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What changed in Accel Entertainment, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Accel Entertainment, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+234 added−212 removedSource: 10-K (2025-03-03) vs 10-K (2024-02-28)

Top changes in Accel Entertainment, Inc.'s 2024 10-K

234 paragraphs added · 212 removed · 179 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

31 edited+13 added−7 removed18 unchanged
Biggest changeWhere We Operate State Year Operations Started or Year of Acquisition Branding Operations Illinois 2012 Accel Entertainment • Establishments with a liquor license (Up to 6 gaming terminals) – Bars/restaurants/retail – Gaming cafes – Fraternal organizations – Veterans’ organizations • Truck stops (Up to 6 gaming terminals) • Large truck stops (Up to 10 gaming terminals) Montana 2022 Century Gaming • Business locations licensed to sell alcoholic beverages for on-premises consumption only, including locations restricted to offering a maximum of 20 slot machines Montana 2022 Grand Vision Gaming • Designs and manufactures gaming terminals and software that are sold to Montana, South Dakota, West Virginia, and Louisiana • Develops proprietary gaming terminals and related software as well as other ancillary equipment for our distributed gaming routes in Montana, Nevada, Nebraska and Georgia Nevada 2022 Century Gaming • Non-casino locations where gaming is incidental to the primary business being conducted at the location, including: – Grocery/drug/convenience stores – Bars/restaurants/taverns – Liquor stores • Games are generally limited to 15 or fewer slot machines with no other forms of gaming activity permitted 1 Table of Contents State Year Operations Started or Year of Acquisition Branding Operations Nebraska 2022 Accel Entertainment • Operate cash devices in retail locations throughout the state • Retail establishments include any business location that is open to the public for the sale of goods other than gaming terminals and that possesses a valid sales tax permit Georgia 2020 Bulldog Gaming • Operate skill-based coin-operated amusement machines with winnings paid in points that may be redeemed for noncash merchandise, prizes, toys, gift cards, or novelties Iowa 2021 Accel Entertainment • Operate amusement concessions, including games of chance and games of skill • Bars, taverns, and restaurants with a certain class of liquor license are permitted to operate up to four electrical or mechanical games of chance Pennsylvania 2023 Accel Entertainment • Operate gaming terminals at qualified truck stops • We are live with a partner truck stop Our Strategic Core Competencies Our strategic core competencies support our local business model and contribute to our industry-leading position: Gaming-as-a-service platform.
Biggest changeWhere We Operate State Year Operations Started or Year of Acquisition Branding Operations Illinois 2012 Accel Entertainment • Establishments with a liquor license (Up to 6 gaming terminals) – Bars/restaurants/retail – Gaming cafes – Fraternal organizations – Veterans’ organizations • Truck stops (Up to 6 gaming terminals) • Large truck stops (Up to 10 gaming terminals) Illinois 2024 FanDuel Sportsbook and Horse Racing • Operate FanDuel Sportsbook & Racetrack, an active horse racing track in Collinsville, IL with ~50 annual race days • Planned opening of Phase I casino in the second quarter of 2025 with Phase II build out of a permanent facility anticipated to start shortly after the completion of Phase I. • Revenue share agreement with FanDuel to operate a sportsbook at Fairmount Park Montana 2022 Century Gaming • Business locations licensed to sell alcoholic beverages for on-premises consumption only, including locations restricted to offering a maximum of 20 slot machines 1 Table of Contents State Year Operations Started or Year of Acquisition Branding Operations Montana 2022 Grand Vision Gaming • Designs and manufactures gaming terminals and software that are sold to Montana, South Dakota, and West Virginia • Develops proprietary gaming terminals and related software as well as other ancillary equipment for our distributed gaming routes in Montana, Nevada, Nebraska and Georgia Nevada 2022 Century Gaming • Non-casino locations where gaming is incidental to the primary business being conducted at the location, including: – Grocery/drug/convenience stores – Bars/restaurants/taverns – Liquor stores • Games are generally limited to 15 or fewer slot machines with no other forms of gaming activity permitted Nebraska 2022 Accel Entertainment • Operate cash devices in retail locations throughout the state • Retail establishments include any business location that is open to the public for the sale of goods other than gaming terminals and that possesses a valid sales tax permit Georgia 2020 Bulldog Gaming • Operate skill-based coin-operated amusement machines with winnings paid by gift cards through redemption terminals or Bulldog Wallet, launched in October 2024, or for noncash merchandise, prizes, toys, gift cards, or novelties Louisiana 2024 Toucan Gaming • Truck stop gaming parlors (up to 50 gaming terminals) • Establishments with a liquor license (up to 3 gaming terminals) – Bars/restaurants/retail – Fraternal organizations – Veterans’ organizations Iowa 2021 Accel Entertainment • Operate amusement concessions, including games of chance and games of skill • Bars, taverns, and restaurants with a certain class of liquor license are permitted to operate up to four electrical or mechanical games of chance Pennsylvania 2023 Accel Entertainment • Operate gaming terminals at qualified truck stops • We are live with a partner truck stop Our Strategic Core Competencies Our strategic core competencies support our local business model and contribute to our industry-leading position: Gaming-as-a-service platform.
In addition, Internet-based lotteries, sweepstakes, and fantasy sports, and Internet-based or mobile-based gaming platforms, which allow their customers to wager on a wide variety of sporting events and/or play casino games from home or in non-casino settings and could divert players from using our products in their locations.
In addition, Internet-based lotteries, sweepstakes, fantasy sports, and Internet-based or mobile-based gaming platforms, which allow their customers to wager on a wide variety of sporting events and/or play casino games from home or in non-casino settings and could divert players from using our products in their locations.
In the distributed gaming industry, we generally operate in markets where our terminal revenue splits are either statutorily determined or negotiated, as follows: Statutory Splits Negotiated Splits Net terminal income splits are statutorily predetermined; minimum and maximum wagers are mandated by the applicable governing bodies Net terminal income splits are negotiated Pricing is not considered a factor as revenue splits with our locations are mandated by law Pricing is driver in contract negotiations as all revenue splits are negotiated Location and customer experience are key differentiating factors for selecting us over our competitors Our focus on player appeal, customer service and reputation are also key factors impacting competition Our markets with statutory splits are: Illinois, Georgia, Pennsylvania Our markets with negotiated splits are: Montana, Nevada, Nebraska, Iowa We face particularly robust competition from other forms of gaming.
In the distributed gaming industry, we generally operate in markets where our terminal revenue splits are either statutorily determined or negotiated, as follows: Statutory Splits Negotiated Splits Net terminal income splits are statutorily predetermined; minimum and maximum wagers are mandated by the applicable governing bodies Net terminal income splits are negotiated Pricing is not considered a factor as revenue splits with our locations are mandated by law Pricing is driver in contract negotiations as all revenue splits are negotiated Location and customer experience are key differentiating factors for selecting us over our competitors Our focus on player appeal, customer service and reputation are also key factors impacting competition Our markets with statutory splits are: Illinois, Georgia, Pennsylvania Our markets with negotiated splits are: Montana, Nevada, Nebraska, Iowa, Louisiana We face particularly robust competition from other forms of gaming.
ITEM 1. BUSINESS Who We Are We are a leading distributed gaming operator in the United States (“U.S.”) and a preferred partner for local business owners in the markets we serve. We offer turnkey, full-service gaming solutions to bars, restaurants, convenience stores, truck stops, and fraternal and veteran establishments across the country.
ITEM 1. BUSINESS Who We Are We are a leading distributed gaming and local entertainment operator in the United States (“U.S.”) and a preferred partner for local business owners in the markets we serve. We offer turnkey, full-service gaming solutions to bars, restaurants, convenience stores, truck stops, and fraternal and veteran establishments across the country.
Our gaming-as-a-service platform provides our local partners with a turnkey, full-service, capital-efficient gaming solution, including: • Business-to-business model secured by long-term, exclusive contracts, allowing for predictable, highly recurring revenue streams with strong loyalty and retention. • Technology-enabled gaming equipment from leading manufacturers and our own proprietary Grand Vision Gaming equipment that provide the most captivating titles in slots entertainment; specifically, we offer our players 135 different types of gaming terminal models and almost 2,000 different games, one of the broadest selections of high quality offerings in distributed gaming. • Data reporting solutions and analytics, offering insight and advice to help maximize revenues and grow. • Strong marketing, compliance, cash management, financial and technical support systems, all of which remain in-house to boost efficiency and enhance our ability to provide best-in-class service.
Our gaming-as-a-service platform provides our local partners with a turnkey, full-service, capital-efficient gaming solution, including: • Business-to-business model secured by long-term, exclusive contracts, allowing for predictable, highly recurring revenue streams with strong loyalty and retention. • Technology-enabled gaming equipment from leading manufacturers and our own proprietary Grand Vision Gaming equipment that provide the most captivating titles in slots entertainment; specifically, we offer our players 135 different types of gaming terminal models and almost 2,000 different games, one of the broadest selections of high quality offerings in distributed gaming. • Data reporting solutions and analytics, offering insight and advice to help maximize revenues and grow. • Strong marketing, compliance, cash management, financial and technical support systems, all of which remain in-house to boost efficiency and enhance our ability to provide best-in-class service. 2 Table of Contents Strong relationships with location partners.
The distributed gaming industry is characterized by an increasingly high degree of competition among a large number of participants on both a local and national level, including casinos, Internet gaming, sports betting, sweepstakes and poker machines not located in casinos, horse racetracks (including those featuring slot machines and/or table games), fantasy sports, real money iGaming, and other forms of gaming.
The distributed gaming industry is characterized by an increasingly high degree of competition among a large number of participants on both a local and national level, including casinos, Internet gaming, sports betting, sweepstakes and poker machines not located in casinos, horse racetracks (including those 5 Table of Contents featuring slot machines and/or table games), fantasy sports, real money iGaming, and other forms of gaming.
We also prohibit unlawful discrimination based on the perception that anyone has any of those characteristics or is associated with a person who has or is perceived as having any of those characteristics. 7 Table of Contents Available Information Our principal executive offices are located at 140 Tower Drive, Burr Ridge, Illinois 60527, and our telephone number is (630) 972-2235.
We also prohibit unlawful discrimination based on the perception that anyone has any of those characteristics or is associated with a person who has or is perceived as having any of those characteristics. Available Information Our principal executive offices are located at 140 Tower Drive, Burr Ridge, Illinois 60527, and our telephone number is (630) 972-2235.
We believe we would be a preferred partner in any of these markets given our track record of success and compliance in the states in which we currently operate. Our Industry We operate within the U.S. distributed gaming industry, which consists of the installation and service of gaming terminals at non-casino locations.
We believe we would be a preferred partner in any of these markets given our track record of success and compliance in the states in which we currently operate. Our Industry Distributed Gaming We are a leading operator within the U.S. distributed gaming industry, which consists of the installation and service of gaming terminals at non-casino locations.
We have prioritized establishing strong, lasting relationships with our location partners since our inception, providing unparalleled support, such as: • Dedicated relationship managers assisting with regulatory applications and compliance onboarding, training on how to engage with players and potential players, monitoring individual gaming areas for compliance, cleanliness and comfort and recommend potential changes to improve player gaming. • Providing individualized weekly gaming revenue reports analyzing and comparing gaming results, which can be used to determine an optimal selection of games, layouts and other ideas to generate foot traffic. • Offering value-added services such as amusement solutions, dart leagues, prize pools, and ATMs, which are a key competitive advantage. 2 Table of Contents Dedication to the customer experience.
We have prioritized establishing strong, lasting relationships with our location partners since our inception, providing unparalleled support, such as: • Dedicated relationship managers assisting with regulatory applications and compliance onboarding, training on how to engage with players and potential players, monitoring individual gaming areas for compliance, cleanliness and comfort and recommend potential changes to improve player gaming. • Providing individualized weekly gaming revenue reports analyzing and comparing gaming results, which can be used to determine an optimal selection of games, layouts and other ideas to generate foot traffic. • Offering value-added services such as amusement solutions, dart leagues, prize pools, and ATMs, which are a key competitive advantage.
We strive to promote a welcoming workplace that fosters partnership with location owners and encourages our employees to bring their best ideas to work every day. As of December 31, 2023, we employ approximately 1,330 people nationwide, and protecting the safety, health, and well-being of our employees is a top priority.
We strive to promote a welcoming workplace that fosters partnership with location owners and encourages our employees to bring their best ideas to work every day. As of December 31, 2024, we employ approximately 1,500 people nationwide, and protecting the safety, health, and well-being of our employees is a top priority.
The program is focused on rewarding employees for company performance and the contributions that each employee has made in delivering those results. • Paid time off program that balances the needs of our employee population that offers two wellness days and a floating holiday to supplement our paid holiday schedule. • 401(k) company match program helps our employees to achieve their financial retirement goals. • Employee assistance program that provides free and confidential counseling to all employees and their families. • Various employee leave programs including: ◦ Fully paid parental/adoption leave ◦ Company paid short-term disability for 12-weeks of paid leave at 60% of weekly earnings ◦ Voluntary long-term disability benefits ◦ FMLA availability ◦ Military family leave benefits that support employees whose family members are on active duty or who need to care for a service member • Adoption assistance which provides for the reimbursement of eligible costs up to a predetermined maximum per adoption • An employee referral bonus program to incentivize our employees to help us recruit strong candidates in their network • ACES, a peer-to-peer employee recognition program, rewards individuals who exceed expectations and consistently demonstrate Accel's core values. • CareShare Program which allows eligible employees to share commissions with other employees.
The program is focused on rewarding employees for company performance and the contributions that each employee has made in delivering those results. • Paid time off program that balances the needs of our employee population that offers two wellness days and a floating holiday to supplement our paid holiday schedule. • 401(k) company match program helps our employees to achieve their financial retirement goals. • Union-sponsored multiemployer benefit plans for certain of our union employees, which includes the participation in several multiemployer defined benefit pension plans under terms of a collective bargaining agreement • Employee assistance program that provides free and confidential counseling to all employees and their families. • Various employee leave programs including: ◦ Fully paid parental/adoption leave ◦ Company paid short-term disability for 12-weeks of paid leave at 60% of weekly earnings 7 Table of Contents ◦ Voluntary long-term disability benefits ◦ FMLA availability ◦ Military family leave benefits that support employees whose family members are on active duty or who need to care for a service member • Adoption assistance which provides for the reimbursement of eligible costs up to a predetermined maximum per adoption • An employee referral bonus program to incentivize our employees to help us recruit strong candidates in their network • ACES, a peer-to-peer employee recognition program, rewards individuals who exceed expectations and consistently demonstrate Accel's core values. • CareShare Program which allows eligible employees to share commissions with other employees.
We continue to evaluate where to expand our distributed gaming operations, including: • Making investments in Louisiana to potentially expand our presence there in mid-2024. • Evaluating other mature gaming jurisdictions where gaming terminals are currently legal, such as Oregon, South Dakota and West Virginia. • Monitoring various states and other jurisdictions that have proposed legislation to permit gaming terminals or other forms of gaming, such as Alabama, Indiana, Kansas, Maine, Michigan, Missouri, Mississippi, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Virginia and Wyoming.
We continue to evaluate where to expand our distributed gaming operations, including: • Evaluating other mature gaming jurisdictions where gaming terminals are currently legal, such as Oregon, South Dakota and West Virginia. • Monitoring various states and other jurisdictions that have proposed legislation to permit gaming terminals or other forms of gaming, such as Alabama, Indiana, Kansas, Maine, Michigan, Missouri, Mississippi, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Virginia and Wyoming.
The SEC maintains an Internet site ( www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
The SEC maintains an Internet site ( www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 8 Table of Contents
If we are presented with advantageous opportunities, we may acquire or develop other businesses that are complementary to our core gaming business, including: 3 Table of Contents • Establishing close to home, convenient gaming parlors, casinos, hospitality/retail locations and other gaming operations that highlight our technology-enabled gaming equipment and have an attractive offering of food and beverage options. • Offering versatile and customer-friendly player rewards programs that can be tailored to the markets we operate in based on statutory regulations, including: bonus games, promotions for players based on the frequency of play, increased daily redemption amounts, and promotions. • Expanding amusement operations, including jukeboxes, dartboards, pool tables, dart leagues and other amusement equipment to provide our local businesses with a wide array of quality devices to help attract more customers.
If we are presented with advantageous opportunities, we may acquire or develop other businesses that are complementary to our core gaming business, including: • Expanding local entertainment where favorable competitive landscape leads to collecting a greater share of location economics through selectively owning establishments through vertical integration. • Establishing close to home, convenient gaming parlors, casinos, hospitality/retail locations and other gaming operations that highlight our technology-enabled gaming equipment and have an attractive offering of food and beverage options. • Offering versatile and customer-friendly player rewards programs that can be tailored to the markets we operate in based on statutory regulations, including: bonus games, promotions for players based on the frequency of play, increased daily redemption amounts, and promotions. • Expanding amusement operations, including jukeboxes, dartboards, pool tables, dart leagues and other amusement equipment to provide our local businesses with a wide array of quality devices to help attract more customers.
We believe that there is potential for additional growth in the markets we serve, including: • Signing competitors’ locations. • Identifying prospects for engagement after current contracts with other partners expire. • Optimizing revenues for gaming terminals we currently operate through refined data analysis, marketing and other initiatives. • Increasing distribution possibilities through corporate partners who operate multiple locations, such as chain stores.
We believe that there is potential for additional growth in the markets we serve, including: • Signing competitors’ locations. • Identifying prospects for engagement after current contracts with other partners expire. 3 Table of Contents • Optimizing revenues for gaming terminals we currently operate through refined data analysis, marketing and other initiatives. • Increasing distribution possibilities through corporate partners who operate multiple locations, such as chain stores. • Driving profitability through operational execution to strategically position ourselves for growth and strong margins.
Even Internet wagering services that may be illegal under federal and state law but operate from overseas locations, may nevertheless sometimes be accessible to domestic gamblers and divert players from visiting location partners to play on our gaming terminals. The availability of other forms of gaming could increase substantially in the future.
Even Internet wagering services that may be illegal under federal and state law but operate from overseas locations, may nevertheless sometimes be accessible to domestic gamblers and divert players from visiting location partners to play on our gaming terminals.
Holidays, vacation seasons and sporting events may also cause our revenues to fluctuate. Human Capital Resources We believe that human capital management, including attracting, developing and retaining a high-quality workforce is critical to our long-term success. Our Board of Directors (the “Board”) is charged with oversight of human capital management.
Human Capital Resources We believe that human capital management, including attracting, developing and retaining a high-quality workforce is critical to our long-term success. Our Board of Directors (the “Board”) is charged with oversight of human capital management.
Seasonality Our results of operations can fluctuate due to seasonal trends and other factors. For example, our operations in colder climates typically experience lower revenues in the summer when players typically spend less time indoors, and higher revenues in cold weather, specifically between February and April, when players will typically spend more time indoors.
For example, our operations in colder climates typically experience lower revenues in the summer when players typically spend less time indoors, and higher revenues in cold weather, specifically between February and April, when players will typically spend more time indoors.
Voters and state legislatures may seek to supplement traditional sources of tax revenue by authorizing or expanding gaming. In addition, jurisdictions are considering or have already recently legalized, implemented and expanded gaming, and there are proposals across the country that would legalize Internet poker and other varieties of Internet gaming in a number of states and at the federal level.
In addition, jurisdictions are considering or have already recently legalized, implemented and expanded gaming, and there are proposals across the country that would legalize Internet poker and other varieties of Internet gaming in a number of states and at the federal level.
In this program, individuals focus on individual development and cross-functional collaboration. • First Time Manager Training: This class is offered to those who are new to managing people or simply new to managing people at Accel.
In this program, individuals focus on individual development and cross-functional collaboration. • First Time Manager Training: This class is offered to those who are new to managing people or simply new to managing people at Accel. The workshop supports the foundation for building successful teams and reinforces the culture that all our people leaders maintain.
Distributed gaming is supported by generally favorable trends, including an increasing number of states contemplating approving gaming to increase tax revenues, broader acceptance in the U.S. of gaming generally, including online and digital gaming, an aging population that appreciates the convenience of gaming entertainment close to home, expected resilience through economic downturns and attractive revenue and return on invested capital profiles when compared to traditional gaming venues, such as casinos. 4 Table of Contents Competition We compete on the basis of the responsiveness of our service to our locations and players, and the popularity, content, features, quality, functionality and reliability of our products.
Distributed gaming is supported by generally favorable trends, including an increasing number of states contemplating approving gaming to increase tax revenues, broader acceptance in the U.S. of gaming generally, including online and digital gaming, an aging population that appreciates the convenience of gaming entertainment close to home, expected resilience through economic downturns and attractive revenue and return on invested capital profiles.
We are continuously evaluating additional opportunities that are complementary to our core business.
We also design and manufacture gaming terminals and related equipment. We are continuously evaluating additional opportunities that are complementary to our core business.
Upon insertion of cash, electronic cards or vouchers, or any combination thereof, the gaming terminal is available to play or simulate the play a video game such as video poker, slots and keno, and in which players may receive free games or credits that can be redeemed for cash or merchandise.
Upon insertion of cash, electronic cards or vouchers, or any combination thereof, the gaming terminal is available to play or simulate the play of a video game such as video poker, slots and keno, and in which players may receive free games or credits that can be redeemed for cash or merchandise. 4 Table of Contents Distributed gaming operations facilitate a low revenue concentration per gaming location, and low-limit slots are more resilient to economic downturn as consumers typically continue to engage in locally convenient, lower cost forms of entertainment in such circumstances.
Games include different varieties of slots, poker, and keno games. We believe our efforts to procure gaming terminals from various sources better enables us to meet the needs of our location partners and players.
We believe our efforts to procure gaming terminals from various sources better enables us to meet the needs of our location partners and players. We routinely meet with existing and potential manufacturers in the market to discuss performance, service trends, and feedback from location partners and players.
As of December 31, 2023, we owned 129 registered trademarks. We also rely on software or technologies that we license from third parties. These licenses may not continue to be available to us on commercially reasonable terms in the future and as a result, we may be required to obtain substitute software or technologies.
These licenses may not continue to be available to us on commercially reasonable terms in the future and as a result, we may be required to obtain substitute software or technologies. Seasonality Our results of operations can fluctuate due to seasonal trends and other factors.
The workshop supports the foundation for building successful teams and reinforces the culture that all our people leaders maintain. 6 Table of Contents Compensation and benefits programs We provide compensation and benefits programs designed to support our employees’ health, wealth and life. We seek to provide comprehensive, competitive and equitable pay and benefits to our employees.
Compensation and benefits programs We provide compensation and benefits programs designed to support our employees’ health, wealth and life. We seek to provide comprehensive, competitive and equitable pay and benefits to our employees.
Our focus is providing unmatched customer support, guidance, and expertise so our location partners can grow their businesses with incremental revenue. We install, maintain, operate and service gaming terminals and related equipment for our location partners as well as redemption devices that have automated teller machine (“ATM”) functionality and stand-alone ATMs.
Our operations offer a complementary source of revenue for our location partners by offering a “one-stop” solution of support, service, and equipment through: • Providing unmatched customer support, guidance, and expertise so our location partners can grow their businesses with incremental revenue. • Installing, maintaining, operating and servicing gaming terminals and related equipment for our location partners as well as redemption devices that have automated teller machine (“ATM”) functionality and stand-alone ATMs, driving game play and player loyalty. • Offering amusement devices, including jukeboxes, dartboards, pool tables, and other entertainment related equipment that enhance customer experience and engagement.
We strive to achieve an injury-free work environment and continue to have zero tolerance for unsafe work conditions for our employees who continue to move, support and sell our products and services. Our human capital management focuses on the following priorities: Talent Recruitment and Management We seek to provide employees with rewarding work, professional growth and educational opportunities.
We have not experienced material interruptions of operations due to disputes with our employees. Our human capital management focuses on the following priorities: Talent Recruitment and Management We seek to provide employees with rewarding work, professional growth and educational opportunities.
Intellectual Property We own or have the right to use the trademarks, service marks or trade names that we use or will use in conjunction with the operation of our business. In the highly competitive gaming industry, trademarks, service marks, trade names and logos are important to the success of our business.
We also purchase redemption terminals, amusement devices and stand-alone ATMs from reputable suppliers such as NRT Technology, Touch Tunes, Arachnid, and Diamond. Intellectual Property We own or have the right to use the trademarks, service marks or trade names that we use or will use in conjunction with the operation of our business.
Our operations also face competition from many other forms of leisure and entertainment activities, including shopping, athletic events, television and movies, concerts, and travel. Suppliers We purchase multi-game gaming terminals from leading manufacturers such as Light & Wonder, Inc., IGT, Aristocrat and Novomatic. We purchase gaming terminals in upright, slant and bar-top varieties.
Suppliers We purchase multi-game gaming terminals from leading manufacturers such as Light & Wonder, Inc., International Game Technology (“IGT”), Aristocrat and Novomatic. We purchase gaming terminals in upright, slant and bar-top varieties. Games include different varieties of slots, poker, and keno games.
Established gaming jurisdictions could also award additional gaming licenses or permit the expansion or relocation of existing gaming operations, including gaming terminals. While we believe we are well positioned to take advantage of certain of these opportunities, expansion of gaming in other jurisdictions, both legal and illegal, could further compete with our gaming terminals.
Established gaming jurisdictions could also award additional gaming licenses or permit the expansion or relocation of existing gaming operations. Distributed Gaming We compete on the basis of the responsiveness of our service to our locations and players, and the popularity, content, features, quality, functionality and reliability of our products.
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We offer amusement devices, including jukeboxes, dartboards, pool tables, and other entertainment related equipment. These operations provide a complementary source of lead generation for our gaming business by offering a “one-stop” source of additional equipment for our location partners. We also design and manufacture gaming terminals and related equipment.
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In strategic markets, we are the owner and operator of our own retail establishments, and gaming and entertainment venues.
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Our ability to succeed in implementing our growth strategy will depend to some degree upon our ability to grow inorganically. As such, we continue to pursue expansion and acquisition opportunities in gaming and related businesses. We may also realize the benefits of potential municipal ordinance changes that would permit our business to operate in new locations. Evaluate additional business opportunities.
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Our ability to succeed in implementing our growth strategy will depend to some degree upon our ability to grow inorganically.
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Generally, a gaming terminal is an electronic video game machine that utilizes a video display and microprocessors.
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As such, we continue to pursue expansion and acquisition opportunities in gaming and related businesses, as demonstrated by our expansion into the Louisiana market in November 2024 and the successful acquisition in December 2024 of FanDuel Sportsbook and Horse Racing in Illinois, which will expand our operations into local casino gaming and horse racing.
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Distributed gaming operations facilitate a low revenue concentration per gaming location, and low-limit slots are more resilient to economic downturn as consumers typically continue to engage in locally convenient, lower cost forms of entertainment in such circumstances.
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We continually evaluate legislative efforts in states where future opportunities would permit our business to operate in new locations/states/municipalities. We are positioning ourselves to take advantage of, and expand into those new jurisdictions, should the opportunity arise. Evaluate additional business opportunities.
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While distributed gaming can experience business disruptions each year due to business failures or natural disasters affecting gaming locations, many of these sites reopen in subsequent years under new owners.
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Casino and Racing Starting in 2025, we plan to open a casino at the FanDuel Sportsbook and Racktrack in the greater St. Louis/southern Illinois market, with Phase I of the casino opening in second quarter 2025 and the Phase II build out of a permanent facility anticipated to start shortly after the completion of Phase I.
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In addition to competition from other forms of gaming and entertainment and the expansion thereof, our business faces significant competition from suppliers and other terminal operators, stand-alone ATMs, jukeboxes, dartboards, pool tables, and other related entertainment machines.
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The 2025 racing season is planned for April - October 2025. The casino property and associated racetrack will generate revenues and expenses from slot machines, video table games, ancillary food and beverage services, commission on pari-mutuel wagering, racing event-related services, and other miscellaneous operations. The racetrack license supports the casino license.
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We routinely meet with existing and potential manufacturers in the market to discuss performance, service trends, and feedback from location partners and players. 5 Table of Contents We also purchase redemption terminals, amusement devices and stand-alone ATMs from reputable suppliers such as NRT, Touch Tunes, Arachnid, and Diamond.
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Competition Overview We operate in a highly competitive industry with many participants, some of which have financial and other resources that are greater than ours. The industry faces competition from a variety of sources for discretionary consumer spending, including spectator sports, sports wagering, and other entertainment and gaming options.
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The availability of other forms of gaming could increase substantially in the future. Voters and state legislatures may seek to supplement traditional sources of tax revenue by authorizing or expanding gaming.
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Casino and Racing Our Fairmount Park (Casino & Racing) property operates in a highly competitive environment and will primarily compete for customers with other casinos in the surrounding regional gaming markets. This property competes to a lesser extent with state-sponsored lotteries, off-track wagering, card parlors, online gambling, and other forms of legalized gaming in the U.S.
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As a racetrack operator, we compete for horses with other racetracks running live racing meets at or near the same time as our races. Our ability to compete is substantially dependent on the racing calendar, number of horses racing, and purse sizes.
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In the highly competitive gaming industry, trademarks, service marks, trade names and logos are important to the success of our business. As of December 31, 2024, we owned 432 registered trademarks. We also rely on software or technologies that we license from third parties.
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Our racing operations will only operate during the months where the weather is conducive to racing, which is typically from late spring through the early fall. Holidays, vacation seasons and sporting events may also cause our revenues to fluctuate.
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We strive to achieve an injury-free work environment and continue to have zero tolerance for unsafe work conditions for our employees who continue to move, support and sell our products and services. As of December 31, 2024, approximately 220 employees were covered by 11 union contracts and 6 unions 6 Table of Contents agreements.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

73 edited+22 added−5 removed175 unchanged
Biggest changeThe failure of these individuals and business entities to submit to such background checks and provide required disclosure, or delayed review or denial of application resulting from such submissions, could jeopardize our ability to obtain or maintain licensure in such jurisdictions, which could negatively impact our licensure in other jurisdictions and ultimately negatively affect opportunities for growth, or could require us to modify or terminate our relationship with such officers, directors, key employees or business partners, equity holders, or lenders, or forego doing business in such jurisdiction.
Biggest changeThe failure of these individuals and business entities to submit to such background checks and provide required disclosure, or delayed review or denial of application resulting from such submissions, could jeopardize our ability to obtain or maintain licensure in such jurisdictions, which could negatively impact our licensure in other jurisdictions and ultimately negatively affect opportunities for growth, or could require us to modify or terminate our relationship with such officers, directors, key employees or business partners, equity holders, or lenders, or forego doing business in such jurisdiction. 10 Table of Contents The licensing procedures and background investigations of the authorities that regulate our businesses may inhibit potential investors from becoming significant stockholders, inhibit existing stockholders from retaining or increasing their ownership, or inhibit existing stockholders from selling their shares to potential investors who are found unsuitable to hold our stock by gaming authorities or whose stock ownership may adversely affect our ability to obtain, maintain, renew or qualify for a license, contract, franchise or other regulatory approval from a gaming authority.
The gaming industry is characterized by an increasingly high degree of competition among a large number of participants on both a local and national level, including casinos, Internet gaming, sports betting, sweepstakes and poker machines not located in casinos, horse racetracks, including those featuring slot machines and/or table games, fantasy sports, real money iGaming, and other forms of gaming, such as, Internet-based lotteries, sweepstakes, and fantasy sports, and Internet-based or mobile-based gaming platforms, which allow their players to wager on a wide variety of sporting events and/or play casino games from home or in non-casino settings.
The gaming industry is characterized by an increasingly high degree of competition among a large number of participants on both a local and national level, including casinos, Internet gaming, sports betting, sweepstakes and poker machines not located in casinos, horse racetracks, including those featuring slot machines and/or table games, fantasy sports, real money iGaming, and other forms of gaming, such as, Internet-based lotteries, sweepstakes, fantasy sports, and Internet-based or mobile-based gaming platforms, which allow their players to wager on a wide variety of sporting events and/or play casino games from home or in non-casino settings.
In addition, pursuant to the Transaction Agreement among TPG and the stockholders of Accel Entertainment, Inc. that was entered into in connection with the Business Combination, and subject to certain limitations set forth in the Transaction Agreement, any person who held (together with such person’s affiliates) at least 8% of the outstanding shares of Class A-1 common stock immediately following the closing of the Stock Purchase in connection with the Business Combination, had the right to nominate an individual to be a member of the Board.
In addition, pursuant to a transaction agreement among TPG and the stockholders of Accel Entertainment, Inc. that was entered into in connection with the Business Combination, and subject to certain limitations set forth in the Transaction Agreement, any person who held (together with such person’s affiliates) at least 8% of the outstanding shares of Class A-1 common stock immediately following the closing of the Stock Purchase in connection with the Business Combination, had the right to nominate an individual to be a member of the Board.
Our revenue growth and future success depends on our ability to expand into new markets, which may not occur as anticipated or at all. • Our industry is highly competitive and we must accurately predict, prepare for and respond promptly to technological and market developments and changing end-customer needs, including by acquiring and integrating other businesses, 8 Table of Contents products and technologies that address a fast-changing technology and threat landscape and that achieve sufficient market acceptance, in order to maintain or improve our competitive position. • We are subject to strict government regulations that are constantly evolving and may be amended, repealed, or subject to new interpretations, which may limit existing operations, have an adverse impact on the ability to grow or may expose us to fines or other penalties. • Our business depends on the protection of intellectual property and proprietary information. • Gaming opponents persist in their efforts to curtail the expansion of legalized gaming, which, if successful, could limit our growth of operations. • Our success depends on the security and integrity of the systems and products offered, and security breaches or other disruptions could compromise certain information and expose us to liability. • Our level of indebtedness and its related variable interest rate, and any increase thereto, could adversely affect results of operations, cash flows and financial condition. • Certain stockholders own a significant portion of Class A-1 common stock and they may have interests that differ from those of other stockholders.
Our revenue growth and future success depends on our ability to expand into new markets, which may not occur as anticipated or at all. • Our industry is highly competitive and we must accurately predict, prepare for and respond promptly to technological and market developments and changing end-customer needs, including by acquiring and integrating other businesses, products and technologies that address a fast-changing technology and threat landscape and that achieve sufficient market acceptance, in order to maintain or improve our competitive position. • We are subject to strict government regulations that are constantly evolving and may be amended, repealed, or subject to new interpretations, which may limit existing operations, have an adverse impact on the ability to grow or may expose us to fines or other penalties. • Our business depends on the protection of intellectual property and proprietary information. • Gaming opponents persist in their efforts to curtail the expansion of legalized gaming, which, if successful, could limit our growth of operations. • Our success depends on the security and integrity of the systems and products offered, and security breaches or other disruptions could compromise certain information and expose us to liability. 9 Table of Contents • Our level of indebtedness and its related variable interest rate, and any increase thereto, could adversely affect results of operations, cash flows and financial condition. • Certain stockholders own a significant portion of Class A-1 common stock and they may have interests that differ from those of other stockholders.
We cannot assure you that the market price of Class A-1 common stock will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following: • the realization of any of the risk factors presented in this Annual Report on Form 10-K; • actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, Adjusted EBITDA, results of operations, level of indebtedness, liquidity or financial condition; • additions and departures of key personnel; • failure to comply with the requirements of the NYSE; • failure to comply with the Sarbanes-Oxley Act or other laws or regulations; • changes to gaming laws, regulations or enforcement policies of applicable gaming authorities; 24 Table of Contents • future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of our capital stock or other securities; • the timing and amount of any repurchases under our stock repurchase program; • the publication of research reports about us, our gaming locations or the gaming terminal industry generally or the cessation of the publication of any such research reports; • the performance and market valuations of other similar companies; • commencement of, or involvement in, litigation involving us; • broad disruptions in the financial markets, including sudden disruptions in the credit markets; • speculation in the press or investment community; • actual, potential or perceived control, accounting or reporting problems; and • changes in accounting principles, policies and guidelines.
We cannot assure you that the market price of Class A-1 common stock will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following: • the realization of any of the risk factors presented in this Annual Report on Form 10-K; • actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, Adjusted EBITDA, results of operations, level of indebtedness, liquidity or financial condition; • additions and departures of key personnel; • failure to comply with the requirements of the NYSE; • failure to comply with the Sarbanes-Oxley Act or other laws or regulations; • changes to gaming laws, regulations or enforcement policies of applicable gaming authorities; • future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of our capital stock or other securities; • the timing and amount of any repurchases under our stock repurchase program; • the publication of research reports about us, our gaming locations or the gaming terminal industry generally or the cessation of the publication of any such research reports; • the performance and market valuations of other similar companies; • commencement of, or involvement in, litigation involving us; 26 Table of Contents • broad disruptions in the financial markets, including sudden disruptions in the credit markets; • speculation in the press or investment community; • actual, potential or perceived control, accounting or reporting problems; and • changes in accounting principles, policies and guidelines.
If we fail to accurately anticipate the needs of location and player preferences, it could lose business to competitors, which would adversely affect our results of operations, cash flows and financial condition. We may not have the financial resources needed to introduce new products or services on a timely basis or at all.
If we fail to accurately anticipate the needs of location and player preferences, we could lose business to competitors, which would adversely affect our results of operations, cash flows and financial condition. We may not have the financial resources needed to introduce new products or services on a timely basis or at all.
Our contracts with our location partners generally contain initial multi-year terms. Contracts entered into with Illinois-based location partners prior to February 2018 typically contain automatic renewal provisions that provide the individual partner with an option to terminate within a specified time frame.
Our contracts with our location partners generally contain initial multi-year terms. Contracts entered into with Illinois-based location partners prior to February 2018 typically contained automatic renewal provisions that provide the individual partner with an option to terminate within a specified time frame.
In particular, subject to certain exceptions, the Credit Agreement restricts our ability to, among other things: • incur or guarantee additional indebtedness; • make loans to others; • make investments; • merge or consolidate with another entity; 21 Table of Contents • make dividends and certain other payments, including payment of junior debt, and repurchases of our Class A-1 common stock; • create liens that secure indebtedness and guarantees thereof; • transfer or sell assets; • enter into transactions with affiliates; • change the nature of our business; • enter into certain burdensome agreements; • make certain accounting changes; and • change our passive holding company status.
In particular, subject to certain exceptions, the Credit Agreement restricts our ability to, among other things: • incur or guarantee additional indebtedness; • make loans to others; • make investments; • merge or consolidate with another entity; 23 Table of Contents • make dividends and certain other payments, including payment of junior debt, and repurchases of our Class A-1 common stock; • create liens that secure indebtedness and guarantees thereof; • transfer or sell assets; • enter into transactions with affiliates; • change the nature of our business; • enter into certain burdensome agreements; • make certain accounting changes; and • change our passive holding company status.
Provisions in our Charter designate the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain times of actions and proceedings that may be initiated by our stockholders, and provisions in our Bylaws also provide that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act which could limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us or with our directors, officers or employees and may discourage stockholders from bringing such claims.
Provisions in our Charter designate the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and provisions in our Bylaws also provide that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act which could limit the ability of our stockholders to obtain a favorable judicial forum for disputes with us or with our directors, officers or employees and may discourage stockholders from bringing such claims.
In the event we pursue significant acquisitions or other expansion opportunities, conduct significant repurchases of outstanding securities, or refinance or repay existing debt, we may need to raise additional capital either through the public or private issuance of equity or debt securities or through additional borrowings under our existing financing arrangements, which sources of funds may not necessarily be available on acceptable terms, if at all. 20 Table of Contents Our level of indebtedness could adversely affect our results of operations, cash flows and financial condition.
In the event we pursue significant acquisitions or other expansion opportunities, conduct significant repurchases of outstanding securities, or refinance or repay existing debt, we may need to raise additional capital either through the public or private issuance of equity or debt securities or through additional borrowings under our existing financing arrangements, which sources of funds may not necessarily be available on acceptable terms, if at all. 22 Table of Contents Our level of indebtedness could adversely affect our results of operations, cash flows and financial condition.
The Charter provides that, to the fullest extent permitted by law, unless we consent to the selection of an alternative forum, and subject to the Court of Chancery of the State of Delaware having personal jurisdiction over the parties named as defendants therein, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to us or our stockholders, creditors or other constituents; • any action asserting a claim against us or any of our directors or officers arising pursuant to any provision of the Delaware General Corporate Law (“DGCL”), the Charter or the Bylaws (as either may be amended and/or restated from time to time); or 25 Table of Contents • any action asserting a claim against us that is governed by the internal affairs doctrine.
The Charter provides that, to the fullest extent permitted by law, unless we consent to the selection of an alternative forum, and subject to the Court of Chancery of the State of Delaware having personal jurisdiction over the parties named as defendants therein, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of a fiduciary duty owed by any of our directors or officers to us or our stockholders, creditors or other constituents; • any action asserting a claim against us or any of our directors or officers arising pursuant to any provision of the Delaware General Corporate Law (“DGCL”), the Charter or the Bylaws (as either may be amended and/or restated from time to time); or • any action asserting a claim against us that is governed by the internal affairs doctrine.
Expanded use of the Internet and other interactive technologies may result in increased security risks for us and our location partners because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not foreseeable or recognized until launched against a target and Accel may be unable to anticipate these techniques or to implement adequate preventative measures.
Expanded use of the Internet and other interactive technologies may result in increased security risks for us and our location partners because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not foreseeable or recognized until launched against a target and we may be unable to anticipate these techniques or to implement adequate preventative measures.
We have paid a penalty with respect to an alleged violation in one municipality (see Note 19, Commitments and Contingencies, of the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K) and have received notice of a potential violation from another municipality. Additionally, membership changes within regulatory agencies could impact operations.
We have paid a penalty with respect to an alleged violation in one municipality (see Note 20, Commitments and Contingencies, of the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K) and have received notice of a potential violation from another municipality. Additionally, membership changes within regulatory agencies could impact operations.
For example, we are currently involved in an administrative hearing process with the IGB related to certain alleged violations of the Video Gaming Act and related rules. See Note 19, Commitments and Contingencies, of the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information.
For example, we are currently involved in an administrative hearing process with the IGB related to certain alleged violations of the Video Gaming Act and related rules. See Note 20, Commitments and Contingencies, of the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information.
As of December 31, 2023, approximately 20% of the shares of our Class A-1 common stock was beneficially owned by affiliates of Clairvest. Following the consummation of the merger of TPG Pace Holding Corp. (“TPG”) and Accel Entertainment, Inc. (the “ Business Combination ” ), one director was jointly nominated by TPG and Clairvest, Mr. Kenneth B. Rotman, and Mr.
As of December 31, 2024, approximately 20% of the shares of our Class A-1 common stock was beneficially owned by affiliates of Clairvest. Following the consummation of the merger of TPG Pace Holding Corp. (“TPG”) and Accel Entertainment, Inc. (the “ Business Combination ” ), one director was jointly nominated by TPG and Clairvest, Mr. Kenneth B. Rotman, and Mr.
Changes to gaming enabling legislation or new interpretations of existing gaming laws may hinder or prevent us from continuing to operate in the jurisdictions where we currently conduct business, which could increase operating expenses and compliance costs or decrease the profitability of operations.
Changes to gaming or horse racing enabling legislation or new interpretations of existing gaming or horse racing laws may hinder or prevent us from continuing to operate in the jurisdictions where we currently conduct business, which could increase operating expenses and compliance costs or decrease the profitability of operations.
While our subsidiaries (including those holding gaming licenses) manage their respective operations in the ordinary course, Clairvest may be able to significantly influence the outcome of matters submitted for action by directors of the Board, subject to our directors’ obligation to act in the interest of all of our stakeholders, and for stockholder action, including the designation and appointment of the Board (and committees thereof) and approval of significant corporate transactions, including business combinations, consolidations and mergers.
While our subsidiaries (including those holding gaming licenses) manage their respective operations in the ordinary course, Clairvest may be able to significantly influence the outcome of matters submitted for action by directors of the Board, subject to our directors’ obligation to act in the interest of all of our 24 Table of Contents stakeholders, and for stockholder action, including the designation and appointment of the Board (and committees thereof) and approval of significant corporate transactions, including business combinations, consolidations and mergers.
In addition to regulatory compliance risk, Illinois, Montana, Nevada or any other states or other jurisdiction in which we operate or may operate (including jurisdictions at the county, district, municipal, town or borough level), may amend or repeal gaming enabling legislation or regulations.
In addition to regulatory compliance risk, Illinois, Montana, Nevada or any other states or other jurisdiction in which we operate or may operate (including jurisdictions at the county, district, municipal, town or borough level), may amend or repeal gaming or horse racing enabling legislation or regulations.
So long as any such stockholder with director nomination rights continues to directly or indirectly own a significant amount of our outstanding equity interests and any 23 Table of Contents individuals affiliated with such stockholder are members of the Board and/or any committees thereof, such major stockholder may be able to exert substantial influence over us and may be able to exercise its influence in a manner that is not in the interests of our other stakeholders.
So long as any such stockholder with director nomination rights continues to directly or indirectly own a significant amount of our outstanding equity interests and any individuals affiliated with such stockholder are members of the Board and/or any committees thereof, such major stockholder may be able to exert substantial influence over us and may be able to exercise its influence in a manner that is not in the interests of our other stakeholders.
If any jurisdiction in which we operate were to repeal gaming enabling legislation, there could be no assurance that we could sufficiently increase revenue in other markets to maintain operations or service existing indebtedness.
If any jurisdiction in which we operate were to repeal gaming or horse racing enabling legislation, there could be no assurance that we could sufficiently increase revenue in other markets to maintain operations or service existing indebtedness.
Historically, we have funded these upfront costs through cash flows generated from operations, available cash on hand and borrowings under the Credit Agreement. In addition, since we are not paid for expenses and services, we may incur upfront costs (which may be significant) prior to receipt of any revenue under such arrangements.
Historically, we have funded these upfront costs through cash flows generated from operations, available cash on hand and borrowings under the Credit Agreement (as defined herein). In addition, since we are not paid for expenses and services, we may incur upfront costs (which may be significant) prior to receipt of any revenue under such arrangements.
Our success depends on the security and integrity of the systems and products offered, and security breaches or other disruptions could compromise certain information and expose us to liability, which could cause our business and reputation to suffer.
Our success depends on the security and integrity of the systems and products offered, and security breaches, including cybersecurity breaches, or other disruptions could compromise certain information and expose us to liability, which could cause our business and reputation to suffer.
If a court were to find the choice of forum provision contained in the Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.
If a court were to find the choice of forum provision contained in the Charter to be inapplicable or unenforceable 27 Table of Contents in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.
If a license, approval or finding of suitability is required by a regulatory authority and we 9 Table of Contents fail to seek or do not receive the necessary approval, license or finding of suitability, or if it is granted and subsequently revoked, it could have an adverse effect on our results of operations, cash flows and financial condition.
If a license, approval or finding of suitability is required by a regulatory authority and we fail to seek or do not receive the necessary approval, license or finding of suitability, or if it is granted and subsequently revoked, it could have an adverse effect on our results of operations, cash flows and financial condition.
See “ — We are subject to strict government regulations that are constantly evolving and may be amended, repealed, or subject to new interpretations, which may limit existing operations, have an adverse 12 Table of Contents impact on the ability to grow or may expose us to fines or other penalties.” If we fail to successfully expand into these markets, we may have difficulty growing our business and may lose business to our competitors.
See “ — We are subject to strict government regulations that are constantly evolving and may be amended, repealed, or subject to new interpretations, which may limit existing operations, have an adverse impact on the ability to grow or may expose us to fines or other penalties.” If we fail to successfully expand into these markets, we may have difficulty growing our business and may lose business to our competitors.
Further, third party-hosted solution providers that provide services to us, such as Rackspace , Salesforce or NetSuite, have in the past been subject to cyber security incidents.
Further, third party-hosted solution providers that provide services to us, such as Microsoft , Salesforce or NetSuite, have in the past been subject to cyber security incidents.
We are subject to similar concentration risks in Georgia, Iowa, and Nebraska, and if we are successful in expanding our operations into Pennsylvania, or other gaming jurisdictions, we may also face similar concentration risk there. If we fail to offer a high-quality experience, our business and reputation may suffer.
We are subject to similar concentration risks in Georgia, Iowa, Louisiana, and Nebraska, and if we are successful in expanding our current operations in Pennsylvania, or entering into other gaming jurisdictions, we may also face similar concentration risk there. If we fail to offer a high-quality experience, our business and reputation may suffer.
These gaming laws and related regulations are administered by the IGB, PA Board, the Georgia Lottery Corporation (the “GLC”), the Montana Department of Justice, Gambling Control Division and the NGC, respectively, which are regulatory boards with broad authority to create and interpret gaming regulations and to regulate gaming activities.
These gaming laws and related regulations are administered by the IGB, the Illinois Racing Board, PA Board, the Georgia Lottery Corporation (the “GLC”), the Montana Department of Justice, Gambling Control Division, the NGC and the Louisiana Gaming Control Board, respectively, which are regulatory boards with broad authority to create and interpret gaming regulations and to regulate gaming activities.
These services or enhancements may not be well received by location partners or consumers, even if well reviewed and of high quality. We could lose some or all of the competitive advantages that we currently have over our current and potential competitors.
These services or enhancements may not be well received by location partners or consumers, even if well reviewed and of high quality. 16 Table of Contents We could lose some or all of the competitive advantages that we currently have over our current and potential competitors.
These gaming authorities are authorized to: • adopt additional rules and regulations under the implementing statutes; • investigate violations of gaming regulations; • enforce gaming regulations and impose disciplinary sanctions for violations of such laws, including fines, penalties and revocation of gaming licenses; • review the character and fitness of manufacturers, distributors and operators of gaming services and equipment and make determinations regarding their suitability or qualification for licensure; 16 Table of Contents • review and approve transactions (such as acquisitions, material commercial transactions, securities offerings and debt transactions); and • establish and collect related fees and/or taxes.
These gaming authorities are authorized to: • adopt additional rules and regulations under the implementing statutes; • investigate violations of gaming and horse racing regulations; • enforce gaming and horse racing regulations and impose disciplinary sanctions for violations of such laws, including fines, penalties and revocation of gaming licenses; • review the character and fitness of manufacturers, distributors and operators of horse racing and gaming services and equipment and make determinations regarding their suitability or qualification for licensure; • review and approve transactions (such as acquisitions, material commercial transactions, securities offerings and debt transactions); and • establish and collect related fees and/or taxes.
In particular, the enactment of unfavorable legislation or government efforts affecting or directed at gaming terminal manufacturers or gaming operators, such as referendums to increase gaming taxes or requirements to use local distributors, would likely have a negative impact on our operations.
In particular, the enactment of unfavorable legislation or government efforts affecting or directed at gaming terminal manufacturers or gaming operators, such as referendums to increase gaming taxes or requirements to use local distributors, or similar unfavorable legislation or government efforts affecting or directed at horse racing, would likely have a negative impact on our operations.
In Illinois, Georgia, Pennsylvania, Montana, Nevada and other regulated gaming jurisdictions, gaming laws can require any holder of common stock to be disclosed, file an application, be investigated, and qualify or have his, her or its suitability determined by gaming authorities.
In Illinois, Georgia, Pennsylvania, Montana, Nevada and other regulated gaming jurisdictions, gaming laws can require any holder of common stock to be disclosed, file an application, be 25 Table of Contents investigated, and qualify or have his, her or its suitability determined by gaming authorities.
Certain of our key business metrics, including number of locations, number of gaming terminals and other measures to evaluate growth trends and the quality of marketing and player behaviors, are calculated using data from Light & Wonder, Inc., a contractor of the IGB.
Certain of our key business metrics, including number of locations, number of gaming terminals and other measures to evaluate growth trends and the quality of marketing and player behaviors, are calculated using data from Light & Wonder, Inc., a 17 Table of Contents contractor of the IGB.
Monitoring the unauthorized use of our intellectual property is difficult. Litigation may be necessary to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Litigation of this type could result in substantial costs and diversion of resources.
Monitoring the unauthorized use of our intellectual property is difficult. Litigation may be necessary to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Litigation of this type 20 Table of Contents could result in substantial costs and diversion of resources.
For example, U.S. capital and credit markets may be adversely affected by numerous factors including: instability in the U.S. and global banking systems due to financial institutions experiencing financial distress, entering into receivership or becoming insolvent, or concerns or rumors about any events of these kinds; uncertainty with respect to the U.S. federal budget; the war in Israel, and the possibility of a wider Middle Eastern or global conflict; and the war between Russia and Ukraine, the possibility of a wider European or global conflict, and global sanctions imposed in response thereto.
For example, U.S. capital and credit markets may be adversely affected by numerous factors including: instability in the U.S. and global banking systems due to financial institutions experiencing financial distress, entering into receivership or becoming insolvent, or concerns or rumors about any events of these kinds; uncertainty with respect to the U.S. federal budget; a resumption of the war in Israel, the war between Russia and Ukraine, the possibility of a wider European or global conflict, reciprocal and increased tariffs and global sanctions imposed in response thereto.
If we fail to obtain a license required in a particular jurisdiction for games and gaming terminals, hardware or software or have such license revoked, we will not be able to expand into, or continue doing business in, such jurisdiction.
If we fail to obtain a license required in a particular jurisdiction for gaming and gaming terminals, hardware or software and racing operations or have such license revoked, we will not be able to expand into, or continue doing business in, such jurisdiction.
There can be no assurance that we will be able to build and maintain consumer value in our trademarks or other intellectual property or that any trademark or other intellectual property right will provide competitive advantages. 18 Table of Contents Despite our efforts to protect our proprietary rights, parties may infringe on our trademarks and our rights may be invalidated or unenforceable.
There can be no assurance that we will be able to build and maintain consumer value in our trademarks or other intellectual property or that any trademark or other intellectual property right will provide competitive advantages. Despite our efforts to protect our proprietary rights, parties may infringe on our trademarks and our rights may be invalidated or unenforceable.
Repeal of gaming enabling legislation could result in losses of capital investments and revenue, limit future growth opportunities and have an adverse effect on our results of operations, cash flows and financial condition.
Repeal of gaming or horse racing enabling legislation could result in losses of capital investments and revenue, limit future growth opportunities and have an adverse effect on our results of operations, cash flows and financial condition.
Additionally, we regularly monitor compliance with applicable financial reporting standards and reviews relevant new accounting pronouncements and drafts thereof.
Additionally, we regularly monitor compliance with applicable financial reporting standards and review relevant new accounting pronouncements and drafts thereof.
See “ Risk Factors — We are dependent on relationships with key manufacturers, developers and third parties to obtain gaming terminals, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms ” for more information. 10 Table of Contents We are dependent on relationships with key manufacturers, developers and third parties to obtain gaming terminals, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms.
See “ Risk Factors — We are dependent on relationships with key manufacturers, developers and third parties to obtain gaming terminals, amusement machines, and related supplies, programs, and technologies for its business on acceptable terms ” for more information.
For example, if our license to operate in Illinois is not renewed as a result of a failure to satisfy suitability requirements or otherwise, our ability to obtain or maintain a license in Montana, Nevada, Nebraska, Pennsylvania, Georgia or Pennsylvania may be harmed.
For example, if one of our licenses to operate in Illinois is not renewed as a result of a failure to satisfy suitability requirements or otherwise, our ability to obtain or maintain a license in Montana, Nebraska, Pennsylvania, Georgia, Louisiana, or Pennsylvania may be harmed.
In addition, a 17 Table of Contents judgment against us or a settlement could make it difficult for us to obtain insurance in the coverage amounts necessary to adequately insure our businesses, or at all, and could materially increase insurance premiums and deductibles.
In addition, a judgment against us or a settlement could make it difficult for us to obtain insurance in the coverage amounts necessary to adequately insure our businesses, or at all, and could materially increase insurance premiums and deductibles.
Our ability to prevent anomalies and monitor and 19 Table of Contents ensure the quality and integrity of its products and services is periodically reviewed and enhanced, and we regularly assesses the adequacy of security systems, including the security of its games and software, to protect against any material loss to location partners and players, as well as the integrity of its products and services and its games.
Our ability to prevent anomalies and monitor and ensure the quality and integrity of our products and services is periodically reviewed and enhanced, and we regularly assess the adequacy of security systems, including the security of our games and software, to protect against any material loss to location 21 Table of Contents partners and players, as well as the integrity of our products and services and our games.
In addition, as of December 31, 2023, approximately 10% of the shares of our Class A-1 common stock were beneficially owned by Mr. Andrew Rubenstein, approximately 2% of the shares of our Class A-1 common stock were beneficially owned by his brother, Mr. Gordon Rubenstein, and Mr. Andrew Rubenstein, together with Mr.
In addition, as of December 31, 2024, approximately 10% of the shares of our Class A-1 common stock was beneficially owned by Mr. Andrew Rubenstein, approximately 2% of the shares of our Class A-1 common stock was beneficially owned by his brother, Mr. Gordon Rubenstein, and Mr. Andrew Rubenstein, together with Mr.
In addition, if we are presented with appropriate opportunities, we may expand beyond our core gaming business by acquiring other additional businesses, services, resources, or assets, including gaming parlors, casinos or hospitality/retail operations, that we believe will be accretive to our core business, which may subject us to additional risks.
In addition, if we are presented with appropriate opportunities, we may expand beyond our core gaming business by acquiring other additional businesses, services, resources, or assets, including gaming parlors, casinos or hospitality/retail operations, that we believe will be accretive to our core business, which may subject us to additional risks. For example, in December 2024, we acquired Fairmount Holdings, Inc.
(“Clairvest”) and members of the Rubenstein Family own a significant portion of Common Stock and have representation on the Board. Clairvest, through its affiliates, and members of the Rubenstein Family may have interests that differ from those of other stockholders.
Risks Related to Our Common Stock Clairvest Group Inc. (“Clairvest”) and members of the Rubenstein Family own a significant portion of Common Stock and have representation on the Board. Clairvest, through its affiliates, and members of the Rubenstein Family may have interests that differ from those of other stockholders.
We are subject to the rules, regulations, and laws applicable to gaming, including, but not limited to, the Illinois Video Gaming Act, the Pennsylvania Gaming Act, the Georgia Lottery for Education Act, the Montana Video Gaming Control Act, and the Nevada Gaming Control Act.
We are subject to the rules, regulations, and laws applicable to gaming and racing facilities/horse racing, including, but not limited to, the Illinois Video Gaming Act, the Illinois Horse Racing Act of 1975, the Pennsylvania Gaming Act, the Georgia Lottery for Education Act, the Montana Video Gaming Control Act, the Nevada Gaming Control Act and the Louisiana Gaming Control Law.
Although we plan to maintain compliance with applicable laws as they evolve and to generally maintain good relations with regulators, there can be no assurance that we will do so, and that law enforcement or gaming or other regulatory authorities will not seek to restrict our business in their jurisdictions or institute enforcement proceedings if we are not compliant.
In addition, we are subject to other rules and regulations related to our business and operations, including rules and regulations concerning the sale and service of alcoholic beverages. 18 Table of Contents Although we plan to maintain compliance with applicable laws as they evolve and to generally maintain good relations with regulators, there can be no assurance that we will do so, and that law enforcement or gaming or other regulatory authorities will not seek to restrict our business in their jurisdictions or institute enforcement proceedings if we are not compliant.
In addition, the renewal of the Nevada license is subject to, among other things, continued satisfaction of suitability requirements. In addition to any licensing requirements, some of our location partners are required to be licensed, and delays in or failure to obtain approvals of these licenses may adversely affect results of operations, cash flows and financial condition.
In addition to any licensing requirements, some of our location partners are required to be licensed, and delays in or failure to obtain approvals of these licenses may adversely affect results of operations, cash flows and financial condition.
As of December 31, 2023, we had total indebtedness of $545.4 million, all of which was borrowed under the Credit Agreement, and had approximately $304.0 million of availability.
As of December 31, 2024, we had total indebtedness of $597.4 million, all of which was borrowed under the Credit Agreement, and had approximately $143.5 million of availability.
We are currently involved in several lawsuits. See Note 19, Commitments and Contingencies, of the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information.
Litigation may adversely affect our business, results of operations, cash flows and financial condition. We are currently involved in several lawsuits. See Note 20, Commitments and Contingencies, of the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information.
There can be no assurance that any instituted enforcement proceedings will be favorably resolved, or that such proceedings will not have an adverse effect on our ability to retain and renew existing licenses or to obtain new licenses in other jurisdictions. Gaming authorities may levy fines against us or seize certain assets if we violate gaming regulations.
There can be no assurance that any instituted enforcement proceedings will be favorably resolved, or that such proceedings will not have an adverse effect on our ability to retain and renew existing licenses or to obtain new licenses in other jurisdictions.
Software bugs or malfunctions, errors in distribution or installation of our software, failure of products to perform as approved by the appropriate regulatory bodies or other errors or malfunctions, may subject us to investigation or other action by gaming regulatory authorities, including fines. Litigation may adversely affect our business, results of operations, cash flows and financial condition.
Software bugs or malfunctions, errors in distribution or installation of our software, failure of products to perform as approved by the appropriate 19 Table of Contents regulatory bodies or other errors or malfunctions, may subject us to investigation or other action by gaming regulatory authorities, including fines.
Although we did not have cash or cash equivalent balances on deposit with these institutions, and these institutions were not lenders under our indebtedness or counterparties to our interest rate hedging arrangements, instability in the U.S. or international financial systems could result in less favorable commercial financing or derivative terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources or hedging, thereby making it more difficult for us to obtain financing on terms favorable to us, which could have a material adverse impact on our results of operations, cash flows and financial condition. 22 Table of Contents Risks Related to Our Common Stock Clairvest Group Inc.
Instability in the U.S. or international financial systems could result in less favorable commercial financing or derivative terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources or hedging, thereby making it more difficult for us to obtain financing on terms favorable to us, which could have a material adverse impact on our results of operations, cash flows and financial condition.
Additionally, our revenue, business, result of operations, cash flows and financial condition could be negatively affected if our location partners sell or merge themselves or their location s with other entities. Upon the sale or merger of such location s, our location partners could choose to no longer partner with us and decide to contract with our competitors.
Additionally, our revenue, business, result of operations, cash flows and financial condition could be negatively affected if our location partners sell or merge themselves or their location s with other entities.
Unfavorable economic conditions or decreased discretionary spending due to other factors such as terrorist activity or threat thereof, epidemics, pandemics or other public health issues, civil unrest or other economic or political uncertainties, may adversely affect our business, results of operations, cash flows and financial condition.
Upon the sale or merger of such location s, our location partners could choose to no longer partner with us and decide to contract with our competitors. 12 Table of Contents Unfavorable economic conditions or decreased discretionary spending due to other factors such as terrorist activity or threat thereof, epidemics, pandemics or other public health issues, civil unrest or other economic or political uncertainties, may adversely affect our business, results of operations, cash flows and financial condition.
Our future success and growth depend in large part on the successful addition of new locations as partners (whether through organic growth, conversion from competitors or partner relationships) and on the entry into new markets. Our ability to succeed in new markets depends in part on displacing entrenched competitors who are familiar with these markets and are known to players.
Our future success and growth depend in large part on the successful addition of new locations as partners (whether through organic growth, such as conversions from competitors or partner relationships) and on the entry into new markets.
However, as a result, we are exposed to the credit and other risks of having a small number of key suppliers. In addition, during 2022 and 2023, we had to accelerate certain of its capital expenditures related to gaming machine components to manage our supply chain, resulting in higher capital expenditures for the year than we had originally anticipated.
In addition, during 2023 and during the first half 2024, we had to accelerate certain of our capital expenditures related to gaming machine components to manage our supply chain, resulting in higher capital expenditures for the year than we had originally anticipated.
Although we have entered into employment agreements with senior executives and key personnel, there can be no assurance that these individuals will remain employed.
Although we have entered into employment agreements with senior executives and key personnel, there can be no assurance that these individuals will remain employed. If we lose the services of any members of our management team or other key personnel, our business may be significantly impaired.
We use this pattern recognition process to implement more optimal gaming layouts for location partners, with the goal of generating increased gaming revenue.
Additionally, we commit significant amounts of resources and employee time to understanding the inherent historical patterns of gaming results within individual location partners. We use this pattern recognition process to implement more optimal gaming layouts for location partners, with the goal of generating increased gaming revenue.
Our business may be negatively impacted following the acquisitions if we are unable to effectively manage expanded operations. 14 Table of Contents We face significant competition from other gaming and entertainment operations, and our success in part relies on maintaining our competitive advantages and market share in key markets. We face significant competition from other operators of gaming terminals.
We face significant competition from other gaming and entertainment operations, and our success in part relies on maintaining our competitive advantages and market share in key markets. We face significant competition from other operators of gaming terminals.
Additionally, disruptions experienced by our regulators due to natural disasters or otherwise could delay the introduction of new products or entry into new jurisdictions where regulatory approval is necessary. While we insure against certain business interruption risks, there can be no assurance that such insurance will adequately compensate for any losses incurred as a result of natural or other disasters.
While we insure against certain business interruption risks, there can be no assurance that such insurance will adequately compensate for any losses incurred as a result of natural or other disasters.
If we are not able to continue to provide high levels of customer service, our reputation, as well as our results of operations, cash flows and financial condition, could be harmed. 13 Table of Contents Our revenue growth and ability to achieve and sustain profitability will depend, in part on being able to expand our sales force and increase the productivity of our sales force.
If we are not able to continue to provide high levels of customer service, our reputation, as well as our results of operations, cash flows and financial condition, could be harmed.
Most of our revenue has been attributable to the efforts of our sales force, which consists of both in-house personnel and independent agents. In order to increase our revenue and achieve and sustain profitability, we intend to increase the size of our sales force to generate additional revenue from new and existing location s.
Our revenue growth and ability to achieve and sustain profitability will depend, in part on being able to expand our sales force and increase the productivity of our sales force. Most of our revenue has been attributable to the efforts of our sales force, which consists of both in-house personnel and independent agents.
For example, we could be impacted by hurricanes, tornados, earthquakes or floods that could disrupt operations or the operations of our location partners, suppliers, data service providers and regulators. Natural disasters or other disruptions at any of our facilities or suppliers’ facilities may impair or delay the operation, development, provisions or delivery of our products and services.
For example, we could be impacted by fires, hurricanes, tornados, earthquakes or floods that could disrupt operations, including our operation of our recently-acquired racetrack that holds outdoor events, or the operations of our location partners, suppliers, data service providers and regulators.
As a result of the Illinois Gaming Board (“IGB”) rule changes, contracts entered into after February 2018 do not contain renewal provisions, automatic or otherwise.
As a result of the Illinois Gaming Board (“IGB”) rule changes, contracts entered into after February 2018 do not contain renewal provisions, automatic or otherwise. At the end of a contract term, location partners may choose to extend their engagement by signing a new contract or may sign with a competitor terminal operator, in their sole discretion.
Insolvency, financial difficulties, supply chain delays, regulatory issues or other factors may result in our suppliers not being able to fulfill the terms of their agreements. Further, such factors may render suppliers unwilling to extend contracts that provide favorable terms to us or may force them to seek to renegotiate existing contracts.
Insolvency, financial difficulties, supply chain delays, regulatory issues, tariffs and trade barriers (including tariffs impacting imports from China) or other factors may result in our suppliers not being able to fulfill the terms of their agreements.
Failure of key suppliers to meet their delivery commitments could result in our being in breach of and subsequently losing contracts with key location partners.
Further, such factors may render suppliers unwilling to extend contracts that provide favorable terms to us or may force them to seek to renegotiate existing contracts. 11 Table of Contents Failure of key suppliers to meet their delivery commitments could result in our being in breach of and subsequently losing contracts with key location partners.
Our ability to achieve significant revenue growth will depend, in large part, on our success in recruiting, training, and retaining sufficient numbers of in-house and independent sales personnel to support growth. New sales personnel require significant training and can take a number of months to achieve full productivity.
In order to increase our revenue and achieve and sustain profitability, we intend to increase the size of our sales force to generate additional revenue from new and existing location s. 14 Table of Contents Our ability to achieve significant revenue growth will depend, in large part, on our success in recruiting, training, and retaining sufficient numbers of in-house and independent sales personnel to support growth.
If we lose the services of any members of our management team or other key personnel, our business may be significantly impaired. 15 Table of Contents We rely on assumptions and estimates to calculate certain key metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.
We rely on assumptions and estimates to calculate certain key metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business. We regularly review metrics, including the number of players and other measures, to evaluate growth trends, measure performance and make strategic decisions.
At the end of a contract term, location partners may choose to extend their engagement by signing a new contract or may sign with a competitor terminal operator, in their sole discretion. 11 Table of Contents While we have historically experienced high rates of contract extension or renewal, these rule changes may lead to declines in contract extension or renewal.
While we have historically experienced high rates of contract extension or renewal, these rule changes may lead to declines in contract extension or renewal.
Our business is geographically concentrated, which subjects us to greater risks from changes in local or regional conditions. We currently install gaming terminals and amusement devices in locations primarily in Illinois, Montana and Nevada.
We currently install gaming terminals and amusement devices in locations primarily in Illinois, Montana and Nevada.
These risks may be heightened when we enter into regions where we have no or limited prior experience.
These risks may be heightened when we enter into regions where we have no or limited prior experience. Our business may be negatively impacted following the acquisitions if we are unable to effectively manage expanded operations. Our expansion into casino operations and horse racing may not be successful.
Removed
For example, in Nevada, we were granted a two-year terminal operator license from the Nevada Gaming Commission (the “NGC”) in June 2022 that will be up for renewal in June 2024. The renewal of our licenses are subject to certain licensing requirements.
Added
We are dependent on relationships with key manufacturers, developers and third parties to obtain gaming terminals, amusement machines, and related supplies, programs, and technologies for our business on acceptable terms.
Removed
The licensing procedures and background investigations of the authorities that regulate our businesses may inhibit potential investors from becoming significant stockholders, inhibit existing stockholders from retaining or increasing their ownership, or inhibit existing stockholders from selling their shares to potential investors who are found unsuitable to hold our stock by gaming authorities or whose stock ownership may adversely affect our ability to obtain, maintain, renew or qualify for a license, contract, franchise or other regulatory approval from a gaming authority.
Added
However, as a result, we are exposed to the credit and other risks of having a small number of key suppliers.
Removed
We regularly review metrics, including the number of players and other measures, to evaluate growth trends, measure performance and make strategic decisions. Additionally, we commit significant amounts of resources and employee time to understanding the inherent historical patterns of gaming results within individual location partners.
Added
Our ability to succeed in new markets depends in part on displacing entrenched competitors who are familiar with these markets and are known to players.
Removed
In addition, we are subject to other rules and regulations related to our business and operations, including rules and regulations concerning the sale and service of alcoholic beverages.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur information technology team is responsible for assessing our cybersecurity risk management program, and we currently do not engage third parties for such assessment. 26 Our cybersecurity program is under the direction of our Chief Financial Officer (“CFO”) and our Chief Technology Officer (“CTO”), who receive reports from our information technology team and monitors the prevention, detection, mitigation, and remediation of cybersecurity incidents.
Biggest changeOur information technology team is responsible for assessing our cybersecurity risk management program, and we currently do not engage third parties for such assessment.
Management is responsible for identifying, considering, and assessing material cybersecurity risks on an ongoing basis, establishing processes to ensure that such potential cybersecurity risk exposures are monitored, putting in place appropriate mitigation measures and maintaining cybersecurity programs, including: • Implementing a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner; • Deploying technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence; • Establishing and maintaining comprehensive incident response and recovery plans that fully address our response to a cybersecurity incident, and such plans are tested and evaluated on a regular basis; and • Providing regular, mandatory training for personnel regarding cybersecurity threats as a means to equip our personnel with effective tools to address cybersecurity threats, and to communicate our evolving information security policies, standards, processes and practices.
Management is responsible for identifying, considering, and assessing material cybersecurity risks on an ongoing basis, establishing processes to ensure that such potential cybersecurity risk exposures are monitored, putting in place appropriate mitigation measures and maintaining cybersecurity programs, including: 28 • Implementing a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner; • Deploying technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence; • Establishing and maintaining comprehensive incident response and recovery plans that fully address our response to a cybersecurity incident, and such plans are tested and evaluated on a regular basis; and • Providing regular, mandatory training for personnel regarding cybersecurity threats as a means to equip our personnel with effective tools to address cybersecurity threats, and to communicate our evolving information security policies, standards, processes and practices.
Although we are subject to ongoing and evolving cybersecurity threats, we are not aware of any material risks from cybersecurity threats in 2023 that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Although we are subject to ongoing and evolving cybersecurity threats, we are not aware of any material risks from cybersecurity threats in 2024 that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
These processes include steps for assessing the severity of a cybersecurity threat, identifying the source of a cybersecurity threat, including whether the cybersecurity threat is associated with a third-party service provider, implementing cybersecurity countermeasures and mitigation strategies, and informing management and our Board of material cybersecurity threats and incidents.
These processes include steps for assessing the severity of a cybersecurity threat, identifying the root cause of a cybersecurity threat, including whether the cybersecurity threat is associated with a third-party service provider, implementing cybersecurity countermeasures and mitigation strategies, and informing management and our Board of material cybersecurity threats and incidents.
Among his other duties as CTO, he manages our cybersecurity team, which comprises certified and experienced information security professionals, and he has been instrumental in the implementation and monitoring of our various cybersecurity systems and tools.
His experience includes roles as Director of Technology, Information Technology Manager, Technical Manager, and Systems Analyst. Among his other duties as CTO, he manages our cybersecurity team, which comprises certified and experienced information security professionals, and he has been instrumental in the implementation and monitoring of our various cybersecurity systems and tools.
Removed
Our CTO has over 26 years of extensive information technology experience in various roles of increasing importance. His experience includes roles as Director of Technology, Information Technology Manager, Technical Manager, and Systems Analyst.
Added
Our cybersecurity program is under the direction of our Chief Financial Officer (“CFO”) and our Chief Technology Officer (“CTO”), who receive reports from our information technology team and monitor the prevention, detection, mitigation, and remediation of cybersecurity incidents. Our CTO has over 27 years of extensive information technology experience in various roles of increasing importance.

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−0 removed3 unchanged
Biggest changeIn this facility there is an IGB-approved secured storage site for sensitive gaming equipment and materials. 27 In Illinois, we own facilities in Peoria, Springfield and Rockford that support our operations. We also own two properties in Billings, Montana, one of which is used to support our operations and the other of which is a gaming location.
Biggest changeIn this facility there is an IGB-approved secured storage site for sensitive gaming equipment and materials. In Illinois, we own facilities in Peoria, Springfield and Rockford that support our operations. We also own and operate the FanDuel Sportsbook & Racetrack, an active racing track in Collinsville, Illinois with ~50 annual race days.
We believe that our current facilities are in good working order and are capable of supporting our operations for the foreseeable future; however, we will continue to evaluate buying or renting additional space as needed to accommodate our growth.
We believe that our current facilities are in good working order and are capable of supporting our operations for the foreseeable future; however, we will continue to evaluate buying or renting additional space as needed to accommodate our growth. 29 Table of Contents
We also rent an additional fifteen locations in Illinois, thirteen locations in Montana, eight locations in Nevada, three locations in Georgia, two locations in Iowa, three locations in Nebraska, and one location in Pennsylvania, which are used to support our operations and provide warehousing for our equipment.
We also rent an additional fourteen locations in Illinois, seventeen locations in Montana, eight locations in Nevada, three locations in Georgia, two locations in Iowa, three locations in Nebraska, three locations in Louisiana, and one location in Pennsylvania, which are used to support our operations and provide warehousing for our equipment.
Added
We also own two properties in Louisiana, to support our operations, and three properties in Billings, Montana, one of which is used to support our operations and the other two are retail gaming locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS Information required by this Item is incorporated by reference from the discussion in Note 19, Commitments and Contingencies, of the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 28 Table of Contents PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS Information required by this Item is incorporated by reference from the discussion in Note 20, Commitments and Contingencies, of the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 30 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRepurchases under our program during our restricted trading windows are executed under the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 29 Table of Contents The following table provides the shares purchased under the share repurchase program in the fourth quarter of 2023: Period Total number of shares purchased Average price paid per share Maximum approximate dollar value of shares that may yet be purchased under the program (in millions) October 2023 559,684 $10.32 $90.6 November 2023 521,627 $10.40 $85.2 December 2023 317,512 $10.13 $81.9 Total 1,398,823 $10.31 Performance Graph The following stock price performance graph should not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10‑K into any filing under the Exchange Act or the Securities Act, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such acts.
Biggest changeRepurchases under our share repurchase program during our restricted trading windows are executed under the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 31 Table of Contents The following table provides the shares purchased under our share repurchase program (prior to the amendment) in the fourth quarter of 2024: Period Total number of shares purchased Average price paid per share Maximum approximate dollar value of shares that may yet be purchased under the program (in millions) October 1, 2024 - October 31, 2024 109,872 $11.33 $59.2 November 1, 2024 - November 30, 2024 61,690 $11.27 $58.5 December 1, 2024 - December 31, 2024 189,270 $10.98 $56.4 Total 360,832 $11.14 Performance Graph The following stock price performance graph should not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10‑K into any filing under the Exchange Act or the Securities Act, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such acts.
Securities Authorized for Issuance Under Equity Compensation Plans The information required by this item with respect to our equity compensation plans is incorporated by reference to our Proxy Statement for the 2024 annual meeting of stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2023.
Securities Authorized for Issuance Under Equity Compensation Plans The information required by this item with respect to our equity compensation plans is incorporated by reference to our Proxy Statement for the 2025 annual meeting of stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2024.
The repurchase program does not obligate us to acquire any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at our discretion. All share repurchases were made under our publicly announced program, and there are no other programs under which we repurchase shares.
Our share repurchase program does not obligate us to acquire any particular amount of shares, and our share repurchase program may be suspended or discontinued at any time at our discretion. All share repurchases were made under our publicly announced program (prior to the amendment), and there are no other programs under which we repurchase shares.
Under the repurchase program, repurchases can be made from time to time using a variety of methods, including open market purchases or privately negotiated transactions, in compliance with the rules of the SEC and other applicable legal requirements.
Under our share repurchase program, repurchases can be made from time to time using a variety of methods, including open market purchases or privately negotiated transactions, in compliance with the rules of the SEC and other applicable legal requirements.
Stockholders There were 89 stockholders of record of our Class A-1 common stock, and 111 stockholders of record of our Class A-2 common stock as of February 26, 2024. Dividends We have not paid any cash dividends on our shares to date, nor do we intend to pay cash dividends.
Stockholders There were 91 stockholders of record of our Class A-1 common stock, and 111 stockholders of record of our Class A-2 common stock as of February 25, 2025. Dividends We have not paid any cash dividends on our shares to date, nor do we intend to pay cash dividends.
The following stock performance graph compares, for the period November 20, 2019 (the day prior to our Class A-1 common stock being traded on the NYSE) through December 31, 2023 (the last trading day of our fiscal year), the cumulative total stockholder return for (1) our Class A-1 common stock, (2) the NASDAQ Composite Index and (3) Russell 3000 Casinos & Gambling Industry Index assuming a hypothetical $100 investment in our stock or respective index on November 20, 2019.
The following stock performance graph compares, for the period January 1, 2020 through December 31, 2024 (the last trading day of our fiscal year), the cumulative total stockholder return for (1) our Class A-1 common stock, (2) the NASDAQ Composite Index and (3) Russell 3000 Casinos & Gambling Industry Index assuming a hypothetical $100 investment in our stock or respective index on January 1, 2020.
The stock price performance below is not necessarily indicative of future stock price performance. 11/20/2019 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Accel Entertainment $100.00 $119.05 $92.24 $118.90 $70.32 $93.79 NASDAQ Composite Index $100.00 $105.23 $151.52 $183.92 $123.05 $176.48 RUSSELL 3000 Casinos & Gambling Industry Index $100.00 $107.94 $125.07 $123.20 $91.96 $115.15 ITEM 6. [RESERVED] 30 Table of Contents
The stock price performance below is not necessarily indicative of future stock price performance. 1/1/2020 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Accel Entertainment $100.00 $80.80 $104.16 $61.60 $82.16 $85.44 NASDAQ Composite Index $100.00 $141.75 $172.07 $115.12 $165.10 $212.39 RUSSELL 3000 Casinos & Gambling Industry Index $100.00 $112.08 $110.40 $82.41 $103.19 $98.63 ITEM 6. [RESERVED] 32 Table of Contents
Added
On February 27, 2025, the Board approved an amendment to the share repurchase program to replenish the dollar amount that may be purchased under the program back to up to $200 million shares of Class A-1 common stock (as amended, our “share repurchase program)”.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

57 edited+17 added−20 removed37 unchanged
Biggest changeDeferred income taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of the assets and liabilities. 33 Table of Contents Results of Operations The following table summarizes our results of operations on a consolidated basis for the years ended December 31, 2023 and 2022: (in thousands, except %s) Year Ended December 31, Increase / (Decrease) 2023 2022 Change Change % Revenues: Net gaming $ 1,113,573 $ 925,009 $ 188,564 20.4 % Amusement 23,973 21,106 2,867 13.6 % Manufacturing 13,353 7,621 5,732 75.2 % ATM fees and other 19,521 16,061 3,460 21.5 % Total net revenues 1,170,420 969,797 200,623 20.7 % Operating expenses: Cost of revenue (exclusive of depreciation and amortization expense shown below) 809,524 666,126 143,398 21.5 % Cost of manufacturing goods sold (exclusive of depreciation and amortization expense shown below) 7,671 4,775 2,896 60.6 % General and administrative 180,248 145,942 34,306 23.5 % Depreciation and amortization of property and equipment 37,906 29,295 8,611 29.4 % Amortization of intangible assets and route and customer acquisition costs 21,211 17,484 3,727 21.3 % Other expenses, net 6,453 9,320 (2,867) (30.8) % Total operating expenses 1,063,013 872,942 190,071 21.8 % Operating income 107,407 96,855 10,552 10.9 % Interest expense, net 33,144 21,637 11,507 53.2 % Loss (gain) on change in fair value of contingent earnout shares 8,539 (19,544) 28,083 143.7 % Income before income tax expense 65,724 94,762 (29,038) (30.6) % Income tax expense 20,121 20,660 (539) (2.6) % Net income $ 45,603 $ 74,102 $ (28,499) (38.5) % Revenues Total net revenues for the year ended December 31, 2023 were $1,170.4 million, an increase of $200.6 million, or 20.7%, compared to the prior year .
Biggest changeDeferred income taxes are recognized for the tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of the assets and liabilities. 35 Table of Contents Results of Operations The following table summarizes our results of operations on a consolidated basis for the years ended December 31, 2024 and 2023 : (in thousands, except %s) Year Ended December 31, Increase / (Decrease) 2024 2023 Change Change % Revenues: Net gaming $ 1,172,777 $ 1,113,573 $ 59,204 5.3 % Amusement 22,244 23,973 (1,729) (7.2) % Manufacturing 12,235 13,353 (1,118) (8.4) % ATM fees and other 23,716 19,521 4,195 21.5 % Total net revenues 1,230,972 1,170,420 60,552 5.2 % Operating expenses: Cost of revenue (exclusive of depreciation and amortization expense shown below) 852,373 809,524 42,849 5.3 % Cost of manufacturing goods sold (exclusive of depreciation and amortization expense shown below) 7,100 7,671 (571) (7.4) % General and administrative 194,721 180,248 14,473 8.0 % Depreciation and amortization of property and equipment 43,978 37,906 6,072 16.0 % Amortization of intangible assets and route and customer acquisition costs 22,577 21,211 1,366 6.4 % Other expenses, net 19,339 6,453 12,886 199.7 % Total operating expenses 1,140,088 1,063,013 77,075 7.3 % Operating income 90,884 107,407 (16,523) (15.4) % Interest expense, net 35,892 33,144 2,748 8.3 % Loss on change in fair value of contingent earnout shares 1,276 8,539 (7,263) (85.1) % Gain on expiration of warrants (13) — (13) (100.0) % Income before income tax expense 53,729 65,724 (11,995) (18.3) % Income tax expense 18,438 20,121 (1,683) (8.4) % Net income $ 35,291 $ 45,603 $ (10,312) (22.6) % Revenues Total net revenues for the year ended December 31, 2024 were $1,231.0 million, an increase of $60.6 million, or 5.2%, compared to the prior year .
Location contract intangibles, which represent the acquisition-date fair value of the preexisting relationships between the acquired company and gaming locations, are generally measured at fair value using an income approach which measures the fair value based on the estimated future cash flows using certain projected financial information such as revenue projections, cost of revenue margins and other assumptions such as discount rates.
Location contract intangibles, which primarily represent the acquisition-date fair value of the preexisting relationships between the acquired company and gaming locations are generally measured at fair value using an income approach which measures the fair value based on the estimated future cash flows using certain projected financial information such as revenue projections, cost of revenue margins and other assumptions such as discount rates.
Company Overview We are a leading distributed gaming operator in the United States (“U.S.”) and a preferred partner for local business owners in the markets we serve. We offer turnkey, full-service gaming solutions to bars, restaurants, convenience stores, truck stops, and fraternal and veteran establishments across the country.
Company Overview We are a leading distributed gaming and local entertainment operator in the United States (“U.S.”) and a preferred partner for local business owners in the markets we serve. We offer turnkey, full-service gaming solutions to bars, restaurants, convenience stores, truck stops, and fraternal and veteran establishments across the country.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those set forth under Item 1A. “Risk Factors.” A discussion of our results of operations on a consolidated basis for the years ended December 31, 2023 and 2022 are presented below.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those set forth under Item 1A. “Risk Factors.” A discussion of our results of operations on a consolidated basis for the years ended December 31, 2024 and 2023 are presented below.
The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto. We were in compliance with all debt covenants as of December 31, 2023. We expect to meet our cash obligations and remain in compliance with all debt covenants for the next 12 months.
The failure to pay certain amounts owing under the Credit Agreement may result in an increase in the interest rate applicable thereto. We were in compliance with all debt covenants as of December 31, 2024 . We expect to meet our cash obligations and remain in compliance with all debt covenants for the next 12 months.
The change reflects a reduction in borrowings to fund business and asset acquisitions, partially offset by lower repurchases of our Class A-1 common stock and payments on consideration payable. Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with U.S. GAAP. In applying accounting principles, it is often required to use estimates.
The change reflects an increase in borrowings to fund business and asset acquisitions and lower repurchases of our Class A-1 common stock, partially offset by lower payments on consideration payable. Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with U.S. GAAP. In applying accounting principles, it is often required to use estimates.
Fu rther, as the 1-month LIBOR/SOFR interest rate began to exceed 2% starting in second half of 2022, we recognized interest income on the caplets of $9.2 million and $1.5 million for the years ended December 31, 2023 and 2022, respectively, which is reflected in interest expense, net in the consolidated statements of operations and other comprehensive income.
Fu rther, as the 1-month LIBOR/SOFR interest rate began to exceed 2% starting in second half of 2022, we recognized interest income on the caplets of $9.8 million and $9.2 million for the years ended December 31, 2024 and 2023 , respectively, which is reflected in interest expense, net in the consolidated statements of operations and other comprehensive income.
As of December 31, 2023, the weighted-average interest rate was approximately 7.3%. Interest is payable quarterly in arrears for ABR loans, at the end of the applicable interest period for SOFR loans (but not less frequently than quarterly) and upon the prepayment or maturity of the underlying loans.
As of December 31, 2024 , the weighted-average interest rate was approximately 7.4% . Interest is payable quarterly in arrears for ABR loans, at the end of the applicable interest period for SOFR loans (but not less frequently than quarterly) and upon the prepayment or maturity of the underlying loans.
The key business metrics include: • Number of locations and; • Number of gaming terminals We also periodically review and revise our key business metrics to reflect changes in our business. Number of locations The number of locations is based on a combination of third-party portal data and data from our internal systems.
The key business metrics include: • Number of locations • Number of gaming terminals and; • Location hold-per-day We also periodically review and revise our key business metrics to reflect changes in our business. Number of locations The number of locations is based on a combination of third-party portal data and data from our internal systems.
Our primary short-term cash needs are paying operating expenses and contingent earnout payments, purchases of property and equipment, servicing outstanding indebtedness, and funding the Board approved share repurchase program and near term acquisitions. As of December 31, 2023, we had $261.6 million in cash and cash equivalents.
Our primary short-term cash needs are paying operating expenses and contingent earnout payments, purchases of property and equipment, servicing outstanding indebtedness, and funding the Board approved share repurchase program and near term acquisitions. As of December 31, 2024, we had $281.3 million in cash and cash equivalents.
The effective tax rate for the year ended December 31, 2023 was 30.6% compared to 21.8% in the prior year period. Our effective income tax rate can vary from period to period depending on, among other factors, the amount of permanent tax adjustments and discrete items.
The effective tax rate for the year ended December 31, 2024 was 34.3% compared to 30.6% in the prior year period. Our effective income tax rate can vary from period to period depending on, among other factors, the amount of permanent tax adjustments and discrete items.
For the discussion of our results of operations on a consolidated basis for the years ended December 31, 2022 and 2021, please see our Annual Report on Form 10-K for the year ended December 31, 2022 that was filed on March 1, 2023.
For the discussion of our results of operations on a consolidated basis for the years ended December 31, 2023 and 2022 , please see our Annual Report on Form 10-K for the year ended December 31, 2023 that was filed on February 28, 2024.
We recognized an unrealized loss on the change in fair value of the interest rate caplets of $4.3 million, net of income taxes, for the year ended December 31, 2023 and an unrealized gain of $12.2 million, net of income taxes, for the year ended December 31, 2022.
We recognized an unrealized loss on the change in fair value of the interest rate caplets of $3.8 million and $4.3 million , net of income taxes, for the years ended December 31, 2024 , and 2023 .
We currently operate as a distributed gaming operator in the following states: • Illinois - we are a licensed terminal operator by the Illinois Gaming Board (“IGB”) since 2012, • Montana - we were granted a manufacturer, distributor and route operator license in June 2022 by the Gambling Control Division of the Montana Department of Justice in June 2022, which has been renewed through June 2024, • Nevada - we were granted a two-year terminal operator license in June 2022 by the Nevada Gaming Commission, • Nebraska - we became a licensed distributor of mechanical amusement devices in Nebraska in June 2022, and commenced operations in this market, • Georgia - we received approval from the Georgia Lottery Corporation as a Master Licensee in July 2020, • Iowa - we are registered with the Iowa Department of Inspections and Appeals to conduct operations in Iowa, • Pennsylvania - we have held a license from the Pennsylvania Gaming Control Board since November 2020.
We currently operate as a distributed gaming operator in the following states: • Illinois - we are a licensed terminal operator by the Illinois Gaming Board (“IGB”) since 2012, • Montana - we were granted a manufacturer, distributor and route operator license in June 2022 by the Gambling Control Division of the Montana Department of Justice since June 2022, • Nevada - we were granted an unlimited gaming license in May 2024 by the Nevada Gaming Commission, • Nebraska - we became a licensed distributor of mechanical amusement devices in Nebraska in June 2022, and commenced operations in this market, • Georgia - we received approval from the Georgia Lottery Corporation as a Master Licensee in July 2020, • Iowa - we are registered with the Iowa Department of Inspections and Appeals to conduct operations in Iowa, • Pennsylvania - we have held a license from the Pennsylvania Gaming Control Board since November 2020. 33 • Louisiana - we entered the Louisiana market via acquisition in November 2024 and hold a license as a device owner from the Louisiana Gaming Control Board to operate video draw poker devices.
ATM fees and other primarily represents fees charged for the withdrawal of funds from our redemption devices and stand-alone ATMs and is recognized at the time of the ATM transaction. Operating Expenses Cost of revenue.
Manufacturing revenue represents sales of gaming terminals and software as well as other ancillary equipment. ATM fees and other. ATM fees and other primarily represents fees charged for the withdrawal of funds from our redemption devices and stand-alone ATMs and is recognized at the time of the ATM transaction. Operating Expenses Cost of revenue.
Leasehold improvements are amortized over the shorter of the useful life or the lease. Amortization of intangible assets and route and customer acquisition costs. Route and customer acquisition costs consist of fees paid at the inception of contracts entered into with third parties and our gaming locations, which allow us to install and operate gaming terminals.
Amortization of intangible assets and route and customer acquisition costs. Route and customer acquisition costs consist of fees paid at the inception of contracts entered into with third parties and our gaming locations, which allow us to install and operate gaming terminals.
The Credit Agreement contains certain customary affirmative and negative covenants and events of default and requires us and certain of our affiliates obligated under the Credit Agreement to make customary representations and warranties in connection with credit extensions thereunder. 39 Table of Contents In addition, the Credit Agreement requires us to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of consolidated EBITDA to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after the Closing Date and determined on the basis of the four most recently ended fiscal quarters for which financial statements have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights.
In addition, the Credit Agreement requires us to maintain (a) a ratio of consolidated first lien net debt to consolidated EBITDA no greater than 4.50 to 1.00 and (b) a ratio of consolidated EBITDA to consolidated fixed charges no less than 1.20 to 1.00, in each case, tested as of the last day of each full fiscal quarter ending after the Closing Date and determined on the basis of the four most recently ended fiscal quarters for which financial statements have been delivered pursuant to the Credit Agreement, subject to customary “equity cure” rights.
Interest expense, net Interest expense, net for the year ended December 31, 2023 was $33.1 million, an increase of $11.5 million, or 53.2%, compared to the prior year, primarily due to higher interest rates and an increase in average outstanding debt, partially offset by the benefit realized on our interest rate caplets.
Interest expense, net Interest expense, net for the year ended December 31, 2024 was $35.9 million, an increase of $2.7 million, or 8.3%, compared to the prior year, primarily due to an increase in average outstanding debt and higher interest rates, partially offset by the benefit realized on our interest rate caplets.
The change was primarily due to the fluctuations in the market value of our Class A-1 common stock, which is the primary input to the valuation of the contingent earnout shares. 35 Table of Contents Income tax expense Income tax expense for the year ended December 31, 2023 was $20.1 million, a decrease of $0.5 million, or 2.6%, compared to the prior year .
The change was primarily due to the fluctuations in the market value of our Class A-1 common stock, which is the primary input to the valuation of the contingent earnout shares. Income tax expense Income tax expense for the year ended December 31, 2024 was $18.4 million, a decrease of $1.7 million, or 8.4%, compared to the prior year .
For example, the gross revenue per machine per day is typically lower in the summer when players will typically spend less time indoors at our locations, and higher in cold weather between February and April, when players will typically spend more time indoors at our locations.
Seasonality Our results of operations can fluctuate due to seasonal trends and other factors. For example, the gross revenue per machine per day is typically lower in the summer when players will typically spend less time indoors at our locations, and higher in cold weather between February and April, when players will typically spend more time indoors at our locations.
Amendment No. 2, among other things, provided for: 38 Table of Contents • an increase in the amount of the revolving credit facility from $100.0 million to $150.0 million, • $350.0 million initial term loan facility, the proceeds of which were applied to refinancing existing indebtedness, and • $400.0 million delayed draw term loan facility, which was originally available for borrowing until October 22, 2023 and was extended to October 22, 2024 by Amendment No. 4 (as described below).
Amendment No. 2, among other things, provided for: 41 Table of Contents • an increase in the amount of the revolving credit facility from $100.0 million to $150.0 million, • $350.0 million initial term loan facility, the proceeds of which were applied to refinancing existing indebtedness, and • $400.0 million delayed draw term loan facility (“DDTL”) The maturity date of the Credit Agreement was extended to October 22, 2026.
Liquidity and Capital Resources In order to maintain sufficient liquidity, we review our cash flow projections and available funds with the Board to consider modifying our capital structure and seeking additional sources of liquidity, if needed.
The increase in performance was attributable to an increase in the number of locations and gaming terminals. 40 Table of Contents Liquidity and Capital Resources In order to maintain sufficient liquidity, we review our cash flow projections and available funds with the Board to consider modifying our capital structure and seeking additional sources of liquidity, if needed.
Cost of revenue consists of (i) taxes on net gaming revenue that is payable to the appropriate jurisdiction, (ii) licenses, permits and other fees required for the operation of gaming terminals and other equipment, (iii) location revenue share, which is governed by local governing bodies and location contracts, (iv) ATM and amusement commissions payable to locations, and (v) ATM and amusement fees.
Cost of revenue consists of (i) taxes on net gaming revenue that is payable to the appropriate jurisdiction (effective July 1, 2024, the tax on net gaming revenue in the State of Illinois increased from 34% to 35%, which is split equally between us and our locations in Illinois), (ii) licenses, permits and other fees required for the operation of gaming 34 Table of Contents terminals and other equipment, (iii) location revenue share, which is governed by local governing bodies and location contracts, (iv) ATM and amusement commissions payable to locations, and (v) ATM and amusement fees.
The following table sets forth information with respect to our primary locations: As of December 31, Increase / (Decrease) 2023 2022 Change Change % Illinois 2,762 2,648 114 4.3 % Montana 609 610 (1) (0.2) % Nevada 352 340 12 3.5 % Nebraska 238 143 95 66.4 % Total locations 3,961 3,741 220 5.9 % Number of gaming terminals The number of gaming terminals in operation is based on a combination of third-party portal data and data from our internal systems.
The following table sets forth information with respect to our primary locations: As of December 31, Increase / (Decrease) 2024 2023 Change Change % Illinois 2,775 2,762 13 0.5 % Montana 619 609 10 1.6 % Nevada 357 352 5 1.4 % Nebraska 270 238 32 13.4 % Louisiana 96 — 96 100.0 % Total locations 4,117 3,961 156 3.9 % Number of gaming terminals The number of gaming terminals in operation is based on a combination of third-party portal data and data from our internal systems.
Macroeconomic Factors Interest rate volatility, persistent inflation and actual or perceived instability in the U.S. and global banking systems may increase the risk of an economic recession and volatility and dislocation in the capital or credit markets in the U.S. and other markets globally.
Macroeconomic Factors Ongoing interest rate uncertainty, persistent inflation, and reciprocal and increased tariffs may increase the risk of an economic recession and volatility in the capital or credit markets in the U.S. and other markets globally.
Upon the consummation of certain non-ordinary course asset sales, we may be required to apply the net cash proceeds thereof to prepay outstanding term loans and additional term loans. The loans under the Credit Agreement may be prepaid without premium or penalty, subject to customary SOFR “breakage” costs.
Upon the consummation of certain non-ordinary course asset sales, we may be required to apply the net cash proceeds thereof to prepay outstanding term loans and additional term loans.
Amortization of intangible assets and route and customer acquisition costs Amortization of intangible assets and route and customer acquisition costs for the year ended December 31, 2023 was $21.2 million, an increase of $3.7 million, or 21.3%, compared to the prior year due to an increase in location contracts acquired and amortization expense on other intangible assets acquired with Century.
Amortization of intangible assets and route and customer acquisition costs Amortization of intangible assets and route and customer acquisition costs for the year ended December 31, 2024 was $22.6 million, an increase of $1.4 million, or 6.4%, compared to the prior year due to an increase in location contracts acquired.
Operating expense includes payroll and related expense for service technicians, route technicians, route security, and preventative maintenance personnel. Operating expense also includes vehicle fuel and maintenance, and non-capitalizable parts expenses. Operating expenses are generally proportionate to the number of locations and gaming terminals.
Operating expense also includes vehicle fuel and maintenance, and non-capitalizable parts expenses. Operating expenses are generally proportionate to the number of locations and gaming terminals. General and administrative expense includes payroll and related expense for account managers, business development managers, marketing, and other corporate personnel.
General and administrative expense includes payroll and related expense for account managers, business development managers, marketing, and other corporate personnel. In addition, general and administrative expense also includes marketing, information technology, insurance, rent and professional fees. Depreciation and amortization of property and equipment. Depreciation is computed using the straight-line method over the estimated useful lives of the individual assets.
In addition, general and administrative expense also includes marketing, information technology, insurance, rent and professional fees. Depreciation and amortization of property and equipment. Depreciation is computed using the straight-line method over the estimated useful lives of the individual assets. Leasehold improvements are amortized over the shorter of the useful life or the lease.
General and administrative Total general and administrative expenses for the year ended December 31, 2023 were $180.2 million, an increase of $34.3 million, or 23.5%, compared to the prior year.
General and administrative Total general and administrative expenses for the year ended December 31, 2024 were $194.7 million, an increase of $14.5 million, or 8.0%, compared to the prior year.
Depreciation and amortization of property and equipment Depreciation and amortization of property and equipment for the year ended December 31, 2023 was $37.9 million, an increase of $8.6 million, or 29.4%, compared to the prior year due to an increased number of gaming terminals primarily attributable to the acquisition of Century .
Depreciation and amortization of property and equipment Depreciation and amortization of property and equipment for the year ended December 31, 2024 was $44.0 million, an increase of $6.1 million, or 16.0%, compared to the prior year due to an increased number of gaming terminals.
The decrease was due to lower non-recurring expenses related to new market development and a $1.7 million gain recognized in the second quarter of 2023 on the convertible note settlement as discussed in Note 4 to the consolidated financial statements, partially offset by higher fair value adjustments associated with the revaluation of contingent consideration liabilities.
The increase was primarily attributable to higher fair value adjustments associated with the revaluation of contingent consideration liabilities and higher non-recurring expenses related to acquisitions, as well as the impact of a $1.7 million gain recognized in the prior-year period on the convertible note settlement as discussed in Note 4 to the consolidated financial statements.
The obligations under the Credit Agreement are guaranteed by us and our wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”). The obligations under the Credit Agreement are secured by substantially all of the assets of the Guarantors, subject to certain exceptions.
The obligations under the Credit Agreement are secured by substantially all of the assets of the Guarantors, subject to certain exceptions.
Cost of manufacturing goods sold. Cost of manufacturing goods sold consists of costs associated with the sale of gaming terminals and related equipment. 32 Table of Contents General and administrative. General and administrative expenses consist of operating expense and general and administrative expense.
Cost of manufacturing goods sold. Cost of manufacturing goods sold consists of costs associated with the sale of gaming terminals and related equipment. General and administrative. General and administrative expenses consist of operating expense and general and administrative expense. Operating expense includes payroll and related expense for service technicians, route technicians, route security, and preventative maintenance personnel.
Amusement revenue represents amounts collected from amusement devices operated at various location partners and is recognized at the point the amusement device is used. Manufacturing. Manufacturing revenue represents sales of gaming terminals and related equipment. ATM fees and other.
Net gaming revenue includes the amounts earned by our location partners and is recognized at the time of gaming play. Amusement. Amusement revenue represents amounts collected from amusement devices operated at various location partners and is recognized at the point the amusement device is used. Manufacturing.
Cost of manufacturing goods sold Cost of manufacturing goods sold for the year ended December 31, 2023 was $7.7 million, an increase of $2.9 million, or 60.6%, compared to the prior year due primarily to higher manufacturing revenue.
Cost of manufacturing goods sold Cost of manufacturing goods sold for the year ended December 31, 2024 was $7.1 million, a decrease of $0.6 million, or 7.4%, compared to the prior year due primarily to lower manufacturing revenue.
We anticipate our capital expenditures will be approximately $55–65 million in 2024. Net cash (used in) provided by financing activities For the year ended December 31, 2023, net cash used in financing activities was $35.2 million, compared to cash provided by financing activities of $106.6 million in the prior year.
Net cash provided by (used in) financing activities For the year ended December 31, 2024, net cash provided by financing activities was $22.7 million, compared to cash used in financing activities of $35.2 million in the prior year.
We are continuously evaluating additional opportunities that are complementary to our core business.
We also design and manufacture gaming terminals and related equipment. We are continuously evaluating additional opportunities that are complementary to our core business.
Through our wholly owned subsidiary, Grand Vision Gaming, we also manufacture gaming terminals in the Montana, Nevada, South Dakota, Louisiana and West Virginia markets.
Through our wholly owned subsidiary, Grand Vision Gaming, we also manufacture gaming terminals in the Montana, Nevada, South Dakota, and West Virginia markets. In December 2024 we acquired the FanDuel Sportsbook and Horse Racing in Illinois, which will expand our operations into local casino gaming and horse racing.
The increase can be attributed to higher working capital adjustments primarily due to an increase in accounts payable and accrued expenses, partially offset by a lower increase in deferred income taxes. 40 Table of Contents Net cash used in investing activities For the year ended December 31, 2023, net cash used in investing activities was $59.8 million, a decrease in cash used of $129.5 million over the prior year.
The decrease can be attributed to higher deferred tax liabilities and working capital adjustments, partially offset by lower payments on consideration payable. Net cash used in investing activities For the year ended December 31, 2024, net cash used in investing activities was $124.2 million, an increase in cash used of $64.4 million over the prior year.
Acquired tangible personal property such as gaming equipment is generally measured at fair value using a cost approach which measures the fair value based on the cost to reproduce or replace the asset. Goodwill is measured as the excess of the consideration transferred over the fair value of the net identifiable assets acquired and liabilities assumed.
Acquired tangible personal property such as gaming equipment and buildings are generally measured at fair value using a cost approach which measures the fair value based on the cost to reproduce 44 Table of Contents or replace the asset, while land is valued using a market approach which looks at the values of similar properties.
The increase was attributable to higher payroll-related costs, as we continue to grow our operations, as well as higher parts and repair expense, higher stock-based compensation expense, and a settlement with the IGB of $1.1 million recorded in the second quarter of 2023.
The increase was attributable to higher payroll-related costs, as we continue to grow our operations, as well as higher stock-based compensation expense, partially offset by lower legal settlements and parts and repair expense.
W e are subject to the various gaming regulations in the states in which we operate, as well as various other federal, state and local laws and regulations. 31 Century Acquisition On June 1, 2022, we completed our acquisition of all of the outstanding equity interests of Century Gaming, Inc., a Montana corporation (“Century”).
W e are subject to the various gaming regulations in the states in which we operate, as well as various other federal, state and local laws and regulations.
In addition, during 2022 and 2023, we accelerated certain of our capital expenditures related to gaming machines and related components to manage our supply chain. We intend to continue to monitor macroeconomic conditions closely and may determine to take certain financial or operational actions in response to such conditions to the extent our business begins to be adversely impacted.
We intend to continue to monitor macroeconomic conditions closely and may determine to take certain financial or operational actions in response to such conditions to the extent our business begins to be adversely impacted. Components of Performance Revenues Net gaming. Net gaming revenue represents net cash received from gaming activities, which is the difference between gaming wins and losses.
Total net revenues by state are presented below (in thousands, except %s): Year Ended December 31, Increase / (Decrease) 2023 2022 Change Change % Total net revenues by state: Illinois $ 867,200 $ 808,652 $ 58,548 7.2 % Montana 154,402 79,639 74,763 93.9 % Nevada 117,074 66,989 50,085 74.8 % Nebraska 19,043 5,217 13,826 265.0 % All other 12,701 9,300 3,401 36.6 % Total net revenues $ 1,170,420 $ 969,797 $ 200,623 20.7 % 34 Table of Contents Cost of revenue Total cost of revenue for the year ended December 31, 2023 was $809.5 million, an increase of $143.4 million, or 21.5%, compared to the prior year due primarily to higher net gaming revenue, described above.
Total net revenues by state are presented below (in thousands, except %s): Year Ended December 31, 2024 Increase / (Decrease) 2024 2023 Change Change % Total net revenues by state: Illinois $ 906,572 $ 867,200 $ 39,372 4.5 % Montana 161,698 154,402 7,296 4.7 % Nevada 114,551 117,074 (2,523) (2.2) % Nebraska 25,384 19,043 6,341 33.3 % Louisiana (1) 5,445 — 5,445 100.0 % All other 17,322 12,701 4,621 36.4 % Total net revenues $ 1,230,972 $ 1,170,420 $ 60,552 5.2 % (1) Revenues for Louisiana only represents two months of operations. 36 Table of Contents Cost of revenue Total cost of revenue for the year ended December 31, 2024 was $852.4 million, an increase of $42.8 million, or 5.3%, compared to the prior year due primarily to higher net gaming revenue, as described above.
On August 23, 2023, we entered into Amendment No. 4 to the Credit Agreement (“Amendment No. 4”), which extended the termination date to draw on the delayed draw term loan to October 22, 2024.
In June 2023, we completed a $100 million draw on the DDTL and used all of the proceeds to pay down an equal portion of the revolving credit facility. On August 23, 2023, we entered into Amendment No. 4 to the Credit Agreement (“Amendment No. 4”), which extended the termination date to draw on the DDTL to October 22, 2024.
Other expenses, net Other expenses, net for the year ended December 31, 2023 were $6.5 million, a decrease of $2.9 million, or 30.8%, compared to the prior year .
Other expenses, net Other expenses, net for the year ended December 31, 2024 were $19.3 million, an increase of $12.9 million, or 199.7%, compared to the prior year .
For the year ended December 31, 2023, the weighted-average interest rate was approximately 7.3% compared to the weighted-average interest rate of approximately 4.4% for the prior year.
For the year ended December 31, 2024, the weighted-average interest rate was approximately 7.4% compared to the weighted-average interest rate of approximately 7.3% for the prior year. 37 Table of Contents Loss on change in fair value of contingent earnout shares Loss on change in fair value of contingent earnout shares for the year ended December 31, 2024 was $1.3 million, a decrease of $7.3 million compared to the prior year .
Our focus is providing unmatched customer support, guidance, and expertise so our location partners can grow their businesses with incremental revenue. We install, maintain, operate and service gaming terminals and related equipment for our location partners as well as redemption devices that have automated teller machine (“ATM”) functionality and stand-alone ATMs.
Our operations offer a complementary source of revenue for our location partners by offering a “one-stop” solution of support, service, and equipment through: • Providing unmatched customer support, guidance, and expertise so our location partners can grow their businesses with incremental revenue. • Installing, maintaining, operating and servicing gaming terminals and related equipment for our location partners as well as redemption devices that have automated teller machine (“ATM”) functionality and stand-alone ATMs, driving game play and player loyalty. • Offering amusement devices, including jukeboxes, dartboards, pool tables, and other entertainment related equipment that enhance customer experience and engagement.
The decrease was attributable to less cash used for business and asset acquisitions, primarily due to the acquisition of Century in 2022, in addition to the proceeds received from the settlement of the convertible notes in 2023, partially offset by more cash used for the purchases of property and equipment and advances against a portion of the purchase price on a pending business acquisition.
The increase was attributable to more cash used for business and asset acquisitions, primarily due to the acquisition of Toucan Gaming, the proceeds from the settlement of our convertible notes that happened in 2023, which did not reoccur in the current year, and our investment in an equity interest, partially offset by lower purchases of property and equipment.
Cash Flows The following table summarizes our net cash provided by or used in operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with our consolidated financial statements and the notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K : (in thousands) Year Ended December 31, 2023 2022 Change Net cash provided by operating activities $ 132,530 $ 107,999 $ 24,531 Net cash used in investing activities (59,793) (189,263) (129,470) Net cash (used in) provided by financing activities (35,239) 106,591 (141,830) Net cash provided by operating activities Fo r the year ended December 31, 2023, net cash provided by operating activities was $132.5 million, an increase of $24.5 million over the prior year.
If the carrying value, after the income or loss attribution, is below the estimated redemption value at each reporting period, we will remeasure the redeemable noncontrolling interests to its redemption value at which point any measurement period adjustments are recorded to equity and a corresponding adjustment to earnings per share. 43 Table of Contents Cash Flows The following table summarizes our net cash provided by or used in operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with our consolidated financial statements and the notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K : (in thousands) Year Ended December 31, 2024 2023 Change Net cash provided by operating activities $ 121,194 $ 132,530 $ (11,336) Net cash used in investing activities (124,151) (59,793) (64,358) Net cash provided by (used in) financing activities 22,651 (35,239) 57,890 Net cash provided by operating activities Fo r the year ended December 31, 2024, net cash provided by operating activities was $121.2 million, a decrease of $11.3 million over the prior year.
The maturity date of the Credit Agreement was extended to October 22, 2026. The interest rate and covenants remained unchanged. We incurred $4.3 million in debt issuance costs associated with Amendment No. 2. We also recognized a loss on debt extinguishment of $1.2 million for the year ended December 31, 2021 in connection with the amendment.
The interest rate and covenants remained unchanged. We incurred $4.3 million in debt issuance costs associated with Amendment No. 2.
The following table sets forth information with respect to the number of gaming terminals in our primary locations: As of December 31, Increase / (Decrease) 2023 2022 Change Change % Illinois 15,276 14,397 879 6.1 % Montana 6,276 6,108 168 2.8 % Nevada 2,704 2,645 59 2.2 % Nebraska 827 391 436 111.5 % Total gaming terminals 25,083 23,541 1,542 6.6 % 36 Table of Contents Non-GAAP Financial Measures Adjusted EBITDA and Adjusted net income are non-GAAP financial measures, but are key metrics management uses to monitor ongoing core operations.
The following tables set forth information with respect to our location hold-per-day in our primary locations: Year Ended December 31, 2024 Increase / (Decrease) 2024 2023 Change Change % Illinois $ 864 $ 849 $ 15 1.8 % Montana 609 582 27 4.6 % Nevada 823 851 (28) (3.3) % Nebraska 241 234 7 3.0 % Louisiana 979 — Non-GAAP Financial Measures Adjusted EBITDA and Adjusted net income are non-GAAP financial measures, but are key metrics management uses to monitor ongoing core operations.
To date, we have not observed material impacts in our business or outlook, but there can be no assurance that, in the event of a recession, levels of gaming activity would not be adversely affected. Further, as described in more detail below, we have observed certain increases in our costs, particularly higher wages and increased interest expense on our debt.
To date, we have not observed material impacts in our business or outlook, outside of observed increases in our costs related to higher wages and increased interest expense on our debt. In 2023 and the first half of 2024, we accelerated certain of our capital expenditures related to gaming machines and related components to manage our supply chain.
The relevance of this policy and the described methods and assumptions vary from period to period depending on the volume of applicable acquisitions occurring. Seasonality Our results of operations can fluctuate due to seasonal trends and other factors.
Goodwill is measured as the excess of the consideration transferred over the fair value of the net identifiable assets acquired and liabilities assumed. The relevance of this policy and the described methods and assumptions vary from period to period depending on the volume of applicable acquisitions occurring.
Holidays, vacation seasons, and sporting events may also cause our results to fluctuate. 41 Table of Contents
Our horse racing operations will only operate during the months where the weather is conducive to racing, which is typically from late spring through the early fall. Holidays, vacation seasons, and sporting events may also cause our results to fluctuate. 45 Table of Contents
The increase was driven primarily by an increase in net gaming revenue of $188.6 million, or 20.4%. The increase in net gaming revenue for the year ended December 31, 2023 was driven by the Century acquisition, adding new locations and 3% same store sales growth in Illinois.
The increase was driven primarily by an increase in net gaming revenue of $59.2 million, or 5.3%, which reflected an increase in gaming locations and terminals.
Removed
We offer amusement devices, including jukeboxes, dartboards, pool tables, and other entertainment related equipment. These operations provide a complementary source of lead generation for our gaming business by offering a “one-stop” source of additional equipment for our location partners. We also design and manufacture gaming terminals and related equipment.
Added
In strategic markets, we are the owner and operator of our own retail establishments, and gaming and entertainment venues.
Removed
The aggregate purchase consideration was $164.3 million, which included: (i) a cash payment made at closing of $45.5 million to the equity holders of Century; (ii) repayment of $113.2 million of Century's indebtedness; and (iii) 515,622 shares of our Class A-1 common stock issued to certain members of Century’s management with a fair value of $5.6 million on the acquisition date.
Added
Starting in 2025, we plan to open a casino at the FanDuel Sportsbook and Racktrack in the greater St. Louis/southern Illinois market, with Phase I of the casino opening in second quarter 2025 and the Phase II build out of a permanent facility anticipated to start shortly after the completion of Phase I.
Removed
The cash payments were financed using cash from a draw of approximately $160 million from our revolving credit facility and delayed draw term loan facility under our senior secured credit facility.
Added
The 2025 racing season is planned for April - October 2025. The casino property and associated racetrack will generate revenues and expenses from slot machines, video table games, ancillary food and beverage services, commission on pari-mutuel wagering, racing event-related services, and other miscellaneous operations.
Removed
Our financial results for the year ended December 31, 2022 include the results of Century from the date of acquisition, and our financial results for the year ended December 31, 2023 include the results of Century for the full year.
Added
We utilize this metric to continually monitor growth from existing locations, organic openings, purchased locations, and competitor conversions. 38 Table of Contents The following table sets forth information with respect to the number of gaming terminals in our primary locations: As of December 31, Increase / (Decrease) 2024 2023 Change Change % Illinois 15,693 15,276 417 2.7 % Montana 6,467 6,276 191 3.0 % Nevada 2,650 2,704 (54) (2.0) % Nebraska 948 827 121 14.6 % Louisiana 588 — 588 100.0 % Total gaming terminals 26,346 25,083 1,263 5.0 % Location hold-per-day Location hold-per-day is calculated by dividing net gaming revenue in the period by the average number of locations, which is then further divided by the number of operational days.
Removed
Components of Performance Revenues Net gaming. Net gaming revenue represents net cash received from gaming activities, which is the difference between gaming wins and losses. Net gaming revenue includes the amounts earned by our location partners and is recognized at the time of gaming play. Amusement.
Added
We utilize this metric to compare market and location performance on a normalized basis. The percent change in location hold-per-day is the underlying metric we use to determine the change in same-store sales.
Removed
Loss (gain) on change in fair value of contingent earnout shares Loss on change in fair value of contingent earnout shares for the year ended December 31, 2023 was $8.5 million, compared to the prior year, which had a gain of $19.5 million.
Added
Adjusted net income is defined as net income plus: • Amortization of intangible assets and route and customer acquisition costs • Stock-based compensation expense • Loss from unconsolidated affiliates • Loss on change in fair value of contingent earnout shares • Gain on expiration of warrants • Other expenses, net which consists of (i) non-cash expenses including the remeasurement of contingent consideration liabilities, (ii) non-recurring lobbying and legal expenses related to distributed gaming expansion in current or prospective markets, and (iii) other non-recurring expenses • Tax effect of adjustments 39 Table of Contents Adjusted EBITDA is defined as net income plus: • Amortization of intangible assets and route and customer acquisition costs • Stock-based compensation expense • Loss from unconsolidated affiliates • Loss on change in fair value of contingent earnout shares • Gain on expiration of warrants • Other expenses, net • Tax effect of adjustments • Depreciation and amortization of property and equipment • Interest expense, net • Emerging markets which reflects the results, on an Adjusted EBITDA basis, for non-core jurisdictions where our operations are developing ◦ Markets are no longer considered emerging when we have installed or acquired at least 500 gaming terminals in the jurisdiction, or when 24 months have elapsed from the date we first install or acquire gaming terminals in the jurisdiction, whichever occurs first ◦ We currently view Pennsylvania as an emerging market ◦ Prior to January 2024, Iowa was considered an emerging market ◦ Prior to April 2023, Nebraska was considered an emerging market • Income tax expense Adjusted net income and Adjusted EBITDA (in thousands, except %s) Year Ended December 31, Increase / (Decrease) 2024 2023 Change Change % Net income $ 35,291 $ 45,603 $ (10,312) (22.6) % Adjustments: Amortization of intangible assets and route and customer acquisition costs 22,577 21,211 1,366 6.4 % Stock-based compensation 12,204 9,416 2,788 29.6 % Loss from unconsolidated affiliates — — — — % Loss on change in fair value of contingent earnout shares 1,276 8,539 (7,263) (85.1) % Gain on expiration of warrants (13) — (13) 100.0 % Other expenses, net 19,339 6,453 12,886 199.7 % Tax effect of adjustments (13,585) (8,702) (4,883) (56.1) % Adjusted net income 77,089 82,520 (5,431) (6.6) % Depreciation and amortization of property and equipment 43,978 37,906 6,072 16.0 % Interest expense, net 35,892 33,144 2,748 8.3 % Emerging markets 165 (948) 1,113 117.4 % Income tax expense 32,023 28,823 3,200 11.1 % Adjusted EBITDA $ 189,147 $ 181,445 $ 7,702 4.2 % Adjusted EBITDA for the year ended December 31, 2024 was $189.1 million , an increase of $7.7 million, or 4.2%, compare d to the prior year.
Removed
We utilize this metric to continually monitor growth from existing locations, organic openings, purchased locations, and competitor conversions.
Added
During October 2024, we borrowed an additional $119.0 million on the DDTL, of which $77.5 million was used to pay down the revolving credit facility under the Credit Agreement, $35.0 million was used used for a business acquisition and the remaining $6.5 million was used for general business operations.
Removed
Adjusted net income and Adjusted EBITDA (in thousands, except %s) Year Ended December 31, Increase / (Decrease) 2023 2022 Change Change % Net income $ 45,603 $ 74,102 $ (28,499) (38.5) % Adjustments: Amortization of intangible assets and route and customer acquisition costs (1) 21,211 17,484 3,727 21.3 % Stock-based compensation (2) 9,416 6,840 2,576 37.7 % Loss (gain) on change in fair value of contingent earnout shares (3) 8,539 (19,544) 28,083 143.7 % Other expenses, net (4) 6,453 9,320 (2,867) (30.8) % Tax effect of adjustments (5) (8,702) (8,327) (375) 4.5 % Adjusted net income 82,520 79,875 2,645 3.3 % Depreciation and amortization of property and equipment 37,906 29,295 8,611 29.4 % Interest expense, net 33,144 21,637 11,507 53.2 % Emerging markets (6) (948) 2,598 (3,546) (136.5) % Income tax expense 28,823 28,987 (164) (0.6) % Adjusted EBITDA $ 181,445 $ 162,392 $ 19,053 11.7 % (1) Amortization of intangible assets and route and customer acquisition costs consist of upfront cash payments and future cash payments to third-party sales agents to acquire the location partners that are not connected with a business acquisition, as well as the amortization of other intangible assets.
Added
Our ability to borrow on the DDTL ended on October 22, 2024. As of December 31, 2024 , there remained $143.5 million of availability under the Credit Agreement. The obligations under the Credit Agreement are guaranteed by us and our wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Guarantors”).
Removed
We amortize the upfront cash payment over the life of the contract, including expected renewals, beginning on the date the location goes live, and recognizes non-cash amortization charges with respect to such items.
Added
The loans under the Credit Agreement may be prepaid without premium or penalty, subject to customary SOFR “breakage” costs. 42 Table of Contents The Credit Agreement contains certain customary affirmative and negative covenants and events of default and requires us and certain of our affiliates obligated under the Credit Agreement to make customary representations and warranties in connection with credit extensions thereunder.
Removed
Future or deferred cash payments, which may occur based on terms of the underlying contract, are generally lower in the aggregate as compared to established practice of providing higher upfront payments, and are also capitalized and amortized over the remaining life of the contract.
Added
Temporary equity In November 2024, we acquired 85% of the ownership interests in both Toucan Gaming, LLC and LSM Gaming, LLC (herein referred to as “Toucan Gaming”), two Louisiana-based operators and owners of multiple licensed video poker establishments.
Removed
Future cash payments do not include cash costs associated with renewing customer contracts as we do not generally incur significant costs as a result of extension or renewal of an existing contract.
Added
Concurrent with the acquisition, we entered into a redemption agreement with the noncontrolling interest holder in the form of put and call options that would allow us to eventually own 100% of Toucan Gaming. The noncontrolling interest holder may exercise its put option after seven years, or if we have a change in control event.
Removed
Location contracts acquired in a business combination are recorded at fair value as part of the business combination accounting and then amortized as an intangible asset on a straight-line basis over the expected useful life of the contract of 15 years.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed4 unchanged
Biggest changeIf the underlying interest rates were to increase by 1.0%, or 100 basis points, the increase in interest expense on our floating rate debt would negatively impact our future earnings and cash flows by approximately $2.5 million annually, assuming the balance outstanding under our Credit Facility remained at $545.4 million.
Biggest changeIf the underlying interest rates were to increase by 1.0%, or 100 basis points, the increase in interest expense on our floating rate debt would negatively impact our future earnings and cash flows by approximately $3.0 million annually, assuming the balance outstanding under our Credit Facility remained at $597.4 million.
Our borrowings under our senior secured credit facility were $545.4 million as of December 31, 2023.
Our borrowings under our senior secured credit facility were $597.4 million as of December 31, 2024.

Other ACEL 10-K year-over-year comparisons