 5.0 5.3

Restricted Stock Awards

As noted above, the Company grants RSAs to our employees and certain non-employee directors.

In addition, the Company issues its named executive officers (“NEOs”) and other key executives RSAs with performance conditions (we refer to our RSAs with performance conditions as “PSAs”), which are discussed in further detail below.

Restricted Stock Awards and Restricted Stock Units

As noted above, the Company grants RSAs and RSUs to our employees and certain non-employee directors.

In addition, the Company issues its named executive officers (“NEOs”) and other key executives RSAs and RSUs with performance conditions (we refer to our RSAs and RSUs with performance conditions as “PSAs”), which are discussed in further detail below.

Performance Share Programs

The Company’s Performance Share Programs (as defined below) were adopted in order to provide our NEOs and certain other key executives with stock-based compensation tied directly to the Company’s performance, which further aligns their interests with those of shareholders and provides compensation only if the designated performance goals are met for the applicable performance periods.

On February 6, 2018, our Compensation Committee adopted a performance share program (the “2018 Performance Share Program”) pursuant to the 2018 Plan, which provided for the issuance of 197,727 PSAs, at target, to be granted in one-third increments.

In February 2019, the Company’s Compensation Committee of the Board of Directors adopted a performance share program (the “Performance Share Program II”) pursuant to the 2018 Plan.

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On February 25, 2020, an aggregate of 107,297 PSAs with performance-based vesting conditions, at target, was granted under the Performance Share Program II, to be granted in one-third increments.

On April 12, 2021, in addition to the Stock Awards mentioned above, an aggregate of 94,673 PSAs with performance-based vesting conditions, at target, was granted under the Performance Share Program II, to be granted in one-third increments.

PSAs issued pursuant to the Performance Share Programs consist of three one-year performance periods over a three-year service period.

The awards have the potential to be earned at between 0 % and 200 % of the number of shares granted depending on achievement of the annual performance goals, but remain subject to vesting for the full three-year service period.

The grant date fair value of our RSAs is based on the most recent closing stock price of the Company’s shares of common stock.

The grant date fair values of our RSAs and RSUs are based on the most recent closing stock price of the Company’s shares of common stock.

The stock-based compensation expense is recognized over the remaining service period at the time of grant, adjusted for the Company’s expectation of the achievement of the performance conditions.

The following table contains information on our RSAs:

During the year ended December 31, 2021, the Company granted 871,763 RSAs and RSUs without performance conditions, of which 501,136 were RSUs rolled over under theScore Plan.

The following table contains information on our RSAs and RSUs:

With Performance Conditions Without Performance Conditions

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Nonvested as of January 1, 2021 229,632 $ 28.84 390,815 $ 25.67

Granted 179,045 $ 28.68 131,313 $ 26.18

Granted and rolled over 1,106,613 $ 62.81 871,763 $ 78.15

Vested ( 136,859 ) $ 31.38 ( 142,350 ) $ 24.83

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Nonvested as of December 31, 2021 1,168,364 $ 58.89 1,103,013 $ 66.90

As of December 31, 2020, the unamortized compensation costs not yet recognized related to RSAs totaled $ 6.4 million and the weighted-average period over which the costs are expected to be recognized is 1.7 years.

The total fair value of RSAs that vested during the years ended December 31, 2020, 2019 and 2018 was $ 16.7 million, $ 5.5 million and $ 0.9 million, respectively.

Phantom Stock Units

Our outstanding PSUs entitle employees, non-employee directors, and the chairman emeritus to receive cash based on the fair value of the Company’s common stock on the vesting date.

Our PSUs vest over a period of three or four years .

The cash-settled PSUs are accounted for as liability awards and are re-measured at fair value each reporting period until they become vested with compensation expense being recognized over the requisite service period.

The Company has a liability, which is included in “Accrued expenses and other current liabilities” within the Consolidated Balance Sheets, associated with its cash-settled PSUs of $ 10.1 million and $ 3.3 million as of December 31, 2020 and 2019, respectively.

For PSUs held by employees, non-employee directors, and the chairman emeritus of the Company, there was $ 16.0 million of total unrecognized compensation cost as of December 31, 2020 that will be recognized over the awards remaining weighted-average vesting period of 2.3 years.

As of December 31, 2021, the unamortized compensation costs not yet recognized related to RSAs and RSUs totaled $ 117.3 million and the weighted-average period over which the costs are expected to be recognized is 3.4 years.

The total fair values of RSAs and RSUs that vested during the year ended December 31, 2021 was $ 28.9 million.

The total fair values of RSAs that vested during the years ended December 31, 2020 and 2019 were $ 16.7 million and $ 5.5 million, respectively.

Cash-settled Phantom Stock Units

Our outstanding CPSUs entitle employees, non-employee directors, and the chairman emeritus to receive cash based on the fair value of the Company’s common stock on the vesting date.

Our CPSUs vest over a period of three or four years .

The cash-settled CPSUs are accounted for as liability awards and are re-measured at fair value each reporting period until they become vested with compensation expense being recognized over the requisite service period.

The Company has a liability, which is included in “Accrued expenses and other current liabilities” within the Consolidated Balance Sheets, associated with its cash-settled CPSUs of $ 8.6 million and $ 10.1 million as of December 31, 2021 and 2020 respectively.

For CPSUs held by employees, non-employee directors, and the chairman emeritus of the Company, there was $ 13.2 million of total unrecognized compensation cost as of December 31, 2021 that will be recognized over the awards remaining weighted-average vesting period of 1.1 years.

For the years ended December 31, 2021, 2020 and 2019, the Company recognized $ 12.1 million, $ 11.5 million, and $ 4.1 million of compensation expense associated with these awards, respectively.

Compensation expense associated with our PSUs is recorded in “General and administrative” within the Consolidated Statements of

Operations and Comprehensive Income (Loss).

We paid $ 4.7 million, $ 2.5 million, and $ 4.2 million during the years ended December 31, 2020, 2019 and 2018, respectively, pertaining to cash-settled PSUs.

Compensation expense associated with our CPSUs is recorded in “General and administrative” within the Consolidated Statements of Operations.

We paid $ 13.3 million, $ 4.7 million, and $ 2.5 million during the years ended December 31, 2021, 2020 and 2019, respectively, pertaining to our cash-settled CPSUs.

Stock Appreciation Rights

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For SARs held by employees of the Company, there was $ 25.0 million of total unrecognized compensation cost as of December 31, 2021 that will be recognized over the awards remaining weighted-average vesting period of 1.8 years.

For the years ended December 31, 2020 and 2019, the Company recognized a charge to compensation expense of $ 69.7 million and $ 10.7 million, respectively, associated with these awards, as compared to a reduction to compensation expense of $ 6.7 million for the year ended December 31, 2018.

Compensation expense associated with the SARs is recorded in “General and administrative” within the Consolidated Statements of Operations and Comprehensive Income (Loss).

For the years ended December 31, 2021, 2020, and 2019 the Company recognized a charge to compensation expense of $ 3.1 million, $ 69.7 million, and $ 10.7 million respectively.

Compensation expense associated with our SARs is recorded in “General and administrative” within the Consolidated Statements of Operations.

We paid $ 39.6 million, $ 32.6 million and $ 3.5 million during the years ended December 31, 2021, 2020 and 2019, respectively, related to cash-settled SARs.

Note 17—Earnings (Loss) per Share

For the year ended December 31, 2020, we recorded a net loss attributable to Penn Common Stock.

As such, because the dilution from potential common shares was antidilutive, we used basic weighted-average common shares outstanding, rather than diluted weighted-average common shares outstanding when calculating diluted loss per share for the year ended December 31, 2020.

On February 20, 2020, the Company issued 883 shares of Series D Preferred Stock to certain individual stockholders affiliated with Barstool Sports which can be converted into 883,000 shares of Penn Common Stock.

The Series D Preferred Stock will be entitled to participate equally and ratably in all dividends and distributions paid to holders of Penn Common Stock.

Holders of the Company's Series D Preferred Stock are not obligated to absorb losses therefore the two-class method was not applied for the year ended December 31, 2020.

(See Note 7 - Investments in and Advances to Unconsolidated Affiliates ).

The stock options, RSAs, convertible preferred shares and convertible debt that could potentially dilute basic EPS in the future that were not included in the computation of diluted loss per share were as follows:

For the years ended December 31, 2021 and December 31, 2019, we recorded net income attributable to Penn National.

As such, we used diluted weighted-average common shares outstanding when calculating diluted income per share for the years ended December 31, 2021 and December 31, 2019.

Stock options, RSAs, RSUs, convertible preferred shares and convertible debt that could potentially dilute basic EPS in the future are included in the computation of diluted income per share.

For the year ended December 31, 2020, we recorded a net loss attributable to Penn National.

As such, because the dilution from potential common shares was antidilutive, we used basic weighted-average common shares outstanding, rather than

diluted weighted-average common shares outstanding when calculating diluted loss per share.

Stock options, RSAs, convertible preferred shares and convertible debt that could potentially dilute basic EPS in the future that were not included in the computation of diluted loss per share were as follows:

(in millions) For the year ended December 31, 2020

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Assumed conversion of convertible debt 9.1

The following table sets forth the allocation of net income for the year ended December 31, 2021, under the two-class method.

For the year ended December 31, 2020 we did not utilize the two-class method due to incurring a net loss for the period, nor did we utilize the two-class method for the year ended December 31, 2019, as we issued Series D Preferred stock on February 20, 2020, as discussed in Note 15, “Stockholders’ Equity.”

For the year ended December 31,

(in millions) 2021 2020 2019

Net income (loss) attributable to Penn National $ 420.8 $ ( 669.5 ) $ 43.9

Net income applicable to preferred stock 2.1 — —

Net income (loss) applicable to common stock $ 418.7 $ ( 669.5 ) $ 43.9

The following table reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS for the years ended December 31, 2021, 2020 and 2019:

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Dilutive stock options 2.3 — 1.8

Dilutive RSAs 0.3 0.2

Dilutive RSAs and RSUs 0.4 — 0.3

Convertible debt 14.1 — —

Weighted-average common shares outstanding—Diluted 175.5 134.0 117.8

Options to purchase zero , 2.4 million, and 0.7 million shares were outstanding during the years ended December 31, 2020, 2019 and 2018, respectively, but were not included in the computation of diluted EPS because they were antidilutive.

The following table presents the calculation of basic and diluted earnings (loss) for the Company’s common stock for the years ended December 31, 2020, 2019 and 2018:

RSAs and RSUs with performance and market based vesting conditions that have not been met as of the period end date are excluded from the computation of diluted earnings per share.

Options to purchase 0.2 million, 0.0 million , and 2.4 million shares were outstanding during the years ended December 31, 2021, 2020 and 2019, respectively, but were not included in the computation of diluted earnings (loss) per share because they were anti-dilutive.

In addition, 0.8 million shares from the assumed conversion of convertible preferred shares were excluded from the computation of diluted earnings (loss) per share for the year ended December 31, 2021, because including them would have been anti-dilutive.

The Company’s calculation of weighted-average common shares outstanding includes the Exchangeable Shares issued in connection with theScore acquisition, as discussed in Note 6, “Acquisitions and Dispositions” and Note 15, “Stockholders’ Equity.” The following table presents the calculation of basic and diluted earnings (loss) for the Company’s common stock for the years ended December 31, 2021, 2020 and 2019:

(in millions, except per share data) 2021 2020 2019

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Net income (loss) applicable to common stock $ 418.7 $ ( 669.5 ) $ 43.9

Weighted-average shares outstanding - Penn National 158.6 134.0 115.7

Weighted-average shares outstanding - Exchangeable Shares 0.1 — —

Weighted-average common shares outstanding - basic 158.7 134.0 115.7

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Net income (loss) applicable to common stock $ 418.7 $ ( 669.5 ) $ 43.9

Interest expense, net of tax (1) :

Convertible Notes 17.0 — —

Diluted income applicable to common stock $ 435.7 $ ( 669.5 ) $ 43.9

Weighted-average common shares outstanding - diluted 175.5 134.0 117.8

Diluted earnings (loss) per share $ 2.48 $ ( 5.00 ) $ 0.37

(1) The year ended December 31, 2021 was tax-affected at a rate of 22 %.

Note 18—Segment Information

We have aggregated our operating segments into four reportable segments based on the similar characteristics of the operating segments within the regions in which they operate:

During the fourth quarter of 2021, the Company evaluated its reportable segments and changed them to:

Northeast, South, West, Midwest, and Interactive.

This change reflects management’s belief that the operating results of our Interactive segment represent a strategic and high growth component of our overall operations.

The Interactive segment, which was previously reported within Other, includes the operating results of Penn Interactive, theScore, and the Company’s proportionate share of earnings attributable to its equity method investment in Barstool Sports.

Corporate expense will continue to be reported in Other in addition to stand-alone racing operations, other joint ventures, management contracts, and Heartland Poker Tour.

As a result of the change in reportable segments described above, the Company has recast previously reported segment information to conform to the current management view for all prior periods presented.

The changes to reportable segments had no impact to the Company’s consolidated financial statements.

We have aggregated our operating segments into five reportable segments.

Retail operating segments are based on the similar characteristics within the regions in which they operate:

Northeast, South, West, and Midwest.

Our Interactive segment includes our interactive operations (as defined above).

The Other category is included in the following tables in order to reconcile the segment information to the consolidated information.

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The following table highlights our revenues and Adjusted EBITDAR for each reportable segment and reconciles Adjusted EBITDAR on a consolidated basis to net income (loss).

The following tables present the Company’s segment information.

As a result of the change in reportable segments described above, we have recast previously reported segment information to conform to the current presentation in the following tables:

For the year ended December 31,

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Midwest segment 1,102.7 681.4 1,094.5

125.0 47.5 40.4

Interactive segment 432.9 121.1 38.3

Intersegment eliminations (2)

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Midwest segment 500.1 258.3 403.6

Interactive segment ( 35.4 ) 37.2 11.6

( 100.7 ) ( 80.7 ) ( 99.4 )

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Contingent purchase price ( 1.9 ) 1.1 ( 7.0 )

Pre-opening and acquisition costs ( 11.8 ) ( 22.3 ) ( 95.0 )

Pre-opening expenses (5)

( 5.4 ) ( 11.8 ) ( 22.3 )

Depreciation and amortization ( 344.5 ) ( 366.7 ) ( 414.2 )

Impairment losses — ( 623.4 ) ( 173.1 )

Recoveries on loan loss and unfunded loan commitments — — 17.0

Insurance recoveries, net of deductible charges — 0.1 3.0

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Net income (loss) $ 420.5 $ ( 669.1 ) $ 43.1

(1) The Other category consists of the Company’s stand-alone racing operations, namely Sanford-Orlando Kennel Club and the Company’s JV interests in Sam Houston Race Park, Valley Race Park, and Freehold Raceway;

(1) The Other category consists of the Company’s stand-alone racing operations, namely Sanford-Orlando Kennel Club, Sam Houston and Valley Race Parks (the remaining 50 % was acquired by Penn National on August 1, 2021), the Company’s joint venture interests in Freehold Raceway;

our management contract for Retama Park Racetrack and our live and televised poker tournament series that operates under the trade name, Heartland Poker Tour (“HPT”).

The Other category also includes Penn Interactive, which operates social gaming, our internally-branded retail sportsbooks, iGaming and our Barstool Sports online sports betting app.

Expenses incurred for corporate and shared services activities that are directly attributable to a property or are otherwise incurred to support a property are allocated to each property.

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payroll, professional fees, travel expenses and other general and administrative expenses that do not directly relate to or have not otherwise been allocated to a property.

In addition, the Other category includes our proportionate share of the Adjusted EBITDAR of Barstool Sports (as determined and discussed in footnotes (3) and (5) below).

(2) Represents the elimination of intersegment revenues associated with Penn Interactive and HPT.

(2) Primarily represents the elimination of intersegment revenues associated with our internally-branded retail sportsbooks, which are operated by Penn Interactive.

(3) We define Adjusted EBITDAR as earnings before interest expense, net;

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impairment losses;

insurance recoveries and deductible charges;

insurance recoveries, net of deductible charges;

changes in the estimated fair value of our contingent purchase price obligations;

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the difference between budget and actual expense for cash-settled stock-based awards;

pre-opening and acquisition costs;

and other income or expenses.

Adjusted EBITDAR is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (see footnote (5) below) added back for Barstool Sports and our Kansas Entertainment JV.

(4) The Company’s triple net operating leases include certain components of the Master Leases (primarily land), the Meadows Lease, the Margaritaville Lease, the Greektown Lease, and the Tropicana Lease.

pre-opening expenses (see footnote (5) below);

Adjusted EBITDAR is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (see footnote (6) below) added back for Barstool Sports and our Kansas Entertainment joint venture.

(4) The Company’s triple net operating leases include the operating lease components contained within our triple net master lease dated November 1, 2013 with GLPI and the triple net master lease assumed in connection with our acquisition of Pinnacle Entertainment, Inc.

(primarily land), our individual triple net leases with GLPI for the real estate assets used in the operation of Tropicana Las Vegas Hotel and Casino and Hollywood Casino at Meadows Racetrack, and our individual triple net leases with VICI for the real estate assets used in the operations of Margaritaville Casino Resort and Greektown Casino-Hotel.

(5) During 2019, 2020 and during the first quarter of 2021, acquisition costs were included within pre-opening and acquisition costs.

Beginning with the quarter ended June 30, 2021, acquisition costs are presented as part of other expenses.

(6) Consists principally of interest expense, net;

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depreciation and amortization;

and stock-based compensation expense associated with Barstool Sports and our Kansas Entertainment JV.

(6) Principally includes holding gains on our equity securities, which are discussed in Note 19, “Fair Value Measurements.” Additionally, includes non-recurring restructuring charges (primarily severance) of $ 13.4 million associated with a company-wide initiative, triggered by the COVID-19 pandemic, designed to (i) improve the operational effectiveness across our property portfolio;

and (ii) improve the effectiveness and efficiency of our Corporate functional support areas.

and stock-based compensation expense associated with Barstool Sports and our Kansas Entertainment joint venture.

We record our portion of Barstool Sports’ net income or loss, including adjustments to arrive at Adjusted EBITDAR, one quarter in arrears.

(7) Includes holding gains and losses on our equity securities, which are discussed in Note 19, “Fair Value Measurements.” Additionally, consists of non-recurring acquisition and transaction costs, finance transformation costs associated with the implementation of our new Enterprise Resource Management system and non-recurring restructuring charges (primarily severance) associated with a company-wide initiative, triggered by the COVID-19 pandemic, designed to (i) improve the operational effectiveness across our property portfolio;

and (ii) improve the effectiveness and efficiency of our Corporate functional support area.

For the year ended December 31,

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Midwest segment 19.8 15.1 32.7

Interactive segment 6.3 9.1 —

Other 25.7 10.8 10.7

Total capital expenditures $ 244.1 $ 137.0 $ 190.6

(in millions) Northeast South West Midwest Other Total

(in millions) Northeast South West Midwest Interactive Other (1)

As of December 31, 2021

Investment in and advances to unconsolidated affiliates $ 0.1 $ — $ — $ 83.8 $ 164.4 $ 6.8 $ 255.1

$ 0.1 $ — $ — $ 85.2 $ 181.5 $ 266.8

Total assets $ 2,283.6 $ 1,224.6 $ 394.8 $ 1,215.8 $ 2,618.3 $ 9,135.0 $ 16,872.1

$ 1,958.4 $ 1,165.4 $ 401.5 $ 1,161.1 $ 9,980.9 $ 14,667.3

As of December 31, 2020

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Total assets $ 1,958.4 $ 1,165.4 $ 401.5 $ 1,161.1 $ 434.1 $ 9,546.8 $ 14,667.3

$ 2,273.7 $ 1,397.0 $ 752.1 $ 1,412.2 $ 8,359.5 $ 14,194.5

As of December 31, 2019

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Total assets $ 2,273.7 $ 1,397.0 $ 752.1 $ 1,412.2 $ 124.1 $ 8,235.4 $ 14,194.5

$ 1,330.2 $ 1,082.3 $ 755.7 $ 1,411.5 $ 6,381.3 $ 10,961.0

(1) Our investment in Barstool Sports is included within the Other category.

(2) As of December 31, 2020 and 2019, total assets of the Other category includes real estate assets subject to the Master Leases, which are classified as either property and equipment, operating lease ROU assets, or finance lease ROU assets.

(3) As of December 31, 2018, total assets of the Other category includes the real estate assets subject to the Master Leases, which are classified as property and equipment.

(1) The real estate assets subject to the Master Leases, which are classified as either property and equipment, operating lease ROU assets, or finance lease ROU assets, are included within the Other category.

Note 19—Fair Value Measurements

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Equity Securities

As of December 31, 2020 and 2019, we held $ 143.1 million and $ 40.5 million in equity securities, respectively, including ordinary shares and warrants, which are reported as “Other assets” in our Consolidated Balance Sheets.

These equity securities are the result of Penn Interactive entering into multi-year agreements with third-party sports betting operators for online sports betting and related iGaming market access across our portfolio.

During the year ended December 31, 2020 and 2019, we recognized a holding gain of $ 106.7 million and $ 19.9 million, respectively, related to these equity securities, which is included in “Other,” as reported in “Other income (expenses)” within our Consolidated Statements of Operations and Comprehensive Income (Loss).

As of December 31, 2021, we held $ 84.3 million in equity securities of ordinary shares which are reported as “Other assets” in our Consolidated Balance Sheets.

During the year ended December 31, 2021, all warrants were exercised for ordinary shares which resulted in a loss of $ 20.1 million included in “Other” within our Consolidated Statements of Operations.

As of December 31, 2020, we held $ 143.1 million in equity securities, which included ordinary shares and warrants which are reported as “Other assets” in our Consolidated Balance Sheets.

During the years ended December 31, 2021 and 2020, we recognized realized and unrealized losses of $ 24.9 million and an unrealized gain of $ 106.7 million, respectively, related to these equity securities, which is included in “Other” within our Consolidated Statements of Operations.

The fair value of the equity securities was determined using Level 2 inputs, which use market approach valuation techniques.

The primary inputs to those techniques include the quoted market price of the equity securities, foreign currency exchange rates, a discount for lack of marketability (“DLOM”) with respect to the ordinary shares, and a Black-Scholes option pricing model with respect to the warrants.

The DLOM is based on the remaining term of the relevant lock-up periods and the volatility associated with the underlying equity securities.

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The promissory notes and the local government corporation bonds are collateralized by the assets of Retama Park Racetrack.

As of December 31, 2020 and 2019, the promissory notes and the local government corporation bonds, which have long-term contractual maturities, are included in “Other assets” within our Consolidated Balance Sheets.

During the year ended December 31, 2019, principally due to the lack of legislative progress and on-going negative operating results of Retama Park Racetrack, we recorded an other-than-temporary impairment on the promissory notes and the local government corporation bonds totaling $ 2.5 million, which is included in “Impairment losses” within our Consolidated Statements of Operations and Comprehensive Income (Loss).

As of December 31, 2021 and 2020, the promissory notes and the local government corporation bonds were included in “Other assets” within our Consolidated Balance Sheets.

The contractual terms of these promissory notes include interest payments due at maturity;

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Long-term Debt

The fair value of our Term Loan A Facility, Term Loan B-1 Facility, 5.625 % Notes, and the 2.75 % Convertible Notes is estimated based on quoted prices in active markets and is classified as a Level 1 measurement.

The fair value of our Term Loan A Facility, Term Loan B-1 Facility, 5.625 % Notes, 4.125 % Notes, and the Convertible Notes is estimated based on quoted prices in active markets and is classified as a Level 1 measurement.

The fair value of our Revolving Credit Facility approximates its carrying amount as it is revolving, variable rate debt, which we also classify as a Level 1 measurement.

Other long-term obligations as of December 31, 2020 and 2019 included the relocation fees for Dayton and Mahoning Valley, which are discussed in Note 11, “Long-term Debt,” and the repayment obligation of the hotel and event center located near Hollywood Casino Lawrenceburg.

The fair values of these long-term obligations are estimated based on rates consistent with the Company’s credit rating for comparable terms and debt instruments and are classified as Level 2 measurements.

Other long-term obligations as of December 31, 2021 and 2020 included a financing arrangement entered in February of 2021, the relocation fees for Dayton and Mahoning Valley, and the repayment obligation of the hotel and event center located near Hollywood Casino Lawrenceburg.

See Note 11, “Long-term Debt” for details.

The fair values of the Dayton and Mahoning Valley relocations fees and the Lawrenceburg repayment obligation are estimated based on rates consistent with the Company’s credit rating for comparable terms and debt instruments and are classified as Level 2 measurements.

Additionally, in February 2021, we entered into a financing arrangement providing the Company with upfront cash proceeds while permitting us to participate in future proceeds on certain claims.

The financing obligation has been classified as a non-current liability and the fair value of the financing obligation is based on what we expect to be settled in a future period of which the principal is contingent and predicated on other events, plus accreted period non-cash interest using an effective interest rate of 27.0 % until the claims and related obligation is settled.

The financing obligation has been classified as a Level 3 measurement and is included within our Consolidated Balance Sheets in “Long-term debt, net of current maturities, debt discount and debt issuance costs.” See Note 11, “Long-term Debt.”

Other Liabilities

Other liabilities as of December 31, 2020 principally consisted of contingent purchase price related to Plainridge Park Casino and, as of December 31, 2019, principally consisted of contingent purchase price related to Plainridge Park Casino and Absolute Games, LLC, which was acquired by Penn Interactive during the second quarter of 2018.

The Plainridge Park Casino contingent purchase price is calculated based on earnings of the gaming operations over the first ten years of operations, which commenced on June 24, 2015.

As of December 31, 2020 and 2019, we were contractually obligated to make five and six additional annual payments, respectively.

During the second quarter of 2020, we made the second and final payment of $ 8.2 million on the Absolute Games, LLC contingent purchase price, which corresponded to the second year of operations after the acquisition and was calculated based on earnings.

The fair value of these liabilities, which are estimated based on an income approach using a discounted cash flow model and have been classified as Level 3 measurements, are included within our Consolidated Balance Sheets in “Accrued expenses and other current liabilities” or “Other long-term liabilities,” depending on the timing of the next payment.

Other liabilities as of December 31, 2021 includes contingent purchase price liabilities related to Plainridge Park Casino and Hitpoint, of which Hitpoint was acquired on May 11, 2021.

The Hitpoint contingent purchase price liability is payable in $ 1.0 million installments in the form of cash and equity, on the first three anniversaries of the acquisition close date (May 11, 2021) and is based on the achievement of mutual goals established by the Company and Hitpoint.

The Plainridge Park Casino contingent purchase price liability is calculated based on earnings of the gaming operations over the first ten years of operations, which commenced on June 24, 2015.

As of December 31, 2021, we were contractually obligated to make four additional annual payments.

The fair value of the Plainridge Park Casino contingent purchase price liability is estimated based on an income approach using a discounted cash flow model.

These contingent purchase price liabilities have been classified as a Level 3 measurement and are included within our Consolidated Balance Sheets in “Accrued expenses and other current liabilities” or “Other long-term liabilities,” depending on the timing of the next payment.

The carrying amounts and estimated fair values by input level of the Company’s financial instruments were as follows:

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Promissory notes $ 15.1 $ 15.1 $ — $ 15.1 $ —

Puts and calls related to certain Barstool Sports shares $ 1.9 $ 1.9 $ — $ 1.9 $ —

Financial liabilities:

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$ 399.6 $ 411.5 $ 411.5 $ — $ —

4.125 % Notes

$ 392.9 $ 389.5 $ 389.5 $ — $ —

Convertible Notes $ 253.5 $ 780.0 $ 780.0 $ — $ —

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Other liabilities $ 13.3 $ 13.2 $ — $ 2.7 $ 10.5

Puts and calls related to certain Barstool Sports shares $ 0.3 $ 0.3 $ — $ 0.3 $ —

December 31, 2020

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$ 399.5 $ 418.0 $ 418.0 $ — $ —

Convertible Notes $ 239.8 $ 1,274.5 $ 1,274.5 $ — $ —

Other long-term obligations $ 73.0 $ 72.8 $ — $ 72.8 $ —

Other liabilities $ 10.1 $ 10.1 $ — $ 2.8 $ 7.3

Puts and calls related to certain Barstool Sports shares $ 0.3 $ 0.3 $ — $ 0.3 $ —

The following table summarizes the changes in fair value of our Level 3 liabilities measured on a recurring basis:

Other Liabilities

(in millions) Contingent Purchase Price

(in millions) Other Liabilities

Balance as of January 1, 2019 $ 19.0

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Payments ( 9.1 )

Included in earnings (1)

Included in loss (1)

Balance as of December 31, 2020 7.3

Additions 75.5

Interest 17.9

Payments ( 1.7 )

Included in loss (1)

Included in earnings (1)

Balance as of December 31, 2021 $ 100.9

(1) The expense is included in “General and administrative” within our Consolidated Statements of Operations and Comprehensive Income (Loss).

The following table sets forth the assets measured at fair value on a non-recurring basis during the years ended December 31, 2020 and 2019:

(1) The expense is included in “General and administrative” within our Consolidated Statements of Operations.

There were no impairment charges to goodwill, gaming licenses and trademarks for the year ended December 31, 2021.

The following table sets forth the assets measured at fair value on a non-recurring basis as of December 31, 2020:

(in millions) Valuation Date Valuation Technique Level 1 Level 2 Level 3 Total Balance Total

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3/31/2020 Discounted cash flow $ — $ — $ 216.5 $ 216.5 $ ( 61.5 )

Goodwill 10/1/2019 Discounted cash flow and market approach $ — $ — $ 161.1 $ 161.1 $ ( 88.0 )

Gaming licenses 10/1/2019 Discounted cash flow $ — $ — $ 290.0 $ 290.0 $ ( 62.6 )

Trademarks 10/1/2019 Discounted cash flow $ — $ — $ 87.5 $ 87.5 $ ( 20.0 )

(1) The fair value, which was concluded to be zero , of our property and equipment associated with Tropicana was determined using Level 3 inputs.

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Valuation Technique Unobservable Input Discount Rate

Other long-term obligation Discounted cash flow Discount rate 27.0 %

Contingent purchase price - Plainridge Park Casino Discounted cash flow Discount rate 4.5 %

As discussed in Note 9, “Goodwill and Other Intangible Assets,” we recorded impairments on our goodwill, gaming licenses and trademarks as a result of the interim assessment for impairment during the first quarter of 2020.

Our annual assessment for impairment as of October 1, 2020, did not result in any impairment charges to goodwill, gaming licenses and trademarks.

As discussed in Note 9, “Goodwill and Other Intangible Assets,” our annual assessment for impairment as of October 1, 2021, did not result in any impairment charges to goodwill, gaming licenses and trademarks.

We recorded impairments on our goodwill, gaming licenses and trademarks as a result of the interim assessment for impairment during the first quarter of 2020.

The following table presents quantitative information about the significant unobservable inputs used in the fair value measurements of other indefinite-lived intangible assets as of the valuation date below:

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The Company currently leases executive office buildings in Wyomissing, Pennsylvania from affiliates of its chairman emeritus of the Board of Directors.

Rent expense for the years ended December 31, 2020, 2019 and 2018 was $ 1.2 million, $ 1.2 million and $ 1.3 million, respectively.

Certain of the leases for the office space expired in May 2019, but have been extended on a month-to-month basis;

the remaining long-term lease for the office space expires in August 2024.

The future minimum lease commitments relating to these leases as of December 31, 2020 were $ 1.5 million.

Rent expense was $ 1.2 million for each of the years ended December 31, 2021, 2020 and 2019.

Two leases were renewed in the current year, and expire in December 2022 and August 2026;

the remaining lease, which had been previously on a month-to-month basis, has been terminated as of December 31, 2021.

The future minimum lease commitments relating to these leases as of December 31, 2021 are $ 2.3 million.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data