Quarterly Report for Quarter Ending June 30, 2022 (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ___________

Commission file number 0-22900

CENTURY CASINOS, INC.

(Exact name of registrant as specified in its charter)

455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903

(Address of principal executive offices, including zip code)

(719) 527-8300

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þNo ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þNo ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨No þ

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

29,864,047shares of common stock, $0.01 par value per share, were outstanding as of August 1, 2022.

INDEX

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PART I - FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

CENTURY CASINOS, INC. AND SUBSIDIARIES

See notes to unaudited condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

See notes to unaudited condensed consolidated financial statements.

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CENTURY CASINOS, INC. AND SUBSIDIARIES

See notes to unaudited condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

See notes to unaudited condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

See notes to unaudited condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

1.DESCRIPTIONOF BUSINESS AND BASIS OF PRESENTATION

Century Casinos, Inc. (the "Company") is a casino entertainment company with operations primarily in North America. The Company's operations as of June 30, 2022 are detailed below.

The Company owns, operates and manages the following casinos through wholly-owned subsidiaries in North America:

The Century Casino & Hotel in Central City, Colorado ("CTL")

The Century Casino & Hotel in Cripple Creek, Colorado ("CRC")

Mountaineer Casino, Racetrack & Resort in New Cumberland, West Virginia ("Mountaineer" or "MTR") ⁽¹⁾

The Century Casino Cape Girardeau, Missouri ("Cape Girardeau" or "CCG") ⁽¹⁾

The Century Casino Caruthersville, Missouri ("Caruthersville" or "CCV") ⁽¹⁾

The Century Casino & Hotel in Edmonton, Alberta, Canada ("Century Resorts Alberta" or "CRA")

The Century Casino St. Albert in Edmonton, Alberta, Canada ("CSA"); and

Century Mile Racetrack and Casino in Edmonton, Alberta, Canada ("CMR" or "Century Mile") ⁽²⁾

(1)VICI Properties Inc. ("VICI PropCo") owns the real estate assets underlying these properties.

(2)CMR leases the land on which CMR's racing and entertainment centre ("REC") and racetrack are located.

On February 10, 2022, the Company sold the land and building in Calgary, transferred the lease agreement for the casino premises to the buyer, and ceased operating Century Sports, a sports bar, bowling and entertainment facility located on the property. See below in this Note 1 for additional information about the Calgary property.

Through August 2021, the Company operated the pari-mutuel off-track betting network in southern Alberta, Canada through Century Bets! Inc. ("CBS" or "Century Bets"). In September 2021, the Company transferred these contracts to Century Mile.

The Company's Colorado and West Virginia subsidiaries have partnered with sports betting and iGaming operators to offer sports wagering and online betting through mobile apps.

The Company has a controlling financial interest through its wholly-owned subsidiary Century Resorts Management GmbH ("CRM") in the following majority-owned subsidiaries:

The Company owns 66.6% of Casinos Poland Ltd ("CPL" or "Casinos Poland"). As of June 30, 2022, CPL owned and operated eightcasinos throughout Poland. CPL is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. Polish Airports Company ("Polish Airports") owns the remaining 33.3% of CPL, which is reported as a non-controlling financial interest.

The Company owns 75% of United Horsemen of Alberta Inc. dba Century Downs Racetrack and Casino ("CDR" or "Century Downs"). CDR operates Century Downs Racetrack and Casino, a REC in Balzac, a north metropolitan area of Calgary, Alberta, Canada. CDR is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. The remaining 25% of CDR is owned by unaffiliated shareholders and is reported as a non-controlling financial interest.

Through its wholly owned subsidiary Century Nevada Acquisition, Inc., the Company has a 50% equity interest in Smooth Bourbon, LLC ("PropCo" or "Smooth Bourbon"). The Company reports this interest as an equity investment.

As of June 30, 2022, the Company had a concession agreement with TUI Cruises for oneship-based casino that ends in the second quarter of 2023. The table below illustrates the ships operating during the three and six months ended June 30, 2022 and 2021.

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Recent Developments Related to COVID-19

The COVID-19 pandemic impacted the Company's results of operations in the first half of 2021 because of closures at the Company's Canada and Poland properties during this period. The table below provides a summary of the time periods in which the Company's casinos, hotels and other facilities were closed in December 2020 and during 2021 to comply with quarantines issued by governments to contain the spread of COVID-19. The Company's casinos have varied their operations based on the governmental health and safety requirements in the jurisdictions in which they are located. Currently the Company's operations are open and have no health and safety requirements for entry and few COVID-19 related restrictions.

The duration and impact of the COVID-19 pandemic remains uncertain. The Company cannot predict the negative impacts that COVID-19 will have on its consumer demand, workforce, suppliers, contractors and other partners and whether future closures will be required. Such closures have had a material impact on the Company's financial results. The effects of COVID-19, ongoing governmental health and safety requirements and any future closures could have a material impact on the Company. The Company will continue to monitor its liquidity and make reductions to marketing and operating expenditures, where possible, if future government mandates or closures are required that would have an adverse impact on the Company.

Other Projects and Developments

Nugget Casino Resort in Sparks, Nevada

On February 22, 2022, the Company entered into a definitive agreement with Marnell Gaming, LLC ("Marnell"), pursuant to which a newly formed subsidiary of the Company (i) purchased from Marnell 50% of the membership interests in PropCo, and (ii) will purchase 100% of the membership interests in Nugget Sparks, LLC ("OpCo"). OpCo owns and operates the Nugget Casino Resort in Sparks, Nevada, and PropCo owns the real property on which the casino is located.

The Company purchased 50% of the membership interests in PropCo for approximately $95.0million (the "PropCo Acquisition") at the first closing, which occurred on April 1, 2022 (the "First Closing"). The Company used approximately $29.3million of cash on hand and borrowings under the Goldman Credit Agreement (see Note 5) in connection with the First Closing. Subject to approval from the Nevada Gaming Commission, the Company's purchase of 100% of the membership interests in OpCo for approximately $100.0million (subject to certain adjustments) (the "OpCo Acquisition" and, together with the PropCo Acquisition, the "Nugget Acquisition") is expected to close within one year after the First Closing (the "Second Closing"). The purchase price for the OpCo Acquisition will be paid from proceeds of the Term Loan (as defined below) deposited in escrow ("Acquisition Escrow") on the First Closing date. Following the Second Closing, the Company will own the operating assets of Nugget Casino Resort and 50% of the membership interests in PropCo. The Company also has a five yearoption to acquire the remaining 50% of the membership interests in PropCo for $105.0million plus 2% per annum. At the First Closing, PropCo entered into a lease with OpCo for an annual rent of $15.0million.

Caruthersville Hotel

In July 2021, the Company announced that it had purchased land and a small two-story hotel near Century Casino Caruthersville with plans to refurbish the existing hotel's 36rooms. The Company plans to open the hotel in August 2022. The Company estimates this project will cost approximately $3.6million. As of June 30, 2022, the Company has spent $2.2million on this project.

Cape Girardeau Hotel

The Company is building a hotel at its Cape Girardeau location. The hotel is planned as a six story building with 68,000square feet that will be adjacent to and connected with the existing casino building. The hotel project has been approved by the City of Cape Girardeau. Additional state and local approvals from other agencies will also be required. Planning, design and preparations for the project are substantially complete. A project start date has not been finalized, and the Company will consider project costs, including the timing of supply chain deliveries, in deciding when to commence construction. The Company estimates a project cost of approximately $26.0million. The Company is financing the project with cash on hand. As of June 30, 2022, the Company has spent $1.1million on this project.

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Caruthersville Casino and Hotel

In July 2021, the Missouri law requiring each casino to be a floating facility was amended to allow casino facilities to be built as a standard building with a container with at least 2,000 gallons of water beneath the facility. Subsequently, a lawsuit was filed by the City of St. Louis that seeks to block the implementation of the omnibus bill that included the amendment to the definition of a floating facility. In June 2022, the Missouri governor signed a standalone bill to amend the definition of a floating facility. This change provides an opportunity for Century Casino Caruthersville, the last remaining riverboat casino on open water in Missouri, to move to a non-floating facility. The Company plans to move the casino from the riverboat to a new land-based casino with a small hotel adjacent to and connected with the existing building. While preparation for the project is substantially complete, the Company is working to optimize the construction timeline in order to minimize supply chain challenges. The Company estimates an opening date of the casino in mid 2024 with an estimated project cost of $47.0million. The Company plans to finance the cost of this project with cash on hand, financing, or a combination of the two. As of June 30, 2022, the Company has spent $1.8million on this project.

Terminated Projects

Century Sports

In August 2020, the Company announced that it had entered into an agreement to sell the casino operations of Century Casino Calgary for CAD 10.0million ($7.5million based on the exchange rate on August 5, 2020) plus a three yearquarterly earn out as specified in the agreement. The transaction closed on December 1, 2020. During the first quarter of 2021, the Company paid CAD 0.1million ($0.1million based on the exchange rate on February 12, 2021) in working capital adjustments under the purchase agreement. Upon closing of the transaction, the Company entered into a three yearlease agreement with the purchaser of the casino operations for annual net rent for the land and building of CAD 0.5million ($0.4million based on the exchange rate on June 30, 2022).

After the sale, the Company continued to operate Century Sports, and to own the underlying real estate. On February 10, 2022, the Company sold the land and building in Calgary for CAD 8.0million ($6.3million based on the exchange rate on February 10, 2022) at which time the Company transferred the lease agreement for the casino premises to the buyer and ceased operating Century Sports. As of December 31, 2021, the assets held for sale included $4.8million in land and $3.6million in buildings and improvements, net of accumulated depreciation. Century Sports was included in the Canada reportable segment.

Mendoza Central Entretenimientos S.A.

The Company, through its subsidiary CRM, had a 7.5% ownership interest in Mendoza Central Entretenimientos S.A, an Argentina company ("MCE"), which leases slot machines and provides related services to Casino de Mendoza, a casino located in Mendoza, Argentina that is owned by the Province of Mendoza. In November 2021, CRM sold its ownership interest in MCE for nominal consideration. In addition, a consulting services agreement between CRM and MCE was terminated.

Preparation of Financial Statements

The accompanying condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") for interim financial reporting, the rules and regulations of the Securities and Exchange Commission which apply to interim financial statements and the instructions to Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated.

In the opinion of management, all adjustments considered necessary for the fair presentation of financial position, results of operations and cash flows of the Company have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-Kfor the year ended December 31, 2021. The results of operations for the six months ended June 30, 2022 are not necessarily indicative of the operating results for the full year.

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Cash, Cash Equivalents and Restricted Cash - A reconciliation of cash, cash equivalents and restricted cash as stated in the Company's condensed consolidated statements of cash flows is presented in the following table:

As of June 30, 2022, the Company had $100.0million related to the Acquisition Escrow in restricted cash on its condensed consolidated balance sheet. As of June 30, 2022 and 2021, restricted cash included in deposits and other included $0.2million related to payments of prizes and giveaways for Casinos Poland, and less than $0.1million related to an insurance policy.

Use of Estimates - The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Management's use of estimates includes estimates for property and equipment, goodwill, intangible assets and income tax.

Presentation of Foreign Currency Amounts - The Company's functional currency is the US dollar ("USD" or "$"). Foreign subsidiaries with a functional currency other than the US dollar translate assets and liabilities at current exchange rates at the end of the reporting periods, while income and expense accounts are translated at average exchange rates for the respective periods. The Company and its subsidiaries enter into various transactions made in currencies different from their functional currencies. These transactions are typically denominated in the Canadian dollar ("CAD"), Euro ("EUR") and Polish zloty ("PLN"). Gains and losses resulting from changes in foreign currency exchange rates related to these transactions are included in income from operations as they occur.

The exchange rates to the US dollar used to translate balances at the end of the reported periods are as follows:

The average exchange rates to the US dollar used to translate balances during each reported period are as follows:

Equity Investment- On April 1, 2022, the Company purchased 50% of the membership interests in Smooth Bourbon. Smooth Bourbon owns the real property on which the Nugget Casino is located. The additional 50% of the membership interest in Smooth Bourbon is held by Marnell. At Smooth Bourbon, decision making is controlled by Marnell, the managing member. The Company completed an assessment of whether Smooth Bourbon is a variable interest entity in which it has a financial interest. Based on this assessment, the Company concluded that Smooth Bourbon is not subject to consolidation under the guidance for variable interest entities. The Company will evaluate its investment in Smooth Bourbon for impairment on an annual basis or whenever events or circumstances indicate the carrying amount may not be recoverable. See Note 3 for additional information about Smooth Bourbon.

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2.SIGNIFICANT ACCOUNTING POLICIES

Accounting Pronouncements Not Yet Adopted- The Company has not yet adopted the following accounting pronouncements:

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848)("ASU 2020-04"). The objective of ASU 2020-04 is to provide optional expedients and exceptions for applying US GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope ("ASU 2021-01"), which provides clarification that certain optional expedients and exceptions in ASU 2020-04 for contract modification and hedge accounting apply to derivatives that are affected by discounting transition. The guidance is effective from March 12, 2020 through December 31, 2022. The Company has evaluated its debt agreements under ASU 2020-04 and has determined that it will not need to modify any of the agreements as a result of the discontinuation of LIBOR. The Company does not expect the adoption of the standard to have a material impact on the Company's financial statements.

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements or notes thereto.

3. EQUITY INVESTMENT

Following is summarized financial information regarding Smooth Bourbon as of June 30, 2022:

The Company's maximum exposure to losses at June 30, 2022 was $94.8million, the value of its equity investment in Smooth Bourbon.

Changes in the carrying amount of the investment in Smooth Bourbon for the six months ended June 30, 2022 are presented in the table below.

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4.GOODWILL AND INTANGIBLE ASSETS

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

The Company tests goodwill for impairment as of October 1 each year, or more frequently as circumstances indicate it is necessary. Testing compares the estimated fair values of our reporting units to the reporting units' carrying values. The reportable segments with goodwill balances as of June 30, 2022 included Canada and Poland. For the quantitative goodwill impairment test, the current fair value of each reporting unit with goodwill balances is estimated using a combination of (i) the income approach using the discounted cash flow method for projected revenue, EBITDA and working capital, (ii) the market approach observing the price at which comparable companies or shares of comparable companies are bought or sold, and (iii) fair value measurements using either quoted market price or an estimate of fair value using a present value technique. The cost approach, estimating the cost of reproduction or replacement of an asset, was considered but not used because it does not adequately capture an operating company's intangible value. If the carrying value of a reporting unit exceeds its estimated fair value, the Company will recognize an impairment for the amount by which the carrying value exceeds the reporting unit's fair value. The impairment analysis requires management to make estimates about future operating results, valuation multiples and discount rates and assumptions based on historical data and consideration of future market conditions. Changes in the assumptions can materially affect these estimates. Given the uncertainty inherent in any projection, heightened by the possibility of additional effects of COVID-19, actual results may differ from the estimates and assumptions used, or conditions may change, which could result in additional impairment charges in the future. Such impairments could be material.

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

Goodwill

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

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Intangible Assets

Intangible assets at June 30, 2022 and December 31, 2021 consisted of the following:

Trademarks

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

Trademarks: Finite-Lived

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

As of June 30, 2022, estimated amortization expense of the Mountaineer trademark over the next five years was as follows:

The weighted-average amortization period of the Mountaineer trademark is 7.4years.

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Trademarks: Indefinite-Lived

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

Casino Licenses: Finite-Lived

As of June 30, 2022, Casinos Poland had eightcasino licenses, each with an original term of six years, which are reported as finite-lived intangible assets and are amortized over their respective useful lives. Changes in the carrying amount of the Casinos Poland licenses are as follows:

As of June 30, 2022, estimated amortization expense for the CPL casino licenses over the next five years was as follows:

These estimates do not reflect the impact of future foreign exchange rate changes or the continuation of the licenses following their expiration. The weighted average period before the next license expiration is 1.6years. In Poland, gaming licenses are not renewable. Once a gaming license has expired, any gaming company can apply for the license.

Casino Licenses: Indefinite-Lived

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

Player's Club Lists

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

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As of June 30, 2022, estimated amortization expense for the player's club lists over the next five years was as follows:

The weighted-average amortization period for the player's club lists is 4.4years.

5. LONG-TERM DEBT

Long-term debt and the weighted average interest rates as of June 30, 2022 and December 31, 2021 consisted of the following:

Goldman Credit Agreement

On April 1, 2022, the Company entered into a Credit Agreement (the "Goldman Credit Agreement") by and among the Company, as borrower, the subsidiary guarantors party thereto, Goldman Sachs Bank USA, as administrative agent and collateral agent, Goldman Sachs Bank USA and BOFA Securities, Inc., as joint lead arrangers and joint bookrunners, and the Lenders and L/C Lenders party thereto. The Goldman Credit Agreement replaces the Macquarie Credit Agreement discussed below. The Goldman Credit Agreement provides for a $350.0million term loan (the "Term Loan") and a $30.0million revolving credit facility (the "Revolving Facility"). As of June 30, 2022, the outstanding balance of the Term Loan was $349.1million and the Company had $30.0million available to borrow on the Revolving Facility. The Company used the Goldman Credit Agreement to fund the PropCo Acquisition, for the repayment of approximately $166.2million outstanding under the Macquarie Credit Agreement, to fund the Acquisition Escrow and for related fees and expenses.

The Term Loan matures on April 1, 2029, and the Revolving Facility matures on April 1, 2027. The Revolving Facility includes up to $10.0million available for the issuance of letters of credit. The Term Loan requires scheduled quarterly payments of $875,000equal to 0.25% of the original aggregate principal amount of the Term Loan, with the balance due at maturity.

Borrowings under the Goldman Credit Agreement bear interest at a rate equal to, at the Company's option, either (a) the Adjusted Term SOFR (as defined in the Goldman Credit Agreement), plus an applicable margin (each loan, being a "SOFR Loan") or (b) the ABR (as defined in the Goldman Credit Agreement), plus an applicable margin (each loan, being a "ABR Loan"). The applicable margin for the Term Loan is 6.00% per annum with respect to SOFR Loans and 5.00% per annum with respect to ABR Loans. The applicable margin for loans under the Revolving Facility ("Revolving Loans") is (1) so long as the Consolidated First Lien Net Leverage Ratio (as defined in the Goldman Credit Agreement) of the Company is greater than 2.75to 1.00, the applicable margin for Revolving Loans that are SOFR Loans will be 5.25% per annum, and for Revolving Loans that are ABR Loans will be 4.25% per annum; (2) so long as the Consolidated First Lien Net Leverage Ratio of the Company is less than or equal to 2.75to 1.00 but greater than 2.25to 1.00, the applicable margin for Revolving Loans that are SOFR Loans will be 5.00% per annum, and for Revolving Loans that are ABR Loans will be 4.00% per annum; and (3) so long as the Consolidated First Lien Net Leverage Ratio of the Company is less than or equal to 2.25to 1.00, the applicable margin for Revolving Loans that are SOFR Loans will be 4.75% per annum, and for Revolving Loans that are ABR Loans will be 3.75% per annum.

In addition, on a quarterly basis, the Company is required to pay each lender under the Revolving Facility a commitment fee in respect of any unused commitments under the Revolving Facility at a per annum rate of 0.50% of the principal amount of unused commitments of such lender, subject to a stepdown to 0.375% based upon the Company's Consolidated First Lien Net Leverage Ratio. The Company is also required to pay letter of credit fees equal to the applicable margin then in effect for SOFR Loans that are Revolving Loans multiplied by the average daily maximum aggregate amount available to be drawn under all letters of credit, plus such letter of credit issuer's customary documentary and processing fees and charges and a fronting fee in an amount equal to 0.125% of the face amount of such letter of credit. The Company is also required to pay customary agency fees. Fees related to the Goldman Credit Agreement of less than $0.1million were recorded as interest expense in the consolidated statements of earnings for the three and six months ended June 30, 2022.

The Goldman Credit Agreement requires the Company to prepay the Term Loan, subject to certain exceptions, with:

• 100% of the net cash proceeds of certain non-ordinary course asset sales or certain casualty events, subject to certain exceptions; and

• 50% of the Company's annual Excess Cash Flow (as defined in the Goldman Credit Agreement) (which percentage will be reduced to 25% if the Consolidated First Lien Net Leverage Ratio is greater than 2.25to 1.00 but less than or equal to 2.75to 1.00, and to 0% if the Consolidated First Lien Net Leverage Ratio is less than or equal to 2.25to 1.00); and

• 100% of the funds in the Acquisition Escrow if the OpCo Acquisition does not occur.

The Goldman Credit Agreement provides that the Term Loan may be prepaid, subject to a prepayment premium in an amount equal to 1.00% of the principal amount of the Term Loan if such event occurs on or before April 1, 2023. This premium does not apply if there is a mandatory prepayment with respect to the Acquisition Escrow.

The borrowings under the Goldman Credit Agreement are guaranteed by the material subsidiaries of the Company, subject to certain exceptions (including the exclusion of the Company's non-domestic subsidiaries), and are secured by a pledge (and, with respect to real property, mortgage) of substantially all of the existing and future property and assets of the Company and the guarantors, subject to certain exceptions.

The Goldman Credit Agreement contains customary representations and warranties, affirmative, negative and financial covenants, and events of default. All future borrowings under the Goldman Credit Agreement are subject to the satisfaction of customary conditions, including the absence of a default and the accuracy of representations and warranties.

Deferred financing costs consist of the Company's costs related to financings. The Company recognized $18.4million in deferred financing costs related to the Goldman Credit Agreement for the six months ended June 30, 2022. Amortization expenses relating to the Goldman Credit Agreement were $0.7million for the three and six months ended June 30, 2022. These costs are included in interest expense in the condensed consolidated statement of earnings for the three and six months ended June 30, 2022.

Credit Agreement - Macquarie Capital

In December 2019, the Company entered into a $180.0million credit agreement with Macquarie Capital Funding LLC, as swingline lender, administrative agent and collateral agent, Macquarie Capital (USA) Inc., as sole lead arranger and sole bookrunner, and the Lenders and L/C Lenders party thereto (the "Macquarie Credit Agreement"). The Macquarie Credit Agreement replaced the Company's credit agreement with the Bank of Montreal (the "BMO Credit Agreement"). The Macquarie Credit Agreement provided for a $170.0million term loan (the "Macquarie Term Loan") and a $10.0million Revolving Facility (the "Macquarie Revolving Facility"). The Macquarie Revolving Facility included up to $5.0million available for the issuance of letters of credit. The Company used proceeds from the Macquarie Term Loan to fund the acquisition of MTR, CCG and CCV (the "Acquired Casinos"), for the repayment of approximately $52.0million outstanding under the BMO Credit Agreement and for general working capital and corporate purposes. In connection with the Goldman Credit Agreement, the Macquarie Term Loan was repaid on April 1, 2022 and the Macquarie Credit Agreement was terminated.

Commitment fees related to the Macquarie Revolving Facility of less than $0.1million were recorded as interest expense in the condensed consolidated statements of earnings for the three and six months ended June 30, 2022 and 2021.

The Company amortized $0.4million for the three and six months ended June 30, 2022 and $0.4million and $0.8million for the three and six months ended June 30, 2021, respectively, relating to Macquarie Credit Agreement deferred financing costs. These costs are included in interest expense in the condensed consolidated statements of earnings for the three and six months ended June 30, 2022 and 2021. The Company wrote-off approximately $7.3million of deferred financing costs to interest expense in the second quarter of 2022 in connection with the prepayment of the Macquarie Term Loan.

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Casinos Poland

CPL's PLN 3.0million term loan and PLN 4.0million term loan with mBank were paid in full in November 2021. The term loans bore an interest rate of 1-month Warsaw Interbank Offered Rate ("WIBOR") plus 1.70%. CPL's PLN 10.0million short-term line of credit was amended on April 22, 2022 and the PLN 2.5million that was available for cash borrowing was removed from the line of credit.

As of June 30, 2022, CPL had onecredit agreement and oneshort-term line of credit with mBank as detailed below. As of June 30, 2022, CPL was in compliance with all applicable financial covenants under these agreements.

The credit agreement between CPL and mBank is a PLN 2.5million term loan that was used to purchase gaming and other equipment for the Marriott Hotel in Warsaw. The credit agreement bears interest at an interest rate of 1-month WIBOR plus 1.90%. The credit agreement has a four yearterm through November 30, 2022. As of June 30, 2022, the credit agreement had an outstanding balance of PLN 0.5million ($0.1million based on the exchange rate in effect on June 30, 2022). CPL has nofurther borrowing availability under this credit agreement. The credit agreement is secured by a building owned by CPL in Warsaw and a pledge of slot machines. In addition, CPL is required to maintain cash inflows of PLN 7.0million to its account held with mBank and to comply with financial covenants, including covenants that relate to profit margins not lower than 0.5%, liquidity ratios no less than 0.6and a debt ratio not higher than 70%. In May 2020, the credit agreement was amended to defer three months of payments to November 30, 2022.

As of June 30, 2022, CPL also had a short-term line of credit with mBank used to finance current operations. The line of credit has a borrowing capacity of PLN 5.0million bearing an interest rate of overnight WIBOR plus 2.00%. As of June 30, 2022, the credit facility had nooutstanding balance and PLN 5.0million ($1.1million based on the exchange rate in effect on June 30, 2022) was available for additional borrowing. The credit agreement is secured by a building owned by CPL in Warsaw. The credit facility contains a number of covenants applicable to CPL, including covenants that require CPL to maintain certain liquidity and liability to asset ratios. The line of credit was amended in April 2022 extending the line of credit through April 27, 2023.

Under Polish gaming law, CPL is required to maintain PLN 3.6million in the form of deposits or bank guarantees for payment of casino jackpots and gaming tax obligations. mBank issued guarantees to CPL for this purpose totaling PLN 3.6million ($0.8million based on the exchange rate in effect on June 30, 2022). The mBank guarantees are secured by land owned by CPL in Kolbaskowo, Poland as well as a deposit of PLN 1.2million ($0.3million based on the exchange rate in effect on June 30, 2022) with mBank and will terminate in June 2024and January 2026, respectively. CPL also is required to maintain deposits or provide bank guarantees for payment of additional prizes and giveaways at the casinos. The amount of these deposits varies depending on the value of the prizes. CPL maintained PLN 0.7million ($0.2million based on the exchange rate in effect on June 30, 2022) in deposits for this purpose as of June 30, 2022. These deposits are included in deposits and other on the Company's condensed consolidated balance sheets.

Century Resorts Management

As of June 30, 2022, CRM had twocredit agreements with UniCredit (the "UniCredit Term Loans").

The first credit agreement ("UniCredit Term Loan 1") is a GBP 2.0million term loan used for construction and fitting out of Century Casino Bath, a casino in Bath, England that the Company closed in March 2020. In November 2021, the Company amended the UniCredit Term Loan 1 to convert it into a USD term loan beginning December 31, 2021. The term loan matures September 30, 2023and bears interest at LIBOR plus 1.625%. If LIBOR is not available, the interest rate will be determined based on a quoted rate from leading banks in the London interbank market. As of June 30, 2022, the amount outstanding on UniCredit Term Loan 1 was $0.7million. CRM has nofurther borrowing availability under the loan agreement. The loan is unsecured and has no financial covenants.

The second credit agreement ("UniCredit Term Loan 2") is a EUR 6.0million term loan converted from a $7.4million line of credit on June 23, 2021. In August 2018, CRM entered into a loan agreement with UniCredit for a revolving line of credit to be used for acquisitions and capital expenditures at the Company's existing operations or new operations. In March 2020, CRM borrowed $7.4million with a 12 month term under the UniCredit Agreement. In March 2021, the term of the line of credit was extended to June 2021, when it was converted into UniCredit Term Loan 2. The term loan matures on December 31, 2025and bears interest at a rate of 2.875%. As of June 30, 2022, the amount outstanding was EUR 4.7million ($4.9million based on the exchange rate in effect on June 30, 2022) and the Company had nofurther borrowings available. UniCredit Term Loan 2 is secured by a EUR 6.0million guarantee by the Company and has no financial covenants.

Century Downs Racetrack and Casino

CDR's land lease is a financing obligation of the Company. Prior to the Company's acquisition of its ownership interest in CDR, CDR sold a portion of the land on which the REC project is located and then entered into an agreement to lease back a portion of the land sold. The Company accounts for the lease using the financing method by accounting for the land subject to lease as an asset and the lease payments as interest on the financing obligation. Under the land lease, CDR has fouroptions to purchase the land. The first option date is July 1, 2023. Due to the nature of the CDR land lease financing obligation, there are noprincipal payments due until the Company exercises its option to purchase the land. Lease payments are applied to interest only, and any change in the outstanding balance of the financing obligation relates to foreign currency translation. As of June 30, 2022, the outstanding balance on the financing obligation was CAD 19.5million ($15.1million based on the exchange rate in effect on June 30, 2022).

As of June 30, 2022, scheduled maturities related to long-term debt were as follows:

6.LONG-TERM FINANCING OBLIGATION

On December 6, 2019, certain subsidiaries of the Company (collectively, the "Tenant") and certain subsidiaries of VICI PropCo (collectively, the "Landlord") entered into the sale and leaseback transaction for the Acquired Casino properties. The Tenant entered into a triple net lease agreement (the "Master Lease") with the Landlord to lease the real estate assets of the Acquired Casinos. The Master Lease does not transfer control of the Acquired Casino properties to VICI Propco subsidiaries. The Company accounts for the transaction as a failed sale-leaseback financing obligation.

When cash proceeds are exchanged, a failed sale-leaseback financing obligation is equal to the proceeds received for the assets that are sold and then leased back. The value of the failed sale-leaseback financing obligations recognized in this transaction was determined to be the fair value of the leased real estate assets. In subsequent periods, a portion of the periodic payment under the Master Lease will be recognized as interest expense with the remainder of the payment reducing the failed sale-leaseback financing obligation using the effective interest method. The failed sale-leaseback obligations will not be reduced to less than the net book value of the leased real estate assets as of the end of the lease term, which is estimated to be $28.5million.

The fair values of the real estate assets and the related failed sale-leaseback financing obligation were estimated based on the present value of the estimated future payments over the term plus renewal options of 35years, using an imputed discount rate of approximately 10.6%. The value of the failed sale-leaseback financing obligation is dependent upon assumptions regarding the amount of the payments and the estimated discount rate of the payments required by a market participant.

The Master Lease provides for the lease of land, buildings, structures and other improvements on the land (including barges and riverboats), easements and similar appurtenances to the land and improvements relating to the operations of the leased properties. The Master Lease has an initial term of 15years with no purchase option. At the Company's option, the Master Lease may be extended for up to four five yearrenewal terms beyond the initial 15year term. The renewal terms are effective as to all, but not less than all, of the property then subject to the Master Lease. The Company does not have the ability to terminate its obligations under the Master Lease prior to its expiration without the Landlord's consent.

The Master Lease has a triple-net structure, which requires the Tenant to pay substantially all costs associated with the Company's Missouri and West Virginia properties, including real estate taxes, insurance, utilities, maintenance and operating costs. The Master Lease contains certain covenants, including minimum capital improvement expenditures. The Company has provided a guarantee of the Tenant's obligations under the Master Lease.

The rent payable under the Master Lease is comprised of "Base Rent" and "Variable Rent". Base rent is:

An initial annual rent (the "Rent") of approximately $25.0million.

The Rent will escalate at a rate of 1.01% for the 2^ndand 3^rdyears and the greater of either 1.0125% (the "Base Rent Escalator") or the increase in the Consumer Price Index ("CPI") for each year starting in the 4^thyear and ending the 7^thyear.

The Base Rent Escalator is subject to adjustment from and after the 6^thyear if the Minimum Rent Coverage Ratio (as defined in the Master Lease) is not satisfied.

Beginning in the 8^thyear of the lease term, Rent will be calculated as (i) 80% of the Rent for the 7^thlease year ("Base Rent"), subject to an annual Base Rent Escalator of the greater of 1.0125% or CPI subject to adjustment if the Minimum Rent Coverage Ratio is not satisfied, plus (ii) variable rent ("Variable Rent") equal to 20% of the Rent for the 7^thlease year, plus or minus 4.0% of the change in average net revenue of the Acquired Casinos calculated as set forth in the Master Lease.

For the 11^thyear and thereafter of the initial lease term, the Base Rent will escalate annually as set forth above and the Variable Rent will be recalculated as set forth in the Master Lease.

The estimated future payments include the payments and adjustments to reflect estimated payments as described in the Master Lease, including an annual escalator of up to 1.0125% and estimates based on contingent rental payments.

Total payments and interest expense related to the Master Lease for the three and six months ended June 30, 2022 and 2021 were as follows:

The future payments related to the Master Lease financing obligation with the Landlord at June 30, 2022 were as follows:

7.COMMITMENTS AND CONTINGENCIES

Litigation - From time to time, the Company is subject to various legal proceedings arising from normal business operations. The Company does not expect the outcome of such proceedings, either individually or in the aggregate, to have a material effect on its financial position, cash flows or results of operations.

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