COMMITMENTS AND CONTINGENCIES
|3 Months Ended|
Mar. 31, 2023
|COMMITMENTS AND CONTINGENCIES.|
|COMMITMENTS AND CONTINGENCIES AND SUBSEQUENT EVENT||
6. COMMITMENTS AND CONTINGENCIES AND SUBSEQUENT EVENTS
The Company is party to a number of pending legal proceedings related to matters that occurred in the normal course of business. Management does not expect that the outcome of any such proceedings, either individually or in the aggregate, will have a material effect on the Company’s financial position, results of operations and cash flows.
Public Trust Tidelands Lease in Mississippi
The Company has been evaluating the potential construction of an additional hotel tower and related amenities at Silver Slipper, a portion of which would extend out over the Gulf of Mexico. In contemplation for such potential future expansion, the Company entered into a lease agreement in the second quarter of 2023 with the State of Mississippi for a 30-year lease of approximately a half-acre of tidelands, with aavailable for another 30 years.
The lease commences on June 1, 2023, and initial rent is due in advance forperiod of $10,000 (the “Construction Rent”). This initial Construction Rent terminates at the beginning of the next six-month period after the opening of commercial operations on the leased premises, but no later than 18 months after the commencement of the lease. Thereafter, annual rent increases to $105,300, with adjustments based on the consumer price index on each anniversary. Before construction can commence, additional entitlements are necessary, including certain environmental approvals. The Company recently reached an agreement with the U.S. Army Corps of Engineers, facilitating satisfaction of such environmental approvals. There can be no certainty that the contemplated Silver Slipper expansion will be built.
Contracted Sports Wagering in Illinois
In May 2022, the Company entered into an agreement with an affiliate of Circa Sports to jointly develop and manage on-site sportsbooks at both The Temporary and American Place casinos in Illinois. In addition to the on-site sportsbook, Circa Sports will utilize the Company’s expected mobile sports skin to conduct Internet sports wagering throughout Illinois. In exchange for such rights, the Company received a non-refundable market access fee of $5 million in May 2022, which was recorded as a long-term liability under deferred revenues. The Company will also receive a percentage of revenues (as defined), subject to a minimum of $5 million per year, once Circa Sports launches operations in Illinois. Such launch is anticipated by August 2023, contingent upon receipt of customary regulatory approvals. The term of the agreement is for eight years, followed by twoextension opportunities at the option of Circa Sports.
Contingent Gaming License Fees in Illinois
As required for its gaming licensure at The Temporary/American Place, the Company may be required to make a “Reconciliation Payment” to the State of Illinois. The Reconciliation Payment is calculated three years after the commencement of gaming operations in Illinois in an amount equal to 75% of the adjusted gross receipts for the most lucrative trailingof operations, offset by certain licensing fees already paid by the Company in the first quarter of 2023. If such calculation of the Reconciliation Payment results in a negative amount, the Company is not entitled to reimbursement of any licensing fees previously paid. The Reconciliation Payment, if any, is due in annual installments over a period of , beginning in the fourth year of gaming operations.
The entire disclosure for commitments and contingencies and subsequent event.
No definition available.