COMMITMENTS AND CONTINGENCIES
|12 Months Ended|
Dec. 31, 2022
|COMMITMENTS AND CONTINGENCIES.|
|COMMITMENTS AND CONTINGENCIES.||
9. COMMITMENTS AND CONTINGENCIES
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 our financial position, results of operations and cash flows.
Options to Lease Land
Option Agreement for 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 adjoining Gulf of Mexico. In contemplation for such potential future expansion, the Company paid $5,000 for an option agreement – entered into by the Company on June 8, 2021 and approved by the Governor of Mississippi on July 13, 2021 – for alease of approximately a half-acre of tidelands, with a term extension for another 30 years, if exercised. This initial option can be renewed for three additional six-month periods, with the payment of $5,000 for each extension. In October 2022, the Company paid an additional $5,000 and exercised its third and last six-month option extension through the end of May 2023.
If the option is exercised, for the first 18 months of the lease or until the beginning of the next six-month period after the opening of commercial operations on the leased premises, whichever occurs sooner, rent would be $10,000 for each six-month period (“Construction Rent”). Construction Rent would terminate no later than 18 months after the commencement of the lease. Thereafter, annual rent would be $105,300, with adjustments, based on the consumer price index on each anniversary. Before construction can commence, additional entitlements would be necessary, including certain environmental approvals. There can be no certainty that the tidelands lease option will be exercised or that the contemplated Silver Slipper expansion will be built.
Contracted Sports Wagering
Illinois. On May 4, 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. Circa Sports currently operates at Circa Resort & Casino in Las Vegas, and offers online sports wagering in several states. 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 an upfront, non-refundable market access fee of $5 million in May 2022. 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 in Spring 2023, subject to customary regulatory approvals. The term of the agreement is for eight years, followed by two four-year extension opportunities at the option of Circa Sports.
Colorado. On December 5, 2022, the Company entered into aSports Agreement for its available sports skin in Colorado. Such agreement began its contractual term in March 2023, though the third party awaits customary regulatory approvals. Similar to the Company’s other sports wagering agreements, the Company will receive a percentage of revenues (as defined), with minimal expected expenses. The total annualized minimum amounts for all three of the Company’s sports wagering agreements in Colorado is $3 million.
Defined Contribution Plan
The Company sponsors a defined contribution plan for all eligible employees providing voluntary contributions by eligible employees and matching contributions made by the Company. In October 2021, the Company reinstated its employer matching of contributions at 50% up to 4% of eligible compensation, which had been previously suspended upon the mandatory shutdown of all of the Company’s properties in March 2020. Matching contributions made by the Company were $248,000 for 2022, and $47,000 for 2021, excluding nominal administrative expenses.
Liquidity, Concentrations and Economic Risks and Uncertainties
The Company carries cash on deposit with financial institutions that may be in excess of federally-insured limits. The extent of any loss that might be incurred as a result of uninsured deposits in the event of a future failure of a bank or other financial institution, if any, is not subject to estimation at this time.
The entire disclosure for commitments and contingencies.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef